{"operation":"document","citation":"CPF 520041011","title":"WHITING PETROLEUM CORP — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2004-03-17","effective_on":null,"summary":"CLOSED notice of probable violation citing 191.17(a), 192.465(a), 192.469, 192.481, 192.603(b), 192.731(a), 192.739(d), 192.743(c), 192.745.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-520041011.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-520041011.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-520041011","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/520041011","body":"Notice of Probable Violation involving WHITING PETROLEUM CORP. PHMSA's enforcement data identifies the cited regulations as 191.17(a),  192.465(a),  192.469,  192.481,  192.603(b),  192.731(a),  192.739(d),  192.743(c),  192.745. The case was opened on 2004-03-17 and is reported as closed as of 2009-07-30. Proposed civil penalty: $35,000. Assessed civil penalty: $32,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n520041011_FinalOrder_07162009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520041011/520041011_FinalOrder_07162009.pdf\n\n520041011_FinalOrder_07162009_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520041011/520041011_FinalOrder_07162009_text.pdf\n\n520041011_FinalOrder_07162009_text.pdf\n\nMr. William K. Gayden 07/16/2009\nPresident, Chief Executive Officer, & Chairman\nMerit Energy Company\n13727 Noel Road\nSuite 500, Tower 2\nDallas, TX 75240\nRe: CPF No. 5-2004-1011\nDear Mr. Gayden:\nEnclosed is the Final Order issued in the above-referenced case. It makes findings of violation,\nassesses a civil penalty of $32,000, and finds that Merit Energy has satisfactorily completed all\nof the corrective actions proposed in the Notice of Probable Violation. The penalty payment\nterms are set forth in the Final Order. This enforcement action closes automatically upon\npayment. Your receipt of the Final Order constitutes service of that document under 49 C.F.R.\n§ 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\nCc: Mr. Chris Hoidal, Director, Western Region, OPS\nMr. James J. Volker, President and Chief Executive Officer, Whiting Petroleum\nCorporation, 1700 Broadway, Suite 2300, Denver, Colorado, 80290-2300\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED [ 7005 0390 0005 6162 5586]\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, DC 20590\n____________________________________\nIn the Matter of )\nMerit Energy Company, ) CPF No. 5-2004-1011\n)\n)\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nFrom August 19 to August 20, 2003, pursuant to 49 U.S.C. § 60117, a representative of\nthe Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of\nPipeline Safety (OPS), inspected a three-mile residue gas1 pipeline, generally known as\nthe Bridger Lake Pipeline, then-operated by Merit Energy Company (Merit or\nRespondent) in the State of Utah.\n2\nAs a result of that inspection, the Director, Western Region, OPS (Director), issued to\nMerit, by letter dated March 17, 2004, a Notice of Probable Violation, Proposed Civil\nPenalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R.\n§ 190.207, the Notice proposed finding that Merit violated Parts 191 and 192 of the\npipeline safety regulations, assessing a total civil penalty of $35,000, and ordering the\ncompany to take certain measures to correct the alleged violations.\nAfter receiving an extension of time, Merit responded to the Notice by letter dated June\n8, 2004 (Response). The company disputed some of the allegations of violation and\nrequested that the civil penalties be “held in abeyance.”3 Respondent did not request a\nhearing and therefore has waived its right to one.\nFINDINGS OF VIOLATION\nItem 1 of the Notice alleged that Merit violated 49 C.F.R. § 191.17(a), which states:\n1 “Residue gas” is defined as the natural gas “remaining after processing in a separator or other plant which\nremoves liquid hydrocarbons contained in the gas when produced.” MANUAL OF OIL AND GAS TERMS, 924\n(10th ed. 1997).\n2 Whiting Petroleum Corporation currently owns and operates the Bridger Lake Pipeline that is the subject\nof this Final Order.\n3 Response at 2.\n\n\n\n2\n§ 191.17 Transmission and gathering systems; Annual report.