{"operation":"document","citation":"CPF 520170004S","title":"HILCORP ALASKA, LLC — Safety Order","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2017-03-03","effective_on":null,"summary":"CLOSED safety order.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-520170004s.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-520170004s.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-520170004s","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/520170004S","body":"Safety Order involving HILCORP ALASKA, LLC. The dataset does not identify a cited regulation for this case. The case was opened on 2017-03-03 and is reported as closed as of 2020-11-23. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n520170004S_Closure Letter_11232020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520170004S/520170004S_Closure%20Letter_11232020.pdf\n\n520170004S_Closure Letter_11232020_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520170004S/520170004S_Closure%20Letter_11232020_text.pdf\n\n520170004S_Consent Order and Agreement_04122017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520170004S/520170004S_Consent%20Order%20and%20Agreement_04122017.pdf\n\n520170004S_Consent Order and Agreement_04122017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520170004S/520170004S_Consent%20Order%20and%20Agreement_04122017_text.pdf\n\n520170004S_Notice of Proposed Safety Order_03032017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520170004S/520170004S_Notice%20of%20Proposed%20Safety%20Order_03032017.pdf\n\n520170004S_Notice of Proposed Safety Order_03032017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520170004S/520170004S_Notice%20of%20Proposed%20Safety%20Order_03032017_text.pdf\n\n520170004S_Consent Order and Agreement_04122017_text.pdf\n\nApril 12, 2017\nVIA CERTIFIED MAIL AND FAX TO: (907) 777-8301\nMr. Greg Lalicker\nPresident\nHilcorp Alaska, LLC\n1111 Travis Street\nHouston, Texas 77002\nCPF No. 5-2017-0004S\nDear Mr. Lalicker:\nEnclosed please find an Order incorporating the terms of the Consent Agreement between the\nPipeline and Hazardous Materials Safety Administration (PHMSA) and Hilcorp Alaska, LLC\n(Hilcorp) which was executed on April 11, 2017. Service of the Order and Consent Agreement by\ncertified mail is deemed effective upon the date of mailing, or as otherwise provided under 49\nC.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nfor Alan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure: Order and Consent Agreement\ncc: Ms. Linda Daugherty, Deputy Associate Administrator for Field Operations, OPS\nMr. Chris Hoidal, Senior Technical Advisor, Program Development, OPS\nMr. Dustin Hubbard, Acting Region Director, Western Region, OPS\nMs. Erin McKay, Regulatory Compliance Manager, Alaska Integrity Group, Hilcorp\nAlaska, LLC, at emckay@hilcorp.com\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D.C. 20590\nIn the Matter of )\n)\n)\nHilcorp Alaska, LLC, )\na subsidiary of Hilcorp Energy Company, Respondent. )\n)\n)\n) CPF No. 5-2017-0004S\nORDER\nBy letter dated March 3, 2017, the Pipeline and Hazardous Materials Safety Administration\n(PHMSA), Office of Pipeline Safety (OPS or Agency), issued a Notice of Proposed Safety Order\n(Notice) to Hilcorp Alaska, LLC (Hilcorp or Respondent), a subsidiary of Hilcorp Energy\nCompany.\nIn accordance with 49 C.F.R. § 190.239, the Notice alleged that conditions exist on\nRespondent’s Middle Ground Shoal (MGS) Fuel Gas System that pose a pipeline integrity risk to\npublic safety, property, or the environment. The Notice also proposed that Respondent take\ncertain corrective measures to remedy the alleged conditions and ensure that the public, property,\nand the environment are protected from the potential risk.\nIn response to the Notice, Respondent requested an informal consultation, whereupon the parties\nengaged in good-faith settlement discussions that have resulted in the Consent Agreement\nattached to this Order, of even date herewith, and that settles all of the allegations in the Notice.\nAccordingly, the Consent Agreement is hereby approved and incorporated by reference into this\nOrder. The Respondent is hereby ordered to comply with the terms of the Consent Agreement,\neffective immediately.\nPursuant to 49 U.S.C. 60101, et seq., failure to comply with this Consent Order may result in the\nassessment of civil penalties of up to $205,638 per day.\nThe terms and conditions of this Consent Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\nApril 12, 2017\nfor Alan K. Mayberry Date\nAssociate Administrator\nfor Pipeline Safety\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D.C. 20590\nIn the Matter of )\n)\n)\nHilcorp Alaska, LLC, )\na subsidiary of Hilcorp Energy Company, Respondent. )\n)\n)\n) CPF No. 5-2017-0004S\nCONSENT AGREEMENT\nOn March 3, 2017, the Regional Director for the Western Region (the Region) of the Pipeline\nand Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS or the\nAgency), issued a Notice of Proposed Safety Order (Notice) to Hilcorp Alaska, LLC (Hilcorp or\nRespondent), a subsidiary of Hilcorp Energy Company. The Notice alleged that conditions exist\non Respondent’s Middle Ground Shoal (MGS) Fuel Gas System that pose a pipeline integrity\nrisk to public safety, property, or the environment. The Notice also proposed that Respondent\ntake certain corrective measures to remedy the alleged conditions and ensure that the public,\nproperty, and the environment are protected from the potential risk.