{"operation":"document","citation":"CPF 420117004","title":"STONE ENERGY — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2011-08-08","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.452(d)(1), 195.452(f)(1), 195.452(f)(3), 195.452(f)(6), 195.452(f)(7), 195.49.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420117004.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420117004.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420117004","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420117004","body":"Notice of Probable Violation involving STONE ENERGY. PHMSA's enforcement data identifies the cited regulations as 195.452(d)(1),  195.452(f)(1),  195.452(f)(3),  195.452(f)(6),  195.452(f)(7),  195.49. The case was opened on 2011-08-08 and is reported as closed as of 2013-04-01. Proposed civil penalty: $39,900. Assessed civil penalty: $39,900. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420117004_Closure_04012013.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_Closure_04012013.pdf\n\n420117004_Closure_04012013_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_Closure_04012013_text.pdf\n\n420117004_Final Order_09142012.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_Final%20Order_09142012.pdf\n\n420117004_Final Order_09142012_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_Final%20Order_09142012_text.pdf\n\n420117004_NOPV PCP PCO_08082011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_NOPV%20PCP%20PCO_08082011.pdf\n\n420117004_NOPV PCP PCO_08082011_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_NOPV%20PCP%20PCO_08082011_text.pdf\n\n420117004_Operator Response to Notice_09062011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_Operator%20Response%20to%20Notice_09062011.pdf\n\n420117004_Closure_04012013_text.pdf\n\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nApril 1, 2013\nMr. David H. Welch\nPresident and CEO\nStone Energy Corporation\n625 East Kaliste Saloom Road\nLafayette, LA 70508\nCPF 4-2011-7004\nDear Mr. Welch:\nOn September 14, 2012, the Pipeline and Hazardous Materials Safety Administration (PHMSA)\nissued to Stone Energy a Final Order in the above-referenced case. This Order included a\nCompliance Order and Civil Penalty assessment. Payment of the civil penalty was received on\nSeptember 27, 2012. Based on our review of the documentation you provided, it has been\ndetermined that you have complied with the terms of this Order.\nAccordingly, this case is now closed and no further action is contemplated with respect to the\nmatters involved in this case. Thank you for your cooperation in this matter.\nSincerely,\nR. M. Seeley\nDirector, Southwest region\nPipeline and Hazardous\nMaterials Safety Administration\n\n420117004_NOPV PCP PCO_08082011_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nand\nPROPOSED COMPLIANCE ORDER\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nAugust 8, 2011\nStone Energy\nMr. Jerry Wenzel\nVice President, Production and Drilling\n625 East Kaliste Saloom Road\nLafayette, LA 70508\nCPF 4-2011-7004\nDear Mr. Wenzel:\nOn December 6-10, 2010, a representative of the Pipeline and Hazardous Materials Safety Administration\n(PHMSA) pursuant to Chapter 601 of 49 United States Code inspected Stone Energy procedures for\nIntegrity Management in Lafayette, Louisiana.\nAs a result of the inspection, it appears that you have committed probable violations of the Pipeline Safety\nRegulations, Title 49, Code of Federal Regulations. The items inspected and the probable violations are:\n1. §195.49 Annual report\nBeginning no later than June 15, 2005, each operator must annually complete and submit\nDOT form RSPA F 7000-1.1 for each type of hazardous liquid pipeline facility operated at\nthe end of the previous year. A separate report is required for crude oil, HVL (including\nanhydrous ammonia), petroleum products, and carbon dioxide pipelines. Operators are\nencouraged, but not required, to file an annual report by June 15, 2004, for calendar year\n2003.\n\n\n\nStone Energy (Stone) did not submit accurate annual reports. Stone submitted PHMSA Form 7000-1.1\nfor years 2005 through 2009 but the data included in the report was not accurate. For example, data from\nthe 2009 annual report Part J (Integrity Inspections Conducted and Actions Taken Based on Inspection)\nshows an entry of 0 miles. During the inspection, integrity assessments were reviewed that indicate IM\nassessments were performed through a hydrostatic test. The East Cameron 46 pipeline was assessed on\nJune 28, 2009.\nAdditionally, Data in Part K (Mileage of Baseline Assessments Completed) from the 2009 report shows\nan entry of 0 miles for all dates. This does not appear to be accurate considering that assessment records\nfor both the West Cameron 45 pipeline and the East Cameron 46 pipeline were examined at the\ninspection. There should have been mileage entries for assessments made in 2005 and 2009. In\nreviewing older annual reports they too, do not indicate the data accurately in Part K.