OKTEX PIPELINE COMPANY, LLC — Notice of Probable Violation

party submissionOfficial PDF420111005_Operator Response to Amended NOPV PCP PCO_05192011.pdf#

420111005_AMENDED NOPV PCP PCO_04192011.pdf, page 1Official PDFU.S. Department 8701 South Gessner, Suite 1110 of Transportation Houston, TX 77074 Pipeline a nd Hazardous Materials Safety Administration AMENDED NOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED April 19, 2011 Mr. Michel E. Nelson President OKTEX Pipeline Company, L.L.C. 1 00 West Fifth Street Tulsa, OK 74103-4298 CPF 4-2011-1005 Dear Mr. Nelson : On February 24, 2011, OKTEX Pipeline Company, L.L.C. was issued a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Com'pliance Order (Notice). In your response dated March 24, 2011, you explained that the regulation cited in Item 2 of the Notice may not apply to the listed devices because they are not pressure relieving, but pressure limiting/regulating devices. This Amended Notice is issued for the purpose of correcting the regulatory citation in Item 2. As specified in the original Notice, on October 18-22, 2010, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected your OKTEX Pipeline Company L.L.C. - EI Paso (OKTEX) system located in EI Paso, TX. As a result of the inspection, it appears that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violation(s) are: 1. §192.475 Internal corrosion control: General.#

420111005_AMENDED NOPV PCP PCO_04192011.pdf, page 2(b) Whenever any pipe is removed from a pipeline for any reason, the internal surface must be inspected for evidence of corrosion .... OKTEX failed to perform the required inspection for' the evidence of internal corrosion on a section of pipe removed from service in April 2010. While performing pipeline patrols on March 3, 2010, OKTEX personnel discovered a Class 2 leak in a section of 3-inch pipe located on the Norteno # 4 pipeline. During the repair of this leak, company personnel discovered a second corrosion leak nearby. As a result, OKTEX removed a 12 foot section of the pipeline which included 3-inch and 4-inch pipe. The section of pipeline was replaced with 12 feet of 4-inch Fusion Bonded Epoxy Steel pipe on April 7, 2010. This replacement activity exposed the inside of the pipe and required that the internal surface be inspected. During the records review, PHMSA inspectors inquired about an internal corrosion inspection record and learned that OKTEX personnel had not performed an internal inspection. Per OKTEX procedure 40.102A, the inspection should be recorded on the form entitled "Pipeline Inspection Program for Excavations." The Internal Corrosion section of the form has several statements that require an answer. Each statement has a drop-down menu of possible choices: 'I\J/A, ' 'Yes, ' or 'No.' The statements have a default result of N/A that would mean the internal surface of the pipe was not exposed and therefore not inspected. A 'Yes' answer means an internal surface inspection was performed and evidence of corrosion was found. A 'No' answer means the inspection was performed and evidence of corrosion was not found. OKTEX "performed an internal pipe surface inspection" and updated the Internal Corrosion section of the report on October 20, 2010. The inspection was performed using the coupon samples from the stopple fittings. 2. §192.739 Pressure limiting and regulating stations: Inspection and testing. (a) Each pressure limiting station, relief device (except rupture discs), and pressure regulating station and its equipment must be subjected at intervals not exceeding 15 months, but at least once each calendar year, to inspections and tests to determine that it is(2) Adequate from the standpoint of capacity and reliability of operation for the service in which it is employed; At the time of the inspection, OKTEX had not determined if the pressure regulating stations have sufficient capacity to provide reliable service. to the downstream facilities . OKTEX purchased the pipeline system in July 2006 from Norteno. OKTEX operates and provides the overpressure protection for the Norteno #4 and #5 pipeline systems which includes five pressure regulating stations. There are four pressure regulating facilities on Norteno # 4: 1. Canutillo Delivery located at 6th & LA Mesa; 2. Strahan located on Strahan and La Mesa; 3. Gillette located on Gillette and La Mesa and 4. Gato located on Gato Road and La Mesa. 2#

