# CAELUS NATURAL RESOURCES ALASKA, LLC — Notice of Probable Violation

- **operation:** document
- **citation:** CPF 520197002
- **title:** CAELUS NATURAL RESOURCES ALASKA, LLC — Notice of Probable Violation
- **source type:** enforcement
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2019-01-21
- **effective on:** Not available
- **summary:** CLOSED notice of probable violation citing 195.260(e), 195.412(a), 195.428(a), 195.440(c), 195.452(b)(1), 195.452(b)(2), 195.452(j)(1), 195.583(a).
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- **source url:** https://primis.phmsa.dot.gov/enforcement-data/case/520197002
**body:**

Notice of Probable Violation involving CAELUS NATURAL RESOURCES ALASKA, LLC. PHMSA's enforcement data identifies the cited regulations as 195.260(e),  195.412(a),  195.428(a),  195.440(c),  195.452(b)(1),  195.452(b)(2),  195.452(j)(1),  195.583(a). The case was opened on 2019-01-21 and is reported as closed as of 2020-07-23. Open the official case record for notices, responses, orders, and the latest status.

Official case documents:

520197002_Closure Letter_07232020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520197002/520197002_Closure%20Letter_07232020.pdf

520197002_Closure Letter_07232020_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520197002/520197002_Closure%20Letter_07232020_text.pdf

520197002_Final Order_07232019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520197002/520197002_Final%20Order_07232019.pdf

520197002_Final Order_07232019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520197002/520197002_Final%20Order_07232019_text.pdf

520197002_NOPV PCO_01212019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520197002/520197002_NOPV%20PCO_01212019.pdf

520197002_NOPV PCO_01212019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520197002/520197002_NOPV%20PCO_01212019_text.pdf

520197002_Operator Response to Notice and Request for Time Extension_02202019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520197002/520197002_Operator%20Response%20to%20Notice%20and%20Request%20for%20Time%20Extension_02202019.pdf

520197002_Closure Letter_07232020_text.pdf

VIA E-MAIL TO MR. LUCA PELLICCIOTTA
July 23, 2020
Mr. Luca Pellicciotta
Vice President, Technical Services
Eni US Operating Co. Inc.
1200 Smith Street, Suite 1700
Houston, TX 77002
CPF 5-2019-7002
Closure Letter
Dear Mr. Pellicciotta:
On July 23, 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to
Caelus Natural Resources Alaska, LLC (Caelus), the operator at that time of the Oooguruk diesel
pipeline, a Final Order in the above-referenced case. This Order included a Compliance Order. Caelus
had previously provided documentation to PHMSA showing that they completed the first action of the
Compliance Order.
Eni US Operating Co., Inc. (Eni), as the current operator of the Oooguruk diesel pipeline, provided to
PHMSA documentation of their June 2020 integrity assessments of the Oooguruk diesel pipeline, which
was the second action of the Compliance Order. Based on our review of the documentation provided by
Eni, PHMSA determined that Eni complied with the actions of the Compliance Order. Accordingly, this
case is now closed and no further action is contemplated with respect to matters involved in this case.
Thank you for your cooperation in this matter.
Sincerely,
Dustin Hubbard
Director, Western Region
Pipeline and Hazardous Materials Safety Administration
cc: PHP-60 Compliance Registry
PHP-500 J. Gano (#158101)
Mr. Larry Burgess, Eni US Operating Co.
Mr. Rich Vicente, Eni US Operating Co.
Mr. Martin Slade, Eni US Operating Co.

520197002_Final Order_07232019_text.pdf

July 23, 2019
Mr. Jim Musselman
President and Chief Executive Officer
Caelus Natural Resources Alaska, LLC
3700 Centerpoint Drive, Suite 500
Anchorage, Alaska 99503
Re: CPF No. 5-2019-7002
Dear Mr. Musselman:
Enclosed please find the Final Order issued in the above-referenced case. It makes findings of
violation and specifies actions that need to be taken by Caelus Natural Resources Alaska, LLC,
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 effective upon the date of mailing, as
provided under 49 C.F.R. § 190.5.
Thank you for your cooperation in this matter.
Sincerely,
Alan K. Mayberry
Associate Administrator
for Pipeline Safety
Enclosure
cc: Mr. Dustin Hubbard, Director, Western Region, Office of Pipeline Safety, PHMSA
Ms. Erin D. Renfro, Operations Engineering Supervisor, Caelus Natural Resources
Alaska, LLC
CERTIFIED MAIL - RETURN RECEIPT REQUESTED



