# STONE ENERGY — Notice of Probable Violation

- **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:** Not available
- **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.
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- **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.

Official case documents:

420117004_Closure_04012013.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_Closure_04012013.pdf

420117004_Closure_04012013_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_Closure_04012013_text.pdf

420117004_Final Order_09142012.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_Final%20Order_09142012.pdf

420117004_Final Order_09142012_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_Final%20Order_09142012_text.pdf

420117004_NOPV PCP PCO_08082011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_NOPV%20PCP%20PCO_08082011.pdf

420117004_NOPV PCP PCO_08082011_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_NOPV%20PCP%20PCO_08082011_text.pdf

420117004_Operator Response to Notice_09062011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420117004/420117004_Operator%20Response%20to%20Notice_09062011.pdf

420117004_Closure_04012013_text.pdf

CERTIFIED MAIL - RETURN RECEIPT REQUESTED
April 1, 2013
Mr. David H. Welch
President and CEO
Stone Energy Corporation
625 East Kaliste Saloom Road
Lafayette, LA 70508
CPF 4-2011-7004
Dear Mr. Welch:
On September 14, 2012, the Pipeline and Hazardous Materials Safety Administration (PHMSA)
issued to Stone Energy a Final Order in the above-referenced case. This Order included a
Compliance Order and Civil Penalty assessment. Payment of the civil penalty was received on
September 27, 2012. Based on our review of the documentation you provided, it has been
determined that you have complied with the terms of this Order.
Accordingly, this case is now closed and no further action is contemplated with respect to the
matters involved in this case. Thank you for your cooperation in this matter.
Sincerely,
R. M. Seeley
Director, Southwest region
Pipeline and Hazardous
Materials Safety Administration

420117004_NOPV PCP PCO_08082011_text.pdf

NOTICE OF PROBABLE VIOLATION
PROPOSED CIVIL PENALTY
and
PROPOSED COMPLIANCE ORDER
CERTIFIED MAIL - RETURN RECEIPT REQUESTED
August 8, 2011
Stone Energy
Mr. Jerry Wenzel
Vice President, Production and Drilling
625 East Kaliste Saloom Road
Lafayette, LA 70508
CPF 4-2011-7004
Dear Mr. Wenzel:
On December 6-10, 2010, a representative of the Pipeline and Hazardous Materials Safety Administration
(PHMSA) pursuant to Chapter 601 of 49 United States Code inspected Stone Energy procedures for
Integrity Management in Lafayette, Louisiana.
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 violations are:
1. §195.49 Annual report
Beginning no later than June 15, 2005, each operator must annually complete and submit
DOT form RSPA F 7000-1.1 for each type of hazardous liquid pipeline facility operated at
the end of the previous year. A separate report is required for crude oil, HVL (including
anhydrous ammonia), petroleum products, and carbon dioxide pipelines. Operators are
encouraged, but not required, to file an annual report by June 15, 2004, for calendar year
2003.



Stone Energy (Stone) did not submit accurate annual reports. Stone submitted PHMSA Form 7000-1.1
for years 2005 through 2009 but the data included in the report was not accurate. For example, data from
the 2009 annual report Part J (Integrity Inspections Conducted and Actions Taken Based on Inspection)
shows an entry of 0 miles. During the inspection, integrity assessments were reviewed that indicate IM
assessments were performed through a hydrostatic test. The East Cameron 46 pipeline was assessed on
June 28, 2009.
Additionally, Data in Part K (Mileage of Baseline Assessments Completed) from the 2009 report shows
an entry of 0 miles for all dates. This does not appear to be accurate considering that assessment records
for both the West Cameron 45 pipeline and the East Cameron 46 pipeline were examined at the
inspection. There should have been mileage entries for assessments made in 2005 and 2009. In
reviewing older annual reports they too, do not indicate the data accurately in Part K.
2. §195.452 Pipeline integrity management in high consequence areas.
(d) When must operators complete baseline assessments? Operators must complete
baseline assessments as follows:
(1) Time periods. Complete assessments before the following deadlines:
If the pipeline is Then complete baseline assessments
and assess at least 50 percent of the
not later than the following date
line pipe on an expedited basis,
according to a schedule that prioritizes
beginning with the highest risk pipe,
assessment:
not later than:
Category 1 March 31, 2008 September 30, 2004
Category 2 February 17, 2009 August 16, 2005
Category 3 Date the pipeline begins operation Not applicable
Stone did not assess at least 50% of their highest risk segments prior to the August 2005 deadline and
failed to complete all baseline assessments prior to the February 2009 deadline. Stone operates
approximately 32 miles of pipeline and performed their HCA identification in 2005. The team reviewed
the baseline assessment records. Specifically, the West Cameron 45 pipeline and the East Cameron 46
pipeline hydro-test records, which indicated that these two assessments were completed on August 20,
2005 and June 28, 2009 respectively. Both of these were after the deadlines and no other assessments
were performed.
2