420111005_AMENDED NOPV PCP PCO_04192011.pdf, page 3There is one pressure regulating facility on Norteno #5: 1. Anthony City Gate located on West Washington. OKTEX is a subsidiary of the OI\JEOK Partners and utilizes the ONEOK procedures. ONEOK procedure 0 KSo p3. 160.1 02, section 3.11 states: "Inspection and test pressure regulators to assure that each: 3.11 .2 Is adequate from the standpoint of capacity and reliability of operation for the service intended." Section 6.3 states: "Use forms OKSops3.160.1 02A Regulator Inspection and Testing ... " During the inspection, PHMSA noted that OKTEX did not use the forms as specified in the procedure. Instead, OKTEX provided excel spread sheet documents for pressure regulator inspections. During discussions with company personnel it was noted that OKTEX had not confirmed or determined the required capacity for the pipeline system pressure regulating stations when it was acquired from Norteno. While it appears that annual checks are made it cannot be determined if these results indicate adequate capacity since the original capacity was not determined. 3. §192.805 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (b) Ensure through evaluation that individuals performing covered tasks are qualified; On December 7, 2006, OKTEX failed to ensure through evaluation that a Company inspector was qualified to perform the covered task 831-0811 : Visual Inspection of Welding and Welds. An individual conducted the visual inspection of all welds for the reconstruction of an existing 4inch railroad crossing on the Norteno # 5 pipeline located in Anthony, TX and was not qualified under 831-0811. The 'Scope of Work' for the reconstruction project, section l\Jon-Destructive Testing, page 2, states: "All welds will be 100% visually inspected by the Company Inspector. Tie-in welds will be visually inspected and leak (soap bubble or flame pack) tested". To comply with the Scope of Work and meet the requirements of §192.241 and §192.805 (b), a non-welder must be qualified to perform the task. The OKTEX Operator Qualification program requires that an individual be qualified for covered task 831-0811 to perform visual weld inspection. PHMSA reviewed the qualification records for this individual and they indicate he has never been qualified for this task. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violation persists up to a maximum of $1,000,000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation(s) and has recommended that you be preliminarily assessed a civil penalty of $35,700.00 as follows: 3#

420111005_AMENDED NOPV PCP PCO_04192011.pdf, page 4Item number PENALTY 2 $35,700.00 Warning Items With respect to items 1 and 3 we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment proceedings at this time. We advise you to promptly correct these item(s) . Be advised that failure to do so may result in OKTEX being subject to additional enforcement action. Proposed Compliance Order With respect to item 2 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to OKTEX. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response to this Notice In accordance with 49 C.F.R. § 190.207(c), you have the opportunity to respond to this Amended Notice. Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you choose not to respond within 30 days of receipt of this Amended Notice, the Associate Administrator for Pipeline Safety will consider your letter dated March 24, 2011, to constitute your response in this matter. In your correspondence on this matter, please refer to CPF 4-2011-1005 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, R. M. Seeley Director, Southwest Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 4#

420111005_AMENDED NOPV PCP PCO_04192011.pdf, page 5PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to OKTEX Pipeline Company, L.L.C. a Compliance Order incorporating the following remedial requirements to ensure the compliance of OKTEX with the pipeline safety regulations: 1. 2. 3. In regard to Item Number 2 of the Notice pertaining to the failure to determine the capacity of pressure regulating stations installed on OKTEX pipelines facilities, OKTEX must perform the required analysis and ensure that the pressure regulators have adequate capacity to provide reliable service to the downstream facilities as required by 49 CFR §192.739. If the pressure regulator capacity is found to be insufficient, OKTEX must install/modify the equipment to provide the required capacity. OKTEX must complete item 1 of the Compliance Order within 30 days following receipt of the Final Order. It is requested (not mandated) that OKTEX Pipeline Company, L.L.C. maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to R. M. Seeley, Director, Southwest Region, Pipeline and Hazardous Materials Safety Administration . It is requested that these costs be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with replacements, additions and other changes to pipeline i nfrastru cture. 5#