\n2. §195.452 Pipeline integrity management in high consequence areas.\n(d) When must operators complete baseline assessments? Operators must complete\nbaseline assessments as follows:\n(1) Time periods. Complete assessments before the following deadlines:\nIf the pipeline is Then complete baseline assessments\nand assess at least 50 percent of the\nnot later than the following date\nline pipe on an expedited basis,\naccording to a schedule that prioritizes\nbeginning with the highest risk pipe,\nassessment:\nnot later than:\nCategory 1 March 31, 2008 September 30, 2004\nCategory 2 February 17, 2009 August 16, 2005\nCategory 3 Date the pipeline begins operation Not applicable\nStone did not assess at least 50% of their highest risk segments prior to the August 2005 deadline and\nfailed to complete all baseline assessments prior to the February 2009 deadline. Stone operates\napproximately 32 miles of pipeline and performed their HCA identification in 2005. The team reviewed\nthe baseline assessment records. Specifically, the West Cameron 45 pipeline and the East Cameron 46\npipeline hydro-test records, which indicated that these two assessments were completed on August 20,\n2005 and June 28, 2009 respectively. Both of these were after the deadlines and no other assessments\nwere performed.\n2\n\n\n\n3. §195.452 Pipeline integrity management in high consequence areas.\n(f) What are the elements of an integrity management program? An integrity management\nprogram begins with the initial framework. An operator must continually change the\nprogram to reflect operating experience, conclusions drawn from results of the integrity\nassessments, and other maintenance and surveillance data, and evaluation of consequences\nof a failure on the high consequence area. An operator must include, at minimum, each of\nthe following elements in its written integrity management program:\n(3) An analysis that integrates all available information about the integrity of the entire\npipeline and the consequences of a failure (see paragraph (g) of this section);\n(g) What is an information analysis? In periodically evaluating the integrity of each\npipeline segment (paragraph (j) of this section), an operator must analyze all available\ninformation about the integrity of the entire pipeline and the consequences of a failure. This\ninformation includes:\n(1) Information critical to determining the potential for, and preventing, damage due to\nexcavation, including current and planned damage prevention activities, and development\nor planned development along the pipeline segment;\n(2) Data gathered through the integrity assessment required under this section;\n(3) Data gathered in conjunction with other inspections, tests, surveillance and patrols\nrequired by this Part, including, corrosion control monitoring and cathodic protection\nsurveys; and\n(4) Information about how a failure would affect the high consequence area, such as\nlocation of the water intake.\nStone did not perform the necessary data analysis or data integration. Stone’s IM program Section 3\nbriefly talks about integration of information, but it focuses on ILI assessments. There is no process\nidentified that addresses how Stone will document their integration of data from hydro-test assessments.\nDuring the inspection, PHMSA asked Stone to demonstrate compliance with the regulation. Stone was\nunable to demonstrate that they had integrated the information from their hydro-test assessments. There\nwas no documentation of the overall results of integrated data analysis and conclusions regarding the\nintegrity of the segment, including the nature of the integrity threats identified. The 2005 and the 2009\nWest Cameron 45 pipeline hydro-tests experienced leaks. These events should have initiated some\nreview and action by Stone which should be documented per the IM requirements.\n4. §195.452(f) (See Above)\n(3) An analysis that integrates all available information about the integrity of the entire\npipeline and the consequences of a failure (see paragraph (g) of this section);\n(g) What is an information analysis? In periodically evaluating the integrity of each pipeline\nsegment (paragraph (j) of this section), an operator must analyze all available information\nabout the integrity of the entire pipeline and the consequences of a failure. This information\nincludes:\n(1) Information critical to determining the potential for, and preventing, damage due to\nexcavation, including current and planned damage prevention activities, and development\nor planned development along the pipeline segment;\n(2) Data gathered through the integrity assessment required under this section;\n3\n\n\n\n(3) Data gathered in conjunction with other inspections, tests, surveillance and patrols\nrequired by this Part, including, corrosion control monitoring and cathodic protection\nsurveys; and\n(4) Information about how a failure would affect the high consequence area, such as\nlocation of the water intake.