{"operation":"document","citation":"PI-14-0020","title":"Stoel Rives LLP (Eni) — Pipeline Safety Interpretation","source_type":"guidance","agency":"Pipeline and Hazardous Materials Safety Administration","status":"guidance","official":true,"published_on":"2015-03-11","effective_on":null,"summary":"PI-14-0020 response to Stoel Rives LLP (Eni) concerning 195.1.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-interpretation-pi-14-0020.json","markdown":"https://regulus.evalyn.ai/document/phmsa-interpretation-pi-14-0020.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-interpretation-pi-14-0020","source_url":"https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/legacy/interpretations/Interpretation%20Files/Pipeline/2015/Eni_PI_14_0020_11_06_2014_Part_195.1.pdf","body":"<<<PAGE 1>>>\n\nU.S. Department of Transportation\nPipeline and Hazardous Materials\nSafety Administration\n1200 New Jersey Ave, S.E.\nWashington, D.C. 20590\n~1M? 1 1 2015\nMs. Ramona L. Momoe\nStoel Rives LLP\n510 I Street, Suite 500\nAnchorage, AL 99501\nDear Ms. Momoe:\nIn a letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA) dated\nOctober 30, 2014, Stoel Rives LLP (representing Eni US Operating Co, Inc.) requested an\ninterpretation of the applicability of the hazardous liquid pipeline safety regulations to a 218-inch\ndiameter diesel fuel line that Eni US Operating Co, Inc. (Eni) operates in connection with the\nNikaitchuq oil field offshore of the North Slope of Alaska. You noted that 49 CFR 195.1 (b)( 5)\nexempts certain offshore pipelines from PHMSA regulation where the pipeline is located in state\nwaters upstream from the farthest downstream facility and where produced hydrocarbons are\nfirst processed. You requested PHMSA' s interpretation of whether this exemption is applicable\nto Eni's 218-inch diesel line.\nYou stated Eni has constructed a gravel island in the shallow waters of the Beaufort Sea on\nwhich it operates a drill site and production equipment. The island is located in state waters near\na state-owned island known as Spy Island. Eni also operates an onshore drill site and oil\nprocessing facility at Oliktok Point. Viscous crude oil is produced :from wells drilled from the\noffshore gravel island and transported approximately 3.8 miles to a separation and processing\nfacility at Oliktok Point.\nYou stated that the 218-inch diameter diesel pipeline is bundled with three other pipelines\nincluding the crude oil pipelines inside a 16-inch outer diameter conductor pipe. This pipe-\nwithin-a-pipe is encased in concrete. lJnlike the crude oil pipeline that transports crude from the\nproduction facilities on the gravel island to the Oliktok Point onshore processing facility, the\ndiesel line transports diesel fuel in the opposite direction out to the production facility on the\ngravel island to power the drill rig and carries base oil used to make drilling mud.\nYou noted that the regulatory exemption established in§ 195.1 (b )(5) applies to pipelines that:\n(i) transport hazardous liquid or carbon dioxide; (ii) are located offshore in state waters; and\n(iii) are located upstream of the outlet flange of the farthest downstream facility. You pointed\nout that the diesel pipeline is located upstream of the Oliktok Point facility and expressed the\nview that because Eni's diesel line meets these criteria it should qualify for the exemption.\nThe Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety provides written clarifications of the Regulations (49 CFR\nParts 190-199) in the form of interpretation letters. These letters reflect the agency's current application of the regulations to the specific facts\npresented by the person requesting the clarification. Interpretations do not create legally-enforceable rights or obligations and are provided to\nhelp the public understand how to comply with the regulations.\n\n<<<PAGE 2>>>\n\n2\nSection 195.1 (b)( 5) states, in relevant part:\n§ 195.1 Which pipelines are covered by this Part?\n(a) ...\n(b) Excepted. This Part does not apply to any ofthe following:\n(1) ...