Alaska Gasline Development Corp. — Pipeline Safety Interpretation

Page 1U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration DEC O 7 2017 1200 New Jersey Avenue, SE Washington, D.C. 20590 Mr. Frank T. Richards, P.E. Senior Vice President, Program Management Alaska Gasline Development Corp. 3201 C Street, Suite 200 Anchorage, AK 99503 Dear Mr. Richards: In a June 5, 2017, letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA), Alaska Gasline Development Corporation (AGDC) requested an interpretation of 49 CFR Part 192 to determine whether AGDC's Alaska LNG Gas Treatment Plant (GTP), would be regulated under the Part 192 regulations. PHMSA has statutory jurisdiction over gas pipeline facilities and the transportation of gas. Furthermore, Part 192 applies to pipeline facilities that transport gas, including pipeline facilities and the transportation of gas within the limits of the Outer Continental Shelf ( 49 CFR § 192.1 (a)). In the letter, AGDC stated that the GTP will process gas received from the Prudhoe Bay Unit and the Point Thompson Unit to meet the Alaska LNG Pipeline Mainline inlet specifications for carbon dioxide (C02), hydrogen sulfide (H2S), water, pressure, and temperature. As AGDC has indicated that the function of the GTP will be to process gas before it enters the proposed AGDC transmission pipeline, PHMSA's interpretation is that the GTP would not be regulated under Part 192. However. Part 192 requires that pipeline operators provide protection to control against accidental over-pressuring. For gas being treated within a processing plant and sent into a downstream regulated pipeline, Part 192 regulatory oversight is applied to the outlet piping leaving a processing plant, including the last pressure control device before the gas enters the regulated pipeline. Hgure 1 GTP/Mainline High Level Process Flow Diagram identifying the proposed demarcation point in your June 5, 2017, letter does not provide sufficient detail to determine regulatory boundaries. In order for PHMSA to make a regulatory determination, it needs the details of the specific demarcation point. 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,enforc.eable rights or obligations and are provided to help the public understand how to comply with the regulations.#

Page 22 PHMSA' s interpretation is based on the information AGDC has provided to PHMSA as of the issuance of this letter, and may be subject to change if AGDC alters the planned design and operation of the proposed GTP as currently shared. Ifwe can be of further assistance, please contact Tewabe Asebe at 202-366-5523. Sincerely, ~$, Associate Administrator for Pipeline Safety 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 3* ** GASLINE* * * * D{{LOPEHT C0TIP. * May23, 2017 Sentho K. White, P.E. General Engineer Pipeline and Hazardous Materials Safety Administration Engineering and Research U.S. Department of Transportation 1200 New Jersey Avenue, SE Washington DC 20590 Re: AKLNG Gas Treatment Plant (GTP) Jurisdiction Dear Ms. White: During our meeting of March 21, 2017, we discussed the PHMSA jurisdiction of the proposed Gas Treatment Plant (GTP) for the Alaska LNG project. Following that discussion, AGDC received an inquiry in this regard from PHMSA, which we understood was to clarify the extent of control the GTP Operational Control Center would exert over pipeline operations, i.e. control of the pipeline beyond the start of the pipeline at the boundary limits of the GTP. Please be advised of the following comments regarding the design basis and operational approach for the GTP. The GTP will have its own control system centered in the control room within the GTP facilities that will be completely separate from control systems of the AKLNG Pipeline and AKLNG LNG facilities. The Pipeline will be controlled from the pipeline control center in Anchorage with backup controls at the pipeline operation I maintenance facility in Fairbanks. Control of the LNG facilities will be within the Nikiski LNG facility. There will be no control functions of the pipeline facilities from the GTP or LNG control rooms. The three control centers (GTP, Pipeline and LNG) will have the capability to notify the other centers as issues may arise so that any control actions, if needed, can be taken by the other control centers for the areas of their responsibility. Pipeline facilities located near the GTP, primarily metering and pig launcher, will be isolated from the GTP facilities. All operation, maintenance and control of those Pipeline facilities will be the responsibility of the Pipeline O&M staff. The GIP O&M staff will have no responsibilities or authority for Pipeline facilities, Likewise, the Pipeline O&M staff will have no responsibilities or authority for the GTP facilities. ALASKA GASLINE DEVELOPMENT CORPORATION 3201 C Street, Suite 200, Anchorage, Ataska 99503 T&. 907-330-6300 Fax 907.330-6309 I www.agdc.us#

Page 4Alaska Gasline Development Corporation Page 2 of 2 This approach is outlined in the AKLNG design basis documents, e.g.: "The Project shall have a dedicated control room in each of the following areas for operations and to control their respective facility: 1) Gas Treatment Plant 2) Mainline 3) LNG/Marine For each facility above, the respective control room shall have the ability to operate, monitor and shutdown all units, packages, processes and utilities within their plant. Each facility (GTP, Mainline & LNG/Marine) shall have standalone Integrated Control & Safety System (ICSS)." It should also be pointed out that this philosophy is consistent with the operations of the existing OHSA regulated North Slope facilities. Regarding the Pipeline operations, control and abnormal conditions actions, please refer to the AKLNG submission to FERC, Resource Report 11 of April17, 2017. Sincerely, Frank T. Richards, P.E. Senior Vice President, Program Management ALASKA GASL.NE DEVELOPMENT CORPORATION 3201 C Street, Suite 200. Anchorage. Alaska 99503 Tel. 907-330-6300 I Fax 907-330-6309 I ww agdc us#

