{"operation":"document","citation":"CPF 520197001M","title":"CAELUS NATURAL RESOURCES ALASKA, LLC — Notice of Amendment","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2019-01-14","effective_on":null,"summary":"CLOSED notice of amendment citing 195.402(c)(3), 195.452(f)(4), 195.452(f)(5), 195.505(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-520197001m.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-520197001m.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-520197001m","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/520197001M","body":"Notice of Amendment involving CAELUS NATURAL RESOURCES ALASKA, LLC. PHMSA's enforcement data identifies the cited regulations as 195.402(c)(3),  195.452(f)(4),  195.452(f)(5),  195.505(a). The case was opened on 2019-01-14 and is reported as closed as of 2019-07-02. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n520197001M_Closure Letter_07022019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520197001M/520197001M_Closure%20Letter_07022019.pdf\n\n520197001M_Closure Letter_07022019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520197001M/520197001M_Closure%20Letter_07022019_text.pdf\n\n520197001M_Notice of Amendment_01142019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520197001M/520197001M_Notice%20of%20Amendment_01142019.pdf\n\n520197001M_Notice of Amendment_01142019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520197001M/520197001M_Notice%20of%20Amendment_01142019_text.pdf\n\n520197001M_Operator Response to Notice Letter_02202019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520197001M/520197001M_Operator%20Response%20to%20Notice%20Letter_02202019.pdf\n\n520197001M_Closure Letter_07022019_text.pdf\n\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nJuly 2, 2019\nMr. Jim Musselman\nPresident and CEO\nCaelus Natural Resources Alaska, LLC\n3700 Centerpoint Drive, Suite 500\nAnchorage, Alaska 99503\nCPF 5-2019-7001M\nClosure Letter\nDear Mr. Musselman:\nFrom April 9 through 13, 2018, a representative of the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA), pursuant to Chapter 601 of 49 United States Code, inspected Caelus Natural\nResources Alaska, LLC’s (Caelus) procedures for pipeline operations, maintenance, corrosion control,\nand integrity management in Anchorage, Alaska. Currently, the Caelus procedures that we reviewed\napply to your Oooguruk 2-inch diesel pipelines.\nAs a result of the inspection, Caelus was issued a Notice of Amendment (NOA) on January 14, 2019,\nwhich proposed amendment of your procedures.\nCaelus submitted its amended procedures on June 3, 2019. My staff reviewed the amended procedures,\nand it appears that the inadequacies outlined in the NOA were corrected.\nThis letter is to inform you no further action is necessary and this case is now closed. Thank you for\nyour cooperation.\nSincerely,\nDustin Hubbard\nDirector, Western Region\nPipeline and Hazardous Materials Safety Administration\ncc: PHP-60 Compliance Registry\nPHP-500 G. St. Pierre (#158101)\nErin Renfro, Caelus Engineering Supervisor, Operations and Production\n\n520197001M_Notice of Amendment_01142019_text.pdf\n\nNOTICE OF AMENDMENT\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nJanuary 14, 2019\nJim Musselman\nPresident and CEO\nCaelus Natural Resources Alaska, LLC\n3700 Centerpoint Drive\nSuite 500\nAnchorage, Alaska 99503\nCPF 5-2019-7001M\nDear Mr. Musselman:\nFrom April 9 through 13, 2018, a representative of the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected Caelus\nNatural Resources Alaska, LLC’s (Caelus) procedures for pipeline operations, maintenance,\ncorrosion control, and integrity management in Anchorage, Alaska. Currently, the Caelus\nprocedures that we reviewed apply to your Oooguruk 2-inch diesel pipelines.\nDuring the inspection, PHMSA identified apparent inadequacies within Caelus’s plans or\nprocedures, as described below:\n1. § 195.402 Procedural manual for operations, maintenance, and emergencies.\n(a) . . . .\n(c) Maintenance and normal operations. The manual required by paragraph (a) of\nthis section must include procedures for the following to provide safety during\nmaintenance and normal operations:\n(3) Operating, maintaining, and repairing the pipeline system in accordance with\neach of the requirements of this subpart and subpart H of this part.\n\n\n\nCaelus's Operations and Maintenance Manual (Rev. 2 March 2018) (the “O&M Manual”) lacks\nwritten processes for operating and maintaining the diesel pipeline consistent with subparts F and\nH of 49 C.F.R. Part 195. Specifically, the O&M Manual lacks:\n A procedure for repairing each type of defect, consistent with § 195.401(b), § 195.422,\nand § 195.585. The O&M Manual incorporates Caelus’s Construction and Repair\nManual by reference. However, the repairs discussed in the Construction and Repair\nmanual are specific to repairs during construction (for example, welding repairs) and do\nnot discuss operations and maintenance repairs to the pipeline (for example, repair of\ncorroded pipe).