UNION OIL COMPANY OF CALIFORNIA (UOCC) — Notice of Probable Violation

party submissionOfficial PDF520087003_operator_response_10142008.pdf#

520087003_nopv pco pcp_09102008_text.pdf, page 1Official PDFU S. DePGrtment Of Tt GASPOttGtlOn Pipsllmne and Hmxmdous Mattsrialls Sa(sty AdmlniskmHon 12300 W Dakota Ave, Suite 110 Lakewood, CO 80228 September 10, 2008 Mr. John Zager General Manager Union Oil Company of Cahfornia 909 West 9" Avenue Anchorage, AI& 99501 CPF 5-2008-7003 Dear Mr. Zager: On May 27 — 29, 2008, a representative of the Pipehne and Hazardous Materials Safety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code, inspected the following Union Oil Company of California (UOCC) crude oil facihties in the Cook Inlet, Alaska The Steelhead, Granite Point, and Dillon offshore oil platforms, the onshore facilities of Trading Bay Production Facility, and the Granite Point Tank farm. 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, Part 195. The items inspected and the probable violations are:#

520087003_nopv pco pcp_09102008_text.pdf, page 2UOCC did not properly inspect valve P-SDV-0002 on the Granite Point Platform during 2007. The UOCC inspection did not attempt to operate or stroke the valve to ensure it could function properly because crude oil was spraying out of the grease center pin. Evidence: Granite Point Valve Manitenance Records, 2 sheets $195. 426 Scraper and sphere facilities. No operator may use a launcher or receiver that is not equipped with a rehef device capable of safely relieving pressure in the barrel before insertion or removal of scrapers or spheres. The operator must use a suitable device to indicate that pressure has been reheved in the barrel or must provide a means to prevent insertion or removal of scrapers or spheres if pxessure has not been reheved in the barrel. The Granite Point Platform crude oil pig launcher was found to be missing a pressure sensing device on the closure. Evidence: Photograph of closure on launcher $195. 571 What criteria must I use to determine the adequacy of cathodic protections Cathodic protection required by this subpart must comply with one or more of the applicable criteria and other considerations for cathodic protection contained in paragraphs 6. 2 and 6. 3 of WACK Standard ~0169-96. Dolly Varden Platform's incoming hnes were applying improper cathodic protection (CP) levels. The PHMSA inspector noted "instant off" readings, based on 2007 Closure Interval Survey CIS) data, above 1400 mv and as high as 2200 mv These do not meet NACE Standard RPO 169-96. Cathodic protection levels this high can cause coating damage Evidence: 2007 CIS readings, 1 sheet 4. $195. 581 Which pipelines must I protect against atmospheric corrosion and what coating material may I use'7#

520087003_nopv pco pcp_09102008_text.pdf, page 3The Granite Point and Bruce Platform pipehnes traverse the shorehne and are exposed at low tide UOCC has a maintenance program that attempts to stabihze and repair the coating damage occurring on these lines whenever possible. However, during the field inspection of the pipeline right-of-way, extensive coating damage was found along with a section of bare pipe. Photographs were taken, and UOCC recorded GPS locations for future maintenance work. Evidence: Photographs of coating damage, 4 Pictures. Pro osed Civil Penalt Under 49 United States Code, ( 60122, you are subject to an administrative 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 Comphance Officer has reviewed the circumstances and supporting documentation involved in the above probable violations and has recommended that you be prehminarily assessed a civil penalty of $29, 000 as follows Item Number PENALTY $29, 000 Pro osed Com hance Order With respect to Items 1, 2, and 4 pursuant to 49 United States Code ( 60118, the Pipehne and Hazardous Materials Safety Administration proposes to issue a Comphance Order to UOCC. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice Warnin Items With respect to Item 3, 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 promptly correct this item Be advised that failure to do so may result in UOCC being subject to additional enforcement action#

520087003_nopv pco pcp_09102008_text.pdf, page 4Res 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 pubhcly available, If you beheve 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 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) 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 Pipehne Safety to find facts as alleged in this Notice without further notice to you and to issue a Fmal Order. In your correspondence on this matter, please refer to CPF 5-2008-7003 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Chris Hoidal Director, Western Region Pipehne and Hazardous Materials Safety Administration cc PHP-60 Comphance Registry PHP-500 B Flanders (¹120665, 120668, 120669) Enclosures Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings#