3. §195.452 Pipeline integrity management in high consequence areas.
(f) What are the elements of an integrity management program? An integrity management
program begins with the initial framework. An operator must continually change the
program to reflect operating experience, conclusions drawn from results of the integrity
assessments, and other maintenance and surveillance data, and evaluation of consequences
of a failure on the high consequence area. An operator must include, at minimum, each of
the following elements in its written integrity management program:
(3) An analysis that integrates all available information about the integrity of the entire
pipeline and the consequences of a failure (see paragraph (g) of this section);
(g) What is an information analysis? In periodically evaluating the integrity of each
pipeline segment (paragraph (j) of this section), an operator must analyze all available
information about the integrity of the entire pipeline and the consequences of a failure. This
information includes:
(1) Information critical to determining the potential for, and preventing, damage due to
excavation, including current and planned damage prevention activities, and development
or planned development along the pipeline segment;
(2) Data gathered through the integrity assessment required under this section;
(3) Data gathered in conjunction with other inspections, tests, surveillance and patrols
required by this Part, including, corrosion control monitoring and cathodic protection
surveys; and
(4) Information about how a failure would affect the high consequence area, such as
location of the water intake.
Stone did not perform the necessary data analysis or data integration. Stone’s IM program Section 3
briefly talks about integration of information, but it focuses on ILI assessments. There is no process
identified that addresses how Stone will document their integration of data from hydro-test assessments.
During the inspection, PHMSA asked Stone to demonstrate compliance with the regulation. Stone was
unable to demonstrate that they had integrated the information from their hydro-test assessments. There
was no documentation of the overall results of integrated data analysis and conclusions regarding the
integrity of the segment, including the nature of the integrity threats identified. The 2005 and the 2009
West Cameron 45 pipeline hydro-tests experienced leaks. These events should have initiated some
review and action by Stone which should be documented per the IM requirements.
4. §195.452(f) (See Above)
(3) An analysis that integrates all available information about the integrity of the entire
pipeline and the consequences of a failure (see paragraph (g) of this section);
(g) What is an information analysis? In periodically evaluating the integrity of each pipeline
segment (paragraph (j) of this section), an operator must analyze all available information
about the integrity of the entire pipeline and the consequences of a failure. This information
includes:
(1) Information critical to determining the potential for, and preventing, damage due to
excavation, including current and planned damage prevention activities, and development
or planned development along the pipeline segment;
(2) Data gathered through the integrity assessment required under this section;
3



(3) Data gathered in conjunction with other inspections, tests, surveillance and patrols
required by this Part, including, corrosion control monitoring and cathodic protection
surveys; and
(4) Information about how a failure would affect the high consequence area, such as
location of the water intake.
(j) What is a continual process of evaluation and assessment to maintain a pipeline's
integrity?
(2) Evaluation. An operator must conduct a periodic evaluation as frequently as needed to
assure pipeline integrity. An operator must base the frequency of evaluation on risk factors
specific to its pipeline, including the factors specified in paragraph (e) of this section. The
evaluation must consider the results of the baseline and periodic integrity assessments,
information analysis (paragraph (g) of this section), and decisions about remediation, and
preventive and mitigative actions (paragraphs (h) and (i) of this section).
Stone did not follow their procedures in performing their Risk Analysis. Stone Energy IMP section 5.04
states that they did not segment the existing pipelines but goes on to say: “Newly constructed or acquired
pipelines will be evaluated to determine whether or not segment subdividing would prove advantageous
to the risk analysis process.”
The team reviewed the available documentation for Stone’s Risk Analysis. West Cameron 45 pipeline
consists of two different vintages of 8 inch pipeline, 1987 and 2009. PHMSA asked Stone to provide the
evaluation of the newly constructed line to see if segmentation would be warranted. Stone could not
demonstrate that the evaluation was performed.
Stone’s section 5.08 states that the frequency of the evaluation “will be at least annually.” Appendix I
“Risk Analysis” indicates some reviews were performed in 2005 and 2006. The last entry states that
EC45 risk analysis was “tabled.” No further indications are made regarding Stone’s risk analysis.
Stone’s Recordkeeping Manual Section 9 “Pipeline Integrity Management Risk Analysis Reviews” did
list some dates that imply a review was conducted but did not contain content of the Risk Analysis
Review Meeting such as factors considered or results. Neither of these “records” contains the required
content to demonstrate that an adequate risk analysis review was conducted.
5. §195.452(f) (See Above)
(1) A process for identifying which pipeline segments could affect a high consequence area;
(3) An analysis that integrates all available information about the integrity of the entire
pipeline and the consequences of a failure (see paragraph (g) of this section);
(6) Identification of preventive and mitigative measures to protect the high consequence
area (see paragraph (i) of this section);
4