\n(5) Transportation of hazardous liquid or carbon dioxide in an\noffshore pipeline in state waters where the pipeline is located\nupstream from the outlet flange of the following farthest\ndownstream facility: The facility where hydrocarbons or carbon\ndioxide are produced or the facility where produced hydrocarbons\nor carbon dioxide are first separated, dehydrated, or otherwise\nprocessed;\nBased on the information you provided. Eni' s conclusion that the exemption in § 195.1 (b)( 5)\napplies to its 2%-inch diesel line appears to be incorrect. In this case, the diesel pipeline is not\ntransporting produced liquids downstream for processing. but is transpmiing finished diesel fuel\nthat was already in the stream of regulated transportation out to a production facility to be used\nas an energy source for production. The gravel island is not the facility where the diesel fuel was\nproduced. Therefore, the 2%-inch diesel pipeline is regulated under § 195.1 (a)(2) because it\ntransports processed petroleum products to the gravel island where they will be consumed.\nPlease note that this response to your October 30, 2014, request reflects PHMSA's preliminary\nviews of the applicability of Part 195 regulations based on the limited information in your\ndescription of the facilities in your letter and is subject to further consideration if any additional\ninformation about the facility would be relevant to this determination.\nIfwe can be of further assistance, please contact Tewabe Asebe ofmy staff at 202-366-5523.\nSincerely,\nI\nDirector, Office of Standards\nand Rulemaking\nThe Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety provides written clarifications of the Regulations\n(49 CFR Parts 190-199) in the form of interpretation letters. These letters retlect the agency's current application of the regulations to the\nspecific facts presented by the person requesting the clarification. Interpretations do not create legally-enforceable rights or obligations and\nare provided to help the public understand how to comply with the regulations.\n\n<<<PAGE 3>>>\n\nSTOEL\nSI0 | Street Suite 500)\nRIVES\nNOV U 4 2014\nAnchorage. Alaska 99501\nman 207 277 1900\nTax 707.277.1920\nSTONEYS AT LAW\nwwt.sloel.com\nRamona L. Monroe\nOctober 30, 2014\nDirect (907) 263-8445\nrimonroe @stoel.com\nVIA FIRST CLASS U.S. MAIL\nJeffrey Wiese. Associate Administrator\nc/o Office of Pipeline Safety (PHP-30)\nPHMSA, U.S. Dept. of Transportation\n1200 New Jersey Avenue. SE\nWashington. DC 20590-0001\nRe: Request for Written Regulatory Interpretation under 49 C.F.R. § 190.11\nDear Mr. Wiese:\nWe are writing on behalf of Eni US Operating Co. Inc. (Eni\") to request a written regulatory\ninterpretation pursuant to 49 C.F.R. § 190.11. Eni seeks an interpretation of the Pipeline and\nHazardous Materials Safety Administration (\"PHMSA\") regulation at 49 C.F.R. § 195.1(b)(5) as\nit applies to a 2%-inch diesel fuel line Eni operates in connection with the Nikaitchuq oil field\noffshore of the North Slope of Alaska.\nThe provisions of 49 C.F.R. § 195.1(b)(5) specify that certain offshore pipelines are exempt from\nPHMSA jurisdiction where the pipeline is located in state waters \"upstream from\" the \"farthest\ndownstream facility*:\nTransportation of hazardous liquid or carbon dioxide in an offshore\npipeline in state waters where the pipeline is located upstream from\nseparated, dehydrated. or otherwise processed.\nThrough this request, for the reasons detailed below, Eni seeks PHMSA's concurrence that the\nabove exemption is applicable to Eni's 2-inch diesel line.\n77512378.1 0009780- 00007\nAlaska\nCalifornia\nMinnesold Oregon Uran Washington\nand Washington. DC\n\n<<<PAGE 4>>>\n\nOffice of Pipeli ne Safety\nOctober 30. 20 14\nPage 2\nI. FACTUAL CONTEXT\nEni holds both onshore and offshore oil and gas leases from the State of Alaska. Eni has\nconstructed a gravel island in the shallow waters ofthe Beaufort Sea on which it operates a drill\nsite and production equipment. The island is located in state waters near a State-owned island\nknown as Spy Island. Eni also operates an onshore drill site and oil processing facility at Oliktok\nPoint.\nViscous crude oil is produced from wells drilled from the offshore gravel island. The produced\noil is mixed with heated water, and this mixture of approximately 50 percent water is transported\nvia a production pipeline to the separation and processing faci lity at Oliktok Point. Once\ndeli vered. the mixture is processed to separate the oi l component and create sales quality crude\noil for subsequent transport through the Trans-Alaska Pipeline System.\nThe oil production pipeline is 12.75 inches in diameter inside of a 16-inch outer diameter\nconductor pipe. This pipe-within-a-pipe is encased in concrete. Bundled with this produced\nhydrocarbon pipeline are three other smaller lines: a 12. 