MEDALLION OPERATING COMPANY, LLC

Incident Narrative

UPDATE 3: 1/2/2018 - ADDED STEPS TO PREVENT FUTURE RECURRENCE. UPDATE2: CORRECTED TIME INCONSISTENCY WITH PART A QUESTION 4 AND QUESTION 18A. UPDATE: SOIL SAMPLES WERE COLLECTED MARCH 7, 2017 AND TAKEN FOR ANALYSIS. THE RESULTS INDICATED CONTAMINANT LEVELS WERE BELOW LOCAL STANDARDS AND THE REMEDIATION IS NOW CONSIDERED COMPLETE. AT APPROXIMATELY 12:30 PM DECEMBER 19, 2016, THERE WERE TWO SEPARATE SPILLS AT MEDALLION OPERATING COMPANY, LLC'S SANTA RITA FACILITY. THE FIRST AND LARGER SPILL (APPROX.. 25 BBLS OF CRUDE OIL) WAS FROM A FUTURE CONNECTION POINT ON THE 10"" DISCHARGE LINE FROM AN 8"" GATE VALVE BUSHING. THE LEAK WAS DISCOVERED DURING NORMAL ROUNDS BY A PIPELINE OPERATOR. THE BUSHING WAS TIGHTENED AND THE LEAK WAS STOPPED. THE SECOND RELEASE FROM A 4"" BALL VALVE WAS DISCOVERED BY THE SAME OPERATOR AFTER REPAIRING THE BUSHING LEAK. THE 4"" BALL VALVE IS ON A RISER FOR A FUTURE TRUCK OFF-LOADING FACILITY AND WAS TERMINATED WITH A BLIND FLANGE. THE VALVE WAS DISCOVERED IN A CLOSED POSITION BUT EXHIBITING A CRACK THAT WAS LEAKING AND RESULTING IN APPROX.. 5 BBLS OF CRUDE OIL TO BE RELEASED. WHEN THE FLANGE WAS REMOVED WATER WAS NOTED BETWEEN THE VALVE BODY AND FLANGE. A REVIEW OF PRESSURE DATA INDICATED THAT NEITHER SECTION OF PIPE EXCEEDED MOP DURING THE TIME AROUND THE INCIDENTS. AMBIENT AIR TEMPERATURES ON THAT DATE WERE REACHED BELOW FREEZING IN THE MORNING HOURS (LOW NEAR 20 F). IT IS BELIEVED THAT COLD AMBIENT TEMPERATURES CAUSED RESIDUAL HYDROTEST WATER TRAPPED BEHIND EACH VALVE TO FREEZE, CRACKING THE 4"" VALVE AND COMPROMISING THE PACKING ON THE 8"" GATE VALVE. IN BOTH INSTANCES THE LEAKS WHERE STOPPED UPON INITIAL DISCOVERY. THE SPILLS REMAINED ON MEDALLION'S SITE AND NO INJURIES, EXPLOSIONS OR FIRES OCCURRED. THE 4"" VALVE WAS REMOVED AND A BLIND FLANGE INSTALLED IN ITS PLACE. THE 8"" GATE VALVE WAS OPENED ALLOWING CRUDE OIL TO WASH THROUGH THE BLINDED SECTION TO REMOVE TRAPPED HYDRO-TEST WATER AND NO FURTHER ACTIONS WERE NEEDED. REMEDIAL ACTIVITIES TO THE AFFECTED SOIL HAVE BEEN COMPLETED AND CONFIRMATORY SAMPLES HAVE BEEN SUBMITTED TO A LABORATORY FOR ANALYSIS TO DETERMINE REQUIRED CLOSURE LEVELS HAVE BEEN MET. THE RESULTS WERE NOT AVAILABLE AT THE TIME OF THIS REPORT AND A FINAL CLOSURE REPORT WILL BE SUBMITTED INDICATING COMPLIANCE WITH APPLICABLE CLEANUP STANDARDS. MEDALLION WILL WORK ALL VALVES OPEN AND CLOSED AFTER HYDROTESTING WITH WATER AND FILLING WITH CRUDE OIL TO ENSURE WATER IS COMPLETELY FLUSHED FROM THE SYSTEM. DISPLACEMENT OF THE WATER WILL PREVENT FUTURE OCCURRENCES.