\nHilcorp responded to the Notice by timely submitting a written response and a request for an\ninformal consultation. An informal consultation was held on March 22, 2017.\nAs a result of the informal consultation process, PHMSA and Hilcorp (collectively, Parties)\nreached agreement that settlement of this proceeding will avoid further administrative\nproceedings or litigation of the Notice and that entry into this Consent Agreement (Agreement) is\nthe most appropriate means of resolving the issues raised in the Notice and is generally in the\npublic interest. Therefore, pursuant to 49 C.F.R. Part 190, without adjudication of any issue of\nfact or law, and upon consent and agreement of Hilcorp and PHMSA, the Parties agree as\nfollows:\nI. General Provisions\n1. Respondent acknowledges that as the operator of the MGS Fuel Gas System,\nRespondent and its MGS Fuel Gas System are subject to the jurisdiction of the Federal pipeline\nsafety laws, 49 U.S.C. § 60101, et seq., and the regulations and administrative orders issued\nthereunder. While this Agreement refers to other Hilcorp facilities, this acknowledgement is\nlimited solely to the MGS Fuel Gas System. For purposes of this Agreement, Respondent\nacknowledges that it received proper notice of PHMSA's action in this proceeding and that the\nNotice states claims upon which relief may be granted pursuant to 49 U.S.C. 60101, et seq., and\n\n\n\nCPF No. 5-2017-0004S\nPage 2\nthe regulations and orders issued thereunder. The MGS Fuel Gas System MGS consists of four\nsections of pipe and is defined more specifically as the Affected Pipeline Facility in Paragraph\n12(a) of this Agreement.\n2. Respondent agrees, for purposes of this Agreement, to address the integrity risks\nidentified in the Notice by completing the actions specified in Section II of this agreement\n(Corrective Measures) and to abide by the terms of this Agreement. This Agreement does not\nconstitute a finding of violation of any Federal law or regulation and may not be used in any civil\nor administrative proceeding of any kind as evidence or proof of any fact, fault or liability, or as\nevidence of the violation of any law, rule, regulation or requirement, except in a proceeding to\nenforce the provisions of this Agreement.\n3. After Respondent returns this signed Agreement to PHMSA, the Agency’s\nrepresentative will present it to the Associate Administrator for Pipeline Safety, recommending\nthat the Associate Administrator adopt the terms of this Agreement by issuing an administrative\norder (Consent Order) incorporating the terms of this Agreement. The terms of this Agreement\nconstitute an offer of settlement until accepted by the Associate Administrator. Once accepted,\nthe Associate Administrator will issue a Consent Order incorporating the terms of this Agreement.\n4. Respondent consents to the issuance of the Consent Order, and hereby waives any\nfurther procedural requirements with respect to its issuance. Respondent waives all rights to\ncontest the adequacy of notice, or the validity of the Consent Order or this Agreement, including\nall rights to administrative or judicial hearings or appeals, except as set forth herein.\n5. This Agreement shall apply to and be binding upon PHMSA, and upon Hilcorp,\nits officers, directors, and employees, and its successors, assigns, or other entities or persons\notherwise bound by law. Respondent agrees to provide a copy of this Agreement and any\nincorporated work plans and schedules to all of Hilcorp’s officers, employees, and agents whose\nduties might reasonably include compliance with this Agreement.\n6. For all transfers of ownership or operating responsibility of Hilcorp’s MGS Fuel\nGas System, Respondent will provide a copy of this Agreement to the prospective transferee at\nleast 30 days prior to such transfer and simultaneously provide written notice of the prospective\ntransfer to the PHMSA Region Director (Director) who issued the Notice.\n7. This Agreement constitutes the final, complete and exclusive agreement and\nunderstanding between the Parties with respect to the settlement embodied in this Agreement.\nThe Parties acknowledge that there are no representations, agreements or understandings relating\nto settlement other than those expressly contained in this Agreement, except that the terms of this\nAgreement may be construed by reference to the Notice.