Following the April 2005 IM audit, Stone was notified that they needed to document the process(es) used
and determinations made in determining whether facilities could or could not effect HCAs (See CPF # 4-
2005-5036M and 4-2005-5039). During this inspection, PHMSA followed-up on this issue and Stone
could not demonstrate that it had completed the evaluations and it is still unknown if this facility could
affect an HCA. Subsequently, no assessment or other IM required actions have been taken in regards to
the Holly Beach Tank Battery, a jurisdictional facility.
6. §195.452(f) (see above.)
(6) Identification of preventive and mitigative measures to protect the high consequence
area (see paragraph i of this section)
(i) What preventive and mitigative measures must an operator take to protect the high
consequence area?
(1) General requirements. An operator must take measures to prevent and mitigate the
consequences of a pipeline failure that could affect a high consequence area. These
measures include conducting a risk analysis of the pipeline segment to identify additional
actions to enhance public safety or environmental protection
(3) Leak detection. An operator must have a means to detect leaks on its pipeline system.
An operator must evaluate the capability of its leak detection means and modify, as
necessary, to protect the high consequence area. An operator's evaluation must, at least,
consider, the following factors–length and size of the pipeline, type of product carried, the
pipeline's proximity to the high consequence area, the swiftness of leak detection, location of
nearest response personnel, leak history, and risk assessment results.
(4) Emergency Flow Restricting Devices (EFRD). If an operator determines that an EFRD
is needed on a pipeline segment to protect a high consequence area in the event of a
hazardous liquid pipeline release, an operator must install the EFRD. In making this
determination, an operator must, at least, consider the following factors–the swiftness of
leak detection and pipeline shutdown capabilities, the type of commodity carried, the rate of
potential leakage, the volume that can be released, topography or pipeline profile, the
potential for ignition, proximity to power sources, location of nearest response personnel,
specific terrain between the pipeline segment and the high consequence area, and benefits
expected by reducing the spill size.
Stone did not perform the required evaluations as specified in their IM Plan.
Stone’s IM Plan section 6.01 states that the Integrity Assessment Team must conduct an evaluation
during the annual review meeting. During the inspection PHMSA asked to see the documentation where
Stone reviewed and evaluated the required elements related to the Preventative and Mitigative Measures.
None was provided. PHMSA also reviewed Stone’s IMP Recordkeeping Manual Section 8 Preventative
Measures Reviews. This section lists several measures that Stone will consider but lacks specific
determination and implementation specifics. It does not indicate what preventative and mitigative
measures were considered, adopted or not adopted.
Stone’s IM Plan section 6.06 states that the Integrity Assessment Team must conduct an evaluation
during the annual review meeting. During the inspection PHMSA asked to see the documentation where
Stone reviewed and evaluated the required elements related to the Leak detection system. None was
provided. PHMSA also reviewed Stone’s IMP Recordkeeping Manual Section 10 EFRD/Leak Detection
Assessment Review but it does not contain documentation of the application of a risk-based decision-
making process for leak detection enhancements.
5