420111005_AMENDED NOPV PCP PCO_ 04192011_text.pdf, page 1Official PDFAMENDED NOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED April 19, 2011 Mr. Michel E. Nelson President OKTEX Pipeline Company, L.L.C. 100 West Fifth Street Tulsa, OK 74103-4298 CPF 4-2011-1005 Dear Mr. Nelson: On February 24, 2011, OKTEX Pipeline Company, L.L.C. was issued a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In your response dated March 24, 2011, you explained that the regulation cited in Item 2 of the Notice may not apply to the listed devices because they are not pressure relieving, but pressure limiting/regulating devices. This Amended Notice is issued for the purpose of correcting the regulatory citation in Item 2. As specified in the original Notice, on October 18-22, 2010, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected your OKTEX Pipeline Company L.L.C. – El Paso (OKTEX) system located in El Paso, TX. As a result of the inspection, it appears that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violation(s) are: 1. §192.475 Internal corrosion control: General.#

420111005_AMENDED NOPV PCP PCO_ 04192011_text.pdf, page 2(b) Whenever any pipe is removed from a pipeline for any reason, the internal surface must be inspected for evidence of corrosion…. OKTEX failed to perform the required inspection for the evidence of internal corrosion on a section of pipe removed from service in April 2010. While performing pipeline patrols on March 3, 2010, OKTEX personnel discovered a Class 2 leak in a section of 3-inch pipe located on the Norteno # 4 pipeline. During the repair of this leak, company personnel discovered a second corrosion leak nearby. As a result, OKTEX removed a 12 foot section of the pipeline which included 3-inch and 4-inch pipe. The section of pipeline was replaced with 12 feet of 4-inch Fusion Bonded Epoxy Steel pipe on April 7, 2010. This replacement activity exposed the inside of the pipe and required that the internal surface be inspected. During the records review, PHMSA inspectors inquired about an internal corrosion inspection record and learned that OKTEX personnel had not performed an internal inspection. Per OKTEX procedure 40.102A, the inspection should be recorded on the form entitled “Pipeline Inspection Program for Excavations. ” The Internal Corrosion section of the form has several statements that require an answer. Each statement has a drop-down menu of possible choices: ‘N/A,’ ‘Yes,’ or ‘No.’ The statements have a default result of N/A that would mean the internal surface of the pipe was not exposed and therefore not inspected. A ‘Yes’ answer means an internal surface inspection was performed and evidence of corrosion was found. A ‘No’ answer means the inspection was performed and evidence of corrosion was not found. OKTEX “performed an internal pipe surface inspection” and updated the Internal Corrosion section of the report on October 20, 2010. The inspection was performed using the coupon samples from the stopple fittings. 2. §192.739 Pressure limiting and regulating stations: Inspection and testing. (a) Each pressure limiting station, relief device (except rupture discs), and pressure regulating station and its equipment must be subjected at intervals not exceeding 15 months, but at least once each calendar year, to inspections and tests to determine that it is- (2) Adequate from the standpoint of capacity and reliability of operation for the service in which it is employed; At the time of the inspection, OKTEX had not determined if the pressure regulating stations have sufficient capacity to provide reliable service to the downstream facilities. OKTEX purchased the pipeline system in July 2006 from Norteno. OKTEX operates and provides the overpressure protection for the Norteno #4 and #5 pipeline systems which includes five pressure regulating stations. There are four pressure regulating facilities on Norteno # 4: 1. Canutillo Delivery located at 6th & LA Mesa; 2. Strahan located on Strahan and La Mesa; 3. Gillette located on Gillette and La Mesa and 4. Gato located on Gato Road and La Mesa. 2#

