WINDSOR ENERGY GROUP, LLC — Notice of Probable Violation

party submissionOfficial PDF520085003_operator response to notice_04042008.pdf#

520085003_withdrawal of notice letter_04182008_text.pdf, page 1Official PDFo U. S. Department of Transportation Pipeline and Hazardous Materials Safety Adlrllhistration 12300 W Dakota Ave, Suite 110 Lakewood, CO 80228 CERTIFIED MAIL - RETURN RECEIPT RK UKSTKD April 18, 2008 Mr. Bill Liedtke Windsor Energy Group LLC 14313 North May Avenue, Suite 100 Oklahoma City, OK 73414-3414 Re: CPF 5-200S-5003 Dear Mr. Liedtke: On March 4, 2008 the Pipeline and Hazardous Materials Safety Administration (PHMSA} issued to Windsor Energy Group LLC a Notice of Probable Violation, Proposed Civil Penalty and Proposed Compliance Order in the above-referenced case. Based on our review of the documentation you provided, it has been determined that the non-rural segment of your Bennett Creek gathering line is a gravity line and is therefore not under the jurisdiction of 49 CFR Part 195, However, if you should install pumps or other mechanisms that introduce pressure to this pipeline, that non-rural segment of the Bennett Creek gathering line will then be subject to all of the applicable sections of 49 CFR Part 195. Accordingly, this case has been withdrawn and no further action is contemplated with respect to the matters involved in this case. Thank you for your cooperation in this matter. Sincerely is Hoidal Director, Western Region Pipeline and Hazardous Materials Safety Administration cc: PHP-60 Compliance Registry PHP-500 G. Davis (¹118875)#

520085003_nopv pcp pco letter_03042008_text.pdf, page 1Official PDFU. S. Department of Transportation Pipelline and Hazardous Materidlls Safety Admirtish'dition 12300 W Dakota Ave, Suite 110 Lakewood, CO 80228 CERTIFIED MAIL - RETURN RECEIPT RE UKSTKD March 4, 2008 Mr. Bill Liedtke Windsor Energy Group LLC 14313 North May Avenue, Suite 100 Oklahoma City, OK 73414-3414 CPF 5-2008-5003 Dear Mr. Liedtke: On August 21 to 23, 2007, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected your Bennett Creek, non-rural gathering line near Clark, Wyoming. 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. 112 New pipe. Any new pipe installed in a pipeline system must comply with the following: (a) The pipe must be made of steel of the carbon, low alloy-high strength, or alloy type that is able to withstand the internal pressures and external loads and pressures anticipated for the pipehne.#

520085003_nopv pcp pco letter_03042008_text.pdf, page 2(b) The pipe must be made in accoi dance with a written pipe specification that sets forth the chemical requirements for the pipe steel and mechanical tests for the pipe to provide pipe suitable for the use intended. (c) Each length of pipe with a nominal outside diameter of 114. 3 mm (4'/& in) or more must be marked on the pipe or pipe coating with the specification to which it was made, the specified minimum yield strength or grade, and the pipe size. The marking must be applied in a manner that does not damage the pipe or pipe coating and must remain visib1le until the pipe is installed. Windsor used 4 1/2" diameter pipe that was not manufactured in accordance with an accepted or In. own standards for the construction of the Bennett Creek gathering line that is located in a non-rural area. Those sections were constructed in 2006. Pipe left over from construction was examined durmg this inspection and the markings on the pipe were documented by PHMSA. Those markings were: "CRESSMAN TUBULAR PO 46851 Prudential 4 1/2" 0. 188 Commercial E KPA 28600 @ SHAW YJ Z245. 21-02, A1 N H560 FM30C 05/06/14/D COATED IN CANADA MADE IN CANADA LOT 031412. " PHMSA researched those markings and determined that the pipe was manufactured in Canada by Prudential Pipe. PHMSA interviews with a Prudential representative revealed that this pipe was graded as "Commercial. " Prudential informed us that the pipe did not meet Canadian Standards Association (CSA) standards and therefore did not meet API or ASTM standards, Prudential stated that this pipe was "seconds" and was sold by a subsidiary company to be used in non-regulated applications. Additionally Prudential said that the pipe was coated with Yellow Jacket coating and the Shaw Coatings lot number %as 31412. Subsequently a representative from Shaw Coatings was contacted and he confirmed that the pipe had been coated by Shaw with Yellow Jacket and the grade of the pipe was "Commercial. " 2. $195. 202 Compliance with specifications or standards. Each pipehne system must be constructed in accordance with comprehensive written specifications or standards that are consistent with the requirements of this part. Windsor was unable to provide comprehensive written specifications or standards used for the 2006 construction of the non-rural portion of their Bennett Creek gathering line. Construction specifications that were provided by Windsor were for general weld inspection, general weld testing, and general weld selection. These specifications were created for Kinder Morgan facilities and were not specific to the Windsor facilities that were constructed. There were no specifications or standards for material inspections, welding of support or braces, pipe location, pipe bending, qualified welding procedures, protection of welding from the weather, repair of arc burns, repair or removal of weld defects, installation of pipe in a trench, coating inspection, coating repair, cover over the pipe, clearance between the pipe and underground structures, backfilling, and required construction records. 3, $195. 204 Inspection - General. Inspection must be provided to ensure the installation of pipe or pipeline systems in accordance with the requirements of this subpart. No person may be used to perform 2#

