Safety Remains Paramount To INGAA Foundation

April 2013, Vol. 240 No. 4

Jeff Share, Editor

We live in an era when natural gas and pipelines are part of everyone’s vocabulary. Never have pipeline operators and the companies that service them had to work more closely to ensure that natural gas is delivered reliably and most important safely throughout our vast underground transportation network.

With the natural gas industry witnessing unprecedented growth opportunities, so has the INGAA Foundation, which is comprised of service companies that work with and for the operators. That makes the job of Foundation chairman a critical position. This year the reins have been passed to Joseph E. Ramsey, group vice president of project execution for Spectra Energy Transmission. Ramsey has been a member of the Foundation since 1994, having served on the executive committee since 2010.
Ramsey joined Spectra Energy in 2008. He oversees Spectra Energy Transmission’s expansion program, which invests more than $1 billion annually in new pipeline, gas processing, storage, and distribution projects. In this interview he discusses the goals of the Foundation and also details some of the important projects that his own company is handling. Throughout the discussion, the topic of safety is never far from his mind.

P&GJ: What are your top priorities as Foundation chairman?

Ramsey: As an industry we will continue to work toward zero safety incidents. Foundation members recognize that working safely is paramount and a guiding principle in everything that we do. The Foundation’s safety video: “A Culture of Safety” will continue to have a positive effect on training employees and supervisors on the importance of employee safety during construction. This culture will carry over into planning and operations through the development of management systems that span all aspects of member companies.

In 2013, the Foundation has several priority studies supporting this effort. In February, the Foundation held its Lessons Learned Workshop where experts from across the industry gathered to discuss and share incidents, near misses and improved procedures. Sharing lessons learned is an important part of our efforts to improve construction safety, quality assurance/quality control practices, and overall safety.

Practical implementation of a Quality Management System (QMS) is another example and the Foundation is combining its resources with Pipeline Research Council International and the Gas Technology Institute on several other important studies in threat interactions, inspection technology tools, route selection practices and lowering-in stresses to name a few.

P&GJ: Where are we today concerning Foundation initiatives on pipeline safety?

Ramsey: 2012 was a banner year for the development and completion of several safety initiatives. The Culture of Safety video and Lessons Learned Repository just mentioned are two examples. Encouraging companies to use the lessons-learned repository is another key area of focus. We are committed to making that system work.

We’ve also completed our first batch of construction safety guidelines that have been distributed to member companies. These guidelines are posted on the Foundation website for use by anyone interested.

P&GJ: How is the Foundation’s 2009 program to improve personnel safety working?

The Construction safety guideline project will help immeasurably. So will the practical guide to a QMS. We are performing a second safety benchmarking survey for the years 2010 through 2012 to collect construction safety data across our member companies to see how we compare to each other. This will allow any company to measure itself against others.

P&GJ: Having worked on the services side of the industry, how have you seen the relationship between service companies and operators change in recent years?

Ramsey: The two sides of the industry have an extremely close working relationship. We need each other. Operators couldn’t get pipelines built without the service companies. And service companies rely on operators for business.

The Foundation provides ample opportunities for the two groups to come together and discuss issues of interest – including safety, best practices, and construction forecasts. We do this at our regularly scheduled meetings, at various special workshops and seminars, and through the study process, which brings members together to work on reports and studies.

P&GJ: In its latest study, the INGAA Foundation reported that other than FERC, federal agencies are lagging when it comes to pipeline permitting. Has this been a serious problem and what steps is the industry taking to deal with it?

Ramsey: I wouldn’t call permitting delays a serious problem. For the most part, the current U.S. system of permitting pipelines works very well. We have a thorough and steady regulatory and legal regime that allows us to get pipelines built and expanded.

The recent Foundation report doesn’t say the permitting system is bad, but that steps could be taken to make sure all permits are issued in a timelier manner. The report made some recommendations to make the permitting process even more efficient and effective. Those recommendations included: amending the Natural Gas Act to provide FERC effective tools to enforce deadlines at other agencies regarding natural gas pipeline project applications; planning for the project early and thoroughly; and establishing better applicant-agency relationships and lines of communication.

P&GJ: What is your outlook for the next 12-18 months regarding new pipeline construction and expansions of existing lines?