420111005_AMENDED NOPV PCP PCO_ 04192011_text.pdf, page 3There is one pressure regulating facility on Norteno #5: 1. Anthony City Gate located on West Washington. OKTEX is a subsidiary of the ONEOK Partners and utilizes the ONEOK procedures. ONEOK procedure OKSop3.160.102, section 3.11 states: “Inspection and test pressure regulators to assure that each: 3.11.2 Is adequate from the standpoint of capacity and reliability of operation for the service intended.” Section 6.3 states: “Use forms OKSops3.160.102A Regulator Inspection and Testing… ” During the inspection, PHMSA noted that OKTEX did not use the forms as specified in the procedure. Instead, OKTEX provided excel spread sheet documents for pressure regulator inspections. During discussions with company personnel it was noted that OKTEX had not confirmed or determined the required capacity for the pipeline system pressure regulating stations when it was acquired from Norteno. While it appears that annual checks are made it cannot be determined if these results indicate adequate capacity since the original capacity was not determined. 3. §192.805 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (b) Ensure through evaluation that individuals performing covered tasks are qualified; On December 7, 2006, OKTEX failed to ensure through evaluation that a Company inspector was qualified to perform the covered task B31-0811: Visual Inspection of Welding and Welds. An individual conducted the visual inspection of all welds for the reconstruction of an existing 4- inch railroad crossing on the Norteno # 5 pipeline located in Anthony, TX and was not qualified under B31-0811. The ‘Scope of Work’ for the reconstruction project, section Non-Destructive Testing, page 2, states: “All welds will be 100% visually inspected by the Company Inspector. Tie-in welds will be visually inspected and leak (soap bubble or flame pack) tested”. To comply with the Scope of Work and meet the requirements of §192.241 and §192.805 (b), a non-welder must be qualified to perform the task. The OKTEX Operator Qualification program requires that an individual be qualified for covered task B31-0811 to perform visual weld inspection. PHMSA reviewed the qualification records for this individual and they indicate he has never been qualified for this task. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violation persists up to a maximum of $1,000,000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation(s) and has recommended that you be preliminarily assessed a civil penalty of $35,700.00 as follows:3#

420111005_AMENDED NOPV PCP PCO_ 04192011_text.pdf, page 4Item number PENALTY 2 $35,700.00 Warning Items With respect to items 1 and 3 we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment proceedings at this time. We advise you to promptly correct these item(s). Be advised that failure to do so may result in OKTEX being subject to additional enforcement action. Proposed Compliance Order With respect to item 2 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to OKTEX. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response to this Notice In accordance with 49 C.F.R. § 190.207(c), you have the opportunity to respond to this Amended Notice. Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you choose not to respond within 30 days of receipt of this Amended Notice, the Associate Administrator for Pipeline Safety will consider your letter dated March 24, 2011, to constitute your response in this matter. In your correspondence on this matter, please refer to CPF 4-2011-1005 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, R. M. Seeley Director, Southwest Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 4#

420111005_AMENDED NOPV PCP PCO_ 04192011_text.pdf, page 5PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to OKTEX Pipeline Company, L.L.C. a Compliance Order incorporating the following remedial requirements to ensure the compliance of OKTEX with the pipeline safety regulations: 1. In regard to Item Number 2 of the Notice pertaining to the failure to determine the capacity of pressure regulating stations installed on OKTEX pipelines facilities, OKTEX must perform the required analysis and ensure that the pressure regulators have adequate capacity to provide reliable service to the downstream facilities as required by 49 CFR §192.739. If the pressure regulator capacity is found to be insufficient, OKTEX must install/modify the equipment to provide the required capacity. 2. OKTEX must complete item 1 of the Compliance Order within 30 days following receipt of the Final Order. 3. It is requested (not mandated) that OKTEX Pipeline Company, L.L.C. maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to R. M. Seeley, Director, Southwest Region, Pipeline and Hazardous Materials Safety Administration. It is requested that these costs be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with replacements, additions and other changes to pipeline infrastructure. 5#

420111005_NOPV PCP PCO_02242011_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED February 24, 2011 Mr. Michel E. Nelson President OKTEX Pipeline Company, L.L.C. 100 West Fifth Street Tulsa, OK 74103-4298 CPF 4-2011-1005 Dear Mr. Nelson: On October 18-22, 2010, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected your OKTEX Pipeline Company L.L.C. – El Paso (OKTEX) system located in El Paso, TX. As a result of the inspection, it appears that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violation(s) are: 1. §192.475 Internal corrosion control: General. (b) Whenever any pipe is removed from a pipeline for any reason, the internal surface must be inspected for evidence of corrosion…. OKTEX failed to perform the required inspection for the evidence of internal corrosion on a section of pipe removed from service in April 2010.#