Stone did not perform the required evaluation to determine if EFRD’s are required. There are currently
no EFRD’s installed on Stone’s pipeline systems. During the inspection PHMSA asked to see the
documentation where Stone evaluated and determined that EFRD’s were not required. None was
provided.
7. §195.452(f) (see above.)
(7) Methods to measure the program's effectiveness (see paragraph (k) of this section);
(k) What methods to measure program effectiveness must be used? An operator's program
must include methods to measure whether the program is effective in assessing and
evaluating the integrity of each pipeline segment and in protecting the high consequence
areas. See Appendix C of this part for guidance on methods that can be used to evaluate a
program's effectiveness.
Stone did not perform the required program effectiveness reviews. Stone’s IM plan section 8 indicates
that Stone will perform annual evaluations and will document these in an “Annual Evaluation Report” to
be kept for the life of the pipeline. During the inspection PHMSA asked Stone to demonstrate
compliance with this requirement and no documentation of periodic self assessments or management
audits was produced.
Stone Energy IMP does not indicate the frequency at which program evaluation through performance
measures will take place. Stone Energy IMP Recordkeeping Manual Section 13 Programs Effectiveness
contains one document with no date or the individuals involved in this review.
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 $39,900 as follows:
Item number PENALTY
2 $20,600
5 $19,300
Proposed Compliance Order
With respect to items 1, 3, 4, 5, 6, and 7 pursuant to 49 United States Code § 60118, the Pipeline and
Hazardous Materials Safety Administration proposes to issue a Compliance Order to Stone Energy.
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
6



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 4-2011-7004 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
7



PROPOSED COMPLIANCE ORDER
Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration
(PHMSA) proposes to issue to Stone Energy a Compliance Order incorporating the following remedial
requirements to ensure the compliance of Stone Energy with the pipeline safety regulations:
1. In regard to Item Number 1 of the Notice pertaining to Annual Reports. Stone Energy shall
submit amended PHMSA F 7000-1.1 annual reports for years 2005 through 2009 showing actual
mileage of baseline assessments completed and actual mileage of integrity inspections conducted
and actions taken based on inspection.
2. In regard to Item Number 3 of the Notice Stone must review their IM Plan and develop the
process they will utilize to analyze and integrate data from hydrotests. Stone must also perform
the required data analysis and integration.
3. In regard to Item Number 4 of the Notice Stone must perform the required evaluation and
determine if segmentation is necessary. Following the evaluation, Stone should perform the
proper risk analysis.
4. In regard to Item Number 5 Stone must perform the appropriate “could affect” evaluation. If it is
determined that the facility could affect an HCA then the integrity program should be modified
appropriately to ensure compliance with all parts of the integrity management regulation
requirements for this facility.
5. In regard to Item Number 6 of the Notice Stone should perform and fully document Preventative
Measures Reviews and EFRD/Leak Detection Assessment Review at the appropriate intervals
and documented to indicate what preventative and mitigative measures were considered, adopted
or not adopted and documentation of the application of a risk-based decision-making process for
leak detection enhancements.
6. In regard to Item Number 7 of the Notice Stone shall perform periodic self assessments and
management audits of its IMP process and document the results. Stone Energy shall amend its
IM Plan to indicate the frequency at which program evaluation through performance measures
will take place.
7. Stone Energy should complete items 1 through 7 within 90 days of receipt of the Final Order.
8. It is requested (not mandated) that Stone Energy 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.
8

420117004_Final Order_09142012_text.pdf

SEPTEMBER 14, 2012
Mr. David H. Welch
President and CEO
Stone Energy Corporation
625 East Kaliste Saloom Road
Lafayette, LA 70508
Re: CPF No. 4-2011-7004
Dear Mr. Welch:
Enclosed please find the Final Order issued in the above-referenced case. It makes findings of
violation, assesses a civil penalty of $39,900, and specifies actions that need to be taken by
Stone Energy Corporation to comply with the pipeline safety regulations. The penalty
payment terms are set forth in the Final Order. When the civil penalty has been paid and the
terms of the compliance order completed, as determined by the Director, Southwest Region,
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. Jerome F. Wenzel, Jr., Executive Vice President – Operations, Stone Energy
Corporation
Mr. Rod M. Seeley, Director, Southwest Region, OPS
Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS
CERTIFIED MAIL - RETURN RECEIPT REQUESTED



