U.S. DOT/PHMSA - Response to Request for Special Permit

Page 1U.S. Department of Transportation 1200 New Jersey Ave, S.E. Safety Administration Pipeline and Hazardous Materials Washington, D.C. 20590 CERTIFIED MAIL - RETURN RECEIPT REQUESTED Mr. M. Dwayne Burton Vice President, Operations and Engineering Midcontinent Express Pipeline, LLC One Allen Center 500 Dallas St Suite 1000 Houston, TX 77002 RE: Midcontinent Express Pipeline, LLC (MEP); Special Permit: PHMSA-2007-27842 Dear Mr. Burton: On August 25, 2009, you wrote to the Pipeline and Hazardous Materials Safety Administration (PHIMSA) requesting to increase the operating pressure of the Midcontinent Express Pipeline, LLC (MEP) to a pressure corresponding to a maximum hoop stress of 80% of the specified minimum yield strength (SMYS) in accordance with the alternative maximum allowable operating pressure (MAOP) Special Permit, Docket No. PHMSA-2007-27842. MEP currently operates at a pressure corresponding to 72% SMYS. Further, under separate cover, MEP submitted documents supporting the request. After a thorough review of the documents and consideration of MEP assertions in your August 25, 2009 letter, this letter responds to your request, providing guidance to attain operating pressures above 12% SMYS up to 80% SMYS. The requirements contained herein in "Attachment A"- Integrity Verification of Pipe Properties - September 1, 2009 apply to the pipeline segments experiencing expansion above 0.60% for 42-inch pipe and 0.75% for pipe equal to or less than 36-inch diameter. On May 21, 2009, PHMSA issued an advisory bulletin (PHMSA-2009-0148), for the Potential for Low and Variable Yield and Tensile Strength and Chemical Compositions in High Strength Line Pipe (ADB), recommending operators to investigate if certain pipelines contain pipe joints not meeting minimum specification requirements (74 FR 23930). The observance of pipe expansions on recently constructed natural gas projects including Kinder Morgan projects led to PHMSA's issuance of the ADB. PHMSA remains concerned about expansion deformations exceeding 1.5% and is particularly concerned with any situation where expansion is present in combination with pipe not meeting mechanical requirements under API 5L. In fact, the basis for the design formula contained in 49 CFR section 192.111 contains specific material property requirements which provides the basis for establishing MAOP under 49 CFR section 192.619.#

Page 22 Therefore, an operator cannot afford to only consider the amount of expansion when reviewing pipeline in-line inspection deformation tool results since expansion may also be evidence of low yield or tensile strength line pipe. Until further studies are complete, PHMSA believes that a conservative approach is necessary that requires the operator to remove excessive pipe expansion anomalies along with performing mechanical testing to confirm if yield strength is a concern. To this end, PHMSA requests MEP to confirm if the following interim guidelines in "Attachment A - Integrity Verification of Pipe Properties" dated September 1, 2009 were met for the MEP pipeline. MEP must implement all special permit conditions in PHMSA-2007-27842, for the special permit pipeline segments. All DCVG/ACVG surveys must be conducted in accordance with the special permit conditions. The DCVG/ACVG surveys and the pipe coating remediation must be completed within 6 months after operating at the alternative MAOP (above 72% SMYS up to 80% SMYS operating pressure). Contingent upon your certification and documentation of compliance with the attached interim guidelines, PHMSA will grant authorization to increase the operating pressure of the designated MEP pipeline to a pressure corresponding to 80% SMYS. Please be advised that the interim Sincerely, Alan K. Mayberr Director, Engineering and Emergency Support Office of Pipeline Safety Cc: Jeffrey Wiese John Gale Linda Daugherty Steve Nanney Rod Seeley#

