{"operation":"document","citation":"PI-20-0008","title":"THUMS Long Beach Company — Pipeline Safety Interpretation","source_type":"guidance","agency":"Pipeline and Hazardous Materials Safety Administration","status":"guidance","official":true,"published_on":"2020-06-15","effective_on":null,"summary":"PI-20-0008 response to THUMS Long Beach Company concerning 195.1.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-interpretation-pi-20-0008.json","markdown":"https://regulus.evalyn.ai/document/phmsa-interpretation-pi-20-0008.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-interpretation-pi-20-0008","source_url":"https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/docs/standards-rulemaking/pipeline/interpretations/74096/thums-long-beach-company-pi-20-0008-06-08-2020-part-195-1.pdf","body":"<<<PAGE 1>>>\n\nU.S. Department\nof Transportation\nPipeline and Hazardous\nMaterials Safety Administration\n1200 New Jersey Avenue, SE\nWashington, DC 20590\nJune 15, 2020\nMr. Jerry Korhonen\nDirector of Pipeline Compliance\nTHUMS Long Beach Company c/o\nCalifornia Resources Corporation\n900 Old River Road\nBakersfield, CA 93311\nDear Mr. Korhonen:\nIn a December 13, 2019, letter to the Pipeline and Hazardous Materials Safety Administration\n(PHMSA), you requested an interpretation of 49 Code of Federal Regulations (CFR) Part 195\n(Request). Specifically, you requested an interpretation regarding the applicability of\n§ 195.1(b)(5). On April 23, 2020 PHMSA responded to THUMS and requested additional\ninformation from the company regarding its operations. On May 11, 2020, THUMS provided\nadditional requested information to PHMSA (Response).\nIn your Request and Response, you stated that THUMS Long Beach Company has nine subsea\npipelines that transport a multi-phase crude oil, natural gas, and water mix from four man-made\noil production islands located in Long Beach Harbor within California State waters to onshore\nfacilities. You also stated that the fluids coming up from the wells contain approximately 2% oil\nand the remainder is water and some entrained gases and solids. You further stated that there is\ngross separation of oil and water on the islands that is accomplished by gravity separation in the\nFree Water Knock-Out (FWKO) vessel located on the islands. Finally, you explained in your\nResponse that the bulk water removal at the islands is necessary for two purposes: 1) re-injection\ninto the reservoir for pressure maintenance of the formation; and 2) State and City-mandated\nsubsidence control. In your Request, you noted that after bulk water separation on each island,\nthe composition of the fluid stream transported to shore within the subsea pipelines is between\n25-30% crude oil with maximum crude oil concentration of 30-40%, and that the multiphase\nfluid undergoes final separation, processing, and dehydration at THUMS’s Pier J facilities to\nyield sales-quality crude oil.\nIn your Request, THUMS asked PHMSA if the exception under § 195.1(b)(5) applies to the nine\nsubsea pipelines between the islands and the Pier J facilities.\nSection 195.1(b)(5) exempts the following pipelines from Part 195 requirements:\n“[t]ransportation of hazardous liquid or carbon dioxide in an offshore pipeline in state waters\nwhere the pipeline is located upstream from the outlet flange of the following farthest\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 are not generally applicable, do not create legally-enforceable rights or\nobligations, and are provided to help the specific requestor understand how to comply with the regulations.\n\n<<<PAGE 2>>>\n\n2\ndownstream facility: The facility where hydrocarbons or carbon dioxide are produced or the\nfacility where produced hydrocarbons or carbon dioxide are first separated, dehydrated, or\notherwise processed.” The exception is narrow, and applies only if the following factors are met:\n(1) the transportation of hazardous liquid or carbon dioxide; (2) in an offshore pipeline in state\nwaters; and (3) the segment is located upstream from the outlet flange of the farthest downstream\nfacility, either where hydrocarbons or carbon dioxide are produced, or the facility where\nproduced hydrocarbons or carbon dioxide are first separated, dehydrated, or otherwise processed.\nThere is no dispute that the first and second prongs to the exception are met. The third prong\nrequires an analysis of whether the point of “first separation” occurs on the four islands where\nwater is removed from the product.\nIt is undisputed that water is removed from the product on the islands where it is produced. For\nthe exception to apply, this removal must not constitute “first separation” under the regulation.\nPHMSA has consistently interpreted this regulation to apply only where the initial separation is\nperformed exclusively for the purpose of enhancing or assisting production operations, such as\nthrough reinjection for gas lift, or to provide power to the production platform instruments or\nequipment.1 PHMSA has never interpreted this exception to apply where the separation is being\nperformed for any purpose not solely related to production operations.