PHILLIPS 66 PIPELINE LLC — Warning Letter

520085039w_warning letter_10152008_text.pdf, page 1Official PDFU. S Department of Transportahon Pipelllne md Hdzmdovs Mafertells Safety Admtrtilsfjrefion 12300 W Dakota Ave, Suite 110 Lakewood, CO 80228 WA~IXG KKTTKR October 15, 2008 Ms. Margaret A Yaege President ConocoPhilhps Pipehnes Inc 600 North Dairy Ashford Houston, TX 77079 CPF 5-2008-5039W Dear Ms. Yaege On May 19-23 and June 2-5, 2008, representatives of the Pipehne and Hazardous Materials Safety Administration (PHMSA) and the Washington Utihties and Transportation Commission (WUTC), pursuant to Chapter 601 of 49 United States Code, conducted an inspection of the ConocoPhilhps Pipe Lme Company's (CPPL) Integrity Management Program (IMP) in Ponca City, Oklahoma As a result of the inspection, it appears that you have committed probable violations of the Pipehne Safety Regulations, Title 49, Code of Federal Regulations The items inspected and the probable violations are fI What are the elements of an integrity management programs An integrity management program begins with the initial framework. An operator must continually change the program to reflect operating expe~ience, 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 ope~ato~ must include, at minimum, each of the following elements in its written integrity management program:#

520085039w_warning letter_10152008_text.pdf, page 2The CPPL evaluated one of their in-hne inspection (ILI) vendors using the quahfication requirements of API 1163 (ASNT-ILI-PQ-2005) The supervisory personnel who review and evaluate integrity assessment results were assessed, however, the CPPL needs to review the process in detail to ensure that all analysts grading ILI tool data meet the requirements specified in API 1163 and ANST ILI-PQ-2005 (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 wi itten integrity management pr ogram: (3) An analysis that integrates all available information about the integrity of the entire pipehne and the consequences of a failure (see par agraph (g) of this section); (g) What is an information analysis?' 1n periodicaHy evaluating the integrity of each pipeline segment (paragraph (j) of this section), an operator must analyze all available information about the integrity of the entire pipeline and the consequences of a failure. This information includes: (1) 1nformation critical to determining the potential for, and preventing, damage due to excavation, including current and planned damage prevention activities, and development or planned development along the pipehne segment; (2) Bata gathered through the integrity assessment required under this section; (3) Data gathered in conjunction with other inspections, tests, surveillance and patrols required by this Part, including, corrosion control monitoring and cathodic protection surveys; and (4) 1nformation about how a failure wouM affect the high consequence area, such as location of the wate~ intake. The CPPL needs to mtegrate and review the data from the previous ILI assessment tools to strengthen the CPPL integrity management performance and to measure the effectiveness of their damage prevention program, $195. 452 Pipehne integrity management in high consequence areas.#

520085039w_warning letter_10152008_text.pdf, page 3data, 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: (6) Identification of preventive and mitigative measures to protect the high consequence area (see paragraph (i) of this section); (i) What preventive and mitigative measures must an operator take to protect the high consequence areaP (t) General requirements. An operator must take measures to prevent and mitigate the consequences of a pipehne failure that could affect a high consequence area. These measures include conducting a nsk analysis of the pipehne segment to identify additional actions to enhance pubhc safety or environmental protection. Such actions may include, but are not Hmited to, implementing damage prevention best practices, better monitoring of cathodic protection where corrosion is a concern, estabHshing shorter inspection intervals, instalHng KF~s on the pipeHne segment, modifying the systems that monitor pressure and detect leaks, prov~ding additional training to personnel on response procedures, conducting drills with local emergency responders and adopting other management controls. (2) Wsk analysis criteria. In identifying the need for additional preventive and mitigative measures, an operator must evaluate the hkeHhood of a pipeline release occurring and how a release could affect the high consequence area. This determination must consider all relevant risk factors, including, but not limited to: (i) Terrain surrounding the pipehne segment, including drainage systems such as small streams and othe~ smaller waterways that couM act as a conduit to the high consequence areal (ii) Elevation profile; (iii) Characteristics of the product transported; (iv) Amount of product that couM be released; (v) Possibility of a spillage in a Farm field Following the drain tile into a waterway; (vi) Ditches along side a roadway the pipehne crosses; (vii) Physical support of the pipeline segment such as by a cable suspension bridge; (viii) Exposure of the pipehne to operating pressure exceeding estabhshed maximum operating pressure. The decision process for implementing CPPL's Preventive and Mitigative Measures (PkMM) prospects should show how their IM prospects are integrated mto the risk model (PIRAMID) process The risk model does not appear to be sensitive to the implementation of the PAMM prospects. In addition, the process for defining and rankrng PRMM for the facility is not well defined m the IMP This is important to ensure future PkMM decisions are made in a consistent, risk-based manner#