\n(j) What is a continual process of evaluation and assessment to maintain a pipeline's\nintegrity?\n(2) Evaluation. An operator must conduct a periodic evaluation as frequently as needed to\nassure pipeline integrity. An operator must base the frequency of evaluation on risk factors\nspecific to its pipeline, including the factors specified in paragraph (e) of this section. The\nevaluation must consider the results of the baseline and periodic integrity assessments,\ninformation analysis (paragraph (g) of this section), and decisions about remediation, and\npreventive and mitigative actions (paragraphs (h) and (i) of this section).\nStone did not follow their procedures in performing their Risk Analysis. Stone Energy IMP section 5.04\nstates that they did not segment the existing pipelines but goes on to say: “Newly constructed or acquired\npipelines will be evaluated to determine whether or not segment subdividing would prove advantageous\nto the risk analysis process.”\nThe team reviewed the available documentation for Stone’s Risk Analysis. West Cameron 45 pipeline\nconsists of two different vintages of 8 inch pipeline, 1987 and 2009. PHMSA asked Stone to provide the\nevaluation of the newly constructed line to see if segmentation would be warranted. Stone could not\ndemonstrate that the evaluation was performed.\nStone’s section 5.08 states that the frequency of the evaluation “will be at least annually.” Appendix I\n“Risk Analysis” indicates some reviews were performed in 2005 and 2006. The last entry states that\nEC45 risk analysis was “tabled.” No further indications are made regarding Stone’s risk analysis.\nStone’s Recordkeeping Manual Section 9 “Pipeline Integrity Management Risk Analysis Reviews” did\nlist some dates that imply a review was conducted but did not contain content of the Risk Analysis\nReview Meeting such as factors considered or results. Neither of these “records” contains the required\ncontent to demonstrate that an adequate risk analysis review was conducted.\n5. §195.452(f) (See Above)\n(1) A process for identifying which pipeline segments could affect a high consequence area;\n(3) An analysis that integrates all available information about the integrity of the entire\npipeline and the consequences of a failure (see paragraph (g) of this section);\n(6) Identification of preventive and mitigative measures to protect the high consequence\narea (see paragraph (i) of this section);\n4\n\n\n\nFollowing the April 2005 IM audit, Stone was notified that they needed to document the process(es) used\nand determinations made in determining whether facilities could or could not effect HCAs (See CPF # 4-\n2005-5036M and 4-2005-5039). During this inspection, PHMSA followed-up on this issue and Stone\ncould not demonstrate that it had completed the evaluations and it is still unknown if this facility could\naffect an HCA. Subsequently, no assessment or other IM required actions have been taken in regards to\nthe Holly Beach Tank Battery, a jurisdictional facility.\n6. §195.452(f) (see above.)\n(6) Identification of preventive and mitigative measures to protect the high consequence\narea (see paragraph i of this section)\n(i) What preventive and mitigative measures must an operator take to protect the high\nconsequence area?\n(1) General requirements. An operator must take measures to prevent and mitigate the\nconsequences of a pipeline failure that could affect a high consequence area. These\nmeasures include conducting a risk analysis of the pipeline segment to identify additional\nactions to enhance public safety or environmental protection\n(3) Leak detection. An operator must have a means to detect leaks on its pipeline system.\nAn operator must evaluate the capability of its leak detection means and modify, as\nnecessary, to protect the high consequence area. An operator's evaluation must, at least,\nconsider, the following factors–length and size of the pipeline, type of product carried, the\npipeline's proximity to the high consequence area, the swiftness of leak detection, location of\nnearest response personnel, leak history, and risk assessment results.\n(4) Emergency Flow Restricting Devices (EFRD). If an operator determines that an EFRD\nis needed on a pipeline segment to protect a high consequence area in the event of a\nhazardous liquid pipeline release, an operator must install the EFRD. In making this\ndetermination, an operator must, at least, consider the following factors–the swiftness of\nleak detection and pipeline shutdown capabilities, the type of commodity carried, the rate of\npotential leakage, the volume that can be released, topography or pipeline profile, the\npotential for ignition, proximity to power sources, location of nearest response personnel,\nspecific terrain between the pipeline segment and the high consequence area, and benefits\nexpected by reducing the spill size.