\n(a) Except as provided in paragraph (b) of this section, each\noperator of a transmission or a gathering pipeline system shall submit\nan annual report for that system on Department of Transportation\nForm RSPA 7100.2-1. This report must be submitted each year, not\nlater than March 15, for the preceding calendar year.\nThe Notice alleged that Merit violated 49 C.F.R. § 191.17(a) by failing to timely submit\nannual reports on the Bridger Lake Pipeline for the 2001, 2002, and 2003 calendar years.\nMerit did not contest these allegations but stated in its Response that its annual reports for\nthose years had all been filed “as of May 2004.” Accordingly, upon consideration of all\nof the evidence, I find that Merit violated § 191.17(a) by failing to submit its 2001, 2002,\nand 2003 annual reports on or before March 15, 2002, March 15, 2003, and March 15,\n2004, respectively.\nItem 2 of the Notice alleged that Merit violated 49 C.F.R. § 192.469, which states:\n§ 192.469 External corrosion control: Test stations.\nEach pipeline under cathodic protection required by this\nsubpart must have sufficient test stations or other contact points for\nelectrical measurement to determine the adequacy of cathodic\nprotection.\nThe Notice alleged that Merit violated 49 C.F.R. § 192.469 by failing to provide\nsufficient test stations or other contact points for electrical measurement to determine the\nadequacy of the Bridger Lake Pipeline’s cathodic protection. Specifically, the Notice\nstated that the line only had two cathodic protection test stations at the time of the OPS\ninspection and that this was not a sufficient number to comply with the regulation. Merit\ndid not contest this allegation. Therefore, upon consideration of all of the evidence, I find\nthat Respondent violated 49 C.F.R. § 192.469 by failing to have sufficient test stations or\nother contacts points for electrical measurement to determine the adequacy of the Bridger\nLake Pipeline’s cathodic protection.\nItem 3 of the Notice alleged that Merit violated 49 C.F.R. § 192.603(b), which states, in\nrelevant part:\n§ 192.603 General provisions.\n(a) . . .\n(b) Each operator shall keep records necessary to\nadminister the procedures established under § 192.605.\nThe Notice alleged that Respondent violated § 192.603(b) by failing to keep records\nnecessary to administer the operations, maintenance, and emergencies procedures it had\nestablished under 49 C.F.R. § 192.605. Specifically, the Notice alleged that Merit failed\nto keep records to demonstrate adequate compliance with five different regulations and\n\n\n\n3\nthat two of those instances of noncompliance were serious enough to warrant findings of\nviolation and civil penalties.\nItem 3(b) alleged that Respondent violated § 192.603(a) by failing to keep records of the\ninspections and electrical tests required under 49 C.F.R. § 192.467(d) to assure the\nadequacy of the electrical isolation on the Bridger Lake Pipeline. Specifically, it alleged\nthat Merit failed to keep any records of such tests for the 2001, 2002, and 2003 calendar\nyears. Merit argued in its Response “that it did not need to test” the Bridger Lake\nPipeline “for electrical isolation” during these years because Questar Corporation, the\noperator of a transmission pipeline4 that interconnects with the Bridger Lake Pipeline,\nhad conducted and kept records of the required electrical tests for these devices. Merit\nowned certain devices5 that provided insulation for the two pipelines and that Questar\nalso noted that it recently obtained and reviewed those test records for the 2001, 2002,\nand 2003 calendar years.\nI do not find Merit’s argument persuasive. When a pipeline operator relies upon the\noperator of an interconnected pipeline to conduct the electrical isolation tests required by\n§ 192.467(d), both operators are required to keep and review the records for such tests.