Fracing Disclosure Main Concern In Senate Energy Bill; Incentives For NG Vehicles Included

The energy bill the Senate is to finally take up in September is primarily a “BP-response” bill. It contains none of the greenhouse gas emission reductions that Democrats had hoped to bring to a vote in a “Climate Change” bill, which is dead for this year. The Clean Energy Jobs and Oil Company Accountability Act of 2010 focuses mostly on oil spill liability and response issues.

Natural gas production offshore doesn’t appear to be a concern, obviously because there is no such thing as a gas “spill.” Moreover, there don’t appear to be any provisions applicable to pipelines, offshore or on. However, Senate Majority Leader Harry Reid (D-NV) slipped in a provision dealing with disclosure of “fracing” chemicals which has drawn the ire of some big natural gas producers.

The fracing disclosure provision in the Senate bill differs from a House bill — which has not been approved by any committee, much less the full House — called the Fracturing Responsibility and Awareness of Chemicals Act (FRAC ACT). The House bill authorizes the EPA to regulate fracing liquids under the Safe Water Drinking Act. That led companies such as ExxonMobil and XTO to oppose the House bill.

The Senate bill says a state “may” require any person using hydraulic fracturing to disclose a list of chemicals used, identified by well location and number, including the chemical constituents of the mixtures, Chemical Abstracts Service registry numbers and material safety data sheets. If a state does not require that disclosure by Dec. 31, 2011, the drilling company would have to disclose the information to the public on its website.

Ken Cohen, vice president of public and government affairs for ExxonMobil, says, “We feel disclosure should be made at the state level without additional and unnecessary regulations from the Environmental Protection Agency and the federal government. States are acting on the fluid disclosure issue, with several important unconventional gas production states recently enacting or proposing new disclosure requirements (such as Colorado, Wyoming, Arkansas, Pennsylvania, and New York). We’ve been following these state guidelines and are working with industry to develop best practices.”

While the fracing disclosure provision may bother shale gas producers, the bill’s provision establishing a Natural Gas Vehicle and Infrastructure Development Program should warm their hearts, and the hearts of other natural gas players, including pipelines. The program would fund consumer rebates for purchase of natural gas vehicles. The bill also offers grants to refuelers for making NG pumps available at service stations, presumably. The consumer rebates would be worth up to 90 percent of the incremental cost of a qualified vehicle, but could be no more than $8,000 for a vehicle with a gross weight rating of not more than 8,500 pounds. The dollar cap would increase as the weight of the vehicle increased. The bill makes $3.8 billion available for those rebates.

EPA Considers Forcing Pipelines To Remove Remaining PCBs
The Environmental Protection Agency is considering requiring interstate and distribution pipelines to remove all Polychlorinated Biphenyls (PCBs) from their pipelines by 2020. The EPA is in the very early stages of making a determination as to whether that is necessary, based on any public health or environmental threat that residual amounts of PCBs remain in pipelines.

PCBs were used as a fire retardant to the lubricating oil used in some pipeline compressor engines and turbines. Lubricating oils containing PCBs sometimes leaked from the compressors and could be carried downstream into natural gas distribution systems by small amounts of oily liquid hydrocarbons entrained in the natural gas.

EPA prohibited the use of PCBs at concentrations greater than 50 ppm in natural gas pipeline systems effective as of May 1, 1980. After nearly 30 years of operations and after all known sources of PCBs were removed from these systems, the EPA says it has information indicating that PCBs at levels greater than 50 ppm continue to be found in natural gas pipeline systems including within equipment which is not specifically designed to collect such material. The EPA is considering whether to require gas utilities to notify EPA “when PCBs are found in any pipeline system, regardless of the source of the PCBs or the owner of the pipeline.” Second, the agency is considering the elimination of all PCBs at greater than or equal to 50 parts per million (ppm) in all distribution or pipeline systems.

Lisa Beal, director, environment and construction policy, INGAA, says, “It is impossible for me to say definitively how much PCB remains in the system, but we can say that since the ban no new PCBs have been introduced into the system and when found, they are removed. Hence the overall mass of PCB is constantly decreasing.”

Pamela A. Lacey, senior managing counsel, environment, American Gas Association, states that if the EPA insists on eliminating all PCBs by 2020, companies would have to remove and replace millions of miles of distribution pipes at an astronomical cost and disrupt service to millions of homes and businesses.

Pipeline Public Education Programs Questioned
Various members of Congress referenced the “BP” issue when complaining about PHMSA’s dependence on an American Petroleum Institute (API) standard related to pipeline communications with the public.

The public education standard required by the Pipeline Safety Improvement Act of 2002 came up during the latest hearings on pipeline safety by the House Transportation and Infrastructure Committee in July. That standard was implemented by the Pipeline and Hazardous Materials Safety Administration (PHMSA) in a final rule in 2005 referencing RP 1162 which instructs transmission and distribution pipelines on what to include in messages to the public about potential, accidental releases, requisite public safety steps, use of one-call phone numbers prior to excavation and other things. Recently, the National Transportation Safety Board cited the failure of pipeline programs based on the standard in the investigation report of a deadly pipeline explosion in Mississippi that killed a girl and her grandmother.

At the hearings in July, Rep. Mark Schauer (D-MI) and others raised the even broader issue of whether PHMSA ought to be depending on API pipeline standards at all, given that they are developed by task forces composed almost exclusively of industry members. Rep. Jerome Nadler (D-NY) was incensed that the public must pay $89 to get a printed copy of RP 1189. It is available for viewing, free of charge, on the API website.

Bill Bush, a spokesman for the API, says there are 21 API standards referenced in PHMSA regulations. Not all are pipeline specific; some deal with storage tanks or some other aspect of the distribution system. Some API pipeline standards are not referenced by PHMSA. The second edition of RP 1162 is in the process of being vetted by an API committee, the final step before a new or revised standard becomes final. The revision, i.e. the second edition, was prepared by a task force composed predominately of API members. But Bush says that PHMSA officials were on the task force, as were representatives of the state pipeline regulatory agencies. After the task force drafted the second edition, API invited groups such as the Pipeline Safety Trust, NTSB, emergency responders and excavators to comment. Some of those comments were used to revise the draft, which is now undergoing a final vote by a committee composed solely of API members.

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