\nStone did not perform the required evaluations as specified in their IM Plan.\nStone’s IM Plan section 6.01 states that the Integrity Assessment Team must conduct an evaluation\nduring the annual review meeting. During the inspection PHMSA asked to see the documentation where\nStone reviewed and evaluated the required elements related to the Preventative and Mitigative Measures.\nNone was provided. PHMSA also reviewed Stone’s IMP Recordkeeping Manual Section 8 Preventative\nMeasures Reviews. This section lists several measures that Stone will consider but lacks specific\ndetermination and implementation specifics. It does not indicate what preventative and mitigative\nmeasures were considered, adopted or not adopted.\nStone’s IM Plan section 6.06 states that the Integrity Assessment Team must conduct an evaluation\nduring the annual review meeting. During the inspection PHMSA asked to see the documentation where\nStone reviewed and evaluated the required elements related to the Leak detection system. None was\nprovided. PHMSA also reviewed Stone’s IMP Recordkeeping Manual Section 10 EFRD/Leak Detection\nAssessment Review but it does not contain documentation of the application of a risk-based decision-\nmaking process for leak detection enhancements.\n5\n\n\n\nStone did not perform the required evaluation to determine if EFRD’s are required. There are currently\nno EFRD’s installed on Stone’s pipeline systems. During the inspection PHMSA asked to see the\ndocumentation where Stone evaluated and determined that EFRD’s were not required. None was\nprovided.\n7. §195.452(f) (see above.)\n(7) Methods to measure the program's effectiveness (see paragraph (k) of this section);\n(k) What methods to measure program effectiveness must be used? An operator's program\nmust include methods to measure whether the program is effective in assessing and\nevaluating the integrity of each pipeline segment and in protecting the high consequence\nareas. See Appendix C of this part for guidance on methods that can be used to evaluate a\nprogram's effectiveness.\nStone did not perform the required program effectiveness reviews. Stone’s IM plan section 8 indicates\nthat Stone will perform annual evaluations and will document these in an “Annual Evaluation Report” to\nbe kept for the life of the pipeline. During the inspection PHMSA asked Stone to demonstrate\ncompliance with this requirement and no documentation of periodic self assessments or management\naudits was produced.\nStone Energy IMP does not indicate the frequency at which program evaluation through performance\nmeasures will take place. Stone Energy IMP Recordkeeping Manual Section 13 Programs Effectiveness\ncontains one document with no date or the individuals involved in this review.\nProposed Civil Penalty\nUnder 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for each\nviolation for each day the violation persists up to a maximum of $1,000,000 for any related series of\nviolations. The Compliance Officer has reviewed the circumstances and supporting documentation\ninvolved in the above probable violation(s) and has recommended that you be preliminarily assessed a\ncivil penalty of $39,900 as follows:\nItem number PENALTY\n2 $20,600\n5 $19,300\nProposed Compliance Order\nWith respect to items 1, 3, 4, 5, 6, and 7 pursuant to 49 United States Code § 60118, the Pipeline and\nHazardous Materials Safety Administration proposes to issue a Compliance Order to Stone Energy.\nPlease refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice.\nResponse to this Notice\nEnclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in\nCompliance Proceedings. Please refer to this document and note the response options. Be advised that\nall material you submit in response to this enforcement action is subject to being made publicly available.\nIf you believe that any portion of your responsive material qualifies for confidential treatment under 5\nU.S.C. 552(b), along with the complete original document you must provide a second copy of the\ndocument with the portions you believe qualify for confidential treatment redacted and an explanation of\nwhy you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If\nyou do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to\n6\n\n\n\ncontest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to\nfind facts as alleged in this Notice without further notice to you and to issue a Final Order.\nIn your correspondence on this matter, please refer to CPF 4-2011-7004 and for each document you\nsubmit, please provide a copy in electronic format whenever possible.