\n6\nIndeed, Merit’s post-Notice decision to obtain and review Questar’s electrical isolation\ntesting records shows that it knew (or should have known) of that obligation. Regardless,\nRespondent does not dispute its status as the operator of the Bridger Lake Pipeline during\nthe 2001, 2002, and 2003 calendar years or that the electrical isolation requirements of\n§ 192.467 applied to that line throughout this period. Accordingly, upon consideration of\nall of the evidence, I find that Merit violated 49 C.F.R. § 192.603(b) by failing to keep\nrecords necessary to administer the procedures established under § 192.605, including the\ntesting required under § 192.467(d) to demonstrate the adequacy of electrical isolation on\nthe cathodically-protected Bridger Lake Pipeline for the 2001, 2002, and 2003 calendar\nyears.\nItem 3(d) alleged that Merit violated § 192.603(a) by failing to keep records of the\nperiodic reviews of the Bridger Lake Pipeline operations, maintenance and emergencies\nmanual (O&M Manual) that every operator is required to perform under 49 C.F.R.\n§ 192.695(a). Specifically, the Notice alleged that Merit failed to review and update its\nO&M Manual for the 2000, 2001, and 2002 calendar years. Respondent did not contest\nthe allegations for the 2000 and 2002 calendar years, but argued in its Response that it\nhad revised its O&M Manual in the 2001 calendar year, a copy of which was submitted\nfor the record. Accordingly, upon consideration of all of the evidence, I find that\nRespondent violated § 192.603(b) by failing to keep a record of the O&M Manual\nreviews that it was required to perform under 49 C.F.R. § 192.695(a) for the 2000 and\n4 The 2,500-mile Questar Pipeline is located in Utah, Wyoming, and Colorado.\nhttp://www.questarpipeline.com (accessed on December 1, 2008).\n5 These included the blow-down riser, Block Valve BR-2, and the insulating flange. Response at 1.\n6 See 49 C.F.R. § 192.3 (defining operator and pipeline for purposes of Part 192); 49 C.F.R. § 192.603\n(requiring “[e]ach operator” to “keep records”).\n\n\n\n4\n2002 calendar years, but that it made and kept a record of the required O&M Manual\nreview for the 2001 calendar year.\nItem 4 of the Notice alleged that Merit violated 49 C.F.R. §§ 192.731(a), 192.739, and\n192.743(a)-(c), which state, in relevant part:\n§ 192.731 Compressor stations: Inspection and testing of relief\ndevices.\n(a) Except for rupture discs, each pressure relieving device\nin a compressor station must be inspected and tested in accordance\nwith §§ 192.739 and 192.743, and must be operated periodically to\ndetermine that it opens at the correct set pressure. . . .\n§ 192.739 Pressure limiting and regulating stations: Inspection\nand testing.\nEach pressure limiting station, relief device (except rupture\ndiscs), and pressure regulating station and its equipment must be\nsubjected at intervals not exceeding 15 months, but at least once\neach calendar year, to inspections and tests to determine that it is--\n(a) In good mechanical condition;\n(b) Adequate from the standpoint of capacity and reliability\nof operation for the service in which it is employed;\n(c) Set to function at the correct pressure; and\n(d) Properly installed and protected from dirt, liquids, or\nother conditions that might prevent proper operation. . . .\n§ 192.743 Pressure limiting and regulating stations: Testing of\nrelief devices.\n(a) If feasible, pressure relief devices (except rupture discs)\nmust be tested in place, at intervals not exceeding 15 months, but\nat least once each calendar year, to determine that they have\nenough capacity to limit the pressure on the facilities to which they\nare connected to the desired maximum pressure.\n(b) If a test is not feasible, review and calculation of the\nrequired capacity of the relieving device at each station must be\nmade at intervals not exceeding 15 months, but at least once each\ncalendar year, and these required capacities compared with the\nrated or experimentally determined relieving capacity of the device\nfor the operating conditions under which it works. After the initial\ncalculations, subsequent calculations are not required if the review\ndocuments that parameters have not changed in a manner which\nwould cause the capacity to be less than required.\n(c) If the relieving device is of insufficient capacity, a new\nor additional device must be installed to provide the additional\ncapacity required.