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590
____________________________________
)
In the Matter of )
)
Stone Energy Corporation, ) CPF No. 4-2011-7004
)
Respondent. )
____________________________________)
FINAL ORDER
Between December 6-10, 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 integrity management program of Stone
Energy Corporation (Stone Energy or Respondent) in Lafayette, Louisiana. Stone Energy
operates a 30-mile crude oil system in the Gulf of Mexico.1 The inspection included the East
Cameron #46 pipeline and the West Cameron #45 pipeline located offshore of Louisiana.2
As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to
Respondent, by letter dated August 8, 2011, a 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 Stone Energy had committed various violations of 49 C.F.R. Part
195 and proposed assessing a civil penalty of $39,900 for the alleged violations. The Notice also
proposed ordering Respondent to take certain measures to correct the alleged violations.
Stone Energy responded to the Notice by letters dated September 6, 2011 and June 7, 2012
(collectively, Response). The company supplied additional information and requested that
PHMSA reconsider the proposed civil penalty amount for certain alleged violations. Stone
Energy did not request a hearing and therefore has waived its right to one.
FINDINGS OF VIOLATION
The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows:
1 Pipeline Safety Violation Report (Violation Report), (August 9, 2011) (on file with PHMSA).
2 Id.



2
Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.49, which states:
§ 195.49 Annual report.
Beginning no later than June 15, 2005, each operator must annually
complete and submit DOT form RSPA F 7000-1.1 for each type of
hazardous liquid pipeline facility operated at the end of the previous year.
A separate report is required for crude oil, HVL (including anhydrous
ammonia), petroleum products, and carbon dioxide pipelines. Operators
are encouraged, but not required, to file an annual report by June 15, 2004,
for calendar year 2003.3
The Notice alleged that Respondent violated 49 C.F.R. § 195.49 by failing to complete and
submit DOT form RSPQ F 7000-1.1 for each type of hazardous liquid pipeline operated at the
end of the previous year. Specifically, the Notice alleged that although Stone Energy filed
annual reports for calendar years 2005-2009, the reports included inaccurate or missing data. For
example, the Notice alleged that Part J of the company’s 2009 annual report stated it had
conducted zero miles of integrity inspections, yet a review of its integrity assessment records
showed that Stone Energy had assessed the East Cameron #46 pipeline on June 28, 2009. This
particular inspection should have been reflected on Part J of the 2009 annual report.
The Notice further alleged that Stone Energy also entered zero on Part K of the 2009 annual
report for the number of pipeline miles for which it had completed baseline assessments, yet the
OPS inspection confirmed that the company had actually examined both the West Cameron #45
and East Cameron #46 pipelines in 2005 and 2009. The 2009 annual report should have
included the appropriate mileage entry for these assessments.
In its Response, Stone Energy did not contest this allegation of violation. Accordingly, after
considering all of the evidence, I find that Stone Energy violated 49 C.F.R. § 195.49 by failing to
file complete annual reports for calendar years 2005-2009.
Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(d)(1), which states:
§ 195.452 Pipeline integrity management in high consequence areas.
(a) . . .
(d) When must operators complete baseline assessments?
Operators must complete baseline assessments as follows:
(1) Time periods. Complete assessments before the following
deadlines:
If the pipeline is: Then complete baseline assessments
not later than the following date
according to a schedule that
prioritizes assessments:
And assess at least 50
percent of the line pipe
on an expedited basis,
beginning with the
highest risk pipe,
not later than:
Category 1…….. March 31, 2008 September 30, 2004
Category 2…….. February 17, 2009 August 16, 2005
Category 3…….. Date pipeline begins operation Not applicable.
3 Section 195.49 was subsequently amended, effective November 26, 2010.



