{"operation":"document","citation":"CPF 520180010W","title":"AIX ENERGY LLC — Warning Letter","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2018-11-06","effective_on":null,"summary":"CLOSED warning letter citing 192.465(b), 192.605(a), 192.625(a), 192.625(b), 192.631(a)(2), 192.706(a), 192.745(a), 192.905(b)(1).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-520180010w.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-520180010w.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-520180010w","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/520180010W","body":"Warning Letter involving AIX ENERGY LLC. PHMSA's enforcement data identifies the cited regulations as 192.465(b),  192.605(a),  192.625(a),  192.625(b),  192.631(a)(2),  192.706(a),  192.745(a),  192.905(b)(1). The case was opened on 2018-11-06 and is reported as closed as of 2018-11-06. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n520180010W_Warning Letter Revised Version_11062018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520180010W/520180010W_Warning%20Letter%20Revised%20Version_11062018.pdf\n\n520180010W_Warning Letter Revised Version_11062018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520180010W/520180010W_Warning%20Letter%20Revised%20Version_11062018_text.pdf\n\n520180010W_Warning Letter_09112018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520180010W/520180010W_Warning%20Letter_09112018.pdf\n\n520180010W_Warning Letter_09112018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520180010W/520180010W_Warning%20Letter_09112018_text.pdf\n\n520180010W_Warning Letter Revised Version_11062018_text.pdf\n\nWARNING LETTER\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nNovember 6, 2018\nMr. Ronald C. Nutt\nChief Operating Officer\nAIX Energy LLC\n2441 High Timbers\nSuite 120\nThe Woodlands, Texas 77380\nCPF 5-2018-0010W\nDear Mr. Nutt:\nOn March 12 through 15, 2018, a representative of the Pipeline and Hazardous Materials\nSafety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code (U.S.C.),\ninspected AIX LLC’s Kenai Loop Pipeline and associated operational records in Kenai,\nAlaska.\nAs a result of the inspection, it is alleged that you have committed probable violations of the\nPipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The items\ninspected and the probable violations are:\n1. § 192.465 External corrosion control: Monitoring.\n(b) Each cathodic protection rectifier or other impressed current power source\nmust be inspected six times each calendar year, but with intervals not exceeding\n21∕2 months, to insure that it is operating.\nAIX failed to monitor their impressed current power source at the intervals required by\n§ 192.465(b). The impressed current source is a direct bond to Enstar's pipeline system. The\nbond is located at the City Gate on the downstream end of the Kenai Loop Pipeline. Between\n2012 and July 2015, AIX monitored the impressed current source only once per calendar year,\n\n\n\nwhen AIX’s corrosion contractor checked the impressed current source as part of the annual\ncathodic protection survey.\n2. § 192.605 Procedural manual for operations, maintenance, and emergencies.\n(a) General. Each operator shall prepare and follow for each pipeline, a manual\nof written procedures for conducting operations and maintenance activities and\nfor emergency response. For transmission lines, the manual must also include\nprocedures for handling abnormal operations. This manual must be reviewed\nand updated by the operator at intervals not exceeding 15 months, but at least\nonce each calendar year. This manual must be prepared before operations of a\npipeline system commence. Appropriate parts of the manual must be kept at\nlocations where operations and maintenance activities are conducted.\nAIX failed to follow their written procedures for emergency response. AIX lists equipment\nthat must be available at the scene of an emergency on their equipment inventory in their\nEmergency Plan. Two explosive gas meters are listed on that inventory. However, both\nexplosive gas meters were out-of-service at the time of the inspection and, according to the\noperator, had been so for about a month.\n3. § 192.625 Odorization of gas.\n(a) A combustible gas in a distribution line must contain a natural odorant or be\nodorized so that at a concentration in air of one-fifth of the lower explosive limit,\nthe gas is readily detectable by a person with a normal sense of smell.\n(b) After December 31, 1976, a combustible gas in a transmission line in a Class\n3 or Class 4 location must comply with the requirements of paragraph (a) of this\nsection unless:\n(1) At least 50 percent of the length of the line downstream from that location is\nin a Class 1 or Class 2 location;\n(2) The line transports gas to any of the following facilities which received gas\nwithout an odorant from that line before May 5, 1975;\n(i) An underground storage field;\n(ii) A gas processing plant;\n(iii) A gas dehydration plant; or\n(iv) An industrial plant using gas in a process where the presence of an odorant:\n(A) Makes the end product unfit for the purpose for which it is intended;\n(B) Reduces the activity of a catalyst; or\n(C) Reduces the percentage completion of a chemical reaction;\n(3) In the case of a lateral line which transports gas to a distribution center, at\nleast 50 percent of the length of that line is in a Class 1 or Class 2 location; or\n(4) The combustible gas is hydrogen intended for use as a feedstock in a\nmanufacturing process.