\n\n\n\n5\nThe Notice alleged that Merit violated 49 C.F.R. §§ 192.731(a) and 192.739 by failing to\ninspect and test each pressure relieving device in a compressor station at intervals not\nexceeding 15 months, but at least once each calendar year. Specifically, it alleged that\nMerit failed to inspect and test the compressor station pressure relief valve on the Bridger\nLake Pipeline during the 2000, 2001, and 2002 calendar years.\nThe Notice also alleged that Merit violated 49 C.F.R. §§ 192.731(a) and 192.743(a)-(d)\nby failing to inspect and test in place (or, in the alternative, to review and calculate) the\ncompressor pressure relief valve to determine whether it had enough capacity to limit the\npressure on the facilities to which it was connected to the desired maximum pressure. In\nparticular, the Notice alleged that Merit had not tested (or, in the alternative, reviewed\nand calculated) the compressor pressure relief valve on the Bridger Lake Pipeline during\nthe 2000, 2001, and 2002 calendar years. Merit did not contest these allegations.\nAccordingly, upon consideration of all of the evidence, I find that Merit violated 49\nC.F.R. §§ 192.731(a), 192.739, and 192.743(a)-(c) by failing to inspect and test the\npressure relief valve at the Bridger Lake Pipeline compressor station for the 2000, 2001,\nand 2002 calendar years.\nThese findings of violation will be considered prior offenses in any subsequent\nenforcement action taken against Respondent.\nASSESSMENT OF PENALTY\n49 U.S.C. § 60122 and 49 C.F.R. § 190.225 require that, in determining the amount of a\ncivil penalty, I consider the following criteria: the nature, circumstances, and gravity of\nthe violation, including adverse impact on the environment; the degree of Respondent’s\nculpability; the history of Respondent’s prior offenses; the Respondent’s ability to pay\nthe penalty and any effect that the penalty may have on its ability to continue doing\nbusiness; and the good faith of Respondent in attempting to comply with the pipeline\nsafety regulations. In addition, I may consider the economic benefit gained from the\nviolation without any reduction because of subsequent damages, and such other matters\nas justice may require.\nThe Notice proposed a total civil penalty of $35,000 for the four Notice Items. Merit\nargued in its Response that “all civil penalties should be held in abeyance.” Each of the\nfour proposed penalties and Respondent’s arguments in opposition thereto are discussed\nindividually below.\nNotice Item 1 proposed a civil penalty of $14,000 for Respondent’s failure to submit\ntimely annual reports as required by 49 C.F.R. § 191.17(a) for the 2001, 2002, and 2003\ncalendar years. Merit did not contest that violation, but offered three reasons why a civil\npenalty should not be assessed. First, it noted that the three reports had eventually been\nfiled. Second, it argued that it had installed “[a] new compliance and filing system” and\nhired a private contractor to monitor the system, effectively ensuring the timely\nsubmission of future reports. Third, it contended that the Bridger Lake Pipeline had\nneither suffered any leaks nor required any repairs during the years in question.\n\n\n\n6\nI find each of these arguments unconvincing. With respect to the first two contentions,\nMerit’s belated compliance with 49 C.F.R. § 191.17(a) and its post-inspection actions to\navoid future violations are not grounds for reducing or eliminating a proposed penalty.\nPHMSA requires that gas pipeline operators submit timely annual reports to facilitate the\ngathering of information for the agency’s compliance activities and to ensure the\neffective regulation of the nation’s critical pipeline infrastructure. As for its third\nargument, the fact that the Bridger Lake Pipeline apparently operated without incident\nduring the years in question is commendable but not controlling. The goal of the pipeline\nsafety regulations is to avoid failures and other adverse events. Thus, the mere fact that a\npipeline operator has not experienced any recent incidents is not a persuasive reason for\nreducing a civil penalty.\nIt should also be noted, as indicated in the OPS inspection report, that Merit received a\nwarning letter for committing the same violation of § 191.17(a) in June 2000.