\n A procedure to maintain each valve needed to safely operate the pipeline, consistent with\n§ 195.420(a). The O&M Manual incorrectly states that there are no valves on the\npipeline, which is inconsistent with documents provided by Caelus to PHMSA during the\ninspection. For example, Caelus’s diesel transfer procedures (“OTP-0300-OP-\n0810REV.06” and “ODS-0300-OP-0810Rev.01”), base oil transfer procedures (“OTP-\n0300-OP-0910Rev.07” and “ODS-0300-OP-0910Rev.01”) and piping and\ninstrumentation diagrams (P&IDs) all identify valves which are needed to safely operate\nthe pipeline. Caelus must identify valves needed to safely operate the pipeline, and must\nprepare a written maintenance program for those valves that is adequate to ensure that the\nvalves are kept in good working order at all times.\n A procedure to inspect each mainline valve at intervals not exceeding 71∕2 months, but at\nleast twice each calendar year, consistent with § 195.420(b). The O&M Manual\nincorrectly states that there are no valves on the pipeline. However, during the inspection\nPHMSA observed valves at the upstream and downstream ends of the pipeline. Caelus\nmust identify each mainline valve (for example, isolation block valves on either end of\nthe pipeline) and must establish for those valves a written inspection program consistent\n§ 195.420(b).\n A procedure to inspect and test each pressure limiting device, relief device, pressure\nregulator, or other item of pressure control, consistent with § 195.428(a). The diesel\npipeline uses various types of overpressure protection and pressure control equipment\n(for example, pressure safety valves and equipment associated with the high-pressure\nshutdown process for the transfer pumps). The O&M Manual does not include\nprocedures to test and inspect the various overpressure protection and pressure control\nequipment.\n A procedure for inspecting the internal surface of the pipe for evidence or corrosion\nwhenever pipe is removed from a pipeline, as required by 195.579(c). The O&M Manual\nincorporates the Caelus Corrosion Control Manual by reference. Neither the O&M\nManual nor the Corrosion Control Manual have a process to inspect the internal surface\nof the removed pipe for evidence of corrosion.\n2\n\n\n\n2. § 195.452 Pipeline integrity management in high consequence areas.\n(a) . . . .\n(f) What are the elements of an integrity management program? An integrity\nmanagement program begins with the initial framework. An operator must\ncontinually change the program to reflect operating experience, conclusions drawn\nfrom results of the integrity assessments, and other maintenance and surveillance\ndata, and evaluation of consequences of a failure on the high consequence area. An\noperator must include, at minimum, each of the following elements in its written\nintegrity management program:\n(4) Criteria for remedial actions to address integrity issues raised by the assessment\nmethods and information analysis (see paragraph (h) of this section);\nCaelus's written Integrity Management Plan (Rev 0, 10/2017) (the “IMP”) lacks written criteria\nfor remedial actions to address integrity issues consistent with § 195.452(h). The IMP states that\nthe diesel pipeline “would remain shut down until an integrity issue is addressed.” However,\nCaelus failed to define in their IMP what is an “integrity issue” which would cause them to shut\ndown the pipeline. The IMP must include a written process explaining how Caelus will\n“evaluate all anomalous conditions and remediate those that could reduce a pipeline's integrity,”\nas required by § 195.452(h)(1). The IMP must include specific criteria for remedial action,\nincluding, at a minimum, the special requirements for scheduling remediation in § 195.452(h)(4).\n3. § 195.452 Pipeline integrity management in high consequence areas.\n(a) . . . .\n(f) What are the elements of an integrity management program? An integrity\nmanagement program begins with the initial framework. An operator must\ncontinually change the program to reflect operating experience, conclusions drawn\nfrom results of the integrity assessments, and other maintenance and surveillance\ndata, and evaluation of consequences of a failure on the high consequence area. An\noperator must include, at minimum, each of the following elements in its written\nintegrity management program:\n(5) A continual process of assessment and evaluation to maintain a pipeline's\nintegrity (see paragraph (j) of this section);\nCaelus's IMP lacks a process of continual assessment and evaluation to maintain the pipeline’s\nintegrity consistent with § 195.452(j). Specifically:\n Caelus failed include a process in their IMP to conduct continuing evaluations of the\npipeline’s integrity consistent with § 195.452(j)(2). The operator stated that their\ncorrosion control contractor conducts quarterly mechanical integrity evaluations of their\nfacilities and pipelines and prepares a summary report. However, this process has not\nbeen incorporated into Caelus’s written IMP. The IMP must include a written process for\ndetermining how frequently evaluations will be conducted based on risk factors specific\nto the pipeline (including, at a minimum, the factors specified in § 195.452(e)). The IMP\nalso must describe the contents of the evaluations. At a minimum, the evaluation must\n3\n\n\n\nconsider the results of the baseline and periodic integrity assessments, information\nanalysis (§ 195.452(g)) and decisions about remediation, and preventive and mitigative\nactions (§ 195.452(h) and § 195.452(i)).