OKTEX PIPELINE COMPANY, LLC — Notice of Probable Violation

party submissionOfficial PDF420171006_Operator Response to Notice_05192017.pdf#

420171006_Closure Letter_03232018_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED March 23, 2018 Wesley Dunbar Vice President – NGP Operations OkTex Pipeline Company, LLC 100 West Fifth Street Tulsa, OK 74103 CPF 4-2017-1006 Dear Mr. Dunbar: On November 17, 2017, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to OkTex Pipeline Company, LLC., a Final Order in the above-referenced case. This Final Order included a Compliance Order and Civil Penalty assessment. Based on our review of the documentation provided and confirmation of payment of the civil penalty, it has been determined that you have complied with the terms of this Order. OkTex submitted documentation addressed in the Items in the Final Order on February 14, 2018 and March 16, 2018. My staff reviewed the documents, and it appears that the required assessments have been completed. This letter is to inform you no further action is necessary and this case is now closed. Thank you for your cooperation. Sincerely, Mary L. McDaniel, P. E. Director, Southwest Region Pipeline and Hazardous Materials Safety Administration#

420171006_Final Order_11172017_text.pdf, page 1Official PDFNovember 17, 2017 Mr. Terry K. Spencer President and Chief Executive Officer ONEOK, Inc. 100 West Fifth Street Tulsa, OK 74103 Re: CPF No. 4-2017-1006 Dear Mr. Spencer: Enclosed please find the Final Order issued in the above-referenced case to your subsidiary, OkTex Pipeline Company, LLC. It makes findings of violation, assesses a civil penalty of $145,000, and specifies actions that need to be taken by OkTex Pipeline to comply with the pipeline safety regulations. This is to acknowledge receipt of payment of the full penalty amount, by wire transfer, dated May 19, 2017. When the terms of the compliance order have been completed, as determined by the Director, Southwest Region, this enforcement action will be closed. Service of the Final Order by certified mail is effective upon the date of mailing as provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Alan K. Mayberry Associate Administrator for Pipeline Safety Enclosure cc: Director, Southwest Region, Office of Pipeline Safety, PHMSA Mr. Wes Dunbar, Vice President Operations, ONEOK, Inc. CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

420171006_Final Order_11172017_text.pdf, page 2U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D.C. 20590 ____________________________________ In the Matter of ) OkTex Pipeline Company, LLC, ) CPF No. 4-2017-1006 a subsidiary of ONEOK, Inc., ) ) ) ) Respondent. ) ____________________________________) FINAL ORDER From May through October, 2016, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities and records of OkTex Pipeline Company, LLC (OkTex or Respondent), a subsidiary of ONEOK, Inc. (ONEOK),1 OkTex operates natural gas pipelines in Oklahoma and Texas, with interconnections to pipelines in New Mexico and Mexico.2 As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated April 10, 2017, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice), which also included warnings pursuant to 49 C.F.R. § 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that OkTex had committed three violations of 49 C.F.R. Part 192 and proposed assessing a civil penalty of $145,000 for the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violations. The warning items required no further action, but warned the operator to correct the probable violations or face possible future enforcement action. ONEOK, on behalf of OkTex, responded to the Notice by letter dated May 18, 2017 (Response). The company did not contest the allegations of violation, paid the proposed civil penalty of $145,000, and agreed to complete the proposed compliance actions. In accordance with 49 C.F.R. § 190.208(a)(1), such payment authorizes the Associate Administrator to make 1 OkTex is owned by ONEOK Partners, LP. See OkTex Pipeline Company, LLC, website, available at http://okt.oneokpartners.com/About (last accessed August 9, 2017). However, as of June 30, 2017, ONEOK Partners, LP, was acquired by ONEOK, Inc. See ONEOK, Inc. website, available at http://ir.oneok.com/news-and- events/press-releases/2017/06-30-2017-211557242 (last accessed August 9, 2017). 2 See OkTex Pipeline, LLC, website, available at http://okt.oneokpartners.com/About and http://okt.oneokpartners.com/~/media/NGP/OKT/SystemMap/OKTSystemMap.ashx (last accessed August 9, 2017).#

