Integrys Replacing Aging Chicago Distribution System

September 2014, Vol. 241, No. 9

Michael Reed, Managing Editor

With about 2,000 miles of cast iron mains to replace within its Peoples Gas distribution system, Integrys Energy Group would be facing a huge job, even in the friendliest of environments.

That the work is taking place in one of the most densely populated cities in the United States – Chicago – and involves replacing about 300,000 services pipes and related meters, increases the degree of difficulty substantially.

“Replacing the remainder of the cast iron in our system means we are essentially installing about half of our system as brand new within 20 years,” said Bill Morrow, executive vice president of the Integrys gas division.

The $2.5 billion project, which began in April 2011, will reduce the risk to the distribution system, increase efficiency and bring long-term environmental and service benefits to the community. Thus far about 35,000 service pipes have been replaced and 245 miles of the cast-iron conductor system have been retired.

While no one said the undertaking would be easy, the biggest test for workers has been maneuvering, simply because of the lack of unoccupied space in which to operate. Chicago is not just an old city, heavily urbanized at its center, but it offers little in the way of more open suburban space for miles around.

“If you think of the Loop or the downtown area, that is the toughest challenge of them all, because there is literally not a trench you can run in the street without running into another utility,” Morrow said. “Coordination with all the other underground infrastructure owners is critical in the work we do in the central business district.”

Obviously, this makes working with other underground infrastructure owners even more critical than usual. There have also been significant traffic hurdles to overcome. With parking at a premium in the city and idle vehicles lining both sides of the street, workers face difficulty not just moving in their heavy equipment, but in finding places to leave their own cars when they report for work.

“Before we even started to dig or navigate how you put the pipe in, we had to consider traffic for the safety of customers and our employees,” he said. “Significant planning is needed before you even start to work in an urban area.”
Heavy traffic and tight quarters were on the minds of project planners well before any digging was done.
Working With The City
Integrys found a huge supporter for its replacement effort in City Hall. Mayor Rahm Emanuel’s administration introduced a 10-year water and sewer replacement project soon after the gas infrastructure work kicked off. While the two projects don’t always operate on matching schedules because of differing priorities, when it comes to the downtown effort, teamwork is essential.

“We are together in literally every street doing work in parallel,” Morrow said. “I won’t call it joint trench, but we are putting pipe and gas main and other underground infrastructure in parallel paths at the same time to get the most efficiency we can while working down there.”

Oddly enough, the often-brutal Chicago winters turned out to be relatively mild during the early going of the project, allowing crews to work uninterrupted, basically keeping a 51-week schedule. Last year’s extreme cold, however, did cause more than a few delays until the weather broke in spring.

The cast-iron pipes, some of which went into service during the late 1800s, are being replaced with polyethylene plastic pipes, ranging from 2 to 18 inches, depending on whether the location is a residential or arterial street. Steel pipe, generally 24 inches but in a few cases as big as 42 inches, is also being installed.

In addition to replacing older cast iron pipes, Peoples Gas is increasing from a low- to medium-pressure system. This requires the installation of a new high-pressure main backbone to supply the new medium pressure system. “In relative terms, we’ve only put about 6.5 miles of that high-pressure steel in during the last three years, but we’ve already installed 445 miles of smaller polyethylene plastic,” said Morrow, who previously served several years as executive vice president of Peoples Energy Corporation and president of Peoples Energy Resources.

In most of Peoples’ residential distribution areas – outside the central business district – workers have relied on horizontal directional drilling. Whenever possible, pipes have been moved from beneath the street and into the parkway between sidewalks and curbs.

Technical Advances
In something of an innovation, fiber-optic cameras are being used to inspect sewer laterals, as well as all the company’s bore holes. An extensive pre-checking process helps identify all nearby utilities before drilling, then a second check is made prior to putting gas in the pipes.

“We have adapted a lot of the plumbing camera tools to help us perform our gas work,” Morrow said. “Before we install new plastic service line to the front of a house, we actually run cameras through the hole that we drilled to make sure other underground utilities not identified during inspection weren’t damaged along the way.”

In another technological advance, the company used GPS data for all new mains going in place. This level of precision will help with future maintenance.

Labor on the project is split between company crews, which do all the work involving live gas, abandonment of old pipes and meter setups, and outside contractors. Contractors install the mains and service pipes, repave streets and handle related fixes, such as lawn restoration. Announced in February, the six main contractors for 2014 are Intren of Union, IL; KS Energy Services of Chicago; Meade of suburban McCook, IL; Michels Pipeline Construction of Brownsville, WI; Henkels & McCoy of Batavia, IL and NPL of Chicago.

In all, Integrys estimates it has created more than 1,000 mostly union jobs and negotiated a project labor agreement with the major trade unions, which include pipefitters, laborers, operating engineers and the Teamsters.

With a program of this size, making sure enough trained personnel would be available was a major concern.

“Some other areas [of the country] are falling short of skilled employees needed to perform some of their piping work,” Morrow said. “That has not been an issue for us because that was a key part of our planning up front.”

To that end, Integrys established a training program for local veterans in partnership with City Colleges of Chicago and the gas workers’ union. The Gas Utility Workers Training Program is designed to develop highly skilled, trained-on-the-job workers for entry positions. After classroom training, students transition into a one-month paid internship with Peoples Gas.

Morrow said prior to the replacement program, the company had one or two major piping contractors available, but now it may have six employed at any given time.

“We are working with not only those contractors, but those that are starting up with diverse backgrounds, such as women-owned and minority-owned firms,” he said. “We will eventually require a higher degree of diversity investment in the community and diversity investment in employees.”

While the shale revolution and lower prices have caused more heating customers to switch to natural gas in many areas, Peoples Gas Light and Coke Co., which started in 1855 as the first utility in Chicago and helped the city rebuild after the Great Chicago Fire in 1871, has pretty much reached a saturation point. Most homes in Chicago and its suburbs – if not quite all – use gas for cooking and heating. Peoples Energy serves about 831,000 residential, commercial and industrial customers.
A worker sets up a meter along at a building where a service pipe was replaced.
For Integrys companies in Minnesota, Michigan and Wisconsin, though, Morrow said there has been a great deal of interest in converting to gas. This was especially true after the harsh winter drew attention to significant problems with both propane pricing and the reliability of its delivery.

“We’re fielding calls like never before from individual homeowners, businesses, even entire towns,” he said. “In some cases they ask, ‘How can we get a gas line and convert the whole town?’”

Merger Aftermath

Following the 2007 merger of WPS Resources Corp. and Peoples Energy Corp., the newly formed Integrys has been moving toward becoming a more utility-based company. At the time of the merger, the company, based on earnings, was about 75% utility, 25% non-regulatory. That split is now closer to 90%-10%.

“We have been doing more to strengthen our utilities in the four states [Illinois, Wisconsin, Minnesota and Michigan] in which we operate,” Morrow said. “We are investing more in our electric plants and, of course, in our gas infrastructure.”

With Integrys being acquired by Wisconsin Energy for $9.1 billion in a deal expected to close in the summer of 2015, the company will become part of the eighth-largest natural gas distribution in the country. (Since the acquisition, Wisconsin Energy has announced it is firmly committed to the Integrys infrastructure replacement program.)

In July 2013, the Illinois General Assembly passed the Natural Gas Consumer, Safety & Reliability Act to fund gas infrastructure upgrades through an adjustment on customer bills. The law contains strong consumer protections, increases transparency and caps customer rate hikes related to main replacement at an annual average of 4% of delivery service rates.

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