With recent FERC approval for its comprehensive pipeline infrastructure replacement program in hand, NiSource has undertaken the initial five-year investment plan for the Columbia Gas Transmission pipeline and its related facilities.
The settlement, widely supported by Columbia’s customers, identifies individual infrastructure projects and establishes a mechanism for recovery of Columbia’s revenue requirement for the company’s investment – $300 million a year, in addition to $100 million investment in ongoing maintenance on system improvements between 2013 and 2017. The improvements include replacement of aging infrastructure, beginning with about 1,000 miles of existing interstate transmission pipeline, most of which is bare steel.
Additionally, NiSource plans to replace and modernize more than 50 critical compressor units system-wide, upgrade pressures and looping systems where needed to ensure reliable delivery, and expand inline inspection capabilities to allow maintenance and inspections without interrupting services.
Shawn Patterson, Columbia Pipeline group president, told P&GJ about some of the company’s priorities as the program progresses, the biggest hurdles in implementing the plan and how NiSource is assuring customers of the continued safe operation of the entire pipeline system for generations to come.
P&GJ: Can you detail Columbia Gas Transmission’s infrastructure replacement program? What are the initial priorities?
Patterson: Columbia Gas Transmission (Columbia) will modernize its natural gas pipeline infrastructure under a comprehensive infrastructure investment plan that will initially span the next five years. The Columbia Modernization program will ensure pipeline and facility upgrades, improve public safety, customer reliability and service and provide economic benefits.
Infrastructure investment work will take place across Columbia’s entire footprint, including Kentucky, Maryland, Ohio, Pennsylvania, Virginia and West Virginia. System improvements will consist of:
• Replacing Aging Infrastructure — replacing approximately 1,000 miles of existing interstate transmission pipelines, primarily bare steel (approximately 400 miles in the first five years);
• Upgrading Natural Gas Compression Systems — replacing and modernizing more than 50 critical compressor units along the pipeline system that will enhance system efficiency and improve environmental performance;
• Increasing Pipeline System Reliability — uprating pressures and looping systems where needed to ensure gas is reliably delivered to critical markets; and
• Expanding Inline Inspection Capabilities — facilitating Columbia’s ability to perform state-of-the-art maintenance and inspections without interrupting services
P&GJ: What is the cost of the overall replacement program? Is the cost increasing from year to year?
Patterson: Columbia projects that its entire modernization program could reach approximately $4 billion over an extended period. Under the settlement, Columbia will invest $300 million per year on system improvements, in addition to a $100 million investment in ongoing maintenance, over the 2013 through 2017 period.
P&GJ: From a purely logistical standpoint, what are the biggest hurdles to overcome in an ongoing infrastructure replacement project of this type? What technologies do you find most useful in your construction and pipe replacement program?
Patterson: Our teams are trained and prepared to tackle the work involved with upgrading our system. We’ve consulted and contracted experts in the industry who will provide support when and where needed. Upgrading our system will help us accommodate today’s latest safety technology, including inline inspection tools. Using advanced safety methods allow for enhanced integrity assessment, which will help greatly improve the efficiency and reliability of our pipeline system.
P&GJ: Will the majority of your work involve new construction or replacement activity? Are you doing most of the construction work yourself or contracting it out?
Patterson: The majority of the work on our pipeline system through the modernization program will involve replacement activity. The work will be managed by Columbia teams while much of the field construction will be completed with internal and external resources. We estimate that more than 7,000 direct jobs will be created as a result of the program.
P&GJ: How far along are you with the program? Is the work on schedule?
Patterson: We are working through the planning and permitting process and are on schedule with intended construction. Working with the Federal Energy Regulatory Commission (FERC) and other federal, state and local agencies, Columbia will continue to engage key stakeholders, landowners and customers throughout the entire process.
P&GJ: What, if anything, is needed to allow providers to recover costs associated with pipeline-replacement programs on a timely basis?
Patterson: There is probably no “one size fits all” approach for recovery of these costs, as the magnitude and timing of these programs varies from pipeline to pipeline. Because of the size and aggressive schedule of Columbia’s program, we wanted to work closely with our customers to develop a collaborative solution. Columbia was able to reach a settlement with its customers that included a mechanism for Columbia to recover its revenue requirement associated with its modernization infrastructure investments. This settlement received approval on Jan. 25, 2012 from FERC. FERC’s approval of our customer settlement is a milestone in our efforts.
P&GJ: How are you faring in applying the Distribution Integrity Management Program?
Patterson: The work we are doing through our modernization program addresses the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) integrity management requirements. We’ve identified areas of our system where upgrades will lead to improved reliability and service. Safe and reliable operations are paramount at Columbia, as well as the entire Columbia Pipeline Group, and we are committed to an ongoing focus on both.
P&GJ: With the growth of natural gas, are you serving more customers (residential, commercial, industrial) and are you having to expand to service them?
Patterson: We are a reliable source of natural gas transportation for our customers and have a number of expansion projects under way to help meet increasing demand, including our most recently announced East Side Expansion Project. Our East Side Expansion Project will include installation of two natural gas looping pipelines and related facilities. The Line 1278 Loop will consist of 8.8 miles of 26-inch diameter pipeline in Chester County, PA and the Line 10345 Loop will consist of 7.45 miles of 20-inch diameter pipeline in Gloucester County, NJ. In addition, modifications will be made to four existing compressor stations and two metering stations.
P&GJ: After recent incidents drew so much attention to gas utilities, what has Columbia done to ensure customers of its system’s safety?
Patterson: Columbia is taking significant steps forward to assure the continued safe operation of our entire pipeline system for generations to come. Aligning our efforts with the “Call to Action” by former Department of Transportation Secretary Ray LaHood, our comprehensive modernization plan ensures pipeline and system upgrades; improves public safety, customer reliability and service; and provides economic benefits. Our modernization effort will strategically and systematically replace, revamp or rebuild key pipeline and compression facilities across our entire system.
P&GJ: Of the 16 states where Columbia Gas Transmission pipeline provides service, which do you consider the most challenging and why? Does being in as many states as you are system-wide complicate the overall process?
Patterson: There is not one state that is more challenging. Having a 12,000-mile system across several states positions us to be more flexible in connecting premium natural gas supplies with some of the nation’s strongest energy markets. Our customers are better served because of it. We have teams of employees across our footprint managing and maintaining day-to-day operations. We also have support from our control rooms. Our control rooms are manned by employees 24 hours a day, seven days a week, and provide continuous monitoring of system activity.
P&GJ: In closing, how did you get into the business?
Patterson: I joined NiSource right out of college as a project engineer – that was about 18 years ago. Since then, I’ve had the opportunity to work in several different roles within the company that have allowed me to learn and contribute to all aspects of the business, including natural gas distribution and gas transmission, as well as electric operations. It’s been a great experience and having exposure to every area of the business has prepared me for the role I’m in today as president, operations and project delivery.
Columbia Gas Transmission will modernize its natural gas pipeline infrastructure under a comprehensive infrastructure investment plan that will initially span the next five years. Infrastructure investment work will take place across Columbia’s entire footprint, including Kentucky, Maryland, Ohio, Pennsylvania, Virginia and West Virginia.
Columbia Gas Transmission projects that its entire modernization program could reach $4 billion over an extended period. The majority of the work on Columbia’s pipeline system will involve replacement activity. Columbia will replace about 1,000 miles of existing interstate transmission pipelines, primarily bare steel.
Through system upgrades, Columbia will accommodate today’s latest safety technology, including in-line inspection tools. Using advanced safety methods allow for enhanced integrity assessment, which will help greatly improve the efficiency and reliability of Columbia’s pipeline system.