\n8. Nothing in this Agreement affects or relieves Respondent of its responsibility to\ncomply with all applicable requirements of the Federal pipeline safety laws, 49 U.S.C. § 60101,\net seq., and the regulations and orders issued thereunder. Nothing in this Agreement alters\nPHMSA's right of access, entry, inspection, and information gathering or PHMSA's authority to\n\n\n\nCPF No. 5-2017-0004S\nPage 3\nbring enforcement actions against Hilcorp pursuant to the Federal pipeline safety laws, the\nregulations and orders issued thereunder, or any other provision of Federal or State law.\n9. This Agreement does not waive or modify any Federal, State, or local laws or\nregulations that are applicable to Respondent’s pipeline systems. This Agreement is not a\npermit, or a modification of any permit, under any Federal, State, or local laws or regulations.\nHilcorp remains responsible for achieving and maintaining compliance with all applicable\nFederal, State, and local laws, regulations and permits.\n10. This Agreement does not create rights in, or grant any cause of action to, any third\nparty not party to this Agreement. The U.S. Department of Transportation is not liable for any\ninjuries or damages to persons or property arising from acts or omissions of Respondent or its\nofficers, employees, or agents carrying out the work required by this Agreement. Hilcorp agrees\nto hold harmless the U.S. Department of Transportation, its officers, employees, agents, and\nrepresentatives from any and all causes of action arising from any acts or omissions of\nRespondent or its contractors in carrying out any work required by this Agreement.\n11. Measures set forth below.\nUpon issuance of the Consent Order, Hilcorp agrees to perform the Corrective\n12. Definitions:\na. The Affected Pipeline Facility means the 8-inch-diameter \"A Pipeline\" shown\non the map attached as Exhibit A to the Notice and consists of the following\nfour sections: 1) MGS onshore facility to \"A Platform;\" 2) \"A Platform\" to\n“Baker Platform;” 3) \"A Platform\" to \"C Platform;\" and 4) \"C Platform\" to\n“Dillon Platform.”\nb. The Affected Segment means the section from the MGS onshore facility to the\n\"A Platform,” on which the leak is physically occurring. The leak is located\napproximately 2.6 miles from the \"A Platform\" and approximately 4.6 miles\nfrom the MGS onshore facility (as measured along the pipeline alignment).\nII. Corrective Measures\n13. Repairs. The Parties understand that a repair of the leak is a two-phase process,\nconsisting of an initial, temporary repair followed by a permanent repair. Hilcorp must mobilize\ndivers and temporarily repair the leak on the failed Affected Segment as soon as Cook Inlet\nconditions allow divers to safely access the leak, but no later than by May 1, 2017. If the \"A\nPipeline\" is not permanently repaired by May 15, 2017, Hilcorp must shut down the \"A Pipeline\"\nand keep it shut down until authorized to resume operation by the Director.\n14. Notification of Pressure Fluctuations. Hilcorp must notify the Director by\ntelephone within one hour of a confirmed discovery of any unplanned pressure fluctuation in\nexcess of 25% of the target operating pressure, as determined by Hilcorp but not to exceed 165\npsi, on the Affected Pipeline Facility. Hilcorp must make any such notifications whenever\n\n\n\nCPF No. 5-2017-0004S\nPage 4\nrequired, 24 hours a day/7 days a week. In the event the Director is unavailable, Hilcorp must\nnotify the Alaska Operations Supervisor, PHMSA, by telephone within the time requirement set\nforth in this paragraph. In the event that neither the Director nor the Alaska Operations\nSupervisor, PHMSA, is available, Hilcorp must leave voicemail messages for both individuals\non their office and mobile telephone numbers.\n15. Temporary Pressure Restriction. Prior to making any permanent repair, Hilcorp\nmust use its best efforts to reduce and maintain the pressure of the Affected Segment as low as\npractical to ensure that water does not intrude the oil-contaminated line or otherwise jeopardize\nsafety or the environment. In no event, however, may Hilcorp increase the pressure above 165\npsi without prior written approval from the Director.\n16. Leak Inspection and Repair Plan. Hilcorp must develop and implement a\n\"Pipeline Leak Inspection and Repair Plan\" for the Affected Segment. Hilcorp must submit\nthis plan for approval to the Director prior to making any temporary repair(s) and no later\nthan two weeks from the issuance of a Consent Order.\n17. Shutdown Plan. Hilcorp must develop and submit a plan to safely shut down\nthe Affected Pipeline Facility in the event operations must cease, either as a result of a\nPHMSA mandate or of a Hilcorp business decision. Hilcorp must submit to the Director\nsuch plan for approval no later than 14 days from the issuance of a Consent Order. At a\nminimum, the plan must address the following:\na. The potential effects on people, environment, wildlife, platforms, and the \"B\nPipeline\" system of terminating fuel gas delivery;\nb. Purging of the \"A Pipeline\" of natural gas and maintaining pipeline pressure to\nprevent water intrusion with a product that is non-hazardous to life, environment,\nand wildlife;\nc. The maintenance of minimum flow in the \"B Pipeline\" to prevent damage to the\npipeline; such as, freezing of water within the pipeline, or in the alternative,\nproviding for the purging of the \"B Pipeline.