75-inch diameter water injection line, a\n6.625-inch diameter spare line, and the 2.375-inch diameter diesel line that is at issue in this\nrequest. The diesel line. like the production line is designed as a pipe-within-a-pipe, such that\nthe diesel line is encased in a larger conductor pipe. All four lines are bundled together in a\nrobust special webstrapping material and secured externall y with a series of locking turnbuckles.\nInternally, the four bundled lines are buffered and protected by high strength polymers to\neliminate friction and ensure pipeline integrity.\nThe bundled lines traverse 3.8 miles between the onshore processing facility at Oliktok Point and\nthe offshore island drill site. See attached map marked \"Figure I.'' The bundle is buried in a\ntrench 6 to 8 feet below the sea fl oor. The trench was backfilled with protective material to\nprevent damage to the bundled pipelines.\nThe oil production line carries the oil/water mix from the offshore production site to the\nseparation and processing fac ilities at Oliktok Point. The spare line is not currently in use and is\npreserved. The water line transports produced water which is reinjected for oil production\nsupport and mixed with produced oil to aid in transportation. The diesel line delivers fuel to\npower the drill rig and carries base oil used to make drilling mud. The pipelines were\nconstructed in 2009 and put into service in 20 II.\n77~ 12378.1 0009780-00007\n\n<<<PAGE 5>>>\n\nOffice of Pi peline Safety\nOctober 30. 20 14\nPage 3\nII. PHMSA JURISDICTIONAL EXEMPTION\nAs addressed in Subsection II.A below. Eni's diesel pipeline qualifies for the PHMSA\njurisdictional exemption established in 49 C.F.R. § 195. 1 (b)(5). In addition, while not\ncontrolling ofthe correct interpretation. as add ressed in Subsection 11.8 below, application of a\njuri sdictional exemption in this instance nevertheless ensures continued safe pipeline operations\nin a very low risk environment and is consistent with other public policies underly ing PHMSA' s\nregulations.\nA. Eni's Diesel Pipeline Qualifies for a Jurisdictional Exemption\nThe regulatory exemption established in 49 C.F.R. § 195. 1 (b)(5) applies to pipelines that: (i)\ntransport hazardous liquid or carbon dioxide; (ii ) offshore in state waters; and (i ii) where the\npipe line is located upstream of outlet flange of the farthest downstream facility. The subject\npipeline transports dieseL which qualifies as a \" hazardous liquid.\" Moreover. the subject\npipeline is located offshore entirely within state (State of A laska) waters.' Accordingly.\napplication of the jurisdictional exemption in this instance turns on whether the pipeline is\nlocated \" upstream\" of the farthest downstream facility.\nThe term \" upstream'\" is not defined in PHMSA \"s regulati ons. Generally, in the oil and gas\nindustry. major operations are divided into upstream and downstream components. See\ngenerally Patrick 1 -1. Martin and Bruce M. Kramer, Williams & Meyers. Manual of Oil and Gas\nTerms. \" downstream'' and \" upstream.\n'' \"Upstream·' refers to operations before a point of\nreference or closer to the source (a given reservoir). pm1icularly exploration and production\noperations. Downstream refers to operations after a given point of reference. often used to\ndescribe post-prod uction processes such as refining and processing. /d. Accordingly,\noperationally \"upstream·' means towards the source and away from \"downstream\" processing.\nDirectionally, in terms of movement of a material rather than a process, '·upstream\"' means to\nmove against the current (i.e., in the opposite directi on from the natural fl ow of a stream of water\nor other substance). The term \"farthest downstream facility\" is defined specifically in 49 C.F.R.\n§ 195.1 (b)(5) as the \"facility where hydrocarbons or carbon dioxide are produced or the facility\n1 The limit of state waters in this area was determined to be three miles fro m the\ncoastline and three miles from offshore islands by the U.S. Supreme CoUI1 in United States v.\nAlaska. No. 84 Original, 52 1 U.S. I (see discussion in Michael W. Reed. Shore and Sea\nBoundaries, Volume 3 at pp. 144-1 5 1 ). Because Spy Island is less than 6 miles from the\ncoastline. the entire area between the coastline and Spy Island is state water.\n77511378. 1 000<)780·00007\n\n<<<PAGE 6>>>\n\nOffi ce of Pipeline Safety\nOctober 30. 20 14\nPage 4\nwhere produced hydrocarbons or carbon d ioxide are fi rst separated. dehydrated. or otherwise\nprocessed.