\nSincerely,\nR. M. Seeley\nDirector, Southwest Region\nPipeline and Hazardous Materials Safety Administration\nEnclosures: Proposed Compliance Order\nResponse Options for Pipeline Operators in Compliance Proceedings\n7\n\n\n\nPROPOSED COMPLIANCE ORDER\nPursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration\n(PHMSA) proposes to issue to Stone Energy a Compliance Order incorporating the following remedial\nrequirements to ensure the compliance of Stone Energy with the pipeline safety regulations:\n1. In regard to Item Number 1 of the Notice pertaining to Annual Reports. Stone Energy shall\nsubmit amended PHMSA F 7000-1.1 annual reports for years 2005 through 2009 showing actual\nmileage of baseline assessments completed and actual mileage of integrity inspections conducted\nand actions taken based on inspection.\n2. In regard to Item Number 3 of the Notice Stone must review their IM Plan and develop the\nprocess they will utilize to analyze and integrate data from hydrotests. Stone must also perform\nthe required data analysis and integration.\n3. In regard to Item Number 4 of the Notice Stone must perform the required evaluation and\ndetermine if segmentation is necessary. Following the evaluation, Stone should perform the\nproper risk analysis.\n4. In regard to Item Number 5 Stone must perform the appropriate “could affect” evaluation. If it is\ndetermined that the facility could affect an HCA then the integrity program should be modified\nappropriately to ensure compliance with all parts of the integrity management regulation\nrequirements for this facility.\n5. In regard to Item Number 6 of the Notice Stone should perform and fully document Preventative\nMeasures Reviews and EFRD/Leak Detection Assessment Review at the appropriate intervals\nand documented to indicate what preventative and mitigative measures were considered, adopted\nor not adopted and documentation of the application of a risk-based decision-making process for\nleak detection enhancements.\n6. In regard to Item Number 7 of the Notice Stone shall perform periodic self assessments and\nmanagement audits of its IMP process and document the results. Stone Energy shall amend its\nIM Plan to indicate the frequency at which program evaluation through performance measures\nwill take place.\n7. Stone Energy should complete items 1 through 7 within 90 days of receipt of the Final Order.\n8. It is requested (not mandated) that Stone Energy maintain documentation of the safety\nimprovement costs associated with fulfilling this Compliance Order and submit the total to R. M.\nSeeley, Director, Southwest Region, Pipeline and Hazardous Materials Safety Administration. It\nis requested that these costs be reported in two categories: 1) total cost associated with\npreparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with\nreplacements, additions and other changes to pipeline infrastructure.\n8\n\n420117004_Final Order_09142012_text.pdf\n\nSEPTEMBER 14, 2012\nMr. David H. Welch\nPresident and CEO\nStone Energy Corporation\n625 East Kaliste Saloom Road\nLafayette, LA 70508\nRe: CPF No. 4-2011-7004\nDear Mr. Welch:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation, assesses a civil penalty of $39,900, and specifies actions that need to be taken by\nStone Energy Corporation to comply with the pipeline safety regulations. The penalty\npayment terms are set forth in the Final Order. When the civil penalty has been paid and the\nterms of the compliance order completed, as determined by the Director, Southwest Region,\nthis enforcement action will be closed. Service of the Final Order by certified mail is deemed\neffective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. Jerome F. Wenzel, Jr., Executive Vice President – Operations, Stone Energy\nCorporation\nMr. Rod M. Seeley, Director, Southwest Region, OPS\nMr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D.C. 20590\n____________________________________\n)\nIn the Matter of )\n)\nStone Energy Corporation, ) CPF No. 4-2011-7004\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nBetween December 6-10, 2010, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline\nand Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),\nconducted an on-site pipeline safety inspection of the integrity management program of Stone\nEnergy Corporation (Stone Energy or Respondent) in Lafayette, Louisiana. Stone Energy\noperates a 30-mile crude oil system in the Gulf of Mexico.1 The inspection included the East\nCameron #46 pipeline and the West Cameron #45 pipeline located offshore of Louisiana.2\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated August 8, 2011, a Notice of Probable Violation, Proposed Civil\nPenalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the\nNotice proposed finding that Stone Energy had committed various violations of 49 C.F.R. Part\n195 and proposed assessing a civil penalty of $39,900 for the alleged violations. The Notice also\nproposed ordering Respondent to take certain measures to correct the alleged violations.\nStone Energy responded to the Notice by letters dated September 6, 2011 and June 7, 2012\n(collectively, Response). The company supplied additional information and requested that\nPHMSA reconsider the proposed civil penalty amount for certain alleged violations. Stone\nEnergy did not request a hearing and therefore has waived its right to one.