{"operation":"document","citation":"CPF 420165029","title":"CHAPARRAL ENERGY, LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2016-08-10","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.402(a), 195.507(a)(2), 195.52(a)(5), 195.571, 195.577(a), 195.589(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420165029.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420165029.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420165029","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420165029","body":"Notice of Probable Violation involving CHAPARRAL ENERGY, LLC. PHMSA's enforcement data identifies the cited regulations as 195.402(a),  195.507(a)(2),  195.52(a)(5),  195.571,  195.577(a),  195.589(c). The case was opened on 2016-08-10 and is reported as closed as of 2019-10-09. Proposed civil penalty: $158,400. Assessed civil penalty: $0. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420165029_Final Order_10092019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165029/420165029_Final%20Order_10092019.pdf\n\n420165029_Final Order_10092019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165029/420165029_Final%20Order_10092019_text.pdf\n\n420165029_NOPV PCP_08102016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165029/420165029_NOPV%20PCP_08102016.pdf\n\n420165029_NOPV PCP_08102016_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165029/420165029_NOPV%20PCP_08102016_text.pdf\n\n420165029_Operator Response to Notice and Request for Telephone Hearing and Case Files_09142016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165029/420165029_Operator%20Response%20to%20Notice%20and%20Request%20for%20Telephone%20Hearing%20and%20Case%20Files_09142016.pdf\n\n420165029_Final Order_10092019_text.pdf\n\nOctober 9, 2019\nMr. K. Earl Reynolds\nChief Executive Officer\nChaparral Energy, Inc.\n701 Cedar Lake Boulevard\nOklahoma City, Oklahoma 73114\nRe: CPF No. 4-2016-5029\nDear Mr. Reynolds:\nEnclosed please find the Final Order issued in the above-referenced case. It makes a finding of\nviolation against Chaparral Energy, LLC, your subsidiary. Since Perdure Petroleum, LLC, is\nnow the successor-in-interest of your CO2 pipeline system, this Final Order is also being sent to\nthem so that they may take steps to comply with elements of the compliance order as proposed in\nthe Amended Notice. This case is now closed. Service of the Final Order by certified mail is\neffective upon the date of mailing, as provided under 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Ms. Mary McDaniel, Direct, Southwest Region, Office of Pipeline Safety, PHMSA\nMr. Ahren Scott Tryon, Esq., Counsel for Chaparral Energy, LLC, Tryon Law Firm,\n4148 Hockaday Drive, Dallas, Texas 75229\nMr. Tracy Evans, Chief Executive Officer, Perdure Petroleum, LLC, 12012 Wickchester\nLane, Houston, Texas 77079\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\n\n\n\nOctober 9, 2019\nMr. Tracy Evans\nChief Executive Officer\nPerdure Petroleum, LLC\n12012 Wickchester Lane\nHouston, Texas 77079\nRe: CPF No. 4-2016-5029\nDear Mr. Evans:\nEnclosed please find a copy of a Final Order issued to Chaparral Energy, LLC, a subsidiary of\nChaparral Energy, Inc. Since your company is now the successor-in-interest of the CO2 pipeline\nsystem at issue in this matter, this Final Order is also being sent to you so that you may be\nadvised of actions to ensure compliance with the pipeline safety regulations as proposed in the\nAmended Notice.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\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____________________________________\nIn the Matter of )\nChaparral Energy, LLC, ) CPF No. 4-2016-5029\na subsidiary of Chaparral Energy, Inc., )\n)\n)\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nFrom March 2 through December 15, 2015, pursuant to 49 U.S.C. § 60117, representatives of the\nPipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety\n(OPS), conducted an on-site pipeline safety inspection of the facilities and records of Chaparral\nEnergy, LLC’s (Chaparral or Respondent), carbon dioxide (CO2) pipeline system in Oklahoma,\nTexas, and Kansas. At the time of the inspection, Chaparral owned a CO2 pipeline system\nconsisting of four different CO2 pipelines totaling 259 miles. These four