\nAIX failed to odorize combustible gas in the Kenai Loop Pipeline, which transports natural\ngas through Class 3 locations, and the Kenai Loop Pipeline does not meet the potential\nexceptions to odorize listed in § 192.625(b)(1) through (b)(4). Notably, the exception in §\n2\n\n\n\n192.625(b)(2) does not apply because the Kenai Loop Pipeline did not exist before May 5,\n1975.\n4. §192.631 Control room management.\n(a) General.\n(2) The procedures required by this section must be integrated, as appropriate,\nwith operating and emergency procedures required by §§ 192.605 and 192.615.\nAn operator must develop the procedures no later than August 1, 2011, and must\nimplement the procedures according to the following schedule. The procedures\nrequired by paragraphs (b), (c)(5), (d)(2) and (d)(3), (f) and (g) of this section\nmust be implemented no later than October 1, 2011. The procedures required by\nparagraphs (c)(1) through (4), (d)(1), (d)(4), and (e) must be implemented no\nlater than August 1, 2012. The training procedures required by paragraph (h)\nmust be implemented no later than August 1, 2012, except that any training\nrequired by another paragraph of this section must be implemented no later than\nthe deadline for that paragraph.\nAIX failed to prepare written Control Room Management procedures prior to commencing\npipeline operations in 2012. The Kenai Loop Pipeline operations are controlled by a SCADA\nsystem, the interface of which is located at the Kenai Loop pad at the upstream end of the\npipeline. AIX’s Control Room Management Procedures were initially released on June 1,\n2016.\n5. § 192.706 Transmission lines: Leakage surveys.\nLeakage surveys of a transmission line must be conducted at intervals not\nexceeding 15 months, but at least once each calendar year. However, in the case\nof a transmission line which transports gas in conformity with § 192.625 without\nan odor or odorant, leakage surveys using leak detector equipment must be\nconducted—\n(a) In Class 3 locations, at intervals not exceeding 7 ½ months, but at least twice\neach calendar year; and….\nAIX failed to conduct leakage surveys at intervals not exceeding 7 ½ months in Class 3\nlocations on the Kenai Loop Pipeline. AIX conducted leakage surveys on June 13, 2013 and\nJune 6, 2015, but did not conduct leak surveys between those dates. AIX has no records of\nleakage surveys, nor claimed to have conducted leakage surveys, during this 24-month period.\n6. § 192.745 Valve maintenance: Transmission lines.\n(a) Each transmission line valve that might be required during any emergency\nmust be inspected and partially operated at intervals not exceeding 15 months,\nbut at least once each calendar year.\nAIX failed to inspect and partially operate each \"transmission line valve that might be\nrequired during an emergency.\" AIX identified upstream valve PV-625 and downstream\nvalve SDV-820 in the \"Kenai Loop #1 Pipeline Segment Operating Procedure\" as the first\n3\n\n\n\nvalves closed during an emergency shutdown. AIX failed to inspect and partially operate\nthese valves as part of their valve maintenance program. AIX provided the records of\ninspection and partial operation of valves for the most recent valve maintenance cycle\n(February 2018), which did not include PV-625 or SDV-820. The operator indicated that this\nwas consistent with the historical practice and that prior records similarly do not include PV-\n625 and SDV-820.\n7. § 192.905 How does an operator identify a high consequence area?\n(b)(1) Identified sites. An operator must identify an identified site, for purposes\nof this subpart, from information the operator has obtained from routine\noperation and maintenance activities and from public officials with safety or\nemergency response or planning responsibilities who indicate to the operator that\nthey know of locations that meet the identified site criteria. These public officials\ncould include officials on a local emergency planning commission or relevant\nNative American tribal officials.\nAIX failed to identify various identified sites. AIX’s Integrity Management Plan states that\nthere are Identified Sites within the pipeline's Potential Impact Radius (PIR), but AIX has not\nproduced a list or could not otherwise state which sites within the PIR are identified sites.\nUnder 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to\nexceed $209,002 per violation per day the violation persists, up to a maximum of $2,090,022\nfor a related series of violations. For violations occurring prior to November 2, 2015, the\nmaximum penalty may not exceed $200,000 per violation per day, with a maximum penalty\nnot to exceed $2,000,000 for a related series of violations. We have reviewed the\ncircumstances and supporting documents involved in this case, and have decided not to\nconduct additional enforcement action or penalty assessment proceedings at this time. We\nadvise you to correct the items identified in this letter. Failure to do so will result in AIX\nbeing subject to additional enforcement action.