Ramsey: The best outlook I can give is from a 2011 INGAA Foundation report. That report, “North American Natural Gas Midstream Infrastructure Through 2035: A Secure Energy Future,” evaluated the need for additional transmission, gathering, compression, storage and processing capacity over the period 2011 through 2035. The report’s reference case, using the most likely scenario for market development, found that more than $205 billion in capital investments would be required through 2035, with average annual industry expenditures of $8.2 billion.

Nationwide, the Foundation estimated that almost $98 billion in transmission mainline projects, $30 billion in lateral projects, $42 billion in gathering lines, $9 billion in compression projects, $5 billion in new storage fields, and $22 billion in additional storage capacity would be needed by 2035.

As for the next year or two, I can tell you that a number of pipelines, including Spectra Energy, are looking at new construction and expansion opportunities.

P&GJ: Will the low price of natural gas put a damper on natural gas activity in areas such as the Marcellus? What other factors do you see affecting pipeline activity in the near future?

Ramsey: While low natural gas prices and other factors may temporarily slow expansion, the long-term outlook is clear – we will need more pipelines. The reason is simple: supply is growing because of the shale gas revolution and demand is rising because of the clean-burning nature of natural gas, its abundance and its affordability. The combination of stronger supply and demand means there will be a continuing need for new pipelines. The industry stands ready to expand.

While there is a lot of discussion about relieving transmission constraints in the Northeast, there are pipeline opportunities virtually everywhere.

P&GJ: Recently Spectra Energy announced acquisition of the Express Platte Pipeline System. How does this fit in with Spectra Energy’s natural gas portfolio?

Expanding into crude oil pipelines is a natural extension of Spectra Energy’s business model and asset portfolio. This is the right move at the right time. Fundamentals for the pipeline system are strong, as both Canadian and U.S. oil production are expected to increase over the foreseeable future. The Express-Platte Pipeline System is one of just three major pipelines moving crude oil from Western Canada to U.S. refineries.

The Express-Platte Pipeline System is in the ground, giving Spectra Energy immediate scale and scope – without the regulatory and construction processes associated with new projects. It will serve as a platform for future investments in other types of crude oil infrastructure, including oil and refined products as well as storage tanks and terminals.

P&GJ: What are some of the ongoing projects Spectra Energy is involved in today, and what are some future projects it is studying?

Ramsey: Spectra Energy has tremendous opportunity ahead to deliver North America’s vast energy resources from producer to market. We have approximately $10 billion in project development earmarked for the next three years and 25 billion through 2020.

In the U.S., we are in the final months of building our New Jersey-New York Expansion Project, which is poised to bring much-needed natural gas supply to the region and will provide consumers in New Jersey and New York $700 million in energy savings. This expansion builds off our strong Texas Eastern backbone, along which we have a number of projects connecting Marcellus suppliers, as well as all those along the entire system, with growing power generation, manufacturing, and other demands from the Northeast to the Southeast. These new lines are expected to enter service in 2014 to 2016.

The rapidly developing Utica play will benefit from our Ohio Pipeline Energy Network, a new system to meet growing needs in Ohio and all Texas Eastern markets. In the Gulf Coast region, we are looking at several opportunities to meet as much as a 10 Bcf/d demand from expanding markets.

It’s an amazing time to be in this business. North America is taking more control of its energy future. We see so much potential to meet the needs of suppliers, consumers, communities, and stakeholders, while delivering real long-term value for shareholders. We’re in a great position.

P&GJ: What activities in Canada is Spectra Energy studying?

Ramsey: In Canada, Spectra Energy is well-positioned to take advantage of four developing unconventional gas resources: Horn River Basin, the Montney, and the less-developed Cordova and Liard areas. Driven by international demand for that gas, we estimate that $40-50 billion of investment will be made over the next 20 years to develop LNG terminals and the pipelines that serve them.

We believe one of the largest opportunities for us in the coming years is this LNG export market. Spectra Energy has partnered with the BG Group to construct a 4.2 Bcf/d pipeline connecting our northern transmission system to the BG Group’s LNG terminal to be located at Prince Rupert. Beyond just LNG, we have extensive gas processing and pipeline facilities to meet the growing needs of major markets in the region and look forward to expanding those services.