420171006_Final Order_11172017_text.pdf, page 3CPF No. 4-2017-1006 Page 2 findings of violation and to issue this final order. Respondent did not request a hearing and therefore has waived its right to one. FINDINGS OF VIOLATION In its Response, Respondent did not contest the allegations in the Notice that it violated 49 C.F.R. Part 192, as follows: Item 6: The Notice alleged that Respondent violated 49 C.F.R. § 192.937(b), which states: § 192.937 What is a continual process of evaluation and assessment to maintain a pipeline's integrity? (a) General. After completing the baseline integrity assessment of a covered segment, an operator must continue to assess the line pipe of that segment at the intervals specified in § 192.939 and periodically evaluate the integrity of each covered pipeline segment as provided in paragraph (b) of this section . . . . (b) Evaluation. An operator must conduct a periodic evaluation as frequently as needed to assure the integrity of each covered segment. The periodic evaluation must be based on a data integration and risk assessment of the entire pipeline as specified in § 192.917. For plastic transmission pipelines, the periodic evaluation is based on the threat analysis specified in [§] 192.917(d). For all other transmission pipelines, the evaluation must consider the past and present integrity assessment results, data integration and risk assessment information (§ 192.917), and decisions about remediation (§ 192.933) and additional preventive and mitigative actions (§ 192.935). An operator must use the results from this evaluation to identify the threats specific to each covered segment and the risk represented by these threats. The Notice alleged that Respondent violated 49 C.F.R. § 192.937(b) by failing to perform a periodic evaluation on its Norteno 1, Norteno 4, and Norteno 5 pipelines as frequently as needed to assure the integrity of each covered segment. OkTex performed baseline assessments of the three lines on July 19, November 6, and November 5, 2007, respectively. However, OkTex was unable to provide any documentation demonstrating that the company subsequently performed periodic evaluations of the three lines, as required under § 192.937(b). Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 192.937(b) by failing to perform periodic evaluations on three of its pipelines. Item 7: The Notice alleged that Respondent violated 49 C.F.R. § 192.939(a), which states: § 192.939 What are the required reassessment intervals? An operator must comply with the following requirements in#

420171006_Final Order_11172017_text.pdf, page 4CPF No. 4-2017-1006 Page 3 establishing the reassessment interval for the operator's covered pipeline segments. (a) Pipelines operating at or above 30% SMYS. An operator must establish a reassessment interval for each covered segment operating at or above 30% SMYS in accordance with the requirements of this section. The maximum reassessment interval by an allowable reassessment method is seven years. . . . The Notice alleged that Respondent violated 49 C.F.R. § 192.939(a) by failing to reassess a covered pipeline segment operating above 30 percent SMYS within the required reassessment interval of seven years. Specifically, the Notice alleged that OkTex failed to reassess the Norteno 1 pipeline, a covered pipeline system in OkTex’s El Paso Unit operating above 30 percent SMYS. The Norteno 1 pipeline had previously been assessed on July 19, 2007, but not reassessed again until November 4, 2015. The reassessment should have been performed by July 2014. ONEOK’s NGP IMP procedures require that, after completion of the baseline assessment on a covered segment, OkTex must continually monitor and reassess covered segments within seven years. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 192.939(a) by failing to reassess a pipeline segment within the required reassessment interval. Item 8: The Notice alleged that Respondent violated 49 C.F.R. § 192.939(b), which states: § 192.939 What are the required reassessment intervals? An operator must comply with the following requirements in establishing the reassessment interval for the operator's covered pipeline segments. (a) . . . . (b) Pipelines Operating Below 30% SMYS. An operator must establish a reassessment interval for each covered segment operating below 30% SMYS in accordance with the requirements of this section. The maximum reassessment interval by an allowable reassessment method is seven years . . . . The Notice alleged that Respondent violated 49 C.F.R. § 192.939(b) by failing to reassess two covered pipeline segments operating below 30 percent SMYS within the required reassessment interval of seven years. Specifically, the Notice alleged that OkTex failed to reassess the Norteno 4 and Norteno 5 pipelines, covered pipeline systems in OkTex’s El Paso Unit operating below 30 percent SMYS. The two pipelines had previously been assessed on November 6 and November 5, 2007, respectively. The reassessments of both the Norteno 4 and Norteno 5 pipelines should have been performed by November 2014. Neither pipeline had been reassessed as of the date of PHMSA’s 2016 inspection. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 192.939(b) by failing to reassess two#