Page 33 "ATTACHMENT A"- Integrity Verification of Pipe Properties - September 1, 2009 MEP must remove all pipe joints expanded in excess of 1.50% in diameter, with elastic loading included (i.e., taking into account the pressure on the pipe at the time of measuring the deformation), or the commensurate adjusted expansion without elastic loading on the pipe when expansion is verified in the field without pressure on the pipe. MEP must also comply with the following requirements prior to operation of Class 1 pipe above 72% specified minimum yield strength (SMYS): 1) Unless already completed, MEP must run a deformation tool through all pipeline segments on the MEP Pipeline. MEP must use a high resolution deformation tool in lieu of a geometry tool to address the threat of low strength, expanded pipe. The deformation tool must include multi-finger sensors that contact the pipe internal diameter and have an accuracy of +/- 1% or less to identify expanded pipe and dents. The results of all deformation tool run results for expanded pipe and dents should be analyzed and submitted to the appropriate PHMSA Regional Director. All pipe exhibiting an indicated diameter greater than 0.60% or 0.75% (based upon pipe diameter 42" or ≥ 36" per API SL above the nominal pipe diameter should be noted on the report of potential deformations. Expanded pipe is defined as pipe exhibiting an indicated diameter greater than 0.60 % or 0.75% (based upon pipe diameter 42" or ≥ 36" per API 5L) above the nominal or actual rolled pipe diameter. MEP must ensure that all deformation tool results are not masked by the approach used to calculate and compare expanded versus non-expanded pipe and the percentage of expansion. MEP must employ procedures to review and compare deformation tool results with other pipe joint diameters to ensure an entire pipe joint is not expanded MEP must review with the appropriate PHMSA Regional Director, the deformation tool reports. This analysis must consider pipe properties and property distributions, hydrostatic test pressures and reported test behavior, and pipe end to center variations. Based on local pressure and expecter ›ehavior, any expansion exceeding the diameter by more than 1.5% witl elastic loading (or the commensurate adjusted expansion with elastic loading on the pipe, when expansion is verified in the field without pressure on the pipe) must be investigated by excavation to determine actual expansion, wall thinning and, if necessary, to verify pipeline special permit segments: tensile strength, yield strength, elongation, chemical composition, carbon equivalent/Pcm, hardness, Charpy - shear area and absorbed energy with full Charpy curves, and drop weight tear test (DWTT) properties ("properties#

Page 44 2. Pipe joints with expansions ≥ 1.5% with elastic loading must be removed and confirmed for strength serviceability as follows: a. Perform "properties test" in the transverse direction. MEP must take 2 sets at 3 locations along the pipe section of "properties test" for each removed pipe joint. The expanded pipe joint should be mapped to identify expanded pipe minimum and maximum wall thicknesses with at least 10 thickness readings mapped showing location on the pipe., b. If expanded pipe properties tests in (a.) do not meet special permit requirements, MEP must: i. Perform "properties test" of at least two (2) expanded pipe joints over 1% with elastic loading and two (2) non-expanded pipe samples from the steel/pipe supplier of expanded pipe (same OD, wall thickness, Grade, weld seam, steel supplier, pipe manufacturer and rolling campaign) to confirm pipe properties. The non-expanded pipe joints may be from in service or spare pipe inventory. ii. Submit remediation plans or a technical justification (fitness for service plan) to PHMSA on how reduced strength pipe meets 49 CFR Part 192.105. c. If the deformation tool run in Condition 1 shows no expanded pipe above 1.5% expansion or the pipe "properties test" in Condition 2. b above shows no reduced pipe properties, MEP must excavate two (2) expanded pipe joints with expansion above 1% with elastic loading to determine if there is wall loss or thinning that is detrimental to safe operations, prior to operating at the alternative MAOP. Any wall loss that would reduce the pipe segment operating pressure in accordance with §§ 192.103, 192.105 192.111, 192.112 and 192.619 must be remediated. If these excavations show wall loss below nominal wall thickness, MEP must continue to excavate and remediate expanded pipe joints above 1% with elastic loading until there are no detrimental wall loss pipe joints in service. All deformation tool results, for an initial run on a "pipeline segment", must be confirmed with at least two calibration digs to validate anomaly sizes and tool evaluations and remediation. accuracy. Tool inaccuracies after validation must be considered into expanded pipe 4. MEP must not use the "one class bump" for class change locations where expansions exceeded 1.0% with elastic loading until completion of a "fitness for service" plan and acceptance by PHMSA. The interim guidelines contained herein must be reviewed with PHMSA, Director of Engineering and Emergency Support and PHMSA, Southern and Southwestern Regional Directors at the completion of the investigation, pipe properties testing, and "fitness for service" plan for technical soundness (including a determination of the proper pipe grade to meet § § 192.103, 192.105, 192.111, 192.112 and 192.619 in determining the alternative MAOP or MAOP of the pipeline segment)#