420111005_NOPV PCP PCO_02242011_text.pdf, page 2While performing pipeline patrols on March 3, 2010, OKTEX personnel discovered a Class 2 leak in a section of 3-inch pipe located on the Norteno # 4 pipeline. During the repair of this leak, company personnel discovered a second corrosion leak nearby. As a result, OKTEX removed a 12 foot section of the pipeline which included 3-inch and 4-inch pipe. The section of pipeline was replaced with 12 feet of 4-inch Fusion Bonded Epoxy Steel pipe on April 7, 2010. This replacement activity exposed the inside of the pipe and required that the internal surface be inspected. During the records review, PHMSA inspectors inquired about an internal corrosion inspection record and learned that OKTEX personnel had not performed an internal inspection. Per OKTEX procedure 40.102A, the inspection should be recorded on the form entitled “Pipeline Inspection Program for Excavations. ” The Internal Corrosion section of the form has several statements that require an answer. Each statement has a drop-down menu of possible choices: ‘N/A,’ ‘Yes,’ or ‘No.’ The statements have a default result of N/A that would mean the internal surface of the pipe was not exposed and therefore not inspected. A ‘Yes’ answer means an internal surface inspection was performed and evidence of corrosion was found. A ‘No’ answer means the inspection was performed and evidence of corrosion was not found. OKTEX “performed an internal pipe surface inspection” and updated the Internal Corrosion section of the report on October 20, 2010. The inspection was performed using the coupon samples from the stopple fittings. 2. §192.743 Pressure limiting and regulating stations: Capacity of relief devices. (a) Pressure relief devices at pressure limiting stations and pressure regulating stations must have sufficient capacity to protect the facilities to which they are connected. Except as provided in §192.739(b), the capacity must be consistent with the pressure limits of §192.201(a). This capacity must be determined at intervals not exceeding 15 months, but at least once each calendar year, by testing the devices in place or by review and calculations At the time of the inspection, OKTEX had not determined that the relief devices have sufficient capacity to protect the facilities to which they are connected. OKTEX purchased the pipeline system in July 2006 from Norteno. OKTEX operates and provides the overpressure protection for the Norteno #4 and #5 pipeline systems which includes five relief devices. There are four devices on Norteno # 4: 1. Canutillo Delivery located at 6th & LA Mesa; 2. Strahan located on Strahan and La Mesa; 3. Gillette located on Gillette and La Mesa and 4. Gato located on Gato Road and La Mesa. There is one device on Norteno #5: 1. Anthony City Gate located on West Washington. OKTEX is a subsidiary of the ONEOK Partners and utilizes the ONEOK procedures. ONEOK procedure OKSop3.160.102, section 3.10 states: 2#

420111005_NOPV PCP PCO_02242011_text.pdf, page 3“Calculate the required capacity, or review a previous calculation, of each relief device. Compare the required capacity to the rated capacity of the device. Review all applicable parameters to ensure new calculations or past calculations are valid. …” Section 6.1 states: “Keep relief device capacity calculations done manually for the life of the particular relief situation. Keep verifications of previous calculations until the subsequent year’s confirmation is competed.” Section 6.3 states: “Use forms OKSops3.160.102A Regulator Inspection and Testing and OKSops3.1002B Relief Valve Inspection and Testing” During the inspection, PHMSA noted that OKTEX did not use the forms as specified in the procedure. Instead, OKTEX provided excel spread sheet documents for relief device inspections. During discussions with company personnel it was noted that OKTEX had not confirmed or determined the required capacity for the pipeline system relief devices when it was acquired from Norteno. While it appears that annual checks are made it cannot be determined if these results indicate adequate capacity since the original capacity was not determined. 3. §192.805 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (b) Ensure through evaluation that individuals performing covered tasks are qualified; On December 7, 2006, OKTEX failed to ensure through evaluation that a Company inspector was qualified to perform the covered task B31-0811: Visual Inspection of Welding and Welds. An individual conducted the visual inspection of all welds for the reconstruction of an existing 4- inch railroad crossing on the Norteno # 5 pipeline located in Anthony, TX and was not qualified under B31-0811. The ‘Scope of Work’ for the reconstruction project, section Non-Destructive Testing, page 2, states: “All welds will be 100% visually inspected by the Company Inspector. Tie-in welds will be visually inspected and leak (soap bubble or flame pack) tested”. To comply with the Scope of Work and meet the requirements of §192.241 and §192.805 (b), a non-welder must be qualified to perform the task. The OKTEX Operator Qualification program requires that an individual be qualified for covered task B31-0811 to perform visual weld inspection. PHMSA reviewed the qualification records for this individual and they indicate he has never been qualified for this task. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violation persists up to a maximum of $1,000,000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation(s) and has recommended that you be preliminarily assessed a civil penalty of $35,700.00 as follows: 3#

