EnVen Energy Ventures — Pipeline Safety Interpretation

Page 1U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 1200 New Jersey Ave, S.E. Washington, D.C. 20590 APR 0 2 2015 Mr. Robert Ellis Vice President Operations En V en Energy Ventures, LLC 3850 N. Causeway Boulevard Suite 1770 Metairie, LA 70002 Dear Mr. Ellis: In a letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA) dated December 19,2014, you requested an interpretation ofthe applicability ofthe control room management regulations in 49 CFR 195.446 to your crude oil pipeline. You stated that En Ven Energy Ventures, LLC (En Ven) recently acquired Shell Oil's Cognac platform located in the Mississippi Canyon Block 194A on the Outer Continental Shelf~ including the Cognac 12-inch Crude Oil pipeline, which is approximately 28 miles long and carries crude oil from the platform to the South West Pass Block 24 terminal operated by Hilcorp (Harvest Pipeline). You stated that En V en plans to have continuous monitoring of the pipeline operations from the Cognac platform via a local Supervisory Control and Data Acquisition (SCADA) system. The pipeline will normally be controlled via SCADA supplied automated programmable logic which includes automated safety devices that will shut down the pumps delivering crude oil to the pipeline in case of high or low pressure, or low flow. There are local start/stop controls at the individual components, such as the pumps and valves, should there be a need to bypass the automated logic control. The platform operators are not using the SCADA to remotely control operations of the pipeline facilities; they are only monitoring the operational status of the pipeline via the SCADA system. At the land based facility, there are three locally controlled valves used for normal flow and pig receiving. The platform SCADA only monitors the status of these valves and does not have the ability to control their operation. These valves are locally controlled for pigging the pipeline and in the event the platform is shut-in. You stated that En V en does not believe it has personnel that meet the definition of a controller found in 49 CFR 195.2. The platform operators only monitor operations of the pipeline facility from the SCAD A. they do not control from the SC ADA. The platform operator does not direct other personnel to take specific actions based upon monitoring of the SCADA. The pipeline components (pumps, valves, etc.) are only operated locally and the SCADA is not capable of operating these components. All control actions are either performed by the automated logic programmed into the SCAD A or locally operated with manual on/off switches at the pipeline The Pipeline and Hazardous Materials Safety Administration. Office of Pipeline Safety provides written clarifications of the Regulations (49 CFR Parts 190-199) in the form of interpretation letters. These letters reflect the agency's current application of the regulations to the specific facts presented by the person requesting the clarification. Interpretations do not create legally-enforceable rights or obligations and are provided to help the public understand how to comply with the regulations.#

Page 22 components. In addition, En V en does not believe it has an operational center that meets the definition of a control room found in 49 CFR 195.2. The platform operators have not been charged with the responsibility of remotely controlling the pipeline. Because En V en does not have personnel that meet the definition of controller and does not have an operation center that meets the definition of a control room, En Ven believes the control room management requirements found under§ 195.446 do not apply. Therefore, you request PHMSA 's interpretation as to the applicability of the control room management regulations in§ 195.446 to your crude oil pipeline. On February 3, 2015, my staff requested additional information and you responded to the request on February 4, 2015. PHMSA's questions and your responses are as follows PHMSA Question: After monitoring the SCADA system, what actions would be undertaken when the personnel on the platform become aware of an abnormal or emergency condition on the pipeline? EnVen Energy Response: The pipeline and platform are set up with programmable logic and safety devices that would automatically shut the pipeline pumps down immediately and keep the pumps offline until qualified platform personnel could then investigate and act appropriately. PHMSA Question: Would the personnel analyze the SCADA displays to determine a course of action or who to call to intervene or personally correct the situation? EnVen Energy Response: No, the course of action is already set with the platform and pipeline safety system. The pipeline pumps would be shut in or not allowed to come on line until the qualified personnel determine the issue at hand and act accordingly with respect to established protocol and existing procedures. PHMSA Question: If automatic switches, independent of the SCAD A system. are used to shut off the pipeline system, then why is the SCADA system needed? EnVen Energy Response: SCADA is not required; however, EnVen typically uses SCADA to monitor current conditions and document historical data on its important platforms and or flow lines. PHMSA Question: Do the job descriptions of the platform personnel include direction about what to do when a pipeline upset condition occurs? En Ven Energy Response: Yes, the job descriptions and required training do provide appropriate direction. PHMSA Question: Who monitors the traveling of the pig? EnVen Energy Response: The Platform does and documents this daily on our morning rep01is. PHMSA Question: How are other elements of safety systems such as hydrogen sulfide or Fire or Gas handled- does it automatically shut in the pipeline? The Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety provides written clarifications of the Regulations (49 CFR Parts 190-199) in the form of interpretation letters. These letters reflect the agency's current application of the regulations to the specific facts presented by the person requesting the clarification. Interpretations do not create legally-enforceable rights or obligations and are provided to help the public understand how to comply with the regulations.#