\nNo reply to this letter is required. If you choose to reply, in your correspondence please refer\nto CPF 5-2018-0010W. Be advised that all material you submit in response to this\nenforcement action is subject to being made publicly available. If you believe that any\nportion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b),\nalong with the complete original document you must provide a second copy of the document\nwith the portions you believe qualify for confidential treatment redacted and an explanation of\n4\n\n\n\nwhy you believe the redacted information qualifies for confidential treatment under 5 U.S.C.\n552(b).\nSincerely,\nKim West\nDirector, Western Region\nPipeline and Hazardous Materials Safety Administration\ncc: PHP-60 Compliance Registry\nPHP-500 J. Gano (#155861)\n5\n\n520180010W_Warning Letter_09112018_text.pdf\n\nWARNING LETTER\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nSeptember 11, 2018\nMr. Randy Bates\nManaging Director\nBranta E&P\n2441 High Timbers, Suite 120\nThe Woodlands, TX 77380\nCPF 5-2018-0010W\nDear Mr. Bates:\nOn March 12 through 15, 2018, a representative of the Pipeline and Hazardous Materials\nSafety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code (U.S.C.),\ninspected AIX LLC’s Kenai Loop Pipeline and associated operational records in Kenai,\nAlaska.\nAs a result of the inspection, it is alleged that you have committed probable violations of the\nPipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The items\ninspected and the probable violations are:\n1. § 192.465 External corrosion control: Monitoring.\n(b) Each cathodic protection rectifier or other impressed current power source\nmust be inspected six times each calendar year, but with intervals not exceeding\n21∕2 months, to insure that it is operating.\nAIX failed to monitor their impressed current power source at the intervals required by\n§ 192.465(b). The impressed current source is a direct bond to Enstar's pipeline system. The\nbond is located at the City Gate on the downstream end of the Kenai Loop Pipeline. Between\n\n\n\n2012 and July 2015, AIX monitored the impressed current source only once per calendar year,\nwhen AIX’s corrosion contractor checked the impressed current source as part of the annual\ncathodic protection survey.\n2. § 192.605 Procedural manual for operations, maintenance, and emergencies.\n(a) General. Each operator shall prepare and follow for each pipeline, a manual\nof written procedures for conducting operations and maintenance activities and\nfor emergency response. For transmission lines, the manual must also include\nprocedures for handling abnormal operations. This manual must be reviewed\nand updated by the operator at intervals not exceeding 15 months, but at least\nonce each calendar year. This manual must be prepared before operations of a\npipeline system commence. Appropriate parts of the manual must be kept at\nlocations where operations and maintenance activities are conducted.\nAIX failed to follow their written procedures for emergency response. AIX lists equipment\nthat must be available at the scene of an emergency on their equipment inventory in their\nEmergency Plan. Two explosive gas meters are listed on that inventory. However, both\nexplosive gas meters were out-of-service at the time of the inspection and, according to the\noperator, had been so for about a month.\n3. § 192.625 Odorization of gas.\n(a) A combustible gas in a distribution line must contain a natural odorant or be\nodorized so that at a concentration in air of one-fifth of the lower explosive limit,\nthe gas is readily detectable by a person with a normal sense of smell.\n(b) After December 31, 1976, a combustible gas in a transmission line in a Class\n3 or Class 4 location must comply with the requirements of paragraph (a) of this\nsection unless:\n(1) At least 50 percent of the length of the line downstream from that location is\nin a Class 1 or Class 2 location;\n(2) The line transports gas to any of the following facilities which received gas\nwithout an odorant from that line before May 5, 1975;\n(i) An underground storage field;\n(ii) A gas processing plant;\n(iii) A gas dehydration plant; or\n(iv) An industrial plant using gas in a process where the presence of an odorant:\n(A) Makes the end product unfit for the purpose for which it is intended;\n(B) Reduces the activity of a catalyst; or\n(C) Reduces the percentage completion of a chemical reaction;\n(3) In the case of a lateral line which transports gas to a distribution center, at\nleast 50 percent of the length of that line is in a Class 1 or Class 2 location; or\n(4) The combustible gas is hydrogen intended for use as a feedstock in a\nmanufacturing process.\n2\n\n\n\nAIX failed to odorize combustible gas in the Kenai Loop Pipeline, which transports natural\ngas through Class 3 locations, and the Kenai Loop Pipeline does not meet the potential\nexceptions to odorize listed in § 192.625(b)(1) through (b)(4). Notably, the exception in §\n192.625(b)(2) does not apply because the Kenai Loop Pipeline did not exist before May 5,\n1975.\n4. §192.631 Control room management.\n(a) General.\n(2) The procedures required by this section must be integrated, as appropriate,\nwith operating and emergency procedures required by §§ 192.605 and 192.615.