520087003_nopv pco pcp_09102008_text.pdf, page 5Pursuant to 49 United States Code ) 60118, the Pipehne and Hazardous Materials Safety Administration {PHMSA) proposes to issue to Union Oil Company of Cahfornia {UOCC) a Comphance Order incorporating the following remedial requirements to ensure the comphance of UOCC with the pipehne safety regulations. 3. 4. In regards to Item Number' 1 of the Notice pertaining to the lack of valve maintenance, within three (3) months of receipt of the Final Order, UOCC shall take appropriate action to repair the DOT-regulated valve, P-SDV-0002, so that it can be properly inspected per ) 195. 420 In regards to Bem Number 2 of the Notice pertaining to the missing pressure sensing device on the crude oil launcher closure on Granite Point Platforin, within three (3) months of receipt of the Final Order, UOCC shall install a sensing device on the launcher closure In regards to Item Number 4 of the Notice pertaining to the exposed pipehnes and coating damage, within nme (9) months of receipt of the Final Order, UOCC shall provide evidence of repair of the coating damage. UOCC shall conduct the activities in Items 1 A 2 and submit documentation of comphance within 120 days of receipt of the Final Order Documentation of- completion of Item 4 shall be submitted within 30 days of completion 5 UOCC shall maintain documentation of the safety improvement costs associated with fulfilhng this Compliance Order and submit the total to Chris Hoidal, Director, Pipehne 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 pipehne infrastructure#

520087003_closure letter_04152011_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED April 15, 2011 Mr. John Zager General Manager Union Oil Company of California 3800 Centerpoint Drive, Suite 100 Anchorage, AK 99503 CPF 5-2008-7003 Dear Mr. Zager: On December 13, 2010, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Union Oil Company of California a Final Order in the above-referenced case. The Final Order issues by PHMSA included a Compliance Order. Based on our review of the documentation you provided, it has been determined that you have complied with the terms of this Order. Accordingly, this case is now closed and no further action is contemplated with respect to the matters involved in this case. Thank you for your cooperation in this matter. Sincerely, Dennis Hinnah Deputy Director, Western Region Pipeline and Hazardous Materials Safety Administration cc: PHP-60 Compliance Registry PHP-500 B. Flanders (#120665, 120668, 120669)#

520087003_FinalOrder_12132010_text.pdf, page 1Official PDFDEC 13 2010 Mr. John Zager General Manager Union Oil Company of California 3800 Centerpoint Drive, Suite 100 Anchorage, AK 99503 Re: CPF No. 5-2008-7003 Dear Mr. Zager: Enclosed please find the Final Order issued in the above-referenced case. It withdraws one of the allegations of violation and the civil penalty, makes other findings of violation, and specifies actions that need to be taken by Union Oil Company of California to comply with the pipeline safety regulations. When the terms of the compliance order have been completed, as determined by the Director, Western Region, this enforcement action will be closed. Service of the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc: Mr. Chris Hoidal, Director, Western Region, PHMSA Mr. Dale A. Haines Manager, Oil & Gas Operations Union Oil Company of California P.O. Box 196247 Anchorage, AK 99519-6247 CERTIFIED MAIL - RETURN RECEIPT REQUESTED [7005 1160 0001 0041 0831]#

520087003_FinalOrder_12132010_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 ) Union Oil Company of California, ) CPF No. 5-2008-7003 ) ) ) Respondent. ) ____________________________________) FINAL ORDER On May 27-29, 2008, 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 of Union Oil Company of California (Union or Respondent) in the Cook Inlet area of Alaska. As a result of the inspection, the Director, Western Region, OPS (Director), issued to Respondent, by letter dated September 10, 2008, a Notice of Probable Violation, Proposed Civil Penalty and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Union committed violations of 49 C.F.R. Part 195, proposed assessing a civil penalty of $29,000 for the alleged violations, and proposed ordering Respondent to take certain measures to correct the alleged violations. The Notice also proposed finding that Respondent had committed another probable violation of 49 C.F.R. Part 195 and warning Respondent to take appropriate corrective action or be subject to future enforcement action. Union responded to the Notice by letter dated October 14, 2008 (Response). The company contested two of the allegations, offered additional information in response to the Notice, and requested that the proposed civil penalty be eliminated. Respondent did not request a hearing and therefore has waived its right to one. FINDINGS OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 195 as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.420, which states in relevant part: § 195.420 – Valve maintenance. (a) Each operator shall maintain each valve that is necessary for the safe operation of its pipeline systems in good working order at all times.#

