FERC Gas-Electric Information Sharing Order Draws Complaints

Two separate challenges have been made to the FERC’s Order 787 issued last November. It allowed interstate pipelines and electric utilities to share non-public, operational information with each other for the purpose of promoting reliable service or operational planning on either the public utility or pipeline system.

That order was an acknowledgement of the growing dependence of electric generators on natural gas as coal-fired plants are being retired. There was strong support for the rule from interstate natural gas and electric companies.

The only somewhat controversial aspect of the final rule was its No-Conduit Rule which prohibits interstate pipeline operational employees from being shared with affiliated non-jurisdictional entities, such as gatherers and intrastate pipelines, who are interconnected with the interstate pipeline.

“The implementation of this new No-Conduit Rule exposes such employees and companies to significant compliance risks for no gain,” says William E. Wolf, assistant general counsel, Enable Midstream Partners which has filed a request for rehearing. Enable is the new name for CenterPoint Energy Gas Transmission Co., LLC. “It is entirely likely that the Commission’s new, overly-broad No-Conduit Rule will impede rather than promote the commission’s policy goals of encouraging sharing of information helpful to system reliability.”

A second request for amending the rule comes from the Natural Gas Supply Association (NGSA), the Process Gas Consumers Group (PGC) and the Northwest Industrial Gas Users (NWIGU). They want FERC to agree to hold a technical conference one year after the regulation takes effect in order to assess Order No. 787’s effectiveness as well as a review of the scope of information being shared pursuant to the order. The regulation took effect on Dec. 23, 2013.

After the regulation was proposed in June 2013, the NGSA expressed concern that the new regulations would allow transmission operators to share commercially sensitive information that could harm producers and marketers by revealing their positions in the market to outside parties. NGSA’s concerns were not alleviated by the final rule which was identical to the proposed version issued last June.

Environmental Group Presses For Pipeline Methane Emission Controls

A leading environmental group wants the Environmental Protection Agency to regulate methane leaks from gas pipeline pneumatic controllers and compressors. The EPA New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants for the oil and gas industry issued in June 2012 apply mostly to oil and gas production facilities. These standards target volatile organics emissions, but they do result in some methane emission reductions, almost exclusively in upstream production and processing.

“While they are a good first step in the right direction, they leave significantly more work to be done regarding methane,” states Vignesh Gowrishankar, staff scientist at the Natural Resources Defense Council (NRDC). The standards require the use of green completions by 2015 and flaring of emissions in the interim.

“But these standards cover only new or modified equipment in limited parts of the supply chain,” adds Gowrishankar. “They do not cover most leaking equipment further downstream from where natural gas is produced and processed, such as in the storage, long-distance transportation and local distribution portions of the natural gas supply chain.” He explains that the 2012 standard will reduce approximately 10-15 percent of the industry’s total annual emissions.

Gowrishankar adds that the NRDC has been talking with other major environmental groups such as the Environmental Defense Fund and Clean Air Task Force about ways in which to press the EPA on methane emissions.

But it doesn’t appear that the EPA has any plans to institute new methane emissions rulemaking, much less one devoted to gas pipelines. Sarah Dunham, director, Office of Atmospheric Programs, EPA, states, “The EPA is currently working with other agencies to assess emissions data, address data gaps, and identify opportunities to further reduce methane emissions through incentive-based programs and existing authorities.”

Methane leaks from pipeline equipment could become a bigger issue because of a study being conducted at the University of Texas at Austin’s Cockrell School of Engineering. Nine natural gas producers and the Environmental Defense Fund are cooperating with David Allen, the director of the UT Center for Energy and Environmental Resources.

The first phase of that study focused on methane emissions from fracking. The conclusion was that methane emissions from venting are substantially less than what the EPA has estimated. But the study also revealed that emissions from pneumatic controllers are substantially higher. That conclusion could pose significant implications for pipelines, since its pneumatic controllers are not covered under the 2012 New Source Performance Standards, which only apply to new and modified equipment and not to existing stock.

The UT-EDF Fugitive Methane Study is entering a second phase which will look at emissions from pneumatic controllers at wells.

OSHA Wants To Include Oil, Gas In Process Safety Standard

The Occupational Safety and Health Administration (OSHA) wants to make some changes to its Process Safety Management (PSM) standard which, if finalized, could have a significant impact on energy companies. Changes to the PSM are being proposed in conjunction with separate changes to the agency’s Explosives and Blasting Agents standard which would impact underground construction firms.

The OSHA announced the potential changes in a request for information, which is the first step in a rulemaking process. That means any changes won’t happen for at least a few years at the earliest. The agency is moving forward because of an Executive Order President Obama signed on Aug. 1, 2013, which charged the OSHA with identifying issues related to modernization of its PSM standard and related standards necessary to prevent major chemical accidents.

OSHA decided on the menu of potential upgrades to the PSM and blasting standards based on after-action reports conducted by the U.S. Chemical Safety and Hazard Investigation Board (CSB) in the wake of chemical and refinery industry explosions over the past half decade or so. The enhancements to the PSM that OSHA is considering include applying it for the first time to oil- and gas-well drilling, servicing and oil- and gas-production facilities. The blasting standard would be expanded to cover dismantling and disposal of explosives, blasting agents and pyrotechnics.

OSHA had considered including oil and gas sectors in the PSM when it was originally finalized in 1992. But it exempted them with the intention of developing a separate PSM, which it never got around to, in part because of opposition from the American Petroleum Institute. One of the incidents OSHA cites as a rational for considering adding oil and gas production relates to a fire in 1998 at a production facility near Pitkin, LA. In that instance, Sonat Exploration Company was using well fluid to purge air from a two-mile pipeline that connected a separation facility to a production well when the separation vessel failed. In its investigation report on the incident, the CSB stated that “[t]wo elements of the PSM standard, process hazard analyses and written operating procedures, are particularly relevant to the Sonat incident.” The CSB further concluded that “[t]he incident would likely have been prevented if process safety management principles or good engineering practice had been followed more effectively at the facility.”

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