420111005_NOPV PCP PCO_02242011_text.pdf, page 4Item number PENALTY 2 $35,700.00 Warning Items With respect to items 1 and 3 we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment proceedings at this time. We advise you to promptly correct these item(s). Be advised that failure to do so may result in OKTEX being subject to additional enforcement action. Proposed Compliance Order With respect to item 2 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to OKTEX. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. In your correspondence on this matter, please refer to CPF 4-2011-1005 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, R. M. Seeley Director, Southwest Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 4#

420111005_NOPV PCP PCO_02242011_text.pdf, page 5PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to OKTEX Pipeline Company, L.L.C. a Compliance Order incorporating the following remedial requirements to ensure the compliance of OKTEX with the pipeline safety regulations: 1. In regard to Item Number 2 of the Notice pertaining to the failure to determine the capacity of relief devices installed on OKTEX pipelines facilities, OKTEX must perform the required analysis and ensure that the relief devices have adequate capacity to protect the facilities as required by 49 CFR §192.743. If the relief capacity is found to be insufficient, OKTEX must install/modify the equipment to provide the required capacity. 2. OKTEX must complete item 1 of the Compliance Order within 30 days following receipt of the Final Order. 3. It is requested (not mandated) that OKTEX Pipeline Company, L.L.C. maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to R. M. Seeley, Director, Southwest Region, Pipeline and Hazardous Materials Safety Administration. It is requested that these costs be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with replacements, additions and other changes to pipeline infrastructure. 5#

420111005_Final Order_12142011_text.pdf, page 1Official PDFDEC 1 4 2011 Mr. Michel E. Nelson Senior Vice President OKTEX Pipeline Company, L.L.C. 100 West Fifth Street Tulsa, OK 74103-4298 Re: CPF No. 4-2011-1005 Dear Mr. Nelson: Enclosed please find the Final Order issued in the above-referenced case. It makes a finding of violation and assesses a civil penalty of $35,700. It further finds that OKTEX Pipeline Company L.L.C. has completed the actions specified in the Notice to comply with the pipeline safety regulations. When the civil penalty has been paid, this enforcement action will be closed. Service of the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc: Mr. R.M. Seeley, Director, Southwest Region, PHMSA Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, Pipeline Safety, PHMSA CERTIFIED MAIL - RETURN RECEIPT REQUESTED [71791000164202982368]#