Page 5* ALASKA * * * GASLINE * ** DEUELOPMENT CORP. June 1, 2017 Sentho K. White, P.E. General Engineer Pipeline and Hazardous Materials Safety Administration Engineering and Research U.S. Department of Transportation 1200 New Jersey Avenue, SE Washington DC 20590 Re: Department of Transportation jurisdictional limits Dear Ms. White: AGDC sent a letter (Frank Richards to White of 5/23/2017) which addressed PHMSA jurisdiction of the proposed North Slope Gas Treatment Plant (GTP). That letter had noted that the separation of Facilities from Pipeline for the proposed Alaska LNG project would be consistent with ongoing North Slope jurisdiction limits. To provide further explanation of AGDC's position, the public 2013 BP Annual ADR Surveillance and Monitoring Report is attached. Please see Appendix A, "Pipeline Schematics", that depicts the DOT jurisdictional limits on existing North Slope facilities. The full, electronic document may be found at: http://dog.dnr.alaska.gov/spcs/Documents/Publications/LesseeAnnualReports/2013/2013 AnnualReport-BP-Combined.pdf Sincerely, Frank T. Richards, P.E. Senior Vice President, Program Management ALASKA GASLINE 3201 C Street, Suite 200, Anchorage, Alaska 99503 DEVELOPMENT CORPORATION Tel. 907-330-6300 | Fax 907-330-6309 | www.agdc.us#

Page 6June 5, 2017 REGULATORY JURISDICTION RATIOI GAS TREATMENT PLANT SUMMARY The Pipeline Hazardous Materials and Safety Administration (PHMSA) is asserting regulatory jurisdiction within the Alaska LNG Gas Treatment Plant (GTP). Regulatory jurisdiction for the GTP should be the same as other North Slope gas and oil processing facilities which are connected to PHMSA jurisdictional pipelines, principally Occupational Safety and Health Administration (OSHA) and the State Fire Marshall. PHMSA jurisdiction would only apply to the Alaska LNG Pipeline ("Mainline") beginning at the demarcation point between pipeline and GTP facilities where ownership, control, safety systems, maintenance, and access of the GTP and the Mainline facilities is transitioned. Figure 1 depicts where the transition would take place from a process perspective, and Figure 2 depicts the physical location of the transition point. ACTION REQUESTED AGDC requires concurrence that PHMSA jurisdiction for the Alaska LNG project does not extend to the GTP facilities.#

Page 7Alaska LNG- PHMSA Regulatory Jurisdiction Rationalization 1. BACKGROUND The Alaska LNG GTP will process gas received from the Prudhoe Bay Unit and the Point Thomson Unit to meet the Alaska LNG Mainline inlet specifications for CO2. H2S, water, pressure and temperature. The GTP will have its own control and safety systems centered in the control room within the GTP facilities that will be completely separate from control and safety systems of the Alaska LNG Pipeline and Plant Facilities. The Mainline will be controlled from the Mainline control center in Anchorage with backup controls at the Mainline operation/maintenance facility in Fairbanks. Control of the LNG facilities will be within the Nikiski LNG facility. There will be no control functions of the Mainline facilities from the GTP or LNG control rooms. The three control centers (GTP, Mainline, and LNG) will have the capability to notify the other centers as issues may arise so that any control actions, if needed, can be taken by the other control centers for the areas of their responsibility. Mainline facilities located near the GTP, primarily metering and pig launcher, will be isolated from the GTP facilities. All operations, maintenance, and control of those Mainline facilities will be the responsibility of the Mainline operations and maintenance (O&M) staff. The GTP O&M staff will have no responsibilities or authority for Mainline facilities. Likewise, the Mainline O&M staff will have no responsibilities or authority for the GTP facilities. Figure 1 shows the demarcation of equipment from a process perspective. Figure 2 shows the physical location on pad of the demarcation point. Figure 1. GTP/Mainhine High Level Process Flow Diagram Hydrocarbon Flow C02 Pressure H2S GTP Control i Pipeline Control ) From GTP Rehigeration -3Tu Pipeline Pig Launcher Pipeline Metering, Analyzer and Protective Shutdown Valve Skid Alaska Gasline Development Corporation I 3201 C St., Suite 200, Anchorage, AK 99503 I www.agdc.us NOTICE -THIS DOCUMENT CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMATION AND SHALL NOT BE DUPLICATED, DISTRIBUTED, DISCLOSED, SHARED OR USED FOR ANY PURPOSE EXCEPT AS MAY BE AUTHORIZED BY AGDC IN WRITING. Rev 0#

Page 8Alaska LNG- PHMSA RegulatoryJurisdiction Rationalization Figure 2. Partial GTP Plot Plan Showing Equipment Location on the GTP Pad I FftTE.1 :: / GAS. cm it ATtU !4in; II G*S -7 Demarcation of ) control between I \ Pipeline and GTP A1 Pipeline Facilities on the GTP pad TP.*SFO(RS / :__ L1-.-- - - ,-, 2. CONCLUSION The Alaska LNG GTP and Mainline ownership, control, safety systems, maintenance, and access are independent of each other, and PHMSA jurisdiction should for be over the mainline facilities only, as with other North Slope facilities. Specifically, the Mainline would be regulated by PHMSA, but the upstream facilities, i.e. the GTP, would not be regulated by PHMSA. Alaska Gasline Development Corporation I 3201 C St., Suite 200, Anchorage, AK 99503 www.agdc.us NOTICE-THIS DOCUMENT CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMATION AND SHALL NOT BE DUPLICATED, DISTRIBUTED, DISCLOSED, SHARED OR USED FOR ANY PURPOSE EXCEPT AS MAY BE AUTHORIZED BYAODC IN WRITING. Rev 0#