\"\n18. Environmental Sampling and Monitoring Obligations. If Hilcorp's\nenvironmental sampling and monitoring obligations ordered by the Alaska Department of\nEnvironmental Conservation (ADEC) cannot be met, or if Hilcorp or ADEC learn of significant\nchanges in the results of environmental sampling and monitoring efforts that suggest harm to the\nenvironment or wildlife, Hilcorp must notify the Director in writing within 12 hours of\nconfirmed discovery of such qualifying changes. Hilcorp must also inform PHMSA, in writing,\nof all requirements and requests made by ADEC to Hilcorp in connection with the Affected\nPipeline Facility within 24 hours of any such requirement or request.\n19. Modification and Inspection Plan. Hilcorp must develop and implement a\n\"Modification and Inspection Plan\" for the Affected Pipeline Facility. Hilcorp must submit\n\n\n\nCPF No. 5-2017-0004S\nPage 5\nthe plan to the Director for approval no later than 45 days from the issuance of a Consent\nOrder. At a minimum, the plan must include the following:\na. b. c. d. ILI Assessment: Hilcorp must modify the Affected Pipeline Facility to\naccommodate the use of ILI methods (\"smart pigs\") or alternative technologies\napproved by the Director. The selected ILI method or alternative technology must\nbe capable of detecting, locating, identifying, and sizing dents, gouges, metal loss,\nexcessive bending and other reasonably-identifiable anomalies.\nHilcorp must conduct an ILI or alternative technology referenced above on the\nAffected Segment and make all necessary repairs by September 30, 2018. Hilcorp\nmust conduct an ILI or alternative technology referenced above on the balance of\nthe Affected Pipeline Facility not included above and make all necessary repairs\nby September 30, 2019.\nThe ILI results (draft and final reports), and documentation of all subsequent\nassociated repairs, must be sent to the Director within 30 days of receipt of each\nILI vendor's report by Hilcorp and 30 days following completion of each repair.\nSonar Inspection: Hilcorp must conduct high-resolution sonar inspection, or\nequivalent technology, with the prior written approval of the Director, of the\nAffected Pipeline Facility to identify pipeline sections that are not adequately\nsupported physically and thus susceptible to excessive bending or current-induced\nvibrations that may damage the relevant pipeline section, no later than 90 days\nafter the ice freeze has subsided in the spring of 2017 and the Affected Pipeline\nFacility becomes accessible by divers. The results of such inspections must be\nsent to the Director no later than 30 days after inspection is complete.\nDiver Inspections for Vibration and Excessive Bending Threats: For areas where\nthe Affected Pipeline Facility is not continuously supported by the seabed (i.e., an\nunsupported span greater than 20 feet with a gap between the pipeline and the\nseafloor of greater than one pipeline diameter), Hilcorp must inspect those areas\nby diver, or equivalent, and determine those areas that require mitigation to\naddress the threats of excessive bending and vibration induced failure. During the\ninspections divers will collect basic information about the pipe, including the\nexistence of weight coat in the areas inspected. The external inspections required\nby this paragraph must be performed no later than October 31, 2017. To further\nassess for excessive bending on the Affected Pipeline Facility, Hilcorp will\nconduct the ILI assessments described in sub-paragraph 19(a), above.\nDiver and ILI Inspections for Mechanical Damage: To address the threat of\nexternal damage, Hilcorp must inspect any areas where the pipeline crosses rocky\noutcroppings. Hilcorp shall have divers inspect all unsupported spans where the\npipe is resting on rocky outcroppings and determine those areas that require\nmitigation to address the threat of external damage. The diver inspections\nrequired by this paragraph must be performed no later than October 31, 2017, on\n\n\n\ne. CPF No. 5-2017-0004S\nPage 6\nthe Affected Segment, and no later than October 31, 2018, on the remainder of the\nAffected Pipeline Facility. To further assess for mechanical damage in those\nlocations, and on the remainder of the Affected Pipeline Facility, Hilcorp will\nconduct the ILI assessments described in sub-paragraph 19(a), above. If Hilcorp\ncan collect and integrate ILI and sonar data in advance of the diver inspection\ndeadlines in this paragraph, it may request that diver inspections be limited to\nareas where integrated data demonstrates that a mechanical damage threat exists.\nThe intervention criteria Hilcorp will use to determine if pipeline repairs or other\nmitigation requirements are needed.\n20. Documentation. Hilcorp must provide the Director with documentation of\ncompliance and supporting data, to all Items above.