··\nIn the present instance. Eni\"s 2%-inch diesel pipeline transports diesel and base oil fo r drilling\nmuds from production facilities at Oliktok Po int, where produced hyd rocarbons are separated.\ndehydrated and processed upstream to the manmade gravel island drilli ng platform located in\nstate waters three miles offshore. In this confi guration, the \"farthest downstream faci lity ..\nlocated in prox imi ty to the diesel pipeline is, as a factual matter. the Oli ktok Point facility from\nwhich the diesel pipeline originates. Accordingly. if viewed operationally, the diesel pipeline is\nlocated \"upstream\" in the production process of the Oliktok Point fac ility (the \"furthest\ndownstream facility .. ). Similarly, if viewed directionall y. the diesel fl ows ·'upstream .. against the\ncurrent of the produced o il toward the producti on source. Accordingly. although the term\n·'upstream\" is unde fi ned and the \" farthest downstream faci lity'' definition provides alternati ve\nchoices, under all applicati ons of these terms to the N ikaitchuq fac ilities. Eni· s d iesel line\ntransports a hazardous liquid offshore in state waters, through a pipeline that is located upstream\nof the farthest downstream facility. As such. Eni 's diesel line meets all of the criteri a for the\nj urisdicti onal exem pti on provided in 49 C.F.R. § 195 .1 (b)(5).\nB. The Diesel Pipeline Is Safely Designed and Operated In a Low Risk and Remote\nEnvironment\nAlthough the relevant analysis provided in Secti on II.A is controlling. given PHMSA' s mission\nto protect people and the environment from the ri sks of hazardous materials transportation, it\nbears emphasis that the diesel pipeli ne at issue here is designed and operated fo r maximum\nsafety. and is located in a very remote location where the potential fo r human exposure and the\nneed fo r public awareness is minima l.\n1. Safe pipeline design and operation\nEni·s diese l pipeline was designed and constructed as a pipe-within-a-pipe. T he 2%-inch steel\nline is within a larger condui t pipeline that would contain any flu id in the unli kely event of a leak\nor spill. The pipeline is buried in an 8-foot deep trench beneath the seafloor which is backfi lled\nwith protective material. T he pipe-within-a-pipe design provides more than one added layer of\nprotection. In addition to the larger conduit pipe containing any leaked fluids. the vacuum\nmaintained in the space between the pipes is monitored for leak detection. Other safety features\ninclude an anode bracelet system that provides cathodic protection and a fi ber optic cable\ninstalled in the bundle that detects stresses. movement, and temperature changes which would\na lso detect any leaks.\n77:\" 123 78. 1 0009780·00007\n\n<<<PAGE 7>>>\n\nOffice of Pipeline Safety\nOctober 30. 2014\nPage 5\nEni \"s operating and inspection practices further ensure the safet y and integrity of the pipeline.\nThe pipeline operates at 20% of the specified minimum yield strength ofthe pipe. The cathodic\nprotection system is inspected annuall y at both ends of the pipeline. In addition, annual side-\nsonar surveys are completed along the length of the pipeline to check for scour by ocean currents\nor Ice.\nThe pipeline has a track record of safe operations. It has been in service since 2011 with no\nreported incidents of any kind. It is used approximately two to four hours per day to de liver\ndiesel to the offshore gravel island drill site.\n2. Remote and low risk environment\nThe pipeline is also located in a very low ri sk environment. There are no nearby communities,\nresidents. or inhabitants other than the small isolated oil fie ld camps for oi l field employees at\neither end of the line. At its closest point, the nearest Alaska Native village (Nuiqsut) is\napproximately 33 miles inland and southwest from the nearest portion of the pipeline.\nAccordingly, although in the broadest possible sense. the pipeline resides w ithin an ex pansive\nsubsistence use area of the Beaufort Sea offshore. the location of the pipeline is remote. very\nsmall in scale and at all times entirely inaccessible to the public. Indeed, there is virtually no\n\"public\" in the area to educate- no affected municipalities, school districts, businesses. or\nresidents.