Page 55 MEP must perform the following actions where deformation tool runs indicate expansion greater than 1.5% or in pipeline segments with low strength pipe. 6. Conduct a re-inspection and remediation of the pipelines with deformation and high resolution magnetic flux leakage (MFL) tools to evaluate for metal loss and expansion anomalies: a. Within 36 months of operating above 72% SMYS up to 80% SMYS on any given pipeline segment with expanded or remediated pipe. b. Schedule subsequent in-line inspection with MFL tools (ILI) and close interval survey re-inspections for the pipelines based on failure pressure ratios intervals. (FPKs) calculated after the first re-inspection, but not to exceed 5 year C. Manage plain dents (in accordance with ANSI B31.8 and § 192.933) not to exceed 6% total strain in pipe body and 2% strain contiguous with weld for future ILl deformation and geometry tool runs 7. Pipeline operations: Pipeline may be operated up to the alternative MAOP (80% SMYS), after successful completion of the following interim guidelines: "Properties tests," and a technical review including review of pipe test pressures to confirm that pipe property results meet API SL specifications and 49 CFR Part 192 requirements for the alternative MAOP or MAOP. The "properties tests" must show conformance with API 5L and alternate MAOP or MAUP criteria. i. Finise foser bic treplan to operate lining alter ate Mily thor A tre based upon pipe "properties test" and any effects of elevated test pressure due to pipe elevation differences may have had on pipe expansion. ili. The technical documentation of all "properties test" findings or "fitness for service" plans must be submitted by MEP to PHMSA, b. For pipeline operations, MEP must run: i. ILI initially within 3 years of operating at the alternative MAOP and on a maximum 5 year interval thereafter. Anomalies must be evaluated and remediated based upon alternative MAOP or MAOP conditions, ii. Conduct close interval surveys (CIS) and remediate pipe in each pipeline segment in accordance with 49 CFR Part 192 on a periodic basis, not to exceed 3 months of running ILI tools ili. MEP must operate in accordance with the "interim guidelines of this document" until PHMSA has developed "go-forward" guidance on expanded pipe removals based upon technical input from research and industry. If the PHMSA technical and safety evaluation of pipe expansion issues results in "go-forward" guidance that differs from the requirements above, MEP must implement the PHMSA "go-#

Page 66 forward" guidance for the alternative MAOP or MAOP pipeline segments. 8. For expanded pipe only not meeting 49 CFR Part 192.105 and special permit requirements, implement enhanced corrosion anomaly response and repair criteria: a. Anomaly Response Time: Repair Immediately • Any anomaly within a pipeline segment operating up to 80% SMYS with either: (1) a failure pressure ratio (FPR) equal to or less than 1.15; (2) an anomaly depth equal to or greater than 50% wall thickness loss. • Any anomaly within a pipeline segment operating up to 72% SMYS with either: (1) a failure pressure ratio (FPR) equal to or less than 1.25; (2) an anomaly depth equal to or greater than 50% wall thickness loss. • Any anomaly within a pipeline segment operating up to 60% SMYS with either: (1) an FPR equal to or less than 1.40; (2) an anomaly depth equal to or greater than 50% wall thickness loss. • Any anomaly within a pipeline segment operating up to 50% SMYS with either: (1) an FPR equal to or less than 1.5; (2) an anomaly depth equal to or greater than 50% wall thickness loss. b. Anomaly Response Time: Repair Within One Year • Any anomaly within a pipeline segment operating at up to 80% SMYS with either: (1) an FPR equal to or less than 1.25; (2) an anomaly depth equal to or greater than 40% wall thickness loss. • Any anomaly within a pipeline segment operating at up to 72% SMYS with either: (1) an FPR equal to or less than 1.39; (2) an anomaly depth equal to or greater than 40% wall thickness loss. • Any anomaly within a pipeline segment operating at up to 60% SMYS with either: (1) an FPR equal to or less than 1.67; (2) an anomaly depth equal to or greater than 40% wall thickness loss. • Any anomaly within a pipeline segment operating at up 50% SMYS with either: (1) an FPR equal to or less than 2.0; (2) an anomaly depth equal to or greater than 40% wall thickness loss. c. Anomaly Assessment Methods: • MEP must use the most conservative anomaly repair method and take into count a lowest pipe proponyes basell pon in a algoro ton, steel source, pipe manufacturer, wall thickness, and grade. 9. MEP must review and document all areas along the pipeline to ensure pipe loadings at all crossings meet combined stress limits for all equipment, farm machinery, roads, highways, and railroads to maintain Special Permit design factors based upon the lowest pipe strengths for that pipe grade, wall thickness, design factor, maximum loadings, and depth of cover. MEP must add a provision in its Operations and Maintenance Manual for annual reviews to account for combined stresses. 10. MEP's Operations and Maintenance Procedures must include the interim guidelines of this document within three months of operating at the alternative MAOP. Submit and must be certified by an officer of MEP to the PHMSA, Director of Engineering Directors. and Emergency Support and the PHMSA Southern and Southwestern Regional#