Failure Report- Jayhawk Pipeline 4/12/05

Page 1Official PDFDOT US Department of Transportation PHMSA Pipeline and Hazardous Materials Safety Administration OPS Office of Pipeline Safety Central Region Principal Investigator Judy Johnson Senior Accident Investigator Bryan Louque Region Director David Barrett Date of Report 09/01/2011 Subject Failure Investigation Report – Jayhawk Taloga to Liberal Internal Corrosion Operator, Location, & Consequences Date of Failure 04/12/2005 Commodity Released Crude Oil City/County & State Hugoton/Stevens, Kansas OpID & Operator Name 9175 - Jayhawk Pipeline, LLC Unit # & Unit Name 3613 – Liberal SMART Activity # 115713 Milepost / Location 36.7 Type of Failure Leak From Internal Corrosion Fatalities 0 Injuries 0 Description of area impacted Non HCA Rural Area, Farm Field Property Damage $16,500#

Page 2Failure Investigation Report – Jayhawk Taloga to Liberal Internal Corrosion 04/12/2005 Executive Summary On April 12, 2005 a farmer was preparing for planting activities and discovered that crude oil had leaked from the Jayhawk Pipeline. The release was located in southwestern Kansas (Stevens County), approximately 6 miles south of Hugoton. The leak was confirmed to be on the Taloga to Liberal interstate pipeline system (Mile post 36.7). No fatalities or injuries occurred as a result of the release and it did not occur in a High Consequence Area (HCA). Evacuations and road closures were not required. The product did not ignite or explode. An estimated 70 barrels of crude oil was released from the underground pipeline on the right of way. Approximately 10 cubic yards of soil were contaminated and remediated but no surface water was affected. The total cost of the accident was estimated as $16,500 including the product lost and repair costs. After the pipeline was shutdown and the upstream mainline valve closed, Jayhawk personnel excavated the pipeline (72 inches deep) and determined by visual inspection that a small hole was located on the bottom of the pipe (6 o’clock position). The external coating on the pipeline was intact. Another pipeline (4 inch in diameter and part of the Anadarko gas pipeline system) was located approximately 21 inches above the Jayhawk line near the area of the leak. At the time of the release, a PHMSA Central Region inspector was performing inspection activities on other Jayhawk Pipeline facilities. This PHMSA inspector was made aware of the release during the inspection and responded to the accident location. Upon cutout of the damaged pipe section, deposits and pitting were observed on the internal pipe surface. Metallurgical analysis of the damaged pipe indicated that “the pipe leaked due to internal corrosion”. The deposits found internal to the pipeline segment were analyzed. Sand and saltwater had collected in a low point in the pipeline resulting in corrosive conditions on the internal pipe surface that led to the development of a pin hole allowing crude oil to be released. System Details The Jayhawk Pipeline system in 2005 contained approximately 700 miles of crude oil pipeline. The system transported crude across Kansas and parts of Nebraska, Oklahoma, and Texas. Jayhawk’s Taloga to Liberal pipeline system runs approximately 80 miles, originating in Morton County, KS and terminating in Meade County, KS. In 2005, Jayhawk moved crude oil from wellhead gathering systems to refineries or tankage. At the accident location, the pipeline was constructed of API 5L Grade B line pipe manufactured in 1958 by Acme Newport. The pipeline was 6.625 inch in diameter with a 0.188 inch wall thickness. The pipe has a seam type of ERW LF (electric resistance welded low frequency) and was coated with AGF-7 (Asphalt-Glass-Felt). The pipeline system was cathodically protected by an impressed current system. There were no service interruptions or supply impacts as a result of the accident. A review of Jayhawk’s leak history records for the 2000-2005 time periods indicated several failures due to internal corrosion. These failures were not limited to line pipe. Several of the identified internal corrosion failures involved station piping. Page 2 of 5#