\nFINDINGS OF VIOLATION\nThe Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows:\n1 Pipeline Safety Violation Report (Violation Report), (August 9, 2011) (on file with PHMSA).\n2 Id.\n\n\n\n2\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.49, which states:\n§ 195.49 Annual report.\nBeginning no later than June 15, 2005, each operator must annually\ncomplete and submit DOT form RSPA F 7000-1.1 for each type of\nhazardous liquid pipeline facility operated at the end of the previous year.\nA separate report is required for crude oil, HVL (including anhydrous\nammonia), petroleum products, and carbon dioxide pipelines. Operators\nare encouraged, but not required, to file an annual report by June 15, 2004,\nfor calendar year 2003.3\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.49 by failing to complete and\nsubmit DOT form RSPQ F 7000-1.1 for each type of hazardous liquid pipeline operated at the\nend of the previous year. Specifically, the Notice alleged that although Stone Energy filed\nannual reports for calendar years 2005-2009, the reports included inaccurate or missing data. For\nexample, the Notice alleged that Part J of the company’s 2009 annual report stated it had\nconducted zero miles of integrity inspections, yet a review of its integrity assessment records\nshowed that Stone Energy had assessed the East Cameron #46 pipeline on June 28, 2009. This\nparticular inspection should have been reflected on Part J of the 2009 annual report.\nThe Notice further alleged that Stone Energy also entered zero on Part K of the 2009 annual\nreport for the number of pipeline miles for which it had completed baseline assessments, yet the\nOPS inspection confirmed that the company had actually examined both the West Cameron #45\nand East Cameron #46 pipelines in 2005 and 2009. The 2009 annual report should have\nincluded the appropriate mileage entry for these assessments.\nIn its Response, Stone Energy did not contest this allegation of violation. Accordingly, after\nconsidering all of the evidence, I find that Stone Energy violated 49 C.F.R. § 195.49 by failing to\nfile complete annual reports for calendar years 2005-2009.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(d)(1), which states:\n§ 195.452 Pipeline integrity management in high consequence areas.\n(a) . . .\n(d) When must operators complete baseline assessments?\nOperators must complete baseline assessments as follows:\n(1) Time periods. Complete assessments before the following\ndeadlines:\nIf the pipeline is: Then complete baseline assessments\nnot later than the following date\naccording to a schedule that\nprioritizes assessments:\nAnd assess at least 50\npercent of the line pipe\non an expedited basis,\nbeginning with the\nhighest risk pipe,\nnot later than:\nCategory 1…….. March 31, 2008 September 30, 2004\nCategory 2…….. February 17, 2009 August 16, 2005\nCategory 3…….. Date pipeline begins operation Not applicable.\n3 Section 195.49 was subsequently amended, effective November 26, 2010.\n\n\n\n3\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.452(d)(1) by failing to complete\nbaseline assessments for its pipeline segments that were located in or could affect High\nConsequence Areas (HCAs),\n4 prior to the deadline of February 17, 2009. In addition, it alleged\nthat Stone Energy also failed to assess at least 50% of the highest-risk pipeline segments prior to\nthe August 16, 2005 deadline.\nStone Energy operates approximately 32 miles of pipeline and performed its HCA identification\nprocess in 2005. During the OPS inspection, the agency determined that Stone Energy had\ncompleted baseline assessments through the use of hydrostatic testing for the West Cameron #45\npipeline and the East Cameron #46 pipeline on August 20, 2005 and June 28, 2009, respectively.\nBoth of these assessments occurred after the deadlines and no other assessments were performed\nfor the rest of Respondent’s facilities.\nIn its Response, Stone Energy stated that it had discovered an additional pressure test on the East\nCameron #46 Pipeline, which was conducted on February 5, 2006. Therefore, it requested that\nPHMSA reconsider this probable violation and the associated civil penalty. However, after a\nmeeting with OPS on May 15, 2012, Stone Energy acknowledged this 2006 hydrotest was a\nspike test and could not be used as a baseline. Accordingly, I find that Respondent violated\n49 C.F.R. § 195.452(d)(1) by failing to complete all baseline assessments prior to the February\n2009 deadline and failing to assess 50% of its highest-risk segments prior to the August 2005\ndeadline.\nItem 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(3), which states:\n§ 195.452 Pipeline integrity management in high consequence areas.\n(a) . . .