Page 33 En Ven Energy Response: Our platform safety systems continually monitor our operating conditions and will shut in the entire platform including the pipeline pumps should there be an upset. PHMSA Question: Do the platform personnel override these abnormal conditions? EnVen Energy Response: No. As per EnVen standards and Government regulations, we never override any safety system during abnormal conditions. PHMSA Question: What is the purpose of the SCAD A monitoring or the outcome of the response to the information? EnVen Energy Response: En Yen does trend analysis with the historic data and likes the ability to get real time data if needed. PHMSA Question: What are the abnormal operating conditions or abnormal operations identified and who responds to those? EnVen Energy Response: As this pertains to the DOT pipeline: Our qualified operators will respond to all of the items listed below: • High Pressure, Pressure Safety 1-ligh Sensor that shuts in the pipeline pumps. • Low Pressure, Pressure Safety Low Sensor that shuts in the pipeline pumps. • Back flow, Installed flow safety valves. • Product loss, we communicate with the receiving station to double check volumes pumped and received. As mentioned above, we will have SCADA to look for condition trends and or irregularities in pressure and volume. • Other emergency situations. such as Fire. Explosions ... , TSE System (Temperature Safety Element) actuates a platform and pump shut in automatically. • Communication loss, we have backup generators for power loss, and battery powered satellite phones to insure that we have communication. • Operator Error, our automatic safety devices will shut in the pipeline pumps. PHMSA Question: You mentioned that. at the end of your downstream pipeline, crude oil is stored. Is the storage a breakout tank? If not please explain how the crude oil is introduced into the downstream operator's pipeline. EnVen Energy Response: The oil, pumped from the platform is pipeline quality oil and is pumped through our pipeline into the onshore facility header and then into the facility storage tank. On February 12, 2015, a PHMSA engineering staff called you and discussed your platform setup as follows: The pipeline is a 12-inch. 28-mile long oil pipeline connecting the Cognac Production Platform (located in 1 ,025 feet of water and operated under Bureau of Safety and Environmental Enforcement (BSEE) jurisdiction), to South West Pass 24/25 Harvest Processing Facility; the operators on the offshore platform have the lease automatic custody transfer (LACT) pumps set up per BSEE safety regulations with pressure safety high (1 06 psi) and low ( 49 psi) settings during pumping operations; these pumps The Pipeline and Hazardous Materiais Safety Administration: Office ofPipeline Safety provides written clarifications of the Regulations (49 CFR Parts 190-199) in the form of interpretation letters. These letters reflect the agency's current application of the regulations to the specific facts presented by the person requesting the clarification. Interpretations do not create legally-enforceable rights or obligations and are provided to help the public understand how to comply with the regulations.#