520085003_nopv pcp pco letter_03042008_text.pdf, page 3Windsor construction documentation indicates all welds had been nondestructively tested. There is, however, no evidence that there had been inspection of the welding process, welding repairs, excavation, coatings, pipe placement, or backfill during construction of the non-rural segment of their Bennett Creek gathering line. Additionally Windsor had no documentation showing that persons used for inspections, other than nondestructive testing (NDT) individuals, were trained and qualified in the particular phase of construction being inspected. 4. $195. 214 Welding procedures (a) Welding must be performed by a qualified welder in accoi dance with welding procedures qualified under Section 5 of API 1104 or Section IX of the ASMK Boiler and Pressure Vessel Code (ibr, see g 195. 3) . The quality of the test welds used to qualify the welding procedure shall be determined by destructive testing. Windsor was unable to provide welding procedures for the 2006 construction of the non- rural segment of their Bennett Creek gathering line. Windsor was only able to provide a procedure for the installation of repair sleeves for pipe greater than 12 '/4 inch nominal size and for the selection of a welding procedure for Kinder Morgan facilities. There was no welding procedure for 4 '/~ inch diameter nominal size pipe available for our inspector In addition, no weld qualification tests could be provided. 5 $195. 234 Welds: Nondestructive testing. (b) Any nondestructive testing of welds must be perfoi med- (1) In accordance with a written set of procedures for nondestructive testing; (c) Procedures for the proper interpretation of each weld inspection must be established to ensure the acceptability of the weld under $195. 228. Windsor could not provide evidence that the nondestructive testing of welds for the Bennett Creek non-rural segment had been performed in accordance with written procedures. Windsor's contractor said they used a standard for Weld Inspection and Testing. This particular standard (OkM/Construction Standard, No. OAM4061 C1066) requires that the nondestructive testing (NDT) technician qualify an approved NDT procedure at the ~ob site. Windsor was unable to provide evidence that there was an approved NDT procedure or that one had been qualified at the ~ob site. 6. $195. 266 Construction records. A complete record that shows the following must be maintained by the operator involved for the Hfe of each pipeline facility: (b) The amount, location, and cover of each size of pipe installed. (c) The location of each crossing of another pipeline. (d) The location of each buried utility crossing.#

520085003_nopv pcp pco letter_03042008_text.pdf, page 4Windsor has no records regarding the amount or the cover over the pipe, the location of each crossing of another pipeline, the location of each buried utility crossing, the location of each overhead crossing and the location of each corrosion test station. During our field inspection, there was evidence of overhead crossings and corrosion test stations. It also appeared this pipeline may cross the natural gas gathering line that generally parallels the Bennett Creek crude oil gathering line. None of these occurrences are reflected in Windsor construction records 7. $195. 310 Records. (a) A record must be made of each pressure test required by this subpart, and the record of the latest test must be retained as long as the facility tested is in use. (b) The record required by paragraph (a) of this section must include: (2) Test instrument calibration data; (9) Where elevation differences in the section under test exceed 100 feet (30 meters), a profile of the pipehne that shows the elevation and test sites over the entire length of the test section. (10) Temperature of the test medium or pipe during the test period Windsor pressure test records do not include either the test instrument calibration data or a profile of the entire test section A profile is required because there is more than a 100-feet of elevation difference within the test section. 8, $195. 401 General requirements. (c) Except as provided by $195. 5, no operator may operate any part of any of the foHowing pipehnes unless it was designed and constructed as requii ed by this part: (5) A low-stress pipehne on which construction was begun after August 10, 1994. Windsor Energy is operating the non-rural segment of their Bennett Creek gathering line without it havmg been constructed m accordance with comprehensive written specifications or standards that were consistent with the requirements of Part 195. Pro osed Civil Penalt 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 $94, 000 as follows: Item number PENALTY $94, 000#

520085003_nopv pcp pco letter_03042008_text.pdf, page 5Pro osed Com liance Order With respect to items 1, 2, 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 Windsor Energy Group LLC. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Res onse 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 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 5-2008-5003 and for each document you submit, please provide a copy in electronic format whenever possible. Smcerely, Chris Hoidal Director, Western Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings cc; PHP-60 Compliance Registry PHP-500 G. Davis (0118875)#