\n(f) What are the elements of an integrity management program? An\nintegrity management program begins with the initial framework. An\noperator must continually change the program to reflect operating\nexperience, conclusions drawn from results of the integrity assessments,\nand other maintenance and surveillance data, and evaluation of\nconsequences of a failure on the high consequence area. An operator must\ninclude, at minimum, each of the following elements in its written\nintegrity management program: . . .\n(3) An analysis that integrates all available information about the\nintegrity of the entire pipeline and the consequences of a failure (see\nparagraph (g) of this section);. . .\n(g) What is an information analysis? In periodically evaluating the\nintegrity of each pipeline segment (paragraph (j) of this section), an\noperator must analyze all available information about the integrity of the\nentire pipeline and the consequences of a failure. This information\nincludes:\n(1) Information critical to determining the potential for, and\npreventing, damage due to excavation, including current and planned\n4 High Consequence Areas are defined as commercially navigable waterways, high population areas, other\npopulated areas, and unusually sensitive areas. See 49 C.F.R. § 195.450.\n\n\n\n4\ndamage prevention activities, and development or planned development\nalong the pipeline segment;\n(2) Data gathered through the integrity assessment required under\nthis section;\n(3) Data gathered in conjunction with other inspections, tests,\nsurveillance and patrols required by this Part, including, corrosion control\nmonitoring and cathodic protection surveys; and\n(4) Information about how a failure would affect the high\nconsequence area, such as location of the water intake.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(3) by failing to develop and\nimplement a written integrity management program (IMP) that included an analysis that\nintegrated all available information about the integrity of its entire pipeline and the consequences\nof a potential failure. Specifically, it alleged that Stone Energy failed to conduct a proper\ninformation analysis that considered data gathered through the integrity assessment process, as\ndetailed in § 195.452(g).\nPHMSA alleged that during the OPS inspection, Stone Energy had been unable to demonstrate\nthat it had integrated data from its hydrotest assessments. There was no documentation of the\noverall results of an integrated data analysis or any conclusions the company had reached\nregarding the integrity of each pipeline segment, including the nature of the integrity threats\nidentified. Stone Energy had allegedly experienced leaks when it conducted the 2005 and the\n2009 hydrotests on the West Cameron #45 pipeline. PHMSA alleged that these events should\nhave initiated some sort of review and action by Stone Energy, including an information analysis\nper the integrity management requirements.\nIn its September 2011 Response, Stone Energy did not contest the alleged violation. However,\nthe company stated in its June 2012 Response that it had confirmed that the West Cameron #45\npipeline did not have a leak and therefore this item had been cleared. The alleged violation,\nhowever, is for the failure to have a process that properly integrated and analyzed data from\nvarious integrity assessments. Regardless of whether or not the West Cameron #45 line\nexperienced a leak during a particular hydrotest, Stone Energy still could not produce\ndocumentation that it had conducted a proper information analysis. Accordingly, I find that\nRespondent violated 49 C.F.R. § 195.452(f)(3) by failing to conduct an information analysis as\npart of its IMP.\nItem 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(3), as quoted above,\nby failing to develop and implement an IMP that included an analysis integrating all available\ninformation about the integrity of its entire pipeline and the consequences of a potential pipeline\nfailure. Specifically, the Notice alleged that Section 5.04 of Stone Energy’s IMP required the\ncompany to evaluate \"newly constructed or acquired pipelines….to determine whether or not\nsegment subdividing would prove advantageous to the risk analysis process.\" During the\ninspection, OPS requested documentation of such an evaluation for the West Cameron #45\npipeline, since it consisted of two different vintages of 8-inch pipe. Stone Energy could not\ndemonstrate that this type of evaluation had been performed. Further, Section 5.08 of the\ncompany’s IMP stated that periodic evaluations conducted pursuant to § 195.452(j)(2) would\n\n\n\n5\noccur “at least annually,” but PHMSA alleged that documentation for such reviews only existed\nfor years 2005 and 2006.\nIn its Response, Stone Energy did not contest the allegations but stated that it would perform\nanother risk analysis for the 2009 pipeline addition to evaluate whether segmentation was\nwarranted. The company also agreed to keep each analysis for the life of the pipe and to include\nthe date of the analysis in the documentation. Accordingly, I find that Respondent violated\n49 C.F.R. § 195.452(f)(3) by failing to follow its own IMP procedures for risk analysis and\nperiodic evaluations.