Page 44 generally operate at 60 psi; when the pipeline pumps are shut down, the pipeline pressure is less than 5 psi; on the platform, the wells flow into oil storage tanks that have level controls that turn on and off the LACT pumps; these pipeline pumps will kick on and off when a certain level is reached. Also, you stated that the pumps are shut off automatically and/or not allowed to pump if there are major upsets on the platfonn. This is done because the pipeline pumps are activated automatically by level controls in the oil tanks. In addition, there are times that the ·pumps will be turned on and off manually (testing, meter proving, pigging maintenance, etc). This operation is not directed by a land based controller/operator. When receiving a pig, the land operator will be communicating with your platform operator as described in your pigging procedure. Your operators man the platform 24 hours a day; your operators can respond to an alarm immediately; the pumps are run for approximately 2.5-2.8 hours a day. The pumps will turn on and off as dictated by the tank level controls and will run for 5-7 minutes during one of its 24 daily cycles. and your platform operators are in daily contact with the land based receiving station to double check daily volumes pumped and received. In addition, whenever you fly from your Rotorcraft Leasing Company Venice Air Base to the Cognac platform and back, your pilot and operators do a visual inspection of the pipeline route, and this is done a minimum of once a week. You have a sonic meter at the South West Pass 24/25 Facility, and it is externally attached to your pipeline and is calibrated monthly or as needed to double check the throughput volumes received. The SCADA is used to only monitor the activities on the pipeline and there are no controls. Also, your offshore operators are regulated by your DOT procedures and are not given direction by your land based personnel. Section 195.446 applies to each operator of a pipeline facility with a controller working in a control room who monitors and controls all or part of a pipeline facility through a SCAD A system. A person that has responsibility to monitor a SCADA system and contacts others to initiate corrective actions is considered a controller. Also, a person that has responsibility to monitor a SCADA system and personally initiates corrective action via the SCADA system is a c.ontroller. The person that receives the pipeline SCADA data and contacts operational personnel to operate or shut-in the pipeline would also be a controller. Controllers are subject to the Control Room Management (CRM) rule published on June 16, 2011 ;76 FR 35130, independent of the particular automated capabilities ofthe SCADA System. However, you stated that the off. shore platform operators have not been charged with the responsibility of remotely controlling the pipeline. Also, all control actions are either performed by the automated logic programmed into the SCAD A or locally operated with manual on/off switches at the pipeline components. In addition, at the land-based facility, there are three locally controlled valves used for normal flow and pig receiving. Therefore, for the off-shore application, as long as the persons on the platform exclusively operate equipment on the platform (which may include pipeline pumps. valves, and pressure control equipment located on the platform), and do not control the pipeline downstream, they are not considered to be controllers subject to the CRM rule. The Pipeline and Hazardous Materials Safety Administration. Office of Pipeline Safety provides written clarifications of the Regulations (49 CFR Parts 190-199) in the form of interpretation letters. These letters reflect the agency's current application of the regulations to the specific facts presented by the person requesting the clarification. Interpretations do not create legally-enforceable rights or obligations and are provided to help the public understand how to comply with the regulations.#

Page 55 Please note that this response to your December 19, 2014, request and the additional information you provided, reflects PHMSA' s preliminary views of the applicability of Part 195 regulations based on the limited information in your description of the facilities in your letter. PHMSA may need to collect additional information and possibly conduct a site visit to make a final determination. If we can be of further assistance, please contact Tewabe Asebe of my staff at 202-366-5523. Director, Office of Standards and Rulemaking The Pipeline and Hazardous Materials Safety Administration, Onice of Pipeline Safety provides written claritications of the Regulations (49 CFR Parts 190-199) in the form of interpretation letters. These letters reflect the agency's current application of the regulations to the specific facts presented by the person requesting the clarification. Interpretations do not create legally-enforceable rights or obligations and are provided to help the public understand how to comply with the regulations.#