\n7\nAccordingly, upon consideration of the penalty assessment criteria and all of the\nevidence, I assess a civil penalty of $14,000 for Respondent’s failure to submit timely\nannual reports for the 2001, 2002, and 2003 calendar years.\nNotice Item 3(b) proposed a civil penalty of $7,000 for Merit’s violation of 49 C.F.R.\n§§ 192.603 and 192.467(d) in failing to make and keep electrical isolation testing records\nfor Bridger Lake Pipeline for the 2001, 2002, and 2003 calendar years. Respondent\nobjected to the assessment of this penalty for two reasons, namely, that it had recently\nobtained records for the years in question from Questar and that Merit had installed its\nown insulating flange near one of the block valves on the Bridger Lake Pipeline. I do not\nagree that such actions warrant the reduction or elimination of the proposed penalty.\nPHMSA requires that annual electrical isolation testing records be made and kept by\nevery operator to ensure the prompt detection of deterioration in that company’s cathodic\nprotection system and to verify the timely performance of such tests. Respondent’s\nconduct in this case frustrated both purposes. Accordingly, upon consideration of the\npenalty assessment criteria and all of the evidence, I assess a civil penalty of $7,000 for\nMerit’s failure to keep electrical isolation testing records for calendar years 2001, 2002,\nand 2003.\nNotice Item 3(d) proposed a civil penalty of $7,000 for Respondent’s violation of 49\nC.F.R. § 192.605(a) in failing to make and keep records of its periodic O&M Manual\nreviews for the 2000, 2001, and 2002 calendar years. Merit argued in its Response that a\ncivil penalty should not be assessed, citing evidence that it had reviewed its O&M\nManual in May 2004, after the OPS inspection, and that this review led to updated rules\nand procedures and new sections on operator compliance and emergency response to\nsafety-related conditions. Merit also stated that it had recently hired an outside contractor\nto assist with its future procedural manual reviews. Neither of these arguments—i.e.,\nMerit’s belated compliance with 49 C.F.R. § 192.605(a) or its post-inspection actions to\navoid future regulatory violations—justifies reducing or eliminating the proposed\npenalty. The fact nevertheless remains that Merit did revise its O&M Manual in 2001, an\n7 CPF No. 5-2000-1006 (issued June 16, 2000). At the time of the 2000 inspection, Merit had failed to\nsubmit an annual report for the Bridger Lake Pipeline in a timely manner.\n\n\n\n7\nact of compliance that warrants an appropriate reduction in the proposed penalty.\nAccordingly, based upon the penalty assessment criteria and all of the evidence, I assess a\nreduced civil penalty of $4,000 for Merit’s failure to make and keep records of its annual\nO&M Manual review for calendar years 2000 and 2002.\nNotice Item 4 proposed a penalty of $7,000 for Respondent’s violation of 49 C.F.R.\n§§ 192.731(a), 192.739, and 192.743(a)-(c) in failing to properly inspect and test the\npressure relief device in the Bridger Lake Pipeline compressor station for the 2000, 2001,\nand 2002 calendar years. Merit argued in its Response that a civil penalty should not be\nassessed, citing the fact that its monthly production logs for that three-year period showed\nthat the relief valve was functioning properly whenever the pipeline experienced an\n“upset condition” and that it had recently inspected the pressure relief valve in question.\nNeither of these arguments warrants a penalty reduction. PHMSA requires the routine\ntesting of pressure relief valves to ensure their safe and effective operation and\nRespondent has not produced any evidence or provided any reason that would justify its\nrepeated failure to do so. Accordingly, based upon the penalty assessment criteria and all\nof the evidence, I assess a civil penalty of $7,000 for Merit’s failure to properly inspect or\ntest the compressor station relief valve for calendar years 2000, 2001, and 2002.\nFor these reasons, I hereby assess Merit a total civil penalty of $32,000 for Notice Items\n1, 3(b), 3(d), and 4.