\nItem 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(1), which states:\n§ 195.452 Pipeline integrity management in high consequence areas.\n(a) . . .\n(f) What are the elements of an integrity management program? An\nintegrity management program begins with the initial framework. An\noperator must continually change the program to reflect operating\nexperience, conclusions drawn from results of the integrity assessments,\nand other maintenance and surveillance data, and evaluation of\nconsequences of a failure on the high consequence area. An operator must\ninclude, at minimum, each of the following elements in its written\nintegrity management program: . . .\n(1) A process for identifying which pipeline segments could affect a\nhigh consequence area; . . .\n(3) An analysis that integrates all available information about the\nintegrity of the entire pipeline and the consequences of a failure (see\nparagraph (g) of this section); . . .\n(6) Identification of preventive and mitigative measures to protect\nthe high consequence area (see paragraph (i) of this section); . . . .\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(1) by failing to develop and\nimplement an IMP that included a process for identifying which pipeline segments could affect\nan HCA. Specifically, it alleged that after an April 2005 integrity management audit, OPS\nnotified Stone Energy that it needed to document the processes used to determine whether its\nfacilities could affect an HCA.5 During the current inspection, OPS allegedly requested this\ndocumentation but Stone Energy still could not provide it. Therefore, it was still unknown\nwhether the company’s Holly Beach Tank Battery could affect an HCA.\nIn its Response, Stone Energy requested that PHMSA reconsider this item. The company\ncontended that it had submitted the required information after the 2005 Notice of Amendment\nand OPS did not request further information and that following a May 15, 2012 meeting with\nOPS, the parties concluded that no further action was required for this item.\nI disagree. Stone Energy was charged with failing to have a process in place to identify which of\n5 See CPF No. 4-2005-5036M and 4-2005-5039.\nhttp://primis.phmsa.dot.gov/comm/reports/enforce/Actions_opid_0 html.\n\n\n\n6\nits pipeline segments could affect HCAs. Stone Energy could not produce any documentation or\nother proof that it had a proper process in place for identifying which of its facilities could affect\nan HCA, as of the date of the 2010 OPS inspection. Accordingly, I find that Respondent violated\n49 C.F.R. § 195.452(f)(1).\nItem 6: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(6), as quoted above,\nand § 195.452(i), which states, in relevant part:\n§ 195.452 Pipeline integrity management in high consequence areas.\n(a) . . .\n(i) What preventive and mitigative measures must an operator take\nto protect the high consequence area?—(1) General requirements. An\noperator must take measures to prevent and mitigate the consequences of a\npipeline failure that could affect a high consequence area. These measures\ninclude conducting a risk analysis of the pipeline segment to identify\nadditional actions to enhance public safety or environmental protection.\nSuch actions may include, but are not limited to, implementing damage\nprevention best practices, better monitoring of cathodic protection where\ncorrosion is a concern, establishing shorter inspection intervals, installing\nEFRDs on the pipeline segment, modifying the systems that monitor\npressure and detect leaks, providing additional training to personnel on\nresponse procedures, conducting drills with local emergency responders\nand adopting other management controls….\n(3) Leak detection. An operator must have a means to detect leaks\non its pipeline system. An operator must evaluate the capability of its leak\ndetection means and modify, as necessary, to protect the high consequence\narea. An operator’s evaluation must, at least, consider, the following\nfactors—length and size of the pipeline, type of product carried, the\npipeline’s proximity to the high consequence area, the swiftness of leak\ndetection, location of nearest response personnel, leak history, and risk\nassessment results.\n(4) Emergency Flow Restricting Devices (EFRD). If an operator\ndetermines that an EFRD is needed on a pipeline segment to protect a high\nconsequence area in the event of a hazardous liquid pipeline release, an\noperator must install the EFRD. In making this determination, an operator\nmust, at least, consider the following factors—the swiftness of leak\ndetection and pipeline shutdown capabilities, the type of commodity\ncarried, the rate of potential leakage, the volume that can be released,\ntopography or pipeline profile, the potential for ignition, ","truncated":true,"body_characters":51939}