pipelines are: (1) the\nCoffeyville Line, which runs from a fertilizer plant in Coffeyville, Kansas to a production field\nnear Shilder, Oklahoma; (2) the Borger Line, which runs from a fertilizer plant in Borger, Texas\nto an oil field in Camrick, Oklahoma; (3) the Farnsworth Line, which runs from the Borger tie-in\nto the Farnsworth Unit and the TEXOK tie-in to the Farnsworth Unit in Texas; and (4) the\nTEXOK Line, which runs from the ethanol plant in Arkalon, Kansas to Elmwood, Oklahoma to\nOchiltree County, Texas.1 On November 20, 2017, Chaparral transferred ownership and\noperation of the aforementioned CO2 pipelines to Perdure Petroleum, LLC (Perdure).2\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated August 10, 2016, a Notice of Probable Violation and Proposed Civil\nPenalty (Notice), which also included warning items pursuant to 49 C.F.R. § 190.205. In\naccordance with 49 C.F.R. § 190.207, the Notice proposed finding that Chaparral had violated 49\nC.F.R. § 195.577 and proposed assessing a civil penalty of $158,400 for the alleged violation.\nThe warning items required no further action, but warned the operator to correct the probable\nviolations or face possible future enforcement action.\nChaparral responded to the Notice by letter dated September 14, 2016 (Response). Chaparral\n1 Pipeline Safety Violation Report (Violation Report), (Aug. 10, 2016) (on file with PHMSA), at 1.\n2 Chaparral Energy Closes EOR Asset Sale for $170 Million, Transitions to Pure-play STACK Operator, Chaparral\nEnergy Press Release, available at https://www.chaparralenergy.com/news/chaparral-energy-closes-eor-asset-sale-\n170-million-transitions-pure-play-stack-operator (last accessed August 6, 2019).\n\n\n\nCPF No. 4-2016-5029\nPage 2\ncontested the alleged violation and requested a telephonic hearing. On February 20, 2017,\nRespondent filed a pre-hearing brief; however, prior to the scheduled hearing date, the parties\nrequested a postponement of the hearing to engage in informal discussions. On May 10, 2017,\nthe Director issued an amended Notice of Probable Violation and Proposed Compliance Order\n(Amended Notice). In accordance with 49 C.F.R. § 190.207, the Amended Notice proposed\nfinding that Chaparral had violated 49 C.F.R. § 195.577 and proposed ordering Respondent to\ntake certain measures to correct the alleged violation. The Amended Notice did not include a\nproposed civil penalty for the alleged violation.\nOn May 15, 2017, Respondent responded to the Amended Notice via email. Chaparral did not\ncontest the alleged violation or the proposed compliance order, and withdrew its request for a\nhearing, thereby authorizing the entry of this Final Order without further notice.\nFINDING OF VIOLATION\nIn its Response, Chaparral did not contest the allegation in the Amended Notice that it violated\n49 C.F.R. Part 195, as follows:\nItem 7: The Amended Notice alleged that Respondent violated 49 C.F.R. § 195.577(a), which\nstates:\n§ 195.577 What must I do to alleviate interference currents?\n(a) For pipelines exposed to stray currents, you must have a program to\nidentify, test for, and minimize the detrimental effects of such currents.\nThe Amended Notice alleged that Respondent violated 49 C.F.R. § 195.577(a) by failing to\nidentify, test for, and minimize the detrimental effects of stray currents to its Coffeyville Line.\nSpecifically, the Amended Notice alleged that Chaparral failed to perform an evaluation of its\npipeline system to determine the effects of any stray current interference from other adjacent\nmetallic structures or to determine if interference bonds were needed for several pipeline\ncrossings on its Coffeyville Line. The Amended Notice further noted that Chaparral’s failure to\nperform the stray current analysis resulted in two reportable accidents on its Coffeyville Line on\nMay 4, 2015, and August 25, 2015, as both failures were attributed to stray current corrosion\nunidentified by Respondent. Respondent was unable to provide any documentation of an\nevaluation for potential stray current interference effects on all pipeline crossings, and if\ninterference bonds were needed for these locations as a method of mitigating stray currents.