Page 6r:c 2: 2014 enven E NERGY V ENTURES www.enven.com 3850 N. Causeway Blvd. Suite 1770 Lakeway Two Metairie. Louisiana 70002 Phone: (504) 831-9008 F o x: Lond/G&G/Exe (5041 830-7645 Fox: Accounting/Marketing (504) 831- 1528 Fox: Operotions/SEMS (504) 830-7629 December 19, 2014 Bv Federal Express Pipeline and Hazardous Materials Safety Administration 1200 New Jersey Avenue SE Washington, DC 20590 Attn: Alan Mayberry, Deputy Associate Administrator, Policies and Programs RE: Letter of Interpretation Request- Control Room Management Dear Mr. Mayberry EnVen Energy Ventures, LLC ("EnVen") is an independent Oil Company with assets in the Federal Waters of the Gulf of Mexico. We recently acquired Shell Oil's Cognac platform located in the Mississippi Canyon Block 194A on the Outer Continental Shelf, including the Cognac 12" Crude Oil pipeline, which is approximately 28 miles long and carries crude oil from the platform to the South West Pass Block 24 terminal operated by Hilcorp (Harvest Pipeline). E nVen has recently received our operator identification number (39214) to take over as the operator of record from Shell Pipeline Company. EnVen plans to have continuous monitoring of the pipeline operations from the Cognac platform via a local SCADA system. The pipeline will normally be controlled via SCADA supplied automated programmable logic which includes automated safety devices that will shut down the pumps delivering crude oil to the pipeline in case of high or low pressure, or low flow. There are local start/ stop controls at the individual component s, such as the pumps and valves, should there be a need to bypass the automated logic control. The platform operators are not using the SCADA to remotely control operations of the pipeline facilities; they are only monitoring the operational status of the pipeline via the SCADA system. At the land-based facility, there are three locally controlled valves used for normal flow and pig receiving. The platform SCADA only monitors the status of these valves and does not have the ability to control their operation. These valves are locally controlled for pigging the pipeline and in the event, the platform is shut-in. Based upon how this pipeline operation is configured, it is EnVen's belief that 49 CFR 195.446 Control Room Management would not be applicable in this case. EnVen does not have personnel that meet the definition of a "controller" found in 49 CFR 195.2.#

Page 7Pipeline and Hazardous Materials Safety Administration Letter of Interpretation Request- Control Room Management December 19, 2014 Page 2 Controller means a qualified individual who remotely monitors and controls the safety-related operations of a pipeline facility via a SCADA system from a control room, and who has operational authority and accountability for the remote operational functions of the pipeline facility. The platform operators only monitor operations of the pipeline facility from the SCADA, they do not control from the SCADA. The platform operator does not direct other personnel to take specific actions based upon monitoring of the SCADA. The pipeline components (pumps, valves, etc.) are only operated locally and the SCADA is not capable of operating these components. All control actions are either performed by the automated logic programmed into the SCADA or locally operated with manual on/off switches at the pipeline components. EnVen does not have an operational center that meets the definition of a "control room" found in 49 CFR 195.2. Control room means an operations center staffed by personnel charged with the responsibility for remotely monitoring and controlling a pipeline facility. The platform operators have not been charged with the responsibility of remotely controlling the pipeline. Because EnVen does not have personnel that meet the definition of ~~co ntroller" and does not have an operation center that meets the definition of a "Control Room", EnVen believes the Control Room Management requirements found under 49 CFR 195.446 do not apply. Given the information provided herein, EnVen is requesting a written opinion as to whether PHMSA is in agreement with EnVen's determination. Should more information or additional discussion be needed, please contact Robert Ellis (contact information attached below). Sincerely, Robert Ellis Vice-President Operations EnVen Energy Ventures, LLC 3850 N. Causeway Blvd. Suite 1770 Metairie, LA 70002 bellis@enven.com {504) 620-8998#

Page 8(LOOP LLC) Storage clovelly Delta Forms LOOP Central Latitte Station Atiak JE Crude Barataria GRAND ISLE BLK.33 HUBCAP -0- Camiine 31.78 BARATARIA PLAQUEMINES DELTA MARLIN 12" PELICAN-NAIR WEST ST. ABI. 1040 Nairn DELTA GAS MIŞS.CANYON BERNARD Island Pelican Ostrica VENE ANT TETCO LAFERALS *SOUTH PASS Terminal 16" Mothbotted Pilottown Energy Part S.W.PASS 24 MAN PASS 69 MAIN PASS 69 BRETON SOUND = SOUND CHANDELEUR ODYSSEY DELTA 20" Bik. 70 the platform to the Hilarp NA KIKA Apache POMPANG that carries crude oil from long, (ruge Oil pipeline MAIN PASS Содрас /Linch, 28 mils CHANDELEUR 7 • 8.500 Bik She® Bi S06 MENSA FLOW LINES • 8ík. 989 20° VI:#