420111005_Final Order_12142011_text.pdf, page 2U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D.C. 20590 ____________________________________ ) In the Matter of ) ) OKTEX Pipeline Company, L.L.C., ) CPF No. 4-2011-1005 ) Respondent. ) ____________________________________) FINAL ORDER From October 18-22, 2010, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities and records of OKTEX Pipeline Company, L.L.C. (OKTEX or Respondent) in El Paso, Texas. OKTEX is an interstate pipeline company owned and operated by ONEOK Partners, L.P., with interconnects in Oklahoma, New Mexico and Texas.1 As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated April 19, 2011, an Amended2 Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that OKTEX violated 49 C.F.R. § 192.739(a)(2) and proposed assessing a civil penalty of $35,700 for the alleged violation. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violation. The warning items required no further action, but advised the operator that it may be subject to future enforcement action, if OPS finds violation of these provisions in subsequent inspections. OKTEX responded to the Amended Notice by letter dated March 24, 2011 (Second Response). The company did not contest the allegation of violation, but provided an explanation of its actions, requested that the proposed civil penalty be reduced or eliminated, and provided 1 http://www.oneokpartners.com/Investor/FinancialInformation/SECFilings.aspx accessed November 2, 2011. 2 PHMSA issued the first NOPV related to this matter on February 24, 2011. On March 24, 2011, OKTEX’s First Response noted that Item 2 of the NOPV cited to §192.743, which does not require capacity calculations and comparison. OKTEX stated that no pressure relief devices exist at the five pressure regulating stations cited in the Item 2 of the February 24, 2011 NOPV. PHMSA responded with an Amended NOPV that replaced the Item 2 violation for §192.743 with a new Item 2 for violation of §192.739. The Second Amended NOPV was considered in the preparation of this Final Order. Both Respondent’s February 24, 2011 and May 19, 2011 Responses were considered.#

420111005_Final Order_12142011_text.pdf, page 32 evidence that it took all actions required by the Proposed Compliance Order. Respondent did not request a hearing and therefore has waived its right to one. FINDING OF VIOLATION In its Second Response, OKTEX did not contest the allegation in the Notice that it violated 49 C.F.R. Part 192, as follows: Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 192.739(a)(2), which states: § 192.739 Pressure limiting and regulating stations: Inspection and testing. (a) Each pressure limiting station, relief device (except rupture discs), and pressure regulating station and its equipment must be subjected at intervals not exceeding 15 months, but at least once each calendar year, to inspections and tests to determine that it is— (1) . . . (2) Adequate from the standpoint of capacity and reliability of operation for the service in which it is employed; The Notice alleged that Respondent violated 49 C.F.R. § 192.739(a)(2) by failing to determine that its pressure regulating stations were adequate from the standpoint of capacity and reliability of operation for the service in which they were employed. Specifically, the Notice alleged that OKTEX did not perform initial capacity calculations on five pressure limiting devices so that it could determine whether its devices were adequate, as to capacity or reliability. The Notice also alleged that OKTEX failed to use the forms specified by its Operating Procedure for the calculation of the required capacity for these pressure limiting devices. In its Second Response, OKTEX acknowledged that “copies of the calculations and comparisons firm delivery volumes are assigned to its downstream meters, further complicating the required analysis. Therefore, in order to measure required versus actual capacity, OKTEX reviewed 39 months of historical delivery totals and arrived at the conclusion that sufficient capacity exists done by the previous operator have not been located.”3 In addition, the Respondent noted that no for these relief devices to protect the facilities to which they are connected. However, at the time of the inspection, Respondent had not performed this analysis. Therefore, while OKTEX performed required inspections and testing at the intervals required by § 192.739(a), no reliable baseline was established as a comparison point. Therefore, Respondent could not determine adequacy of capacity and operation for these relief devices and therefore was not in compliance with § 192.739(a)(2). I will consider OKTEX’s request for elimination or modification of the proposed penalty in a subsequent section. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 192.739(a)(2) by failing to 3 Second Response, at 3.#