3
The Notice alleged that Respondent violated 49 C.F.R. § 195.452(d)(1) by failing to complete
baseline assessments for its pipeline segments that were located in or could affect High
Consequence Areas (HCAs),
4 prior to the deadline of February 17, 2009. In addition, it alleged
that Stone Energy also failed to assess at least 50% of the highest-risk pipeline segments prior to
the August 16, 2005 deadline.
Stone Energy operates approximately 32 miles of pipeline and performed its HCA identification
process in 2005. During the OPS inspection, the agency determined that Stone Energy had
completed baseline assessments through the use of hydrostatic testing for the West Cameron #45
pipeline and the East Cameron #46 pipeline on August 20, 2005 and June 28, 2009, respectively.
Both of these assessments occurred after the deadlines and no other assessments were performed
for the rest of Respondent’s facilities.
In its Response, Stone Energy stated that it had discovered an additional pressure test on the East
Cameron #46 Pipeline, which was conducted on February 5, 2006. Therefore, it requested that
PHMSA reconsider this probable violation and the associated civil penalty. However, after a
meeting with OPS on May 15, 2012, Stone Energy acknowledged this 2006 hydrotest was a
spike test and could not be used as a baseline. Accordingly, I find that Respondent violated
49 C.F.R. § 195.452(d)(1) by failing to complete all baseline assessments prior to the February
2009 deadline and failing to assess 50% of its highest-risk segments prior to the August 2005
deadline.
Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(3), which states:
§ 195.452 Pipeline integrity management in high consequence areas.
(a) . . .
(f) What are the elements of an integrity management program? An
integrity management program begins with the initial framework. An
operator must continually change the program to reflect operating
experience, conclusions drawn from results of the integrity assessments,
and other maintenance and surveillance data, and evaluation of
consequences of a failure on the high consequence area. An operator must
include, at minimum, each of the following elements in its written
integrity management program: . . .
(3) An analysis that integrates all available information about the
integrity of the entire pipeline and the consequences of a failure (see
paragraph (g) of this section);. . .
(g) What is an information analysis? In periodically evaluating the
integrity of each pipeline segment (paragraph (j) of this section), an
operator must analyze all available information about the integrity of the
entire pipeline and the consequences of a failure. This information
includes:
(1) Information critical to determining the potential for, and
preventing, damage due to excavation, including current and planned
4 High Consequence Areas are defined as commercially navigable waterways, high population areas, other
populated areas, and unusually sensitive areas. See 49 C.F.R. § 195.450.



4
damage prevention activities, and development or planned development
along the pipeline segment;
(2) Data gathered through the integrity assessment required under
this section;
(3) Data gathered in conjunction with other inspections, tests,
surveillance and patrols required by this Part, including, corrosion control
monitoring and cathodic protection surveys; and
(4) Information about how a failure would affect the high
consequence area, such as location of the water intake.
The Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(3) by failing to develop and
implement a written integrity management program (IMP) that included an analysis that
integrated all available information about the integrity of its entire pipeline and the consequences
of a potential failure. Specifically, it alleged that Stone Energy failed to conduct a proper
information analysis that considered data gathered through the integrity assessment process, as
detailed in § 195.452(g).
PHMSA alleged that during the OPS inspection, Stone Energy had been unable to demonstrate
that it had integrated data from its hydrotest assessments. There was no documentation of the
overall results of an integrated data analysis or any conclusions the company had reached
regarding the integrity of each pipeline segment, including the nature of the integrity threats
identified. Stone Energy had allegedly experienced leaks when it conducted the 2005 and the
2009 hydrotests on the West Cameron #45 pipeline. PHMSA alleged that these events should
have initiated some sort of review and action by Stone Energy, including an information analysis
per the integrity management requirements.
In its September 2011 Response, Stone Energy did not contest the alleged violation. However,
the company stated in its June 2012 Response that it had confirmed that the West Cameron #45
pipeline did not have a leak and therefore this item had been cleared. The alleged violation,
however, is for the failure to have a process that properly integrated and analyzed data from
various integrity assessments. Regardless of whether or not the West Cameron #45 line
experienced a leak during a particular hydrotest, Stone Energy still could not produce
documentation that it had conducted a proper information analysis. Accordingly, I find that
Respondent violated 49 C.F.R. § 195.452(f)(3) by failing to conduct an information analysis as
part of its IMP.
Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(3), as quoted above,
by failing to develop and implement an IMP that included an analysis integrating all available
information about the integrity of its entire pipeline and the consequences of a potential pipeline
failure. Specifically, the Notice alleged that Section 5.04 of Stone Energy’s IMP required the
company to evaluate "newly constructed or acquired pipelines….to determine whether or not
segment subdividing would prove advantageous to the risk analysis process." During the
inspection, OPS requested documentation of such an evaluation for the West Cameron #45
pipeline, since it consisted of two different vintages of 8-inch pipe. Stone Energy could not
demonstrate that this type of evaluation had been performed. Further, Section 5.08 of the
company’s IMP stated that periodic evaluations conducted pursuant to § 195.452(j)(2) would