Page 9SL 1009 A SHELL CONOCO SL 979 SL 978 4405) SP24 UNOCAL SL 1008 SHELL SHEET|7 WD53 BOODRICH SP25 SHELL PIPELINE WD54! CONOCO AO 0160 AO 0161 CONOCO > UNOCAL SL 2227 SL 1010 SHELL, TOTAL LENGTO MUS SEGMENT NO SP27 SL 2593 UNOCAL SL. 2227 WD83 SHEET 5 SL 1922 SL 17203 EPL DATA BY SL 1011 SHELI SP26 FLORES & RUCKS SL 15016 CEC GATA 2,000 Shell Pipeline Company LP AS-BUILT 12" OIL / HS PIPELINE Block 194, Mississippi Canyon Ared Revised JOB NO: 062118 Block 27, South Pass Ama FILENAME: 092118_511093 DMG SHEET 6 of ? DATE: APR 27,2007#

Page 1080 Z GET HAVE A FROM MC-194 PRESUME SNOT ALM 80. 1001 PSN 15999 LOV SNUT 02/20/1315-0/1 PISER ISCUATION VALVE MASSAC SAITT IDE STATION UMITS 12/12/13 asUC FOR REVIE SULATING CASTE OCCATON OF NOVSON FLOW CONTROL WALVE PRESSURE NOICATOR/ LOCK A KID VICE SOUTHWEST PASS PUMP STATION AND TERMINAL TANSMITTOR SAI O*: SoN. MANSI SOUTHWEST PASS COGNAC OFFSHORE CRUDE → TO TANKS SOUT NEST PASS INCOMING 12-OL PIPELINE DATE: - 12/20/13 AS-BUILT SD - 403#

Page 11/ 8/ROM ERL LACT SHE.L MATCHLINE TO LOUIRE SORC PA- 10" FROM CHEVRON E. RELEE FROM CHEVRON .ME TO BARCE LOADING (IDLE) - SEE D-TANTO MATCHLNE LEGEND THIRD PARTY SPLC SEPCO (COGNAC) FLOW AE , REAS ONE DK OMRI WIK ONAT HEDEANCE ORAN MER GOUTHWEST PASS STATION DELTA CRUDE LAUNCHENE ORGE AREA (oran D- 16111#

Page 121 OHE VRVE PROISUE SAZTT VANE 80 NEUMANC OPERAOR 0 (1 ARGE PUMP SKIC REDUCER (CONCONTRIC O 00» PLATFORM: SIMTEL SUR BOLTON HAM O JATNO DASAL SO PRO 3° 308 ALV FRISS ROCA'OTONTA 1)-8- 1,03 MISSISSIPPI CANYON 194 PLATFORM "A" (COGNAC) DATE: 12/20/13 AS-BUILT MC 194A FACILITY COGNAC OFFSHORE CRUDE P/L P/L P/L P/L 85 0 320 3.822 4 186 1.123 3 034 12.530 0 253 0.253 -E8= PSN 15999 - La H PaC 12.75 12 75 12 75 1275 1275 12.75 12 75 12.75 1440 730 0.250 0 250 0 562 0 562 0.625 0.562 0 625 SEGMENT (LENCTH (MI)| OD (IN)| W.T (IN) PIPE SPEC (GRADE) MAOP (PSIC)] PIPEUNE SEGMENT DESCRIPTION MC 194A OUTGOING - 12ª OIL PIPELINE FLOW DIAGRAM - SAFETY SCHEMATIC 23 i%r MCS TO SW PASS 5LX-X65 5LX-X65 SLX-X46 5LX-X46 5LX-X46 SLX-X46 5LX-X46 SLX-X42 SD - 402 1440 1440 1440#

Page 15103,#