\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 195.577(a) by failing to identify, test\nfor, and minimize the detrimental effects of interference currents from adjacent metallic\nstructures and pipeline crossings on its Coffeyville Line.\nThis finding of violation will be considered a prior offense in any subsequent enforcement action\ntaken against Respondent.\n\n\n\nCPF No. 4-2016-5029\nPage 3\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Item 7 in the Amended Notice for a\nviolation of 49 C.F.R. § 195.577. Under 49 U.S.C. § 60118(a), each person who engages in the\ntransportation of hazardous liquids or who owns or operates a pipeline facility is required to\ncomply with the applicable safety standards established under Chapter 601.\nSince the Amended Notice was issued, Chaparral has transferred the assets which were the\nsubject of the Amended Notice to Perdure. There is no indication in the record that Perdure has\nreceived notice of the Amended Notice or the proposed compliance order. However, as the\nsuccessor-in-interest and the current operator of the CO2 pipeline system in the Amended Notice,\nPerdure should consider the following actions in the proposed compliance order to ensure its\npipeline complies with § 195.577. Moreover, Perdure remains obligated to operate its pipeline\nfacilities in accordance with the Federal pipeline safety regulations.\n1. With respect to Chaparral’s violation of § 195.577(a) (Item 7), Perdure should\nconsider taking the following actions:\na. Perform an evaluation of the CO2 pipeline system to determine the potential\nfor and effects of any stray current interference, and provide documentation of\nthe evaluation at each pipeline crossing and the determination of the need for\ninterference bonds (critical/non-critical).\nb. Review its procedures for evaluating interference corrosion to determine if\nrevisions are necessary to include provisions for both critical and non-critical\nbonds on all of its pipeline systems.\nIt is requested (not mandated) that Perdure maintain documentation of the safety improvement\ncosts associated with fulfilling this Compliance Order and submit the total to the Director. It is\nrequested 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.\nWARNING ITEMS\nWith respect to Items 1 through 6, the Amended Notice alleged probable violations of Part 195\nbut did not propose a civil penalty or compliance order for these items. Therefore, these are\nconsidered to be warning items. The warnings were for:\n49 C.F.R. § 195.402(a) (Item 1) ─ Respondent’s alleged failure to follow its\nOperations and Maintenance Manual (O&M Manual), Monitoring for\nAtmospheric Corrosion Section (Revised 09-13-14) to fill out the required\nMaintenance Record/Atmospheric Corrosion Inspection form following\natmospheric corrosion inspections on the exposed portions of the TEXOK,\nBorger, and Farnsworth Lines for calendar year 2014;\n\n\n\nCPF No. 4-2016-5029\nPage 4\n49 C.F.R. § 195.571 (Item 2) ─ Respondent’s alleged failure to maintain an\nadequate level of cathodic protection at two test stations on its TEXOK Line as\nrequired by NACE SP 0169 and its O&M Manual;\n49 C.F.R. § 195.507(a)(2) (Item 3) ─ Respondent’s alleged failure to maintain\nrecords to demonstrate compliance with the Operator Qualification (OQ)\nregulations after a significant change in its OQ covered task list;\n49 C.F.R. § 195.52(a) (Item 4) ─ Respondent’s alleged failure to provide notice\nof a CO2 release meeting the immediate notification requirements of “the earliest\npracticable moment following discovery of a release of … carbon dioxide”;\n49 C.F.R. § 195.589(c) (Item 5) ─ Respondent’s alleged failure to maintain\ncorrosion remediation records demonstrating compliance with Subpart H\ncorrosion control requirements; and\n49 C.F.R. § 195.571 (Item 6) ─ Respondent’s alleged failure to consider voltage\ndrops (IR drops) in determining the adequacy of cathodic protection on its Border,\nTEXOK, and Coffeyville Lines during the annual survey.\nIf OPS finds a violation of any of these items in a subsequent inspection, Respondent may be\nsubject to future enforcement action.\nThe terms and conditions of this Final Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\nOctober 9, 2019\n___________________________________ _________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":13089}