\n21. Revisions of Plans. Hilcorp must revise all plans identified in Items 16, 17,\nand 19 above, as necessary to incorporate new information obtained during the evaluations\nand associated remedial activities. Hilcorp must submit any such plan revisions to the\nDirector for prior approval. The Director may approve plan elements incrementally. The\nplans identified in Items 16, 17, and 19 above, once approved by the Director, will be\nincorporated by reference into any Consent Order issued by PHMSA.\n22. Written Approvals Required. Hilcorp may only implement the plans\nidentified in Items 16, 17, and 19 above after they have been approved, in writing, by the\nDirector, including any revisions to the plan(s).\n23. Quarterly Reports. Hilcorp must submit quarterly reports to the Director that:\n(1) include analysis of all available data and results of the testing and evaluations required by\nthis Agreement; and (2) describe the progress of the repairs and other remedial actions being\nundertaken. The first report will be due 45 days from issuance of a final Consent Order.\n24. Extensions of Time. The Director may grant an extension of time for\ncompliance with any of the terms of the Agreement upon a written request timely submitted\ndemonstrating good cause for an extension.\n25. Appeals. Respondent may appeal any decision of the Director to the Associate\nAdministrator for Pipeline Safety. Decisions of the Associate Administrator will be final.\nIII. Review and Approval Process\n26. With respect to any submission under Section II (Corrective Measures) of this\nAgreement that requires the approval of the Director, the Director may: (a) approve, in whole or\nin part, the submission, (b) approve the submission on specified, reasonable conditions, (c)\ndisapprove, in whole or in part, the submission, or (d) any combination of the foregoing. If the\nDirector approves, approves in part, or approves with conditions, Hilcorp will take all action as\napproved by the Director, subject to Respondent's right to invoke the dispute resolution\nprocedures in Section IV with respect to any conditions the Director identifies. If the Director\ndisapproves all or any portion of the submission, the Director will provide Hilcorp with a written\n\n\n\nCPF No. 5-2017-0004S\nPage 7\nnotice of the deficiencies. Respondent will correct all deficiencies within the time specified by\nthe Director and resubmit it for approval.\nIV. Dispute Resolution\n27. The Director and Hilcorp will informally attempt to resolve any disputes arising\nunder this Agreement. If Respondent and the Director are unable to informally resolve the\ndispute within 15 days of submittal of Respondent’s invoking dispute resolution, Hilcorp may\nrequest in writing, within 10 days thereafter, a written determination resolving the dispute from\nthe Associate Administrator for Pipeline Safety providing all information that Respondent\nbelieves is relevant to the dispute. If the request is submitted as provided herein, the Associate\nAdministrator will issue a final determination in writing. The existence of a dispute and the\nPHMSA's consideration of matters placed in dispute will not excuse, toll, or suspend any term or\ntimeframe for completion of any work to be performed under this Agreement during the\npendency of the dispute resolution process except as agreed by the Director or the Associate\nAdministrator in writing.\nV. Enforcement\n28. This Agreement, as adopted by the Consent Order, is subject to all enforcement\nauthorities available to the PHMSA under 49 U.S.C. § 60101, et seq., and 49 C.F.R. Part 190. work plans and associated schedules set forth or referenced in Section II will be automatically\nincorporated into this Agreement and are enforceable in the same manner.\nAll\nVI. Recordkeeping and Information Disclosure\n29. Unless otherwise required in this Agreement, Hilcorp agrees to maintain records\ndemonstrating compliance with all requirements of this Agreement for a period of at least five\nyears following completion of all work to be performed. For any reports, plans, or other\ndeliverables required to be submitted to PHMSA pursuant to this Agreement, Respondent may\nassert a claim of business confidentiality or other protections applicable to the release of\ninformation by PHMSA, covering part or all of the information required to be submitted to\nPHMSA pursuant to this Agreement in accordance with 49 C.F.R. Part 7. Respondent must\nmark the claim of confidentiality in writing on each page, and include a statement specifying the\ngrounds for each claim of confidentially. PHMSA determines release of any information\nsubmitted pursuant to this Agreement in accordance with 49 C.F.R. Part 7, the Freedom of\nInformation Act, 5 U.S.C. § 552, DOT and PHMSA policies, and other applicable regulations\nand Executive Orders.\nVII. Effective Date\n30. The term “Effective Date,” as used herein, is the date on which the Order is issued\nby the Associate Administrator incorporating the terms of this Agreement. Unless specified to\nthe contrary, all deadlines for actions required by this Agreement run from the Effective Date of\nthis Order.