VENOCO, INC — Warning Letter

520077003w_warning letter_06052007_text.pdf, page 1Official PDFU. S Department of Transportation Pipeline and Hazardous Materials Safety Administration 12300 W Dakota Ave, Suite tt0 Lakewood, CO 80228 SENT TO COMPLIANt"E REG/$'Jgg Hardcopy Electromcal y ¹ of Copies / Date WARNING LETTER CERTIFIED MAIL - RETURN RECEIPT RE UESTED June 5, 2007 Mr, Keith Wenal Venoco Inc. 6267 Carpinteria Avenue Carpinteria, CA 93013 CPF 5-2007-7003W Dear Mr. Wenal: On April 18, 2007, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code, inspected your procedures and records for Venoco Inc. 's (Venoco) Integrity Management Program in Carpinteria, California. 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. 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: (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#

520077003w_warning letter_06052007_text.pdf, page 22. the high consequence areas. See Appendix C of this part for guidance on methods that can be used to evaluate a program's effectiveness. Venoco has not yet implemented their process for program evaluation. $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: (5) A continual process of assessment and evaluation to maintain a pipeline's integrity (see paragraph (j) of this section); (j) What is a continual process of evaluation and assessment to maintain a pipeline's integrity? (1) General. After completing the baseline integrity assessment, an operator must continue to assess the line pipe at specified intervals and periodically evaluate the integrity of each pipeline segment that could affect a high consequence area. (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). (3) Assessment intervals. An operator must establish intervals not to exceed five (5) years for continually assessing the line pipe's integrity. An operator must base the assessment intervals on the risk the line pipe poses to the high consequence area to determine the priority for assessing the pipeline segments. An operator must establish the assessment intervals based on the factors specified in paragraph (e) of this section, the analysis of the results from the last integrity assessment, and the information analysis required by paragraph (g) of this section. Venoco did not consider all of the risk factors listed in $195. 452(e) and (g) when establishing re-assessment intervals. 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. We have 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 correct the item(s)#

520077003w_warning letter_06052007_text.pdf, page 3identified in this letter. Failure to do so will result in Venoco Inc. being subject to additional enforcement action. No reply to this letter is required. If you choose to reply, in your correspondence please refer to CPF 5-2007-7003W. 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). Sincerely, W) C oi c Director, Western Region Pipeline and Hazardous Materials Safety Administration cc: PHP-60 Compliance Registry PHP-500 H. Monfared (¹118966) -3-#