420171006_Final Order_11172017_text.pdf, page 5CPF No. 4-2017-1006 Page 4 pipeline segments within the required reassessment interval. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations.3 In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and gravity of the violation, including adverse impact on the environment; the degree of Respondent’s culpability; the history of Respondent’s prior offenses; and any effect that the penalty may have on its ability to continue doing business; and the good faith of Respondent in attempting to comply with the pipeline safety regulations. In addition, I may consider the economic benefit gained from the violation without any reduction because of subsequent damages, and such other matters as justice may require. The Notice proposed a total civil penalty of $145,000 for the violations cited above. Item 6: The Notice proposed a civil penalty of $53,500 for Respondent’s violation of 49 C.F.R. § 192.937(b), for failing to perform periodic evaluations on three of its pipelines. OkTex neither contested the allegation nor presented any evidence or argument justifying a reduction in the proposed penalty. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $53,500 for violation of 49 C.F.R. § 192.937(b). Item 7: The Notice proposed a civil penalty of $43,200 for Respondent’s violation of 49 C.F.R. § 192.939(a), for failing to reassess a pipeline segment within the required reassessment interval. OkTex neither contested the allegation nor presented any evidence or argument justifying a reduction in the proposed penalty. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $43,200 for violation of 49 C.F.R. § 192.939(a). Item 8: The Notice proposed a civil penalty of $48,300 for Respondent’s violation of 49 C.F.R. § 192.939(b), for failing to reassess two pipeline segments within the required reassessment interval. OkTex neither contested the allegation nor presented any evidence or argument justifying a reduction in the proposed penalty. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $48,300 for violation of 49 C.F.R. § 192.939(b). In summary, having reviewed the record and considered the assessment criteria for each of the Items cited above, I assess Respondent a total civil penalty of $145,000. Payment of this penalty was received by PHMSA on May 19, 2017. 3 These amounts are adjusted annually for inflation. See, e.g., Pipeline Safety: Inflation Adjustment of Maximum Civil Penalties, 82 Fed. Reg. 19325 (April 27, 2017).#

420171006_Final Order_11172017_text.pdf, page 6CPF No. 4-2017-1006 Page 5 COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 6 and 8 in the Notice for violations of 49 C.F.R. §§ 192.937(b) and 192.939(b), respectively. Under 49 U.S.C. § 60118(a), each person who engages in the transportation of gas or who owns or operates a pipeline facility is required to comply with the applicable safety standards established under chapter 601. Pursuant to the authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the following actions to ensure compliance with the pipeline safety regulations applicable to its operations: 1. With respect to the violation of § 192.937(b) (Item 6), Respondent must conduct evaluations and assessments of its facilities, as required by 49 C.F.R. § 192.937, within 90 days of receipt of this Order. Respondent must provide a copy of the evaluation results to PHMSA. 2. With respect to the violation of § 192.939(b) (Item 8), Respondent must conduct reassessments of its facilities as required by 49 C.F.R. § 192.939, within 90 days of receipt of this Order. Respondent must provide a copy of the reassessment results to PHMSA. It is requested that OkTex maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to the 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. The Director may grant an extension of time to comply with any of the required items upon a written request timely submitted by the Respondent and demonstrating good cause for an extension. Failure to comply with this Order may result in the administrative assessment of civil penalties not to exceed $200,000, as adjusted for inflation (49 C.F.R. § 190.223), for each violation for each day the violation continues or in referral to the Attorney General for appropriate relief in a district court of the United States. WARNING ITEMS With respect to Items 1, 2, 3, 4, and 5, the Notice alleged probable violations of Part 192 but did not propose a civil penalty or compliance order for these items. Therefore, these are considered to be warning items. The warnings were for:#

420171006_Final Order_11172017_text.pdf, page 7CPF No. 4-2017-1006 Page 6 49 C.F.R. § 192.605(a) (Item 1) ─ Respondent’s alleged failure to follow ONEOK procedures for documenting the annual review of OkTex’s Emergency Plan; 49 C.F.R. § 192.615(b)(2) (Item 2) ─ Respondent’s alleged failure to follow ONEOK procedures for documenting emergency response training; 49 C.F.R. § 192.709 (Item 3) ─ Respondent’s alleged failure to maintain records of a repair by accurately completing the Pipeline Inspection Program and Evaluation form in accordance with ONEOK procedures; 49 C.F.R. § 192.911(l) (Item 4) ─ Respondent’s alleged failure to have and follow a quality assurance process for its integrity management program (IMP) by conducting an annual IMP audit in accordance with ONEOK procedures; and 49 C.F.R. § 192.917(b) (Item 5) ─ Respondent’s alleged failure to demonstrate that data was gathered and evaluated to identify potential threats to a covered pipeline segment, in accordance with ASME B31.8S, Section 4. OkTex presented information in its Response showing that it is taking certain actions to address the cited items. If OPS finds a violation of any of these items in a subsequent inspection, Respondent may be subject to future enforcement action. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. November 17, 2017 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#