\n\n\n\nCPF No. 5-2017-0004S\nPage 8\nVIII. Modification\n31. The terms of this Agreement may be modified by mutual agreement of the Parties.\nSuch modifications must be in writing and signed by both parties.\nIX. Termination\n32. This Agreement terminates upon completion of all terms set forth in Section II\n(Corrective Measures) as determined by the Director. Hilcorp may request written confirmation\nfrom PHMSA when this Agreement is terminated and the Director will provide such\nconfirmation. Nothing in this Agreement prevents Respondent from completing any of the\nobligations earlier than the deadlines provided for in this Agreement.\nX. Ratification\n33. The Parties’ undersigned representatives certify that they are fully authorized to\nenter into the terms and conditions of this Agreement and to execute and legally bind such party\nto this document.\n34. The Parties hereby agree to all conditions and terms of this Agreement.\nFor Hilcorp Alaska, LLC (Respondent):\n___________________________________\n________________________\nDate\nFor PHMSA:\n___________________________________\nDustin Hubbard\nActing Director, Office of Pipeline Safety\nPHMSA Western Region\nU.S. Department of Transportation\n________________________\nDate\n\n520170004S_Closure Letter_11232020_text.pdf\n\nVIA E-MAIL TO MR. GREG LALICKER\nNovember 23, 2020\nMr. Greg Lalicker\nChief Executive Officer\nHilcorp Energy Company\n1111 Travis Street\nHouston, Texas 77002\nRE: Consent Agreement CPF No. 5-2017-0004S\nMiddle Ground Shoal Fuel Gas System\nRequest for Termination of Consent Agreement – Item 32\nDear Mr. Lalicker:\nOn March 3, 2017, the Pipeline and Hazardous Materials Safety Administration (PHMSA)\nissued a Notice of Proposed Safety Order to Hilcorp Alaska, LLC (Hilcorp)1 for alleged\nconditions existing on Hilcorp’s Middle Ground Shoal (MGS) Fuel Gas System and proposed\nthat Hilcorp take certain corrective measures. On March 15, 2017, Hilcorp requested an\ninformal consultation. An informal consultation was held on March 22, 2017. As a result of the\ninformal consultation process, PHMSA and Hilcorp entered into a Consent Agreement on April\n11, 2017. On April 12, 2017, PHMSA issued an Order approving and incorporating the terms of\nthe Consent Agreement.\nBy letter dated September 14, 2020, Hilcorp stated that the final outstanding items required by\nthe Consent Agreement had been completed and requested closure of the Consent Agreement.\nHilcorp indicated that the final outstanding items were the abandonment of the Baker “B” and\nDillon “A” pipelines pursuant to 49 CFR 192.727. By letter dated October 29, 2020, PHSMA\nrequested supporting data documenting abandonment of the above referenced pipelines, which\nHilcorp provided by letter dated November 5, 2020.\nWith respect to Hilcorp’s request for closure of the Consent Agreement, PHMSA agrees that the\nlast remaining corrective measures of the Consent Agreement were the abandonment of the\nBaker “B” and Dillon “A” pipelines. Given their abandonment, I have determined that the terms\nof the Consent Agreement have been completed. Accordingly, the Consent Agreement is\nterminated. Thank you for your cooperation in this matter.\nSincerely,\n1 Hilcorp Alaska, LLC, which is a wholly-owned subsidiary of Hilcorp Energy Company.\n\n\n\nDustin Hubbard\nDirector, Western Region\nPipeline and Hazardous Materials Safety Administration\ncc: PHP-60 Compliance Registry\nPHP-500 T. Johnson (#155644)\nMr. David S. Wilkins, Senior Vice President, Hilcorp Alaska (via email)\nMr. Ben Wasson, Hilcorp Alaska (via email)\n\n520170004S_Notice of Proposed Safety Order_03032017_text.pdf\n\nVIA FACSIMILE TO (907) 777-8301 AND CERTIFIED MAIL\nMarch 3, 2017\nMr. Greg Lalicker\nPresident\nHilcorp Alaska, LLC\n1201 Louisiana Street\nSuite 1400\nHouston, Texas 77002\nCPF 5-2017-0004S\nDear Mr. Lalicker:\nEnclosed is a Notice of Proposed Safety Order (Notice) issued in the above-referenced case.\nThe Notice proposes that you take certain measures with respect to Hilcorp Alaska, LLC’s1\nMiddle Ground Shoal (MGS) Fuel Gas System located in Cook Inlet, Alaska, to ensure pipeline\nsafety. Your options for responding are set forth in the Notice. Your receipt of the Notice\nconstitutes service of that document under 49 C.F.R. § 190.5.\nWe look forward to a successful resolution of this integrity issue to ensure pipeline safety.\nPlease direct any questions on this matter to me at 720-963-3160.\nSincerely,\nChris Hoidal\nDirector, Western Region\nPipeline and Hazardous Materials Safety Administration\nEnclosure: Notice of Proposed Safety Order & Attachment A (General Overview Map)\n1 Hilcorp Alaska, LLC, operates as a subsidiary of Hilcorp Energy Company.