\nPAYMENT OF PENALTY\nPayment of the civil penalty must be made within 20 days of service. Federal regulations\n(49 C.F.R. § 89.21(b)(3)) require this payment be made by wire transfer, through the\nFederal Reserve Communications System (Fedwire), to the account of the U.S. Treasury.\nDetailed instructions are contained in the enclosure. Questions concerning wire transfers\nshould be directed to: Financial Operations Division (AMZ-341), Federal Aviation\nAdministration, Mike Monroney Aeronautical Center, P.O. Box 25082, Oklahoma City,\nOK 73125; (405) 954-8893.\nFailure to pay the $32,000 civil penalty will result in accrual of interest at the current\nannual rate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. §\n89.23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per\nannum will be charged if payment is not made within 110 days of service. Furthermore,\nfailure to pay the civil penalty may result in referral of the matter to the Attorney General\nfor appropriate action in a United States District Court.\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Items 2 and 4 for violations by\nRespondent of 49 C.F.R. §§ 192.469, 192.731(a), 192.739, and 192.743(a)-(c). Under 49\nU.S.C. § 60118(a), each person who engages in the transportation of gas or who owns or\noperates a pipeline facility is required to comply with the applicable safety standards\n\n\n\n8\nestablished under chapter 601. The Director has indicated that Respondent has taken the\nfollowing actions specified in the proposed compliance order:\n With regard to 49 C.F.R. § 192.469 (Item 2), Respondent has installed\nsufficient cathodic protection stations on the Bridger Lake Pipeline; and\n With regard to 49 C.F.R. §§ 192.731(a), 192.739, and 192.743(a)-(c) (Item\n4), on March 25, 2004, Respondent has satisfactorily inspected the\npressure relief valve on the Bridger Lake Pipeline.\nAccordingly, since Respondent has achieved compliance with respect to these violations,\nit is unnecessary to include the proposed compliance terms in this Order.\nWARNING ITEMS\nWith respect to Items 3(a), 3(c), 3(e), and 3(f), the Notice alleged probable violations of\nPart 192, but did not propose a civil penalty or compliance order for these items.\nTherefore, these are considered to be warning items. The warnings were for:\n49 C.F.R. §§ 192.603(b) and 192.465(a) (Item 3a) — Merit allegedly did\nnot have a record for its 2001 cathodic protection survey of the Bridger\nLake Pipeline at the time of the OPS inspection.\n49 C.F.R. §§ 192.603(b) and 192.481 (Item 3c) — Merit allegedly did not\nhave a record of conducting an atmospheric corrosion control inspection\nof the Bridger Lake Pipeline from June 2000 to August 2003 at the time of\nthe OPS inspection.\n49 C.F.R. § 192.603(b) and 192.739(a)-(d) (Item 3(e)) — Merit allegedly\ndid not have a record for its 2000, 2001, and 2002 inspections of the low-\nand high-pressure shut-down switches for the compressor on the Bridger\nLake Pipeline at the time of the OPS inspection.\n49 C.F.R. § 192.603(b) and 192.745 (Item 3(f)) — Merit allegedly did not\nhave records for its 2000, 2001, and 2002 inspections of two of the\nemergency valves on the Bridger Lake Pipeline at the time of the OPS\ninspection.\nMerit presented information in its Response indicating that it had taken certain actions to\naddress these warning items. Having considered that information, I find that probable\nviolations of Part 192 occurred as of the date of the inspection. Merit is hereby advised\nto review and correct such conditions. In the event OPS finds a violation of any of these\nitems in a subsequent inspection, Merit may be subject to future enforcement action.\n\n\n\n9\nUnder 49 C.F.R. § 190.215, Respondent has a right to submit a Petition for\nReconsideration of this Final Order. The petition must be received within 20 days of\nRespondent’s receipt of this Final Order and must contain a brief statement of the\nissue(s). The terms of the order, including any required corrective action and amendment\nof procedures, shall remain in full force and effect unless the Associate Administrator,\nupon request, grants a stay. The terms and conditions of this Final Order shall be\neffective upon receipt.\n___________________________________ __________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":24872}