420171006_NOPV PCP PCO_04102017_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED April 10, 2017 Wesley Dunbar Vice President – NGP Operations OkTex Pipeline Company, LLC 100 West Fifth Street Tulsa, OK 74103 CPF 4-2017-1006 Dear Mr. Dunbar: From May 2016 to October 2016, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code inspected your OkTex Pipeline Company, LLC (OkTex) pipeline and facilities in El Paso and Oklahoma. As a result of the inspection, it is alleged 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. §192.605 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline, a manual of written procedures for conducting operations and maintenance activities and for#

420171006_NOPV PCP PCO_04102017_text.pdf, page 2emergency response. For transmission lines, the manual must also include procedures for handling abnormal operations. This manual must be reviewed and updated by the operator at intervals not exceeding 15 months, but at least once each calendar year. This manual must be prepared before operations of a pipeline system commence. Appropriate parts of the manual must be kept at locations where operations and maintenance activities are conducted. (e) Surveillance, emergency response, and accident investigation. The procedures required by §§192.613(a), 192.615, and 192.617 must be included in the manual required by paragraph (a) of this section. OkTex Pipeline failed to follow ONEOK procedures for documenting the annual review of the Emergency Plan as listed in the ONEOK Partners O&M plan. ONEOK Partners O&M plan; OKSops3.080.403 (date issued: 12/31/2009; date revised: 9/13/2013 Rev14); Section 6-Recordkeeping requirements, states that Form 80.403A should be used to document the review of the Emergency Plan. No record was available to document the annual review as required. 2. §192.615 Emergency plans. (a) Each operator shall establish written procedures to minimize the hazard resulting from a gas pipeline emergency. At a minimum, the procedures must provide for the following: (b) Each operator shall: (2) Train the appropriate operating personnel to assure that they are knowledgeable of the emergency procedures and verify that the training is effective. OkTex Pipeline failed to follow ONEOK Partners procedures in documenting emergency response training in accordance with the ONEOK Partners O&M plan. ONEOK Partners O&M plan; OKSops3.080.403 – Emergency Plan (date issued: 12/31/2009; date revised: 9/13/2013 Rev14); Section 6-Recordkeeping requirements. Section 6.2 states that Form 80.403B- Simulated Emergency Training should be used to document dates, attendance and subject matter of the training. According to ONEOK representatives, OkTex Pipeline personnel also operate other assets owned by ONEOK Partners and attend emergency response training that is conducted on those assets. Mock Drills were conducted in Enid, Oklahoma for the El Reno teams in 2014 and 2015. This training was not documented on the form as referenced in the ONEOK Partners procedure that has an area to list team members who are present. There were references to teams being present but no evidence of what employees attended these drills (sign-in sheets, list of attendees, etc). 2#

420171006_NOPV PCP PCO_04102017_text.pdf, page 33. §192.709 Transmission lines: Recordkeeping. Each operator shall maintain the following records for transmission lines for the periods specified: (a) The date, location, and description of each repair made to pipe (including pipe-to- pipe connections) must be retained for as long as the pipe remains in service. OkTex failed to accurately complete the Pipeline Inspection Program and Evaluation (PIPE) form as outlined in the ONEOK Procedure OKSops 3.040.102. On January 15, 2016, a leak was found on the Norteno 4 pipeline system (251 LaMesa, El Paso, TX). OkTex failed to complete Section 3-External Corrosion Details on the PIPE form when the cause of the leak was listed as external corrosion in Section 6 of the form. The form indicated that neither an external Corrosion Inspection was performed, nor was there any sign of external corrosion. OkTex indicated the cause was determined by visual examination. 4. §192.911 What are the elements of an integrity management program? An operator's initial integrity management program begins with a framework (see §192.907) and evolves into a more detailed and comprehensive integrity management program, as information is gained and incorporated into the program. An operator must make continual improvements to its program. The initial program framework and subsequent program must, at minimum, contain the following elements. (When indicated, refer to ASME/ANSI B31.8S (incorporated by reference, see§192.7) for more detailed information on the listed element.) (l) A quality assurance process as outlined in ASME/ANSI B31.8S, section 12. OkTex Pipeline failed to conduct an Annual IMP Audit as required by the ONEOK NGP IMP written integrity management program. ONEOK’s written IMP, Chapter 14; Section 14.3.3 states that “Each year, Pipeline Integrity members (IMPC) will conduct an Annual IMP Audit that will review and verify HCAs, risk assessments, compliance and other various documents necessary to maintain compliance with the regulations. The audit will be led by the Supervisor Prevention and Mitigation and will be completed in the first quarter of every year. The computer based maintenance management system will be used to schedule this review. The review forms are found at the end of this chapter.” 3#