Page 3Failure Investigation Report – Jayhawk Taloga to Liberal Internal Corrosion 04/12/2005 Events Leading up to the Failure The Taloga to Liberal maximum operating pressure (MOP) was 1160 psig as established by hydrostatic test in 2001. The operator initially reported that the operating pressure at the location and time of the failure was 572 psig. The pressure at the time of the failure was later updated and reported to have been approximately 508 psig. Previous maintenance projects relevant to the failure involved ineffective maintenance activities associated with pipeline cleaning. In 1996 a Hazardous Facility Order (CPF No. 36505H) was issued regarding the Jayhawk Pipeline system in response to two failures resulting from internal corrosion occurring between Meade and Chase stations. Jayhawk Pipeline did inject corrosion inhibitor (JaCam 1902C) in this affected pipeline segment prior to this 2005 failure and it was understood that internal corrosion coupons were also in place. Emergency Response The Jayhawk Pipeline control center was notified by the farmer who obtained the phone number from a pipeline marker located in the vicinity of the release. Telephonic notification to the National Response Center was made on April 13, 2005. However, a PHMSA Central Region inspector was already working with the operator at the time of the control center notification. Jayhawk Pipeline personnel were dispatched to the accident site and the pipeline was shut down with manual valve closures. Approximately 10 cubic yards of contaminated soil were remediated. There were no wildlife or water impacts. Long term environmental impact assessment was not required. Summary of Return-to-Service After the field investigation was complete, the damaged pipeline segment was cut out and replaced with pre-tested pipe. Jayhawk Pipeline completed the repair and returned the pipeline to service at a reduced operating pressure approximately 2.5 days after the release. A Corrective Action Order (CAO), CPF 3-2005-5020H, was issued by Central Region on April 26, 2005. This CAO required an MOP pressure reduction from Taloga (MP 12.8) to Liberal (MP 58.8) of 470 psig, quarterly reports providing CAO status updates, metallurgical analysis of the failed pipe, and the submission of a written plan including corrective measures that required an integration of data regarding all integrity threat conditions including a review of previous failure and leak history, ILI testing from Interstate to Meade stations, an evaluation for internal corrosion of all pump stations and breakout tanks in the entire Jayhawk Pipeline system (this included the identification of areas of possible internal corrosion such as dead legs, low spots, areas not subjected to cleaning pig intervals within facilities). The CAO required proposed solutions to internal corrosion with completion schedules for the identified solutions as a result of facility evaluations, repairs, and testing. Since this 2005 failure the frequency of cleaning pigs was increased to weekly runs. Water samples are reported by the operator to be pulled during cleaning pig runs and based on the results, biocide trains are run as necessary. When culture counts increase, the operator reports that trains of biocide and Page 3 of 5#

Page 4Failure Investigation Report – Jayhawk Taloga to Liberal Internal Corrosion 04/12/2005 corrosion inhibitor are run with contact time such that microbiological growth can be more effectively controlled. The style, design, wear and manufacturer of the cleaning pigs used are reviewed by the operator to identify possible improvements. Corrosion coupons continue to be monitored. Internal pipeline coating and breakout tank treatments with biocide balls that dissolve or melt on contact with water are ongoing activities. Investigation Details Metallurgical analysis was performed on a 39-inch long segment of the damaged pipe which included the pin hole (approximately 1/8” in diameter) and internal pitted area. Two pits were confirmed through the metallurgical analysis but only one was thru wall. The deposits also found internal to the pipeline segment were sampled and analyzed for composition information. The metallurgical report included information about the deposit samples and stated that “quartz, feldspar, and calcite were from sand that apparently collected in a low spot in the line. A small amount of saltwater also collected at that location and the combination created corrosive conditions that led to the development of the pit responsible for the leak”. Further information provided by the metallurgical report revealed that “the composition of the deposit indicated that acid gasses such as carbon dioxide and hydrogen sulfide had not contributed significantly to the corrosion.” On June 2, 2005, Jayhawk Pipeline completed an in-line inspection (ILI) assessment of the pipeline from Interstate Station to Meade Station as required by the CAO. Jayhawk prepared and implemented a plan to repair the pipeline based on the ILI results. Forty-one sections of pipe were replaced and fifty-six repair sleeves were installed. Following completion of repairs, the Taloga to Liberal pipeline segment was hydrostatically tested in December 2005. On December 20, 2005, the Taloga to Liberal pipeline segment was restarted with the Taloga Station maximum discharge pressure limited to 976 psig. Findings and Contributing Factors Jayhawk Pipeline had several failures due to internal corrosion prior to the accident of April 12, 2005. Prior knowledge of internal corrosion threats did exist for the operator. The Jayhawk Pipeline Taloga to Liberal accident of April 12, 2005 was caused by internal corrosion. Prior to the accident cleaning pigs were not run on a frequent enough basis to prevent accumulation of sand and saltwater at a low point in the pipeline. Sand and saltwater in the low point created corrosive conditions that facilitated the development of corrosion pits on the internal steel pipe surface. One of two corrosion pits identified in the failed segment sent for metallurgical analysis grew until it reached critical depth in the pipe wall and resulted in a pin hole in the pipe that allowed crude oil to be released. Page 4 of 5#