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590
____________________________________
In the Matter of )
Caelus Natural Resources Alaska, LLC, ) )
)
)
Respondent. )
____________________________________)
CPF No. 5-2019-7002
FINAL ORDER
From April 9 through April 20, 2018, pursuant to 49 U.S.C. § 60117, representatives of the
Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety
(OPS), conducted an on-site pipeline safety inspection of the facilities and records of Caelus
Natural Resources Alaska, LLC’s (Caelus or Respondent) 2-inch diesel and base oil pipeline (the
“diesel pipeline”) that services the Oooguruk oil field located on the Alaska North Slope. The
associated pipeline operations and maintenance procedures and records were reviewed in
Anchorage, Alaska.
As a result of the inspection, the Director, Western Region, OPS (Director), issued to
Respondent, by letter dated January 21, 2019, a Notice of Probable Violation and Proposed
Compliance Order (Notice), which also included warnings pursuant to 49 C.F.R. § 190.205. In
accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Caelus had committed
eight violations of 49 C.F.R. Part 195 and proposed ordering Respondent to take certain
measures to correct the alleged violations. The warning items required no further action, but
warned Caelus to correct the probable violations or face possible future enforcement action.
Caelus responded to the Notice by letter dated February 20, 2019 (Response). The company did
not contest the allegations of violation and agreed to complete the proposed compliance actions.
Respondent requested additional time to submit one element of a proposed compliance action.
Respondent did not request a hearing and therefore has waived its right to one.
FINDINGS OF VIOLATION
In its Response, Caelus did not contest the allegations in the Notice that it violated 49 C.F.R. Part
195, as follows:
Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.260(e), which states:



CPF No. 5-2019-7002
Page 2
§ 195.260 Valves: Location.
A valve must be installed at each of the following locations:
(a) . . . .
(e) On each side of a water crossing that is more than 100 feet (30
meters) wide from high-water mark to high-water mark unless the
Administrator finds in a particular case that valves are not justified.
The Notice alleged that Respondent violated 49 C.F.R. § 195.260(e) by failing to install a valve
on each side of a water crossing greater than 100 feet wide. Specifically, the Notice alleged that
the underwater portion of the diesel pipeline that traverses the Beaufort Sea between the
mainland and an offshore artificial drilling island is approximately 5.7 miles. Although there are
shutoff valves located at the artificial drilling island side of the water crossing, the pipeline does
not have the required shutoff valve at the mainland side of the water crossing. The nearest valve
to the mainland side of the water crossing is at the pumping and pigging module at the upstream
end of the diesel pipeline, which is approximately 2.3 miles from the water.
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. § 195.260(e) by failing to install a
valve on each side of a water crossing greater than 100 feet wide.
Item 7: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(j)(1), which states:
§ 195.452 Pipeline integrity management in high consequence areas.
(a) . . . .
(j) What is a continual process of evaluation and assessment to
maintain a pipeline's integrity?
(1) General. After completing the baseline integrity assessment, an
operator must continue to assess the line pipe at specified intervals and
periodically evaluate the integrity of each pipeline segment that could affect
a high consequence area.
The Notice alleged that Respondent violated 49 C.F.R. § 195.452(j)(1) by failing to continue to
assess its line pipe at specified intervals and periodically evaluate the integrity of each pipeline
segment that could affect a high consequence area after completing the baseline integrity
assessment. Specifically, the Notice alleged that the diesel pipeline’s baseline assessment was
conducted in 2007, and that Caelus had not completed an integrity reassessment of the line pipe
since that time. Under 49 C.F.R. § 195.452(j)(3), the assessment interval must not exceed 5
years or 68 months. Caelus was also utilizing a leak detection test that was not an allowable
integrity assessment method.
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. § 195.452(j)(1) by failing to continue
to assess the line pipe at specified intervals and periodically evaluate the integrity of each
pipeline segment that could affect a high consequence area after completing the baseline
integrity assessment.