520085003_nopv pcp pco letter_03042008_text.pdf, page 6Pursuant to 49 United States Code $ 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Windsor Energy Group LLC a Compliance Order incorporating the following remedial requirements to ensure the comphance of Windsor Energy Group LLC (Windsor) with the pipeline safety regulations 1. In regard to Item Number 1 of the Notice pertaining to the use of pipe materials that were not manufactured in accordance with an accepted or known standard for the 2006 construction of that portion of the Bennett Creek gathering line that is non-rural. Windsor must replace all pipe material within that portion of the Bennett Creek gathering line that is non-rural Windsor must notify PHMSA 30 days prior to the replacement of the pipe material of that portion of the Bennett Creek gathering line that is non-rural. Windsor must submit, to the Western Region Director, all pipe material documentation that provides evidence that the new pipe materials have been manufactured in accordance with an accepted or known standard. 2, In regard to Item Number 2 of the Notice pertaining to Windsor's lack of comprehensive written specifications or standards used for the 2006 construction of that portion of their Bennett Creek gathering line that is non-rural ~ Windsor must develop comprehensive written specifications that will ensure that the replacement of pipe materials for that portion of their Bennett Creek gathering line that is non-rural will be in accordance with 49 CFR 195 Windsor must submit those comprehensive written specifications to the Director 3. In regard to Item Number 3 of the Notice pertaining to mspection that did not ensure that installation of that segment of the Bennett Creek gathering line that is non-rural was in accordance with the requirements of 49 CFR 195. Windsor must develop an inspection plan for the replacement of that segment of the Bennett Creek gathering line that is non-rural, The inspection plan must ensure that the replacement is in accordance with 49 CFR 195. Windsor must develop criteria for the person(s) performing the inspection of the replacement of that segment of the Bennett Creek gathering hne that is non-rural. These criteria must ensure that the person(s) has been trained and is qualified in the phase of construction to be inspected. Winsor must provide the inspection plan and the inspector criteria to the Director, 4 In regard to Item Number 4 of the Notice pertaining to the construction of that segment of the Bennett Creek gathering line that is non-rural that was performed without written and quahfied weldmg procedures Windsor must develop written welding procedures for the replacement of that segment of the Bennett Creek that is non-rural in accordance with 49 CFR 195. 6#

520085003_nopv pcp pco letter_03042008_text.pdf, page 7Windsor must qualify those welding procedures m accordance with 49 CFR 195. o Windsor must provide those welding procedures and their quahfications to the Director. 5. In regard to Item Number 5 of the Notice pertaining to the nondestructive testing procedure used for the construction of that segment of the Bennett Creek gathering line that is non- rural, Windsor must develop written nondestructive testing procedures that will insure the acceptability of the weld under $195. 228, Windsor must submit those written nondestructive testing procedures to the Director 6. In regard to Item Number 6 of the Notice pertaining to the incomplete construction records for the installation of that segment of the Bennett Creek gathering line that is non-rural Windsor must ensure that all records required by $195. 266 are maintained for the hfe of the pipeline. Specifically those records must include (1) The total number of girth welds and the number nondestructively tested, including the number rejected and the disposition of each rejected weld; (2) The amount, location, and cover of each size of pipe installed; (3) The location of each crossing of another pipeline; (4) The location of each buried utility crossing; (5) The location of each overhead crossing; and (6) The location of each valve and corrosion test station. Windsor must submit those construction records to the Director. 7 In regard to Item Number 7 of the Notice pertaining to incomplete pressure test records for that segment of the Bennett Creek gathering line that is non-rural. Windsor must ensure that the pressure test records for the replacement of that segment of the Bennett Creek gathering line that is none rural will include (1) The pressure recording charts; (2) Test instrument calibration data; (3) The name of the operator, the name of the person responsible for making the test, and the name of the test company used, if any; (4) The date and time of the test; (5) The minimum test pressure; (6) The test medium; (7) A description of the facility tested and the test apparatus; (8) An explanation of any pressure discontinuities, mcludmg test failures, that appear on the pressure recording charts; (9) Where elevation differences in the section under test exceed 100 feet (30 meters), a profile of the pipeline that shows the elevation and test sites over the entire length of the test section; and (10) Temperature of the test medium or pipe during the test period. Windsor must submit those pressure testing records to the Director 8, In regard to Item Number 8 of the Notice pertaining to Windsor's operation of the non-rural segment of the Bennett Creek gathering line without it having been constructed in accordance with 49 CFR 195. Windsor must cease operation of the non-rural segment of the Bennett Creek gathering line until the hne has been constructed in accordance with 49 CFR 195 Windsor must notify the Director when the non-rural segment is de-activated and when it is re-activated.#

520085003_nopv pcp pco letter_03042008_text.pdf, page 89. Winsor must submit the records for items 1, 2, 3, 4, 5, 6, and 7 within 30 days of the receipt of the Final Order or within 30 days of the completion of construction, which ever comes later. 10. Windsor shall maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Chris Hoidal, Director, Western Region, Pipeline and Hazardous Materials Safety Administration. Costs shall 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#