Page 5Failure Investigation Report – Jayhawk Taloga to Liberal Internal Corrosion 04/12/2005 Appendices A Map and Photographs B NRC Report #755621 C Operator Accident Report D Metallurgical Report Page 5 of 5#

Page 6Appendix A Maps and Photographs Map showing failure location This document is on file at PHMSA Page 1 of 6#

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Page 12TeleDetail Page 1 of 2 Appendix B NRC Report #755621 HMIS->INCIDENTS->TELEPHONICS (Version 3.4.05 PROD ) Rules of Behavior Home Logout Menu [Return to Search] << Previous << Previous 1..1 of 1 << Save >> Rescinded Rescinded Comments (max 250 characters) NRC Number: 755621 Call Date: 04/13/2005 Call Time: 09:54:00 Caller Information First Name: RICHARD Last Name: PETERSEN Company Name: JAY HAWK PIPELINE Address: 2000 SOUTH MAIN City: MCPHERSON State: KS Country: USA Zip: 67460 Phone 1: 6202419271 Phone 2: Organization Type: PE Is caller the spiller? Yes Yes No No No Response No Response Confidential: Yes Yes No No No Response No Response Discharger Information First Name: RICHARD Last Name: PETERSEN Company Name: JAY HAWK PIPELINE Address: 2000 SOUTH MAIN City: MCPHERSON State: KS Country: USA Zip: 67460 Phone 1: 6202419271 Phone 2: Organization Type: PE Spill Information State: KS County: STEVENS Nearest City: HOUGTON Zip Code: Location Spill Date: (mm/dd/yyyy) 08:00:00 04/13/2005 Spill Time: (24hh:mm:ss) DTG Type: Occured Incident Type PIPELINE Reported Incident Type Pipeline Description Page 1 of 2 https://phmhqnwas003/hmis/telephonics/Teledetail.aspx?showresult=Y&ReceivedDate=&... 3/11/2011#

Page 13TeleDetail Page 2 of 2 Appendix B NRC Report #755621 CALLER STATED THAT LAND OWNER REPORTED CRUDE OIL ON THE GROUND THAT MAYBE COMING FROM A PIPELINE DUE TO UNKNOWN CAUSES. Materials Involved Material / Chris Name Chris Code Total Qty. Water Qty. OIL: CRUDE OIL: CRUDE OIL 70 BBL Medium Type: Land Additional Medium Information: GROUND Injuries: 0 Fatalites: 0 Evacuations: Yes Yes No No Unknown Unknown No. of Evacuations: 0 Damages: Yes Yes No No Unknown Unknown Damage Amount: 0 Federal Agency Notified: Yes Yes No No Unknown Unknown State Agency Notified: Yes Yes No No Unknown Unknown Other Agency Notified: Yes Yes No No Unknown Unknown Remedial Actions IN THE PROCESS OF MOBILIZING RESPONSE TEAM,INVESTIGATION UNDERWAY Additional Info KDHE WILL BE NOTIFIED Latitude Degrees: Minutes: Seconds: Quadrant: Longitude Degrees: Minutes: Seconds: Quadrant: Distance from City: Direction: Section: 1634S37W Township: Range: Milepost: Page 2 of 2 https://phmhqnwas003/hmis/telephonics/Teledetail.aspx?showresult=Y&ReceivedDate=&... 3/11/2011#

