Major New Pipeline Safety Program Being Readied By PHMSA

The federal pipeline safety agency is opening up a new front in its efforts to improve gas and oil pipeline safety. The Integrity Verification Process (IVP) previewed this summer by the Pipeline and Hazardous Materials Safety Administration (PHMSA) would be an “add-on,” and a very costly one at that, to the existing Integrity Management (IM) program which obligates pipelines to test segments in “high consequence areas (HCAs).” There are 18,000 miles of pipeline in HCAs.

This IVP would cover nearly 91,000 gas transmission miles (about 30 percent of the total interstate mileage), including some segments already covered under the IM program. But the brunt of those miles would be in a new classification called “Moderate Consequence Areas (MCAs)” which have not been included in the IMP. The idea is for interstate companies to verify characteristics such as maximum allowable operating pressure (MAOP) and construction materials for what are called “grandfathered” pipelines – i.e. those pre-1970 for whom MAOP was never established.

Despite it being one of the biggest regulatory programs being developed by the federal government, the IVP has flown under the congressional radar. That may be in part because neither interstate nor intrastate gas nor hazardous liquid companies have been publically commenting or questioning the proposed new regulations – at least not yet. A final rule appears to be a few years off. But when that final rule arrives, “the integrity management program will probably pale in comparison,” says one industry insider.

Eric Amundsen, vice president, technical services, Energy Transfer Partners, says, “The rule addressing MAOP and grandfathered pipe will be very significant. It is one we are watching very closely, and we plan to be very pro-active about it.” About 5,000 miles of ETP’s total 18,000 would fall under the IVP rule.

The American Gas Association has estimated that testing will cost its member $27.1 billion, three times the cost of the original intrastate IM program. Tal Centers, Jr., division vice president for System Integrity & Operations Support at Center Point Energy-Gas Operations, says the testing will take an “historic effort.”

There is no estimate of what that requirement would cost the interstate natural gas industry. But the industry has been throwing around informal numbers in the neighborhood of $50 billion. The final cost will depend on the intricacies of the testing requirement.

PHMSA is developing this new IVP process at the same time it is considering subjecting additional pipelines to the IM program. That has caused some confusion and concern within the interstate pipeline industry with regard to a potentially jumble of new safety requirements.

The MAOP testing requirement stems from the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011. It and recommendations from the National Transportation Safety Board (NTSB) led to the PHMSA development of the IVP. Together, these mandates and recommendations call for: removal of the existing “grandfather clause” within PHMSA’s regulations; new pressure testing requirements; integrity verification plans for pipeline segments that do not have complete records establishing their maximum operating pressures; and the conversion of all gas transmission pipelines to accommodate inspection by inline inspection (ILI) technology (i.e., smart pigs).

But any number of both interstate and intrastate companies have taken issue with many facets of the way the PHMSA plans to implement the MAOP provisions. For example, in a detailed filing submitted to the PHMSA on Oct. 9, INGAA stated: “INGAA members are concerned that the agency is retroactively imposing recordkeeping requirements. In PHMSA’s first draft IVP chart dated July 9, and in FAQs #13-16, the agency proposes that an operator must have four sets of records in order to properly verify MAOP. Even though PHMSA revised its flow chart on Sept. 10, the notes portion still indicates a similar requirement.”

PHMSA published a second iteration IVP draft on Sept. 11, and INGAA praised the agency for making improvements from its original draft. But the industry still has a number of not-insignificant bones to pick with the PHMSA second draft. There are differences over how MAOP should be reconfirmed for grandfathered pipe – that it is pipeline put in the ground pre-1970, before MAOP recordkeeping requirements were in effect.

Aside from that difference on “screening,” PHMSA and INGAA have different ideas on the “actions” that are required to reconfirm MAOP, such as pressure tests, de-rating, replacing or in-line inspection.

Under the new pipeline law President Obama signed in Jan. 2012, PHMSA was supposed to have published a final rule by June 2013 establishing the testing requirements for MAOP. That rule was not forthcoming and isn’t likely to any time soon, because PHMSA appears to be road-testing that requirement as part of the IVP, which will not be finalized for a few years.

This and other delays of implementation of the pipeline law have made some top Democrats hot under the collar. In a letter sent to Transportation Secretary Anthony Foxx on Oct. 31, Rep. John Dingell, (D-MI), wrote that a natural gas pipeline explosion in Rosston, OK, and an oil pipeline spill in North Dakota earlier this month underscored the need for the new regulations. Dingell argued that the department appears to have done little to meet the law’s requirements and said it is unclear when new regulations on pipeline testing, data gathering and shut-off valves may be completed.

Bill Would Eliminate State Department From Cross Boundary Pipeline Approvals

A top federal pipeline officials voiced opposition to a new congressional bill which would remove the State Department from the process of approving the construction of pipelines that cross the U.S. borders with Canada and Mexico. Many energy industry players, and various interest groups, are angry at the State Department for taking so long to finish an environmental review of TransCanada’s Keystone XL pipeline project. Because that pipeline goes from Hardisty, Alberta, and extends south to Steele City, NE, the State Department is required to issue a Presidential Permit, which in turn requires a detailed environmental review.

But Jeff Wright, the director of the Office of Energy Products for the Federal Energy Regulatory Commission (FERC), opposes the North American Energy Infrastructure Act (H.R. 3301) because it would take the State Department out of the current process, eliminate environmental reviews of potential projects and require the FERC, in the case of natural gas pipelines, to approve a project within 120 days. “A 120-day deadline would not permit construction of an adequate record, enable important agency consultation or allow for meaningful public interaction in arriving at a decision,” he told the House Energy and Commerce Committee at the end of October.

INGAA supports the bill. In a letter to Reps. Fred Upton (R-MI) and Gene Green (D-TX), the sponsors of the bill, INGAA CEO Don Santa wrote: “The laws governing the approval of cross-border energy infrastructure should be updated to reflect the free trade arrangement we have shared with these nations since 1994.”

The Keystone XL isn’t the only inter-North American pipeline project whose Presidential Permit has been delayed. John H. Kyles, senior attorney, Plains All American Pipeline, L.P., says his company has two permits related to the minor issue of change of ownership which have been stuck in the State Department for years.

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