\n The IMP lacks a process to establish an assessment interval based on all factors,\nconsistent with § 195.452(j)(3). The IMP has no process to establish reassessment\nintervals, based on the risk factors § 195.452(e). The IMP also lacks a process to notify\nPHMSA for variance from the 5-year maximum integrity assessment interval (for\nexample, engineering basis or unavailable technology), consistent with § 195.452(j)(4)\nand § 195.452(m).\n The IMP lacks a process to implement the integrity assessments using the allowable\nmethods in § 195.452(j)(5) and in accordance with industry standards consistent with\n§ 195.425(b)(6). The IMP states that “[a] one-hour leak integrity test is performed\nmonthly in lieu of performing a hydrostatic test every 5 years.” This is not one of the\nallowable assessment methods in § 195.452(j)(5).\n The IMP lacks a process to review the integrity assessment results analysis by a person\nqualified to evaluate the results consistent with § 195.452(f)(8). The IMP has no process\nfor reviewing integrity assessment results.\n4. § 195.505 Qualification program.\nEach operator shall have and follow a written qualification program. The program\nshall include provisions to:\n(a) Identify covered tasks;\nCaelus failed to identify all covered tasks consistent with § 195.501(b). In Caelus’s Operator\nQualification Manual (Rev. 0 July 2016) and associated Task Analysis Sheets (November 2016),\nCaelus identified covered tasks associated with maintaining the mainline pipe (for example,\n“Conduct Close Interval Survey”) but failed to identify tasks associated with operating any\nequipment, facility, or building used in the transportation of hazardous liquids. For example,\nstarting up and shutting down the pipeline and valve operation and maintenance are not\nidentified as covered tasks.\nResponse to this Notice\nThis Notice is provided pursuant to 49 U.S.C. § 60108(a) and 49 C.F.R. § 190.206. Enclosed as\npart of this Notice is a document entitled Response Options for Pipeline Operators in\nCompliance Proceedings. Please refer to this document and note the response options. Be\nadvised that all material you submit in response to this enforcement action is subject to being\nmade publicly available. If you believe that any portion of your responsive material qualifies for\nconfidential treatment under 5 U.S.C. 552(b), along with the complete original document you\nmust provide a second copy of the document with the portions you believe qualify for\nconfidential treatment redacted and an explanation of why you believe the redacted information\nqualifies for confidential treatment under 5 U.S.C. 552(b).\n4\n\n\n\nFollowing the receipt of this Notice, you have 30 days to submit written comments, revised\nprocedures, or a request for a hearing under §190.211. If you do not respond within 30 days of\nreceipt of this Notice, this constitutes a waiver of your right to contest the allegations in this\nNotice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in\nthis Notice without further notice to you and to issue an Order Directing Amendment. If your\nplans or procedures are found inadequate as alleged in this Notice, you may be ordered to amend\nyour plans or procedures to correct the inadequacies (49 C.F.R. § 190.206). If you are not\ncontesting this Notice, we propose that you submit your amended procedures to my office within\n90 days of receipt of this Notice. This period may be extended by written request for good\ncause. Once the inadequacies identified herein have been addressed in your amended\nprocedures, this enforcement action will be closed.\nIt is requested (not mandated) that Caelus Natural Resources Alaska, LLC maintain\ndocumentation of the safety improvement costs associated with fulfilling this Notice of\nAmendment (preparation/revision of plans, procedures) and submit the total to Chris Hoidal,\nActing Director, Western Region, Pipeline and Hazardous Materials Safety Administration. In\ncorrespondence concerning this matter, please refer to CPF 5-2019-7001M and, for each\ndocument you submit, please provide a copy in electronic format whenever possible.\nSincerely,\nChris Hoidal\nActing Director, Western Region\nPipeline and Hazardous Materials Safety Administration\ncc: PHP-60 Compliance Registry\nPHP-500 J. Gano (#158101)\nEnclosure: Response Options for Pipeline Operators in Compliance Proceedings\n5","truncated":false,"body_characters":14472}