Page 14Appendix C Operator Accident Report NOTICE: This report is required by 49 CFR Part 195. Failure to report can result in a civil penalty not to exceed $25,000 for each violation Form Approved for each day that such violation persists except that the maximum civil penalty shall not exceed $500,000 as provided in 49 USC 60122 OMB No. 2137-0047 U.S. Department of Transportation Research and Special Programs Administration ACCIDENT REPORT – HAZARDOUS LIQUID PIPELINE SYSTEMS Report Date No. (DOT Use Only) INSTRUCTIONS Important: Please read the separate instructions for completing this form before you begin. They clarify the information requested and provide specific examples. If you do not have a copy of the instructions, you can obtain one from the Office Of Pipeline Safety Web Page at http://ops.dot.gov. PART A – GENERAL REPORT INFORMATION Original Report Supplemental Report Final Report 1. a. Operator's OPS 5-digit Identification Number (if known) / ____________/ 2. b. If Operator does not own the pipeline, enter Owner’s OPS 5-digit Identification Number (if known) / ___ / c. Name of Operator ______________________________________________________________________________________ d. Operator street address _______________________________________________________________________________ e. Operator address ______________________________________________________________________________________ City, County, State and Zip Code IMPORTANT: IF THE SPILL IS SMALL, THAT IS, THE AMOUNT IS AT LEAST 5 GALLONS BUT IS LESS THAN 5 BARRELS, COMPLETE THIS PAGE ONLY, UNLESS THE SPILL IS TO WATER AS DESCRIBED IN 49 CFR §195.52(A)(4) OR IS OTHERWISE REPORTABLE UNDER §195.50 AS REVISED IN CY 2001. 2. Time and date of the accident / / / / / / / / hr. month day year 3. Location of accident (If offshore, do not complete a through d. See Part C.1) a. Latitude: _____ Longitude: __________ (if not available, see instructions for how to provide specific location) b. _________________________________________________ City, and County or Parish c. _________________________________________________ State and Zip Code d. Mile post/valve station or survey station no. (whichever gives more accurate location) _________________________________ 4. Telephone report / / / / / / / / NRC Report Number month day year 5. Losses (Estimated) Public/Community Losses reimbursed by operator: Public/private property damage $_______________ Cost of emergency response phase $_______________ Cost of environmental remediation $_______________ Other Costs $_______________ (describe) _____________________________________ Operator Losses: Value of product lost $_______________ Value of operator property damage $_______________ Other Costs $_______________ (describe) _____________________________________ Total Costs $_______________ 6. Commodity Spilled Yes No (If Yes, complete Parts a through c where applicable) a. Name of commodity spilled ___________________________ b. Classification of commodity spilled: HVLs /other flammable or toxic fluid which is a gas at ambient conditions CO2 or other non-flammable, non-toxic fluid which is a gas at ambient conditions Gasoline, diesel, fuel oil or other petroleum product which is a liquid at ambient conditions Crude oil c. Estimated amount of commodity involved : Barrels Gallons (check only if spill is less than one barrel) Amounts: Spilled : ____________ Recovered: ____________ CAUSES FOR SMALL SPILLS ONLY (5 gallons to under 5 barrels) : (For large spills [5 barrels or greater] see Part H) Corrosion Natural Forces Excavation Damage Other Outside Force Damage Material and/or Weld Failures Equipment Incorrect Operation Other PART B – PREPARER AND AUTHORIZED SIGNATURE (type or print) Preparer's Name and Title Area Code and Telephone Number Preparer's E-mail Address Area Code and Facsimile Number Authorized Signature (type or print) Name and Title Date Area Code and Telephone Number Form RSPA F 7000-1 ( 01-2001 ) Page 1 of 4 OPS Data Facsimile Page 1 of 4#