5
occur “at least annually,” but PHMSA alleged that documentation for such reviews only existed
for years 2005 and 2006.
In its Response, Stone Energy did not contest the allegations but stated that it would perform
another risk analysis for the 2009 pipeline addition to evaluate whether segmentation was
warranted. The company also agreed to keep each analysis for the life of the pipe and to include
the date of the analysis in the documentation. Accordingly, I find that Respondent violated
49 C.F.R. § 195.452(f)(3) by failing to follow its own IMP procedures for risk analysis and
periodic evaluations.
Item 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(1), which states:
§ 195.452 Pipeline integrity management in high consequence areas.
(a) . . .
(f) What are the elements of an integrity management program? An
integrity management program begins with the initial framework. An
operator must continually change the program to reflect operating
experience, conclusions drawn from results of the integrity assessments,
and other maintenance and surveillance data, and evaluation of
consequences of a failure on the high consequence area. An operator must
include, at minimum, each of the following elements in its written
integrity management program: . . .
(1) A process for identifying which pipeline segments could affect a
high consequence area; . . .
(3) An analysis that integrates all available information about the
integrity of the entire pipeline and the consequences of a failure (see
paragraph (g) of this section); . . .
(6) Identification of preventive and mitigative measures to protect
the high consequence area (see paragraph (i) of this section); . . . .
The Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(1) by failing to develop and
implement an IMP that included a process for identifying which pipeline segments could affect
an HCA. Specifically, it alleged that after an April 2005 integrity management audit, OPS
notified Stone Energy that it needed to document the processes used to determine whether its
facilities could affect an HCA.5 During the current inspection, OPS allegedly requested this
documentation but Stone Energy still could not provide it. Therefore, it was still unknown
whether the company’s Holly Beach Tank Battery could affect an HCA.
In its Response, Stone Energy requested that PHMSA reconsider this item. The company
contended that it had submitted the required information after the 2005 Notice of Amendment
and OPS did not request further information and that following a May 15, 2012 meeting with
OPS, the parties concluded that no further action was required for this item.
I disagree. Stone Energy was charged with failing to have a process in place to identify which of
5 See CPF No. 4-2005-5036M and 4-2005-5039.
http://primis.phmsa.dot.gov/comm/reports/enforce/Actions_opid_0 html.



6
its pipeline segments could affect HCAs. Stone Energy could not produce any documentation or
other proof that it had a proper process in place for identifying which of its facilities could affect
an HCA, as of the date of the 2010 OPS inspection. Accordingly, I find that Respondent violated
49 C.F.R. § 195.452(f)(1).
Item 6: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(6), as quoted above,
and § 195.452(i), which states, in relevant part:
§ 195.452 Pipeline integrity management in high consequence areas.
(a) . . .
(i) What preventive and mitigative measures must an operator take
to protect the high consequence area?—(1) General requirements. An
operator must take measures to prevent and mitigate the consequences of a
pipeline failure that could affect a high consequence area. These measures
include conducting a risk analysis of the pipeline segment to identify
additional actions to enhance public safety or environmental protection.
Such actions may include, but are not limited to, implementing damage
prevention best practices, better monitoring of cathodic protection where
corrosion is a concern, establishing shorter inspection intervals, installing
EFRDs on the pipeline segment, modifying the systems that monitor
pressure and detect leaks, providing additional training to personnel on
response procedures, conducting drills with local emergency responders
and adopting other management controls….
(3) Leak detection. An operator must have a means to detect leaks
on its pipeline system. An operator must evaluate the capability of its leak
detection means and modify, as necessary, to protect the high consequence
area. An operator’s evaluation must, at least, consider, the following
factors—length and size of the pipeline, type of product carried, the
pipeline’s proximity to the high consequence area, the swiftness of leak
detection, location of nearest response personnel, leak history, and risk
assessment results.
(4) Emergency Flow Restricting Devices (EFRD). If an operator
determines that an EFRD is needed on a pipeline segment to protect a high
consequence area in the event of a hazardous liquid pipeline release, an
operator must install the EFRD. In making this determination, an operator
must, at least, consider the following factors—the swiftness of leak
detection and pipeline shutdown capabilities, the type of commodity
carried, the rate of potential leakage, the volume that can be released,
topography or pipeline profile, the potential for ignition, 
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