A recently released report Gas Distribution Infrastructure: Pipeline Replacement and Upgrades prepared for The American Gas Foundation by Yardley Associates provides insight into the need for Local Distribution Companies (LDCs) to replace or upgrade existing pipeline infrastructure.
As noted in the report, natural gas provides 25 percent of the nation’s primary energy, serving more than 71 million customers and is used to generate 21 percent of U.S. electricity supplies. Competitive pricing, environmental benefits and supportive public policies contribute to the widespread use of natural gas for heating, cooking, industrial process applications, and growing electric generation and transportation needs. Of course, this would not have been possible without public confidence in the safety and reliability of interstate transmission and local distribution pipeline delivery networks.
The report also points out that the overwhelming majority of the nation’s natural gas is produced within North America and transported to U.S. market areas by more than 300,000 miles of large-diameter, high-pressure pipelines. Local distribution companies (LDCs) deliver gas supply within market areas to customers using 1.2 million miles of smaller diameter, low-pressure mains and 880,000 miles of customer -service lines that deliver gas from a street connection to the customer’s meter.
One challenge facing LDCs, regulators and other industry stakeholders is the impact of leak-prone infrastructure installed using materials that are susceptible to corrosion or other material failure.
Prior to 1940, the primary materials used for distribution pipe were wrought and cast iron. Just as the 1940s and 1950s saw a transition to steel materials, which were relied upon exclusively for a few decades, the 1970s brought a transition from steel to plastic facilities, except for large-diameter installations that continued to rely on steel.
Although plastic pipe materials have evolved over time and LDCs rely predominantly on medium- and high-density PE materials, a number of iron, steel and certain categories of plastic pipe pose distinct concerns as they age.
As indicated in Table 1, more than 112,000 miles of distribution mains in service at the end of 2011 are constructed of materials and techniques that are the most susceptible to corrosion and leaks, requiring eventual replacement.
The composition of service lines by material type is provided in Table 2, which reveals a similar percentage of services that are considered replacement candidates. State level data corresponding to Tables 1 and 2 as well as corresponding data for Canada are presented in Appendix A. (Available at www.gasfondation.org.)
Safety a priority
Today, LDCs are working closely with federal and state regulators to enhance the safety and efficiency of distribution networks. As cited in the report, implementation of the Distribution Integrity Management Program (DIMP) regulation required gas utility operators to establish better overall management of the risks that impact the reliability of gas distribution infrastructure.
Among the requirements is that LDCs must install excess flow valves (EFVs) when constructing a new or replacement service to a single-family residence or when the connection between a single-family service line and the main are replaced under most conditions. It also mandated that operators document a risk-based approach to distribution mains and service integrity management in a plan to be prepared by each operator by Aug. 2, 2011.
The DIMP requirements include the need to document system characteristics; identify, categorize and assess risks; employ risk-mitigation measures; and monitor the effectiveness of the program. The risk-management approach inherent in DIMP also recognizes that many factors, and not simply the age of pipe, must be considered when determining what measures, including replacement, are appropriate to maintain the safety, reliability and integrity of a distribution system. DIMP rules require pipeline operators to determine the fitness for service of pipeline infrastructure on an ongoing basis.
In April 4, 2011, in response to recent pipeline safety incidents, Secretary of Transportation Ray LaHood announced a Pipeline Safety Action Plan calling for pipeline operators, including LDCs, to accelerate their efforts to replace pipeline facilities and take other actions to enhance the integrity of network facilities.
Federal safety regulators did not mandate a timetable for completion of the efforts; however, the strong expectation of the Call to Action and related initiative is that pipeline operators and their regulators will work toward addressing the replacement needs expeditiously. The benefits of accelerated replacement efforts are compelling and include: pace of replacement; geographic approach to replacement; outside contractor costs; and coordinated planning with municipalities.
In summary, proactive management of the integrity of aging pipe infrastructure, accelerated replacement, enhances safety and reliability, contributes to cost savings over the longer term and is less disruptive to customers and communities than a reactive approach. Acceleration of replacement efforts also delivers the desired integrity and safety benefits more expeditiously, lowering maintenance requirements associated with the aging plant that is being replaced.
While noting that LDCs expend considerable effort and capital maintaining and replacing the infrastructure serving existing gas customers, the American Gas Foundation report calls attention to the challenges that remain as considerable quantities of pipe in service are constructed of material types and vintage that will eventually require replacement. Moreover, the current slow pace of replacement in some states is projected to lead to significantly longer time frames to complete.
This is illustrated in the accompanying Figures 1 and 2 that show the miles of mains represented by these materials has declined from 195,000 in 1990 to 112,000 in 2011, the most recent year for which data are available. Similarly, the count of services has declined from 11,395,000 in 1990 to 5,655,000 in 2011. While the data show progress has been made across the range of materials, it also indicates it may take another three decades to finish the job at the current pace of replacement.
While the primary objectives of efforts to address leak-prone pipe infrastructure are to preserve the public safety and maintain the reliability of supply delivery, an important secondary objective is to manage the level of costs incurred, particularly for LDCs that have significant replacement challenges.
When leaks develop, a fundamental choice faced by LDCs is whether to repair or replace aging pipe – a decision that requires an assessment of the safety risk along with the tradeoff between a current capital cost and likely ongoing operations and maintenance (O&M) expenses.
While the replacement of mains requires a substantial capital outlay, the continued presence of older mains and services contributes to higher O&M costs associated with more frequent inspections and responding to suspected gas leaks. The pipe vintage, material and overall condition of surrounding facilities dictate the particular strategy that is likely to be most cost-effective.
The occurrence of leaks along a particular section of pipe is initially addressed through repair and subsequent monitoring. However, the number and severity of leaks along pipe segments typically accelerates over time. As a consequence, replacement eventually becomes more cost-effective than continued repair.
While some sections of pipe are addressed immediately to resolve a critical safety or reliability concern, most replacement activities can be accomplished on a planned basis. These decisions reflect several factors: pace of Replacement; geographic Approach to Replacement; outside Contractor Costs; and coordinated planning with municipalities.