Page 15Appendix C Operator Accident Report PART C – ORIGIN OF THE ACCIDENT (Check all that apply) 1. Additional location information a. Line segment name or ID _______________________ b. Accident on Federal land other than Outer Continental Shelf Yes No c. Is pipeline interstate? Yes No Offshore: Yes No (complete d if offshore) d. Area ___________________ Block # ______________ State / / or Outer Continental Shelf 2. Location of system involved (check all that apply) Operator’s Property Pipeline Right of Way High Consequence Area (HCA)? Describe HCA____________________________________ 3. Part of system involved in accident Above Ground Storage Tank Cavern or other below ground storage facility Pump/meter station; terminal/tank farm piping and equipment, including sumps Other Specify: _________________________________ Onshore pipeline, including valve sites Offshore pipeline, including platforms If failure occurred on Pipeline, complete items a - g: 4. Failure occurred on Body of Pipe Pipe Seam Scraper Trap Pump Sump Joint Component Valve Metering Facility Repair Sleeve Welded Fitting Bolted Fitting Girth Weld Other (specify) Year the component that failed was installed: / / 5. Maximum operating pressure (MOP) a. Estimated pressure at point and time of accident: ____ PSIG b. MOP at time of accident: ___________PSIG c. Did an overpressurization occur relating to the accident? Yes No a. Type of leak or rupture Leak: Pinhole Connection Failure (complete sec. H5) Puncture, diameter (inches) _________ Rupture: Circumferential – Separation Longitudinal – Tear/Crack, length (inches) __________ Propagation Length, total, both sides (feet) _________ N/A Other _______________________________ b.Type of block valve used for isolation of immediate section: Upstream: Manual Automatic Remote Control Check Valve Downstream: Manual Automatic Remote Control Check Valve c. Length of segment isolated _______ ft d. Distance between valves _______ ft e. Is segment configured for internal inspection tools? Yes No f. Had there been an in-line inspection device run at the point of failure? Yes No Don’t Know Not Possible due to physical constraints in the system g. If Yes, type of device run (check all that apply) High Resolution Magnetic Flux tool Year run: ______ Low Resolution Magnetic Flux tool Year run: ______ UT tool Year run: ______ Geometry tool Year run: ______ Caliper tool Year run: ______ Crack tool Year run: ______ Hard Spot tool Year run: ______ Other tool Year run: ______ PART D – MATERIAL SPECIFICATION PART E – ENVIRONMENT 1. Nominal pipe size (NPS) / / in. 2. Wall thickness / / in. 3. Specification SMYS / / 4. Seam type 5. Valve type 6. Manufactured by in year / / 1. Area of accident In open ditch Under pavement Above ground Underground Under water Inside/under building Other ____________ 2. Depth of cover: inches PART F – CONSEQUENCES 1. Consequences (check and complete all that apply) a. Fatalities Injuries c. Product ignited Yes No d. Explosion Yes No Number of operator employees: _______ _______ e. Evacuation (general public only) / / people Contractor employees working for operator: _______ _______ Reason for Evacuation: General public: _______ _______ Precautionary by company Totals: _______ _______ Evacuation required or initiated by public official b. Was pipeline/segment shutdown due to leak? Yes No f. Elapsed time until area was made safe: If Yes, how long? ______ days ______ hours _____ minutes / / hr. / / min. 2. Environmental Impact a. Wildlife Impact: Fish/aquatic Yes No e. Water Contamination: Yes No (If Yes, provide the following) Birds Yes No Amount in water _________ barrels Terrestrial Yes No Ocean/Seawater No Yes b. Soil Contamination Yes No Surface No Yes If Yes, estimated number of cubic yards: _________ Groundwater No Yes c. Long term impact assessment performed: Yes No Drinking water No Yes (If Yes, check below.) d. Anticipated remediation Yes No Private well Public water intake If Yes, check all that apply: Surface water Groundwater Soil Vegetation Wildlife Form RSPA F 7000-1 ( 01-2001 ) Page 2 of 4 OPS Data Facsimile Page 2 of 4#