\n\n\n\ncc: Mr. Alan K. Mayberry, Associate Administrator for Pipeline Safety, OPS\nMs. Linda Daugherty, Deputy Associate Administrator for Field Operations, OPS\nMs. Erin McKay, Regulatory Compliance Manager, Alaska Integrity Group, Hilcorp Alaska,\nLLC, emckay@hilcorp.com\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWESTERN REGION\nLAKEWOOD, COLORADO 80228\n________________________________________________\nIn the Matter of )\n)\n)\nHilcorp Alaska, LLC, )\na subsidiary of Hilcorp Energy Company, )\nRespondent. )\n_______________________________________________ )\n) CPF No. 5-2017-0004S\nNOTICE OF PROPOSED SAFETY ORDER\nBackground and Purpose\nPursuant to Chapter 601 of Title 49, United States Code, the Pipeline and Hazardous Materials\nSafety Administration (PHMSA), U.S. Department of Transportation, has initiated an\ninvestigation and information review of the safety of your Middle Ground Shoal (MGS) Fuel\nGas System, consisting of approximately 15 miles of in-service gas pipeline mileage located in\nthe Cook Inlet, Alaska. This investigation stems from a gas leak that was first discovered by\nHilcorp Alaska, LLC (Hilcorp) on February 7, 2017, and that is ongoing in the waters of Cook\nInlet.\nThe MGS Fuel Gas System provides non-odorized gas (including oil production lift gas) to\nHilcorp’s offshore “A Platform,” “Baker Platform,” “C Platform,” and “Dillon Platform,” all\nutilizing gas from the East Cook Inlet Gas Gathering System (ECIGGS). ECIGGS is a PHMSA-\nregulated natural gas transmission pipeline system. PHMSA Letter of Interpretation (PI-10-\n0024) to XTO Energy, Inc., prior owner of the line, dated July 12, 2011, established that the\npipeline associated with the MGS Fuel Gas System is a transmission line under PHMSA\njurisdiction, as defined by 49 C.F.R. § 192.3.2 The MGS pipeline system begins at the three-inch\ntie-in to the ECIGGS pipeline on Wik Road in Nikiski, Alaska. The pipeline passes through\nStation O (201 Meter) and the MGS onshore facility before transitioning to the subsea portion\n2 See 49 C.F.R. §192.3 (defining transmission lines as “a pipeline, other than a gathering line, that: (1) transports gas\nfrom a gathering line or storage facility to a distribution center, storage facility, or large volume customer that is not\ndown-stream from a distribution center; (2) operates at a hoop stress of 20 percent or more of SMYS; or (3) transports\ngas within a storage field. NOTE: A large volume customer may receive similar volumes of gas as a distribution\ncenter, and includes factories, power plants, and institutional users of gas.”\n\n\n\n2\nthat extends to the platforms in Cook Inlet. The MGS pipeline system, as shown on Attachment\nA, includes 2-inch, 4-inch, 6-inch and 8-inch diameter pipe.3\nAs a result of the investigation and information review, it appears that conditions exist on your\npipeline facilities that pose a pipeline integrity risk to public safety, property or the environment.\nPursuant to 49 U.S.C. § 60117(l), PHMSA issues this Notice of Proposed Safety Order (Notice),\nnotifying you of the preliminary findings of the investigation, and proposing that you take certain\nmeasures to ensure that the public, property, and the environment are protected from this\nintegrity risk.\nFor purposes of this Notice, the term Affected Pipeline Facility means the 8-inch-diameter “A\nPipeline” and consists of the following four sections: 1) MGS onshore facility to “A Platform”;\n2) “A Platform” to Baker Platform; 3) “A Platform” to “C Platform;” and 4) “C Platform” to\nDillon Platform. In addition, the term “Affected Segment” means the “A Pipeline” segment on\nwhich the leak is physically occurring and that runs from the MGS onshore facility to the “A\nPlatform.”\nPreliminary Findings:\n The gas leak on the Affected Segment is located approximately 2.6 miles from the “A\nPlatform” and approximately 4.6 miles from the MGS onshore facility (as measured\nalong the pipeline alignment).\n The leak was discovered on February 7, 2017 and is still ongoing, with a current\nestimated leak rate of between 210,000 to 310,000 cubic feet per day.\n The accident was initially reported by Hilcorp to the National Response Center at 7:49\npm EST on February 7, 2017 (NRC Report No. 1170504), indicating an unknown\nquantity release of natural gas. In addition, Hilcorp’s Regulatory Compliance Manager\nleft a phone message for a PHMSA Anchorage Office employee on February 7, 2017, at\n8:25 pm EST.\n Hilcorp reports that in late January 2017, it noticed an increased trend in pipeline flow\ndata on the Affected Segment. In response to this data, Hilcorp indicates that it\nconducted aerial pipeline surveillances by helicopter, looking specifically for leaks, and\ndiscovered the leak on February 7, 2017. Subsequently, Hilcorp’s flow analysis revealed\nthat the pipeline began leaking in late December 2016.\n The offshore (subsea) portion of the MGS Fuel Gas System is identified as the “A\nPipeline.” As noted above, the “A Pipeline” begins at the onshore facility and is routed\nto the “A Platform.” At the “A Platform,” the pipeline bifurcates, with one leg extending\n3 Attachment A, General overview map of the pipeline system.\n\n\n\n3\nto the “Baker Platform” and the other to the “C Platform” and “Dillon Platform.” The “A\nPipeline” is an 8-inch nominal diameter gas transmission pipeline and was converted\nfrom liquid to gas service in 2005.