\nThe location of the pipeline in a buried offshore trench in shallow water is an additional very\nsignificant source of separation between the pipeline and human or animal activities. and\nassociated reduced risk. The depth of the buried bundle protects the pipelines from contact with\nvessels, anchors. and grounded sea ice which could damage the pipelines.2 Moreover, the\nshallow water depths of 8 to I 0 feet prevent large vessels from navigating the area during the\nopen water season. and the presence of ice prevents all navigation for approximately nine months\nof the year. Eni estimates that 99% of the vessel traffic in the area during the brief open water\nseason are Eni vessels related to its oilfield operations.\nFinall y, offshore excavation activities in the vicinity of the pipeline could occur only after\nextended federal and state public notice and permitting processes (i.e., at a minimum. pursuant to\na state right-of-way grant, a federal Clean Water Act§ 404 permit from the U.S. Army Corps of\n2 The small sections of the pipeline at either end that are aboveground to connect with\nother faci lities are marked and protected with barriers to prevent accidental vehicle collisions.\n775 123 78. 1 00097110-00007\n\n<<<PAGE 8>>>\n\nOffice of Pipeline Safety\nOctober 30. 201 4\nPage 6\nEngineers, and a federal ocean dumping permit from the U.S. EPA. along with NEPA\nenvironmental impact analysis). These processes ensure beyond any question that no\nunanticipated activities that may be incompatible with the pipeline presence and use could occur.\nand that no excavation that might damage or compromise the existing pipeline could be\nproposed. approved or initiated without establi shing all appropriate mitigation and protection.\nBecause the pipeline is pa11 of o ilfield operations, it is further subject to other state and federal\nsafety regulations. These existing regulations include reporting requirements, emergency\nresponse. integrity protection. and leak detection requirements (see generally AS 46.04.030; II\nAAC 75.005 - 11 AAC 75).\nIn sum, Eni·s diesel pipeline has been constructed in an extremely remote location. in a\nconfiguration that presents an exceptionally low ri sk to a very small number of humans or to the\nenvironment. Moreover. the design of the pipeline, corrosion prevention system. and leak\ndetection measures provide additional specific and important protections for humans and the\nenvironment.\nIII. REQUEST FOR FORMAL INTERPRETATION\nFor the reasons stated above, pursuant to 49 C.F.R. § 190.11 , Eni requests a formal written\ninterpretation from PHMSA confirming that based upon the facts presented above, Eni's 2%-inch\ndiesel line operated in connection with the Nikaitchuq oil field offshore of the North Slope of\nAlaska qualifies for the jurisdictional exemption provided in 49 C.F.R. § 195.1 (b)(5). Please\ncontact me at (907) 263-8445 with any questions regarding this request for written interpretation\nand direct your response to Stoel Rives LLP, Attn: Ramona Monroe, 510 \" L\" Street, Suite 500.\nAnchorage. AK 99501. Your attention to and response regarding this request is appreciated.\nSincerely.\n~~m~\nRamona L. Monroe\ncc: Anthony Neiser, Eni Petroleum\nSusan Lindberg, Eni Petroleum\nWhitney Grande, Eni Petroleum\nScot Childress, Eni Petroleum\n77) 12378.1 0009780-00007\n\n<<<PAGE 9>>>\n\nU014N008E13\nU014N009E18\nU014N009E16\nU014N009E15\n17-\nISLAND\nT 14 N\n(SPY ISLAND DRILLSITE)\nSID\nPlanned Sea Ice Pad\napproximately 300ft x 150ft\nFloating with thickness 72 in\nU014N008E24\nU014N009E19\nU014N009E20\nU014N009E21\nU014N009E22\nPlanned Sea Ice Pad\napproximately 550ft x 200ft\nFloating with thickness 72 in\nU014N008E25\nU014N009E30\nU014N009E29\nU014N009E28\nU014N009E27 S\nPlanned Ice Road\nApproximate Length = 4.2 miles\nU014N008E36\nU014N009E31\nU014N009E32\nU014N009E33\nU014N009E34\nTownship U014N008E\nTownship U014N009E\nTownship U013N008E\nTownship U013N009E\nOLIKTOK DOCK\nU013N008E01\nU013N009E06\nOLIKTOK PROCESS PAD\nOliktok Point\nOLIKTOK POINT STAGING PAD\nU013N009E04\nU013N009E03\nLanding Strip,:\nPlanned 2.5 acre pad\napproximately 330ft x 330ft\nMap Location\nOLIKTOK DEW LINE\nWest\nBase\nSITE\n« Cabir\nDRILLSITE 3R\n9E0Z\n40T3N009508\nLanding Strip\nNO 15 009509\nSimps 98730009E10\nsagoon\n10\n9E18\nU013N009E17\n401300956\nLegend\nIce Pads\na Planned Ice Road\nPLS Township\nJ Gravel Footprint Pipelines\nPLS Sections\n•- SID subsea flowline\n• Onshore Pipeline\nEni Petroleum\neni SLR\nTHIS DRAWING IS FOR CONCEPTUAL PURPOSES ONLY\nAPPROXIMATE AND NOT ALL STRUCTURES ARE SHOWN\nLOCATION AND SIZE OF PROPOSED FEATURES ARE\nFIGURE: 1\nOctober 2014\nDATE:\nNikaitchug Project Offshore Ice Roads\nand Pad Locations - Vicinity Map","truncated":false,"body_characters":21438}