\nIn the case of THUMS, there is bulk water separation at the four islands, resulting in an increase\nof fluid oil content from approximately 2% to 25-30% crude oil composition. This separation is\nnot minor, nor is it being performed only to assist production operations. Instead, it is being\nperformed for pressure maintenance of the formation and to comply with state and local\nmandates. Additional processing at the Pier J facilities does not alter the fact that at this location\nthe pipeline already carries a commodity that has been initially separated at an upstream facility,\nregardless of the fact that it is not considered sales-quality crude. Therefore, the bulk water\nseparation occurring on the four islands constitutes “first separation” for purposes of the\nregulation, and therefore, the nine pipelines from the outlet flange of the four islands to the Pier J\nfacilities would not fall under the § 195.1(b)(5) exception.\n1 See e.g., PHMSA Letter of Interpretation to L.G. Otteman – Offshore Operators Committee, No. PI-79-025 (Aug.\n2, 1979) (“The separation to which Sections 192.1 and 195.1 refer is a type of processing of hydrocarbons for purposes\nof their further transportation by pipelines. This type of processing does not include separation of minor amounts of\ngas exclusively for the purpose of running instruments or equipment.”).\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 are not generally applicable, do not create legally-enforceable rights or\nobligations, and are provided to help the specific requestor understand how to comply with the regulations.\n\n<<<PAGE 3>>>\n\nIn sum, the nine transportation-related pipelines moving hydrocarbons from the four offshore\nproduction islands to the onshore facilities for further processing are subject to Part 195\nregulations.2\nIf we can be of further assistance, please contact Tewabe Asebe at 202-366-5523.\nSincerely,\nJohn A. Gale\nDirector, Office of Standards\nand Rulemaking\n2 Despite THUMS’s classification of these lines as production lines, these lines are engaged in transportation. Even\nif § 195.1(b)(5) applied, which it does not, these nine pipelines would be subject to PHMSA’s jurisdiction. Section\n195.2 defines production facility as “piping or equipment used in the production, extraction, recovery, lifting,\nstabilization, separation or treating of petroleum or carbon dioxide, or associated storage or measurement.” As\nexplained in THUMS’s Request and Response, the FWKOs on each island and subsequent reinjection is being used\nfor more than just petroleum production. In this case, reinjection is also being used to control subsidence of the\nsurrounding ground surface, including the local infrastructure and buildings, and waterflood optimization. Further,\nthere is also a geographic limit to what can be considered a production facility. Section 12 of the Pipeline Safety,\nRegulatory Certainty, and Job Creation Act of 2011 (49 U.S.C. § 60101 et seq.) notes that “the term ‘transportation-\nrelated oil flow line’ means a pipeline transporting oil off of the grounds of the well where it originated and across\nareas not owned by the producer, regardless of the extent to which the oil has been processed, if at all.” Based on this\ndefinition, and the fact that reinjection is being used for more than production purposes, the nine subsea lines are all\nengaged in transportation and fall under the jurisdiction of the U.S. Department of Transportation as authorized by 49\nU.S.C. § 60101 et seq.The 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 are not generally applicable, do not create legally-enforceable rights or\nobligations, and are provided to help the specific requestor understand how to comply with the regulations.\n\n<<<PAGE 4>>>\n\nA subsidiary of California Resources Corporation\nTHUMS LONG BEACH COMPANY\n1 World Trade Center, Suite 1500, Long Beach, California 90831 CORRESPONDENCE P.O. Box 2900, Long Beach, California 90801-2900\nTel 562.624.3400 Fax 562.624.3295\nDecember 13, 2019\nAlan K. Mayberry\nAssociate Administrator for Pipeline Safety\nPipeline and Hazardous Materials Safety Administration (PHMSA)\n1200 New Jersey Ave, SE., East Building\nWashington, DC 20590\nRe: THUMS Long Beach Company (OPID 19410) – Request for Jurisdictional Applicability Review of\nTHUMS Subsea Gross Production Liquid Pipelines from Production Islands\nDear Mr. Mayberry:\nTHUMS Long Beach Company (OPID 19410), located at 1 World Trade Center, Suite 1500, Long Beach,\nCA 90831, requests a 49 CFR Part 195.1 jurisdictional applicability review for the nine (9) subsea gross\nproduction liquid pipelines associated with operations of the four (4) man-made production islands\nlocated in Long Beach Harbor.\nTHUMS Long Beach Company serves as the field contractor and partner for the production islands and\nassociated subsea pipelines under a production sharing agreement with the State of California, the\nprimary mineral owner, and the City of Long Beach, the field operator and owner of the production islands\nand associated facilities.