520085039w_warning letter_10152008_text.pdf, page 4data, and evaluation of consequences of a failuxe on the high consequence area. An operato~ must include, at minimum, each of the following elements in its written integrity management program: (6) Identification of preventive and mitigative measuxes to pxotect the high consequence area (see paragraph (i) of this section); (i) What preventive and mitigative measuxes must an operator take to protect the high consequence area~ (3) I. eak detection. An opexator must have a means to detect leaks on its pipeline system. An operatox must evaluate the capability of its leak detection means and modify, as necessary, to protect the high consequence area. An operator's evaluation must, at least, considex, the foHowing factoxs — length and size of the pipeline, type of pxoduct carried, the pipeHne's proximity to the high consequence axea, the swiftness of leak detection, location of nearest response personnel, leak history, and risk assessment results. (4) Emergency Flow Restricting Devices (KF~). If an operator determines that an KF~ is needed on a pipehne segment to protect a high consequence area in the event of a hazardous Hquid pipeline release, an operator must install the KF~. In making this determination, an opexatox must, at least, consider the following factors — the swiftness of leak detection and pipeline shutdown capabiHties, the type of commodity carried, the rate of potential leakage, the volume that can be released, topography or pipeline profile, the potential for ignition, proximity to power sources, location of nearest response pexsonnel, specific terrain between the pipehne segment and the high consequence Mea, and benefits expected by reducing the spill size. The process for evaluating and identifying PkMM, leak detection capabihty, and emergency flow restricting devices (EFRD) is not fully implemented. It is expected at this time that the required processes would be mature and the focus needs to be on the implementation aspects to reduce both risk and release volume (f) What are the elements of an integrity management pxogxam~ An integrity management pxogram begins with the initial framework. An opexator must continuaHy change the program to reflect operating experience, conclusions d~awn from results of the integrity assessxnents, and other maintenance and surveiHance data, and evaluation of consequences of a failure on the hiigh consequence area. An operator must include, at minimum, each of the foHowing elements in its written integrity management pxogram: (5) A continual process of assessxnent and evaluation to maintain a pipehne's integrity (see par agx aph (j) of this section); (j) What is a continual process of evaluation and assessment to maintain a pipeHne's integnty?' (]. ) General. After completing the basehne integrity assessment, an operato~ must continue to assess the hne pipe at specified intervals and pexiodicaHy evaluate the integrity of each pipeline segment that could affect a high consequence area.#

520085039w_warning letter_10152008_text.pdf, page 5CPPL must ensure and document that all niformation (for instance stress corrosion crackIng) regarding a pipelme's mtegrity is being continually evaluated to determine impacts on reassessment schedules, assessment methods, and other aspects of CPPL's Integrity Management Program 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 items identified in this letter Failure to do so will result in ConocoPhilhps Pipe Line Company being subject to additional enforcement action No reply to this letter is required If you choose to reply, m your correspondence please refer to CPP 5-ZOOS-5O39W Be advised that all material you submit m response to this enforcement action is sub]ect to being made pubhcly available. If you believe that any portion of your responsive material quahfies 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 beheve quahfy for confidential treatment redacted and an explanation of why you beheve the redacted information quahfies for confidential treatment under 5 U. S. C 552(b) Sincerely, Chris Hoidal Director, Western Region Pipehne and Hazardous Materials Safety Administration cc PHP-60 Compliance Registry PHP-500 H Nguyen (0121862)#