P&GJ: How is the Foundation involved in working with service companies on cybersecurity?

Cybersecurity is a serious issue for all companies – not just natural gas companies or pipeline companies. We intend to continue to inform our members about cyber-intrusion threats, and the steps they can take to protect their systems. We will work with INGAA on this effort.

P&GJ: Do you think there is more or less public opposition to energy development, particularly pipelines? Is the natural gas industry doing a better job explaining its work to the public?

Ramsey: We’ve clearly seen an increase in public opposition to energy development, including pipelines. There always have been landowner concerns about pipelines, but now we are seeing some stakeholders oppose midstream projects to try to stop upstream activities.

There’s a strong need for the industry to do a better job of explaining the importance and benefits of pipelines. Pipelines are the safest and most efficient way to move energy. Developing natural gas and providing the infrastructure to transport that gas already has generated wealth and jobs for Americans, and further development is poised to help the U.S. economy even more.

It’s important that we share our success story – that of both the natural gas and specifically pipeline industry – with the American public because they are truly the ones benefiting from it – with jobs, lower natural gas prices, cleaner air and a resurgence in domestic manufacturing.

P&GJ: Regarding the Foundation, the organization has seen tremendous growth in the past three years. Is there any feeling that it has gotten too large? Also, how has the increase in dues been received? And do you foresee any fundamental changes?

The Foundation provides its members unique opportunities. As the only association bringing together interstate natural gas pipelines and the industries that serve the pipelines, it’s not surprising the Foundation’s numbers have grown in recent years. Most have embraced this increase in membership as a positive thing. We are working in a growing and dynamic industry.

The Foundation had not until this year increased dues since its inception. We realized it was time to increase, given the benefits members realize from their affiliation with the Foundation. As a result, a small dues increase was implemented. So far, very few members have dropped off, and several new members have joined.

P&GJ: What studies can we look forward to hearing about this year?

Ramsey: The Foundation has a number of studies planned for this year. Some big ones you can anticipate include:
* A review of the Nationwide Permit Program and why it is critical.
* Winter pipeline construction guidelines.
* A look at the reliability of firm pipeline service.
We also will be doing a number of safety-related workshops, studies and guidelines, including a construction QA/QC workshop; a look at threat interactions; line crossing guidelines; technical, operational, practical and safety considerations of hydrostatic testing; and a study of rollover protection.

P&GJ: What made you decide to get into the energy industry and what was the career path that led you to your current position?

Ramsey: While I was still in engineering school at the University of Houston, I decided I wanted to pursue an MBA after graduation; the economic side of products or projects was more appealing to me than the detailed technical side. After selling industrial chemicals for a couple of years, I went back to school and was fortunate to get a summer job at Tenneco Inc., which at the time was the 14th-largest company in the U.S.

I worked in corporate finance and corporate planning with special interest in the gas pipeline division of the company and joined Tenneco full time after getting my MBA. I moved into the pipeline division after a couple of years and began a career that included assignments in planning, rates, international development, gas supply, and marketing. After leaving Tenneco, I led gas and electric consulting groups for Stone & Webster Engineering and Jacobs Engineering. These consulting activities were often in the areas of new project development, engineering, operations, and safety. It was one of those consulting assignments with Spectra Energy that led me to joining the company five years ago. Heading our corporate project execution groups has been a great experience.

But there may be a more fundamental reason why I have been in the energy industry, especially the natural gas sector, for 40 years. My first summer job when I moved to Houston was as a pipefitter’s helper and welder’s helper on an expansion of a small chemical plant on the Houston Ship Channel. The plant converted molten sulfur to methyl mercaptan, the product that is added to odorless natural gas to give it that distinctive “rotten egg’ smell. Needless to say, this was a very stinky place to work, and I lived it and breathed it for three months. So I’ve often thought I’ve had natural gas in my DNA ever since!

P&GJ: At the end of your term how will you determine whether it was a successful year?

Ramsey: I am confident that when my term ends the Foundation will be strong and vibrant, and I hope my leadership will have contributed to that continued success. We have a good study planning process and strive to continually improve it to make sure we are studying the cutting edge of what our industry needs. As long as that continues, I’ll have been successful.