420111005_Final Order_12142011_text.pdf, page 43 determine that five pressure relief devices were adequate from the standpoint of capacity and reliability of operation for the service in which they were employed. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed $100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any related series of violations. In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and gravity of the violation, including adverse impact on the environment; the degree of Respondent’s culpability; the history of Respondent’s prior offenses; the Respondent’s ability to pay the penalty and any effect that the penalty may have on its ability to continue doing business; and the good faith of Respondent in attempting to comply with the pipeline safety regulations. In addition, I may consider the economic benefit gained from the violation without any reduction because of subsequent damages, and such other matters as justice may require. Item 2: The Notice proposed a civil penalty of $35,700 for Respondent’s violation of 49 C.F.R. §193.739(a)(2), for failing to determine that its pressure regulating stations were adequate from the standpoint of capacity and reliability of operation for the service in which they were employed. While it offered further information, Respondent did not contest that it violated Item 2. Respondent argued that the proposed civil penalty should be either reduced or eliminated for the following reasons: (1) [Item 2] did not affect the safety of the public or OKTEX employees; (2) No physical changes to the system or delivery rates were made since OKTEX took over operation; (3) The new calculations confirm that the regulators have adequate capacity; and (4) OKTEX promptly responded when it received notice of the violation. Admittedly, Respondent’s failure to establish a baseline against which to measure subsequent testing and inspections did not ultimately affect the safety of the public or its employees. However, the company never conclusively established that adequate capacity existed, until prompted by PHMSA. OKTEX reasons that, since no fundamental changes to the system or delivery rates occurred since its acquisition of the pipeline in 2003, it was unnecessary to determine a starting point for its pressure limiting devices. However, if baseline calculations were indeed made by the previous operator, OKTEX did not have and was not able to locate them. Respondent’s own procedures confirm the importance of establishing this baseline. 4 OKTEX had no way of knowing whether its subsequent tests and inspections demonstrated 4 ONEOK procedure OKSop3.160.102, Section 3.10 states: “Calculate the required capacity, or review a previous calculation, of each relief device . . . Review all applicable parameters to ensure new calculations or past calculations are valid . . .” Section 6.1 further states: “Keep relief device capacity calculations done manually for the life of the particular relief situation. Keep verifications of previous calculations until the subsequent year’s confirmation is completed . . .” Pipeline Safety Violation Report, at 7.#

420111005_Final Order_12142011_text.pdf, page 54 adequate capacity or reliability, as required by § 192.739(a)(2). As such, it cannot credibly argue that it performed its due diligence, as its inspections were performed in a vacuum, without adequate context. Therefore, even though no consequences to public safety or OKTEX employees were realized, the pipeline safety regulations require confirmation of these kinds of assumptions through concrete records and analysis. In addition, while OKTEX promptly performed these calculations, they were not performed until after the deficiency was identified by PHMSA’s inspectors. Therefore, Respondent’s remedial efforts are not adjudged to be in good faith. It did not self report the failure to conduct this analysis until prompted by an inspection. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $35,700 for violation of 49 C.F.R. § 192.739(a)(2). Payment of the civil penalty must be made within 20 days of service. Federal regulations (49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal Reserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed instructions are contained in the enclosure. Questions concerning wire transfers should be directed to: Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The Financial Operations Division telephone number is (405) 954-8893. Failure to pay the $35,700 civil penalty will result in accrual of interest at the current annual rate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not made within 110 days of service. Furthermore, failure to pay the civil penalty may result in referral of the matter to the Attorney General for appropriate action in a district court of the United States. COMPLIANCE ORDER The Notice proposed a compliance order with respect to the violation cited above. Under 49 U.S.C. § 60118(a), each person who engages in the transportation of gas or who owns or operates a pipeline facility is required to comply with the applicable safety standards established under chapter 601. The Director has indicated that the Respondent has provided the required forms and calculations and PHMSA has verified that Respondent took the following actions specified in the proposed compliance order: 1. Respondent has performed the required analysis and verified that the pressure regulators have adequate capacity to provide reliable service to the downstream facilities. Accordingly, I find that compliance has been achieved with respect to this violation. Therefore, the compliance terms proposed in the Notice are not included in this Order.#

420111005_Final Order_12142011_text.pdf, page 65 WARNING ITEMS With respect to Items 1 and 3, the Notice alleged probable violations of Part 192 and specifically considered them as warning items. The warnings were for: 49 C.F.R. § 192.475 (Item 1) ─ Respondent’s alleged failure to inspect the internal surface of any pipeline removed, for any reason, for evidence of internal corrosion; and 49 C.F.R. § 192.805 (Item 3) ─ Respondent’s alleged failure to ensure that individuals performing covered tasks are qualified. In its response, OKTEX presented information showing that it took certain actions to address the cited items. If OPS finds violations of these provisions in a subsequent inspection, Respondent may be subject to future enforcement action. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#