\n In close proximity to the “A Pipeline” is Hilcorp’s parallel “B Pipeline,” a crude-oil\npipeline not shown on Attachment A. The “B Pipeline” has similar pipeline\ncharacteristics as those of the “A Pipeline” and transports hazardous liquids produced and\ninitially processed by the offshore platforms to the MGS onshore facilities. The “B\nPipeline” is operating in an environment substantially similar to the “A Pipeline.”\n The “A Platform” and “C Platform” produce crude oil, conduct initial processing, and are\nmanned 24 hours a day, seven days a week. The “Baker Platform” and “Dillon Platform”\nare in “light house” mode and are unmanned.4\n The “A Pipeline” is an 8-inch nominal diameter transmission pipeline with 0.594” wall\nthickness. The pipeline is Grade B seamless pipe with X-Tru Coat and one-inch concrete\nweight coating. The portion of the “A Pipeline” running from the MGS shore facility to\nthe “A Platform” and the portion running from the “A Platform” to “C” Platform were\ninstalled in 1965.\n Hilcorp Alaska, LLC (OPID: 32645), purchased oil and gas facilities located in Nikiski,\nAlaska from XTO Energy, Inc. (OPID: 31178), on September 1, 2015. This purchase\nincluded the “A Pipeline.”\n The product being transported by the “A Pipeline” is transmission-quality natural gas\n(98.67% methane). The pipeline operates continuously and has a normal operating\npressure range of 160-250 psig. The pipeline was converted from liquid service to gas\nservice in 2005.\n Since the leak was discovered by Hilcorp on February 7, 2017, the following actions have\nbeen taken by Hilcorp: (1) the operating pressure on “A Pipeline” was lowered to 165\npsi; (2) periodic helicopter overflights were conducted for visual surveillance of the leak\narea; (3) periodic situational reports were compiled; (4) the company performed analyses\nof different operational options; (5) the operator calculated the estimated gas leak rate;\n(6) the company shut down non-essential equipment on the offshore platforms to\nminimize gas demand; (7) it performed modeling on methane dispersion in Cook Inlet\nwaterway; (8) it made preliminary preparations for divers and dive boat to perform\nnecessary repairs when ice conditions and weather permitted; and (9) the company\nparticipated in meetings with federal and state agencies to coordinate response efforts.\nThe National Oceanic and Atmospheric Administration (NOAA), National Marine\nFisheries Service (NMFS) has expressed concerns to PHMSA about the potential\n4 “Light house” mode means no active production is taking place at these platforms. The primary operating objectives\nfor light house mode platforms are the continual operation of impressed current cathodic protection systems and\nnavigational-aid lighting.\n\n\n\n4\nenvironmental damage that may result from the continued release of gas in Cook Inlet.\nBy letter dated February 24, 2017 to PHMSA, NMFS provided an outline of the species\nand designated critical habitat that occur in Cook Inlet and documented its concerns\nregarding the potential effects of the natural gas discharge on marine mammals, including\nthe critically-endangered Cook Inlet beluga whales.\n The Alaska Department of Environmental Conservation (ADEC) has also responded to\nthe ongoing gas release from “Pipeline A” because it considers the leak to be a discharge\nof hazardous substance into or upon the waters or lands of the state, which is prohibited\nunless authorized by ADEC, under Alaska Statute 46.03.745. By letter dated February\n27, 2017, ADEC ordered Hilcorp to conduct environmental sampling and monitoring. To\ndate, ADEC has issued three Situation Reports regarding the leak. ADEC also has\ndescribed the environmentally sensitive areas and wildlife issues in its Incident Report,\nwhich was prepared with input from the National Marine Fisheries Service, the Alaska\nDepartment of Fish and Game, and the US Fish and Wildlife Service.\n Regarding risks associated with water craft, the United States Coast Guard (USCG) has\ndetermined that risk to life and property appear to be low, primarily based on the remote\narea of the failure, current limited access due to sea ice, and modeling of the flammable\narea of the vapor cloud. As the sea ice dissipates, USCG estimates that the risk to life\nand property would likely increase. The USCG has and continues its Very High\nFrequency radio broadcast to mariners describing the gas leak, its location, and specific\nrequests to mitigate the risk. At this time the USCG has not implemented a safety zone\naround the leak location; however, if necessary it could. An identified risk condition\nrelated to the leaking pipeline itself is that the leak could get worse and potentially fail if\nthe leak was caused by outside forces, e.g. vibration, vortex shedding, excessive bending,\nor rock impingement.\n Regarding risks associated with commercial aircraft, PHMSA finds that in the event the\nfailure was caused by outside force as noted above, then the leak could po","truncated":true,"body_characters":57470}