EPA GHG Emission Requirements Could Affect Interstate Pipelines

Pipelines dodged one Environmental Protection Agency greenhouse gas (GHG) bullet temporarily but may get hit by another.

The EPA’s final rule issued on Sept. 22 on who has to report GHG emissions to the EPA leaves out the interstate pipeline industry, although it is not clear whether the industry, which had protested its initial inclusion in the proposed rule, is out of the woods entirely or whether the agency is simply refining reporting requirements for pipelines, and will publish them in the near future. The more potentially significant EPA GHG action, however, was its Sept. 30 proposed rule which would actually require industrial sources of GHG emissions to reduce those emissions below certain levels. Again, the application of this second, proposed rule to the pipeline industry is unclear, according to Terry Boss, a senior vice president with INGAA.

Pipelines are responsible for two sources of GHGs: carbon dioxide from the internal combustion engines which run compressors, and methane from the compressors themselves. The proposed rule limiting emissions would apply to any industrial source – and its chief targets, of course, are power plants, refiners and industrial manufacturers – which emits more than 250 tons a year of GHGs from any source. Boss says he thinks interstate pipelines will exceed that floor, but he is not sure how dramatically. If it is over the threshold, a pipeline company might have to install what is referred to as “best available control technology.” That could be costly. The costs of controlling nitrogen oxide, which is not a GHG, but is the subject of another proposed rule the EPA issued last summer, is expensive, and might parallel the costs of controlling carbon dioxide and methane emissions. To address a state requirement, an INGAA member was recently required to reduce NOx from existing IC engines for several facilities. At one facility, low emissions combustion (LEC) NOx control was installed on three larger engines (3,400 hp each) with a total capital investment (TCI) cost of over $3.4 million.

Of course, simply reporting GHG emissions to the EPA would presumably be less costly. Nonetheless, INGAA took issue with a number of the reporting elements of the EPA proposal issued last summer, particularly the requirement that the calculations be done via “direct measurement.” INGAA proposed an alternative using emission factor based approaches to estimate fugitive emissions. When the EPA published its final rule on GHG reporting, it admitted that the pipelines (and the oil companies who are in the same category, for purposes of GHG reporting) made some good points.

“These alternatives will provide similar coverage of vented and fugitive methane and other GHG emissions in the oil and gas sector, while concurrently taking into account industry burden,” the agency said. “Where applicable, EPA will also consider the applicability of engineering estimates, emissions modeling software and emissions factors rather than relying so extensively on the use of direct measurement. EPA will consider optimal methods of data collection in order to maximize data accuracy, while considering industry burden.”

PHMSA Changes to Incident and Registry Reporting Raise Hackles
The Pipeline and Hazardous Materials Safety Administration (PHMSA) wants to change some of its rules on that topic too. Actually, INGAA is indirectly to blame for some of the new proposed requirements, such as when a interstate pipeline has to report an “incident.” INGAA filed a petition in 2005 with PHMSA asking the agency to change the definition of incident, which was tied to the value of gas that was lost due to a “reportable incident.” Under the current definition, a reportable incident includes estimated property damage, including cost of gas lost, of the operator or others, or both, of $50,000 or more.

In its petition, INGAA asserted that the current definition effectively freezes the dollar amount of the cost of an incident to 1984/1985 levels. Therefore, INGAA claims that, although less gas is being released, more incidents are being reported because the price of gas has escalated over time. The Government Accounting Office agreed with the INGAA contention in a report it issued in 2006.

INGAA recommended PHMSA establish a volume based threshold for a reportable incident and suggested 20,000 MCF (20 million standard cubic feet) as a reporting threshold. But PHMSA came back with 3,000 MCF because it more accurately represents the median volume of gas loss reported through transmission incident reports since 2002.

The other sore point in the PHMSA proposed rule, according to INGAA, is the creation of a National Registry of Pipeline and LNG Operators. This data will provide PHMSA with timely updates on significant and potential safety impacting changes occurring under its purview, and help PHMSA to better monitor and assess operator performance. In comments INGAA submitted in September, it said: “Unfortunately, the proposed regulations governing registry updates do not accord with basic business practices and far exceed similar requirements that have long been imposed by the Federal Energy Regulatory Commission.”

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