\nAs detailed within the attachment to this letter, gross production from the multiple wells located on each\nof the production islands is comingled and transported for processing and dehydration within the onshore\nPier J facilities to yield sales quality crude oil.\nOnly gross separation of bulk water occurs on each island. Immediate bulk water removal at the islands\nis necessary due to the requirement of the THUMS waterflood operation for re-injection into the reservoir\nfor pressure maintenance of the formation and for subsidence mitigation. The fluids coming up from the\nwells contain only about 2% oil, with the balance being water and some entrained gases and solids. After\nthe bulk water separation on each island, the composition of the fluid stream within the subsea pipelines\nis typically just 25-30% crude oil, with the balance being water and some remaining entrained gases.\nOther than the preliminary water removal described above, all water separation, dehydration, and\ncrude oil processing occurs within the THUMS onshore Pier J Facility. A key point of information is there\nare no dehydration operations occurring at any of the four (4) production islands.\n\n<<<PAGE 5>>>\n\nA subsidiary of California Resources Corporation\nTHUMS LONG BEACH COMPANY\n1 World Trade Center, Suite 1500, Long Beach, California 90831 CORRESPONDENCE P.O. Box 2900, Long Beach, California 90801-2900\nTel 562.624.3400 Fax 562.624.3295\nThe specific jurisdictional applicability review question for the nine (9) subsea gross production liquid\npipelines (listed below) is whether the exemption listed under 49 CFR 195.1(b)(5) is applicable to this\nspecific operational configuration.\nCross NPMS Defined\nNominal\nLength\nMOP\n% SMYS\nLow\nLine Description\nDiameter\n(miles)\n(psig)\nat MOP\nStress\nGravity\nLine Rural\nCommercially Navigable\nWaterway\nU.S. Coast\nGuard\nJurisdiction\nCW-2 Island Chaffee to Island White 8\" 1.53 400 15.31% YES NO NO NO NO\nCW-7 Island Chaffee to Island White 8\" 1.53 400 15.31% YES NO NO NO NO\nFW-2 Island Freeman to Island White 8\" 0.75 400 15.31% YES NO NO NO NO\nFW-3 Island Freeman to Island White 6\" 0.75 400 13.52% YES NO NO NO NO\nFW-5 Island Freeman to Island White 6\" 0.75 400 13.52% YES NO NO NO NO\nWG-2R Island White to Island Grissom 12\" 1.60 400 14.57% YES NO NO NO NO\nWG-4 Island White to Island Grissom 12\" 1.60 400 19.43% YES NO NO NO NO\nGJ-2 Island Grissom to Onshore Pier J 12\" 1.15 400 19.43% YES NO NO YES NO\nGJ-6 Island Grissom to Onshore Pier J 12\" 1,15 400 19.43% YES NO NO YES NO\nThe THUMS production islands and the associated subsea pipelines are located within California state\nwaters and, as stated above, only bulk water removal is occurring on the islands because immediate\nwater re-injection is required for formation waterflood and subsidence mitigation.\n• The composition of the gross production fluids in these nine (9) subsea liquid pipelines typically\ncontains only 25-30% crude oil, with water comprising the remaining 70-75% of the gross\nproduction fluids.\n• The maximum crude oil concentration found within any of these nine (9) subsea liquid pipelines is\n30-40% oil, with water comprising the remaining 60-70% of the gross production fluids.\nThe conclusion reached by THUMS, with the City of Long Beach’s concurrence, is that exemption 49 CFR\n195.1(b)(5) is applicable as bulk water removal on each of the THUMS production islands for immediate\nre-injection into the formation is not considered to be a “processing” step for this specific and unique\nconfiguration.\n• The separation, dehydration, and processing steps referenced within 49 CFR 195.1(b)(5) occur\nwithin the THUMS onshore Pier J facility.\n• The sales grade crude oil pipelines downstream of the Pier J Facility (to the J6 Breakout Tanks\nand from the J6 Breakout Tanks to downstream third-party crude oil pipelines located at the\nTHUMS Broadway & Mitchell (B&M) Facility) are jurisdictional under 49 CFR 195, but the\nupstream nine (9) subsea gross production liquid pipelines from the four (4) THUMS production\nislands should be exempt from 49 CFR Part 195 requirements.\nEXEMPTION:\n“195.1(b)(5) Transportation of hazardous liquid or carbon dioxide in an offshore pipeline in state\nwaters where the pipeline is located upstream from the outlet flange of the following farthest\ndownstream facility: The facility where hydrocarbons or carbon dioxide are produced or the facility\nwhere produced hydrocarbons or carbon dioxide are first separated, dehydrated, or otherwise\nprocessed; …”\n\n<<<PAGE 6>>>\n\nPlease feel free to contact me by either telephone or email as listed below if you have any questions or\nneed any additional information on this request for jurisdictional applicability review.\nSincerely,\nJams When\nJerry Korhonen\nDirector - Pipeline Compliance\nTHUMS Long Beach Company c/o\nCalifornia Resources Corporation\n900 Old River Road\nBakersfield, CA 93311\nE-Mail: Jerry.Korhonen@crc.com\nOffice:\n661-412-5457\nCell:\n281-380-2077\nATTACHMENT: THUMS Crude Oil Processing - Details","truncated":false,"body_characters":15241}