\nAn operator must develop the procedures no later than August 1, 2011, and must\nimplement the procedures according to the following schedule. The procedures\nrequired by paragraphs (b), (c)(5), (d)(2) and (d)(3), (f) and (g) of this section\nmust be implemented no later than October 1, 2011. The procedures required by\nparagraphs (c)(1) through (4), (d)(1), (d)(4), and (e) must be implemented no\nlater than August 1, 2012. The training procedures required by paragraph (h)\nmust be implemented no later than August 1, 2012, except that any training\nrequired by another paragraph of this section must be implemented no later than\nthe deadline for that paragraph.\nAIX failed to prepare written Control Room Management procedures prior to commencing\npipeline operations in 2012. The Kenai Loop Pipeline operations are controlled by a SCADA\nsystem, the interface of which is located at the Kenai Loop pad at the upstream end of the\npipeline. AIX’s Control Room Management Procedures were initially released on June 1,\n2016.\n5. § 192.706 Transmission lines: Leakage surveys.\nLeakage surveys of a transmission line must be conducted at intervals not\nexceeding 15 months, but at least once each calendar year. However, in the case\nof a transmission line which transports gas in conformity with § 192.625 without\nan odor or odorant, leakage surveys using leak detector equipment must be\nconducted—\n(a) In Class 3 locations, at intervals not exceeding 7 ½ months, but at least twice\neach calendar year; and….\nAIX failed to conduct leakage surveys at intervals not exceeding 7 ½ months in Class 3\nlocations on the Kenai Loop Pipeline. AIX conducted leakage surveys on June 13, 2013 and\nJune 6, 2015, but did not conduct leak surveys between those dates. AIX has no records of\nleakage surveys, nor claimed to have conducted leakage surveys, during this 24-month period.\n6. § 192.745 Valve maintenance: Transmission lines.\n(a) Each transmission line valve that might be required during any emergency\nmust be inspected and partially operated at intervals not exceeding 15 months,\nbut at least once each calendar year.\n3\n\n\n\nAIX failed to inspect and partially operate each \"transmission line valve that might be\nrequired during an emergency.\" AIX identified upstream valve PV-625 and downstream\nvalve SDV-820 in the \"Kenai Loop #1 Pipeline Segment Operating Procedure\" as the first\nvalves closed during an emergency shutdown. AIX failed to inspect and partially operate\nthese valves as part of their valve maintenance program. AIX provided the records of\ninspection and partial operation of valves for the most recent valve maintenance cycle\n(February 2018), which did not include PV-625 or SDV-820. The operator indicated that this\nwas consistent with the historical practice and that prior records similarly do not include PV-\n625 and SDV-820.\n7. § 192.905 How does an operator identify a high consequence area?\n(b)(1) Identified sites. An operator must identify an identified site, for purposes\nof this subpart, from information the operator has obtained from routine\noperation and maintenance activities and from public officials with safety or\nemergency response or planning responsibilities who indicate to the operator that\nthey know of locations that meet the identified site criteria. These public officials\ncould include officials on a local emergency planning commission or relevant\nNative American tribal officials.\nAIX failed to identify various identified sites. AIX’s Integrity Management Plan states that\nthere are Identified Sites within the pipeline's Potential Impact Radius (PIR), but AIX has not\nproduced a list or could not otherwise state which sites within the PIR are identified sites.\nUnder 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to\nexceed $209,002 per violation per day the violation persists, up to a maximum of $2,090,022\nfor a related series of violations. For violations occurring prior to November 2, 2015, the\nmaximum penalty may not exceed $200,000 per violation per day, with a maximum penalty\nnot to exceed $2,000,000 for a related series of violations. We have reviewed the\ncircumstances and supporting documents involved in this case, and have decided not to\nconduct additional enforcement action or penalty assessment proceedings at this time. We\nadvise you to correct the items identified in this letter. Failure to do so will result in AIX\nbeing subject to additional enforcement action.\nNo reply to this letter is required. If you choose to reply, in your correspondence please refer\nto CPF 5-2018-0010W. Be advised that all material you submit in response to this\nenforcement action is subject to being made publicly available. If you believe that any\nportion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b),\nalong with the complete original document you must provide a second copy of the document\nwith the portions you believe qualify for confidential treatment redacted and an explanation of\n4\n\n\n\nwhy you believe the redacted information qualifies for confidential treatment under 5 U.S.C.\n552(b).\nSincerely,\nKim West\nDirector, Western Region\nPipeline and Hazardous Materials Safety Administration\ncc: PHP-60 Compliance Registry\nPHP-500 J. Gano (#155861)\n5","truncated":false,"body_characters":20579}