420171006_NOPV PCP PCO_04102017_text.pdf, page 45. §192.917 How does an operator identify potential threats to pipeline integrity and use the threat identification in its integrity program? (b) Data gathering and integration. To identify and evaluate the potential threats to a covered pipeline segment, an operator must gather and integrate existing data and information on the entire pipeline that could be relevant to the covered segment. In performing this data gathering and integration, an operator must follow the requirements in ASME/ANSI B31.8S, section 4. At a minimum, an operator must gather and evaluate the set of data specified in Appendix A to ASME/ANSI B31.8S, and consider both on the covered segment and similar non-covered segments, past incident history, corrosion control records, continuing surveillance records, patrolling records, maintenance history, internal inspection records and all other conditions specific to each pipeline. OkTex failed to provide documentation to demonstrate that data was gathered and evaluated as specified in ASME B31.8S, section 4 for the Norteno 1 pipeline system. Records show that Norteno 1 was reassessed by hydro testing the segment on November 4, 2015. During the records inspection, documentation of the data gathering process was requested and the operator provided records on the hydro-test and a “NGL Integrity Management Program 6.01: Data Integration form”. This form appeared to be for a liquid system and the information on the form was inaccurate and was not data from the Norteno 1 pipeline segment. 6. §192.937 What is a continual process of evaluation and assessment to maintain a pipeline’s integrity? (b) Evaluation. An operator must conduct a periodic evaluation as frequently as needed to assure the integrity of each covered segment. The periodic evaluation must be based on a data integration and risk assessment of the entire pipeline as specified in §192.917. For plastic transmission pipelines, the periodic evaluation is based on the threat analysis specified in §192.917(d). For all other transmission pipelines, the evaluation must consider the past and present integrity assessment results, data integration and risk assessment information (§192.917), and decisions about remediation (§192.933) and additional preventive and mitigative actions (§192.935). An operator must use the results from this evaluation to identify the threats specific to each covered segment and the risk represented by these threats. OkTex Pipeline failed to perform a periodic evaluation on the Norteno 1, Norteno 4 and the Norteno 5 to assure pipeline integrity. OkTex performed a baseline assessment of Norteno 1 on July 19, 2007, Norteno 4 on November 6, 2007, and Norteno 5 on November 5, 2007. During the inspection, OkTex was not able to provide documentation to demonstrate that 4#

420171006_NOPV PCP PCO_04102017_text.pdf, page 5the company has ever performed a periodic evaluation as required by §192.937 on the covered segments as required. 7. §192.939 What are the required reassessment intervals? (a) Pipelines operating at or above 30% SMYS. An operator must establish a reassessment interval for each covered segment operating at or above 30% SMYS in accordance with the requirements of this section. The maximum reassessment interval by an allowable reassessment method is seven years. If an operator establishes a reassessment interval that is greater than seven years, the operator must, within the seven-year period, conduct a confirmatory direct assessment on the covered segment, and then conduct the follow-up reassessment at the interval the operator has established. A reassessment carried out using confirmatory direct assessment must be done in accordance with §192.931. The table that follows this section sets forth the maximum allowed reassessment intervals. OkTex Pipeline failed to reassess a pipeline system operating above 30% SMYS in the El Paso Unit within the required reassessment interval of seven years. The Norteno 1 was previously assessed on July 19, 2007 via pressure test. The reassessment of Norteno 1 did not occur until November 4, 2015. Norteno 1 operates above 30% SMYS and this reassessment should have been performed in July of 2014. ONEOK NGP IMP procedures state that after completing the baseline assessment of a covered segment, the segment is continually monitored and reassessed within seven years of the initial assessment. This system has not had a reassessment within the required reassessment interval of seven years. 8. §192.939 What are the required reassessment intervals? (b) Pipelines Operating Below 30% SMYS. An operator must establish a reassessment interval for each covered segment operating below 30% SMYS in accordance with the requirements of this section. The maximum reassessment interval by an allowable reassessment method is seven years. An operator must establish reassessment by at least one of the following— (1) Reassessment by pressure test, internal inspection or other equivalent technology following the requirements in paragraph (a)(1) of this section except that the stress level referenced in paragraph (a)(1)(ii) of this section would be adjusted to reflect the lower operating stress level. If an established interval is more than seven years, the operator must conduct by the seventh year of the interval either a confirmatory direct assessment in accordance with §192.931, or a low stress reassessment in accordance with §192.941. OkTex Pipeline failed to reassess two pipeline systems operating below 30% SMYS in the El Paso Unit within the required reassessment interval of seven years. The Norteno 4 and Norteno 5 pipelines were previously assessed on November 6, 2007 and November 5, 5#