CPF No. 5-2019-7002
Page 3
These findings of violation will be considered prior offenses in any subsequent enforcement
action taken against Respondent.
WARNING ITEMS
With respect to Items 2, 3, 4, 5, 6, and 8, the Notice alleged probable violations of Part 195 but
did not propose a civil penalty or compliance order for these items. Therefore, these are
considered to be warning items. The warnings were for:
49 C.F.R. § 195.412(a) (Item 2) ─ Respondent’s alleged failure to inspect the
surface conditions on or adjacent to the diesel pipeline at intervals not exceeding
3 weeks, but at least 26 times each calendar year;
49 C.F.R. § 195.428(a) (Item 3) ─ Respondent’s alleged failure to test each
overpressure safety device on the diesel pipeline at least once each calendar year,
with intervals not to exceed 15 months;
49 C.F.R. § 195.440(c) (Item 4) ─ Respondent’s alleged failure to review its
Public Awareness Plan on an annual basis consistent with API RP 1162;
49 C.F.R. § 195.452(b)(1) (Item 5) ─ Respondent’s alleged failure to develop a
written integrity management program that addresses the risks on each segment of
pipeline within one year after the date the pipeline began operation;
49 C.F.R. § 195.452(b)(2) (Item 6) ─ Respondent’s alleged failure to identify
each pipeline or pipeline segment covered by § 195.452 within the required
timeframe; and
49 C.F.R. § 195.483(a) (Item 8) ─ Respondent’s alleged failure to conduct
atmospheric corrosion inspections on the diesel pipeline at the required inspection
intervals.
Caelus presented information in its Response showing that it will take certain actions to address
the cited items. If OPS finds a violation of any of these items in a subsequent inspection,
Respondent may be subject to future enforcement action.
COMPLIANCE ORDER
The Notice proposed a compliance order with respect to Items 1 and 7 in the Notice for
violations of 49 C.F.R. §§ 195.260(e) and 195.452(j)(1), 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. 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



CPF No. 5-2019-7002
Page 4
regulations applicable to its operations:
1. With respect to the violation of § 195.260(e) (Item 1), Respondent must install a
shutdown valve on the main land side of the Beaufort Sea water crossing. The
location of the valve must be as near as practicable to the shore. The valve selected
must comply with § 195.116 and be consistent with Caelus’s Excess Flow Restricting
Device study required by § 195.452(i). Caelus must install the valve within 180 days
after the receipt of the Final Order, and must provide documentation that this has
been completed to the Director within 30 days of the installation.
2. With respect to the violation of § 195.452(j)(1) (Item 7), Respondent must:
a. Prepare a written plan for conducting an integrity assessment consistent with
§ 195.452(i)(l). If a pressure test is the selected assessment method, the written
plan must be consistent with Subpart E of 49 C.F.R. Part 195. Caelus must
submit its written integrity assessment plan to the Director within 90 days after
the receipt of the Final Order.
b. Implement an integrity assessment in accordance with Item 2(a). Caelus must
complete the integrity assessment under Item 2(b), and submit the results of the
integrity assessment to the Director within one year of the receipt of the Final
Order.
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.
It is requested (not mandated) that Respondent maintain documentation of the safety
improvement costs associated with fulfilling this Compliance Order and submit the total to the
Director. It is requested that these costs 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 pipeline infrastructure.
Failure to comply with this Order may result in the administrative assessment of civil penalties
not to exceed $200,000, as adjusted for inflation (49 C.F.R. § 190.223), 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.
Under 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final
Order to the 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, no later than 20 days after receipt of service of this
Final Order by Respondent. Any petition submitted must contain a statement of the issue(s) and
meet all other requirements of 49 C.F.R. § 190.243. The terms of the order, including corrective
action, remain in effect unless the Associate Administrator, upon request, grants a stay.



CPF No. 5-2019-7002
Page 5
The terms and conditions of this Final Order are effective upon service in accordance with 49
C.F.R. § 190.5.
July 23, 2019
___________________________________ __________________________
Alan K. Mayberry Date Issued
Associate Administrator
for Pipeline Safety
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