Page 16Appendix C Operator Accident Report PART G – LEAK DETECTION INFORMATION 1. Computer based leak detection capability in place? Yes No 2. Was the release initially detected by? (check one): CPM/SCADA-based system with leak detection Static shut-in test or other pressure or leak test Local operating personnel, procedures or equipment Remote operating personnel, including controllers Air patrol or ground surveillance A third party Other (specify) _________________ 3. Estimated leak duration days ____ hours ____ PART H – APPARENT CAUSE Important: There are 25 numbered causes in this Part H. Check the box corresponding to the primary cause of the accident. Check one circle in each of the supplemental categories corresponding to the cause you indicate. See the instructions for guidance. b. Visual Examination Localized Pitting General Corrosion Other ____________________ H1 – CORROSION a. Pipe Coating c. Cause of Corrosion 1. External Corrosion Bare Galvanic Atmospheric Coated Stray Current Microbiological Cathodic Protection Disrupted 2. Internal Corrosion Stress Corrosion Cracking Selective Seam Corrosion (Complete items a – e Other ____________________ where applicable.) d. Was corroded part of pipeline considered to be under cathodic protection prior to discovering accident? No Yes, Year Protection Started: / / e. Was pipe previously damaged in the area of corrosion? No Yes => Estimated time prior to accident: / / years / / months Unknown H2 – NATURAL FORCES 3. Earth Movement => Earthquake Subsidence Landslide Other 4. Lightning 5. Heavy Rains/Floods => Washouts Flotation Mudslide Scouring Other 6. Temperature => Thermal stress Frost heave Frozen components Other 7. High Winds H3 – EXCAVATION DAMAGE 8. Operator Excavation Damage (including their contractors/Not Third Party) 9. Third Party (complete a-f) a. Excavator group General Public Government Excavator other than Operator/subcontractor b. Type: Road Work Pipeline Water Electric Sewer Phone/Cable Landowner-not farming related Farming Railroad Other liquid or gas transmission pipeline operator or their contractor Nautical Operations Other ________ c. Excavation was: Open Trench Sub-strata (boring, directional drilling, etc…) d. Excavation was an ongoing activity (Month or longer) Yes No If Yes, Date of last contact /_________/ e. Did operator get prior notification of excavation activity? Yes; Date received: / / mo. / / day / ______/ yr. No Notification received from: One Call System Excavator Contractor Landowner f. Was pipeline marked as result of location request for excavation? No Yes (If Yes, check applicable items i - iv) i. Temporary markings: Flags Stakes Paint ii. Permanent markings: iii. Marks were (check one) : Accurate Not Accurate iv. Were marks made within required time? Yes No H4 – OTHER OUTSIDE FORCE DAMAGE 10. Fire/Explosion as primary cause of failure => Fire/Explosion cause: Man made Natural 11. Car, truck or other vehicle not relating to excavation activity damaging pipe 12. Rupture of Previously Damaged Pipe 13. Vandalism Form RSPA F 7000-1 ( 01-2001 ) Page 3 of 4 OPS Data Facsimile Page 3 of 4#

Page 17Appendix C Operator Accident Report H5 – MATERIAL AND/OR WELD FAILURES Material 14. Body of Pipe => Dent Gouge Bend Arc Burn Other 15. Component => Valve Fitting Vessel Extruded Outlet Other 16. Joint => Gasket O-Ring Threads Other Weld 17. Butt => Pipe Fabrication Other 18. Fillet => Branch Hot Tap Fitting Repair Sleeve Other 19. Pipe Seam => LF ERW DSAW Seamless Flash Weld HF ERW SAW Spiral Other Complete a-g if you indicate any cause in part H5. a. Type of failure: Construction Defect => Poor Workmanship Procedure not followed Poor Construction Procedures Material Defect b. Was failure due to pipe damage sustained in transportation to the construction or fabrication site? Yes No c. Was part which leaked pressure tested before accident occurred? Yes, complete d-g No d. Date of test: / / yr. / / mo. / / day e. Test medium: Water Inert Gas Other f. Time held at test pressure: / / hr. g. Estimated test pressure at point of accident: PSIG H6 – EQUIPMENT 20. Malfunction of Control/Relief Equipment => Control valve Instrumentation SCADA Communications Block valve Relief valve Power failure Other 21. Threads Stripped, Broken Pipe Coupling => Nipples Valve Threads Dresser Couplings Other 22. Seal Failure => Gasket O-Ring Seal/Pump Packing Other H7 – INCORRECT OPERATION 23. Incorrect Operation a. Type: Inadequate Procedures Inadequate Safety Practices Failure to Follow Procedures Other _______________________________________ b. Number of employees involved who failed a post-accident test: drug test: / / alcohol test /_________/ H8 – OTHER 24. Miscellaneous, describe: 25. Unknown Investigation Complete Still Under Investigation (submit a supplemental report when investigation is complete) PART I – NARRATIVE DESCRIPTION OF FACTORS CONTRIBUTING TO THE EVENT (Attach additional sheets as necessary) Form RSPA F 7000-1 (01-2001 ) Page 4 of 4 OPS Data Facsimile Page 4 of 4#

Page 18Appendix D Metallurgical Report This document is on file at PHMSA#