420171006_NOPV PCP PCO_04102017_text.pdf, page 62007, respectively. Both pipelines operate below 30% SMYS and the reassessment of these two lines should have been performed by November 2014. ONEOK NGP IMP procedures state that after completing the baseline assessment of a covered segment, the segment is continually monitored and reassessed within seven years of the initial assessment. These systems have not had a reassessment within the required reassessment interval of seven years. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $205,638 per violation per day the violation persists up to a maximum of $2,056,380 for a related series of violations. For violations occurring between January 4, 2012 to August 1, 2016, the maximum penalty may not exceed $200.000 per violation per day, with a maximum penalty not to exceed $2,000,000 for a related series of violations. For violations occurring prior to January 4, 2012, the maximum penalty may not exceed $100,000 per violation per day, with a maximum penalty not to exceed $1,000,000 for 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 $145,000 as follows: Item number PENALTY Item 6 $53,500 Item 7 $43,200 Item 8 $48,300 Warning Items With respect to items 1, 2, 3, 4 and 5, PHMSA has reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment proceedings at this time. We advise you to promptly correct these item(s). Failure to do so may result in additional enforcement action. Proposed Compliance Order With respect to items 6 and 8, pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to OkTex. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. All material you submit in response to this enforcement action may be 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 6#

420171006_NOPV PCP PCO_04102017_text.pdf, page 7explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. In your correspondence on this matter, please refer to CPF 4-2017-1006 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: Response Options for Pipeline Operators in Compliance Proceedings 7#

420171006_NOPV PCP PCO_04102017_text.pdf, page 8PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to OkTex a Compliance Order incorporating the following remedial requirements to ensure the compliance of OkTex with the pipeline safety regulations: 1. 2. 3. 4. In regard to Item Number 6 of the Notice pertaining to the failure to conduct periodic evaluation and assessment to assure the integrity of covered segments, OkTex must conduct evaluations and assessments of their facility as required by §192.937. In regard to Item Number 8 of the Notice pertaining to the failure to conduct the reassessments to assure the integrity of covered segments, OkTex must conduct the reassessments as required by §192.939. Pertaining to items above of the Proposed Compliance Order, OkTex must complete the required reassessments and evaluations within 90 days of the date of the of the issuance of a Compliance Order and provide a copy of the results to PHMSA. It is requested (not mandated) that OkTex 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#

420171006_Closure Letter_03232018.pdf, page 1Official PDFof Transportation U.S. Department 8701 S. Gessner, Suite 630 Houston, TX 77074 Pipeline and Hazardous Materials Safety Administration CERTIFIED MAIL - RETURN RECEIPT REQUESTED March 23, 2018 Wesley Dunbar Vice President - NGP Operations OkTex Pipeline Company, LLC 100 West Fifth Street Tulsa, OK 74103 CPF 4-2017-1006 Dear Mr. Dunbar: On November 17, 2017, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to OkTex Pipeline Company, LLC., a Final Order in the above-referenced case. This Final Order included a Compliance Order and Civil Penalty assessment. Based on our review of the documentation provided and confirmation of payment of the civil penalty, it has been determined that you have complied with the terms of this Order. OkTex submitted documentation addressed in the Items in the Final Order on February 14, 2018 and March 16, 2018. My staff reviewed the documents, and it appears that the required assessments have been completed. This letter is to inform you no further action is necessary and this case is now closed. Thank you for your cooperation. Sincerely, Mary ly. McDaniel, P. E. Director, Southwest Region Pipeline and Hazardous Materials Safety Administration#