520087003_FinalOrder_12132010_text.pdf, page 32 (b) Each operator shall, at intervals not exceeding 7 ½ months, but at least twice each calendar year, inspect each mainline valve to determine that it is functioning properly. The Notice alleged that Respondent violated 49 C.F.R. § 195.420 by failing to inspect each mainline valve at intervals not exceeding 7 ½ months, but at least twice each calendar year. Specifically, the Notice alleged that Union failed to operate or stroke a specific valve on the Granite Point Platform during 2007. In its Response, Union contested this allegation of violation and provided information demonstrating that the valve was stroked during 2007 in accordance with the requirements of § 195.420. Accordingly, based upon a review of all of the evidence, I find that Respondent did not violate 49 C.F.R. § 195.420 as alleged in this item. Based upon the foregoing, I hereby order that Item 1 be withdrawn. Please be advised that operators must provide PHMSA inspectors with required records at the time of inspection, and failure to do so could be a violation of § 195.404(c)(3) that could result in a separate allegation of violation and appropriate sanction.1 Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.426, which states: § 195.426 – Scraper and sphere facilities. No operator may use a launcher or receiver that is not equipped with a relief device capable of safely relieving pressure in the barrel before insertion or removal of scrapers or spheres. The operator must use a suitable device to indicate that pressure has been relieved in the barrel or must provide a means to prevent insertion or removal of scrapers or spheres if pressure has not been relieved in the barrel. The Notice alleged that Respondent violated § 195.426 by failing to: 1) use a suitable device to indicate that pressure has been relieved in the barrel, or 2) provide a means to prevent insertion or removal of scrapers or spheres if pressure has not been relieved in the barrel. Specifically, the Notice alleged that the crude oil pig launcher at Granite Point Platform did not have a closure. In its Response, Union contested the allegation. It acknowledged that the launcher at issue did not have a door equipped with a pressure warning device to prevent the door from opening when pressurized. However, it argued that the launcher satisfied the requirements of the regulation because it had a pressure warning device and relief device capable of relieving the pressure before opening the door. While such devices do meet the first requirement of the provision, they do not meet the requirement contained in the second sentence of the provision, because they do not “indicate that pressure has been relieved in the barrel” or “prevent insertion or removal of scrapers or spheres if pressure has not been relieved in the barrel.” Thus, the launcher does not fully satisfy the requirements of § 195.426. 1 See § 190.203(a).#

520087003_FinalOrder_12132010_text.pdf, page 43 Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.426 by failing to use a suitable device to indicate that pressure has been relieved in the barrel or provide a means to prevent insertion or removal of scrapers or spheres if pressure has not been relieved in the barrel. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.581, which states in relevant part: § 195.581 – Which pipelines must I protect against atmospheric corrosion and what coating material may I use? (a) You must clean and coat each pipeline or portion of pipeline that is exposed to the atmosphere, except pipelines under paragraph (c) of this section. (b) Coating material must be suitable for the prevention of atmospheric corrosion. The Notice alleged that Respondent violated § 195.581 by failing to maintain adequate coating on portions of its pipeline that are exposed to the atmosphere. Specifically, the Notice alleged that pipelines at Granite Point and Bruce Point are exposed to the atmosphere at low tide, and that during the inspection, OPS identified sections of these pipelines that were bare or on which the coating was extensively damaged. 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. § 195.581 by failing to maintain adequate coating on portions of its pipeline that are exposed to the atmosphere. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. WITHDRAWAL OF PENALTY The Notice proposed a civil penalty of $29,000 for the alleged violation described in Item 1. Because I ordered that Item 1 be withdrawn, the proposed civil penalty is also withdrawn. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 1, 2, and 4 in the Notice for violations of 49 C.F.R. §§ 195.420, 195.426, and 195.581, respectively. Under 49 U.S.C. § 60118(a), each person who engages in the transportation of hazardous liquids or who owns or operates a pipeline facility is required to comply with the applicable safety standards established under chapter 601. Because I ordered that Item 1 be withdrawn, the corresponding compliance terms proposed in the Notice are not included in this Order.#

520087003_FinalOrder_12132010_text.pdf, page 54 The Director indicates that Respondent has taken the following actions specified in the proposed compliance order: 1. With respect to the violation of § 195.581 (Item 4), Respondent has repaired the coating damage in the relevant locations. Accordingly, I find that compliance has been achieved with respect to this violation. 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 § 195.426 (Item 2), Respondent must, within 120 days of receipt of this Order, install a sensing device on the launcher closure on Granite Point Platform and submit documentation to this effect to the Director. 2. Respondent must maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit that total to the Director. Costs shall be reported in two categories: (1) total cost associated with preparation and 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 $100,000 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 ITEM With respect to Item 3, the Notice alleged a probable violation of Part 195 but did not propose a civil penalty or compliance order for this item. Therefore, this is considered to be a warning item. The warning was for: 49 C.F.R. § 195.571 (Item 3) ─ Respondent’s alleged failure to maintain adequate cathodic protection on lines at Dolly Varden Platform. Union presented information in its Response showing that it had taken certain actions to address the cited items. Accordingly, having considered such information, I find, pursuant to 49 C.F.R. § 190.205, that a probable violation of 49 C.F.R. § 195.571 (Notice Item 3) has occurred, and Respondent is hereby advised to correct such condition. In the event that OPS finds a violation of this provision in a subsequent inspection, Respondent may be subject to future enforcement action.#

520087003_FinalOrder_12132010_text.pdf, page 65 Under 49 C.F.R. § 190.215, Respondent has a right to submit a Petition for Reconsideration of this Final Order. The petition must be sent to: Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of Chief Counsel, PHMSA, at the same address. PHMSA will accept petitions received no later than 20 days after receipt of this Final Order by the Respondent, provided they contain a brief statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.215. Unless the Associate Administrator, upon request, grants a stay, the terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#