The ascent of Republicans to majority status in the Senate in 2015 means the pipeline industry will be able to play more effective defense against Obama administration regulations it opposes and more effective offense behind energy legislation it supports.
House Republicans passed several narrow, pipeline-friendly bills in 2013-14 which died in the Democratic-controlled Senate. That was true of H.R. 1900, a pipeline-permitting bill, which would have forced federal agencies to abide by timeframes when considering applications. That bill passed the House 252-165 in late 2013. It was never considered by the Senate in part because the bill was mistakenly referred to the Senate Commerce, Science and Transportation Committee, instead of the Senate Energy and Natural Resources Committee.
Martin Edwards, vice president of legislative affairs, at INGAA, says Sen. Mary Landrieu (D-LA), chairman of Senate Energy, tried to fix that at the end of the 2014 session but may have been preoccupied by her own re-election battle, which will now be decided by a runoff. The bill was supported several House Democrats, and having passed the House in late 2013 Landrieu should have had time early in 2014 to get the jurisdictional question sorted out. But she did not.
Sen. Lisa Murkowski (R-AK), who becomes chairman of Senate Energy in 2015, will likely move quickly on the permitting bill if the House, as expected, passes it quickly, again, at the start of the new year. That bill is just one of 30 pieces of legislation that the House Republicans packaged into one bill called H.R. 2 in September. The bill passed with only Republican support. Besides H.R. 1900, H.R. 2 included pro-energy provisions dealing with LNG exports, the Keystone XL pipeline, state authority to regulate fracking, offshore oil and gas leasing and other provisions.
Not included in H.R. 2 was H.R. 6 to expedite Department of Energy approval of applications to export LNG to countries without free trade agreements. Rep. Cory Gardner (R-CO), who won a Senate seat, sponsored that bill. It was approved in June in the House by a vote of 266-150 and had considerable Democratic support. It went nowhere in the Senate. That will probably change in 2015, especially if Gardner is assigned to the Senate Energy Committee.
The LNG and permitting bills, plus another dictating administration approval of the Keystone pipeline, will be among the leading energy bills Republicans will push through the House and Senate in 2015. Senate passage of at least the permitting and LNG bills is quite possible since the GOP commands 52 votes. If Democrats mount a filibuster, the Republicans would need 60 votes. They are certainly obtainable from other Democrats.
With regard to possible Republican moves to block regulations, the administration’s Clean Power rule is one target. Murkowski has been vocal about the potential impact of the Environmental Protection Agency rule requiring states to reduce greenhouse gas emissions from power plants. This is expected to result in the closing of coal-fired utilities, putting a burden on interstate gas pipelines. There is concern in some quarters, including from FERC Commissioner Phillip Moeller, that adequate pipeline capacity is not available. That increases the priority on building pipelines from shale deposits in places such as Marcellus and Utica, or, in the alternative, passing legislation which moderates the EPA’s final rule.
PHMSA Underlines Requirements For Reversal Of Pipeline Flows
The Pipeline and Hazardous Materials Safety Administration (PHMSA) published an advisory bulletin on pipeline flow reversals in September. It contains nothing the agency hasn’t said in past advisory bulletins. Rick Kuprewicz, president, Accufacts Inc., a pipeline advisory company, notes the bulletin “raises the bar” for companies by cautioning against lackadaisical attention to details. The agency emphasized the importance of effective hydrostatic testing and checking of valves. Kuprewicz is a member of the PHMSA hazardous liquids advisory committee.
A couple of serious accidents in recent years apparently convinced PHMSA to issue the bulletin: the ExxonMobil Pegasus accident which resulted in a proposed $2.6 million civil penalty and the Tesoro High Plains Pipeline rupture discovered on Sept. 29, 2013 which occurred six months after the Pegasus leak.
Pipeline flow reversals have become more common as operators seek ways to get shale gas from Marcellus and Utica formations to the Gulf of Mexico. The Pegasus proposed fine has not been finalized. The pipeline, originally composed of three segments, has flowed south from Illinois to Texas since 2006. Prior to that the three segments operated separately and flowed north.
The United States, unlike Canada, for example, does not require federal approval of an interstate pipeline flow reversal or a change in what the pipeline carries. Pipelines must notify PHMSA when the cost of reversing a pipeline flow exceeds $10 million or if the changes will substantially affect their integrity management program, its implementation, or modify the schedule for carrying out the program elements. Damon Hill, a spokesman for PHMSA, says the agency does not make public a list of those notifications.
According to the bulletin, operators are strongly encouraged to submit a comprehensive written plan to the appropriate PHMSA regional office prior to performing flow reversals, product changes and conversions to service. Once PHMSA receives a notification, it may – -or may not – look at the company’s integrity management plan “to the extent that the incremental increase in risk as a result of these changes may be relevant.”
In terms of demonstrating that change of flow or conversion was properly prepared, an operator must perform a new pressure test. The advisory bulletin says operators should consider performing ILI and hydrostatic pressure with a spike test prior to implementing any of these changes, especially if historical records have indications of previous in-service or hydrostatic pressure test failures, selective seam corrosion, stress corrosion cracking, other cracking threats or other systemic concerns. A spike test 30 minutes in duration at 100-110% specified minimum yield strength or between 1.39-1.5 times the maximum allowable operating pressure (MAOP) for gas and the maximum operating pressure for hazardous liquids is suggested as it is the best method for evaluating cracking threats.
In the case of the Pegasus leak, the pipeline was operating at 708-pound-force per square inch gauge (psig) at the time of the 2013 accident. It had last had a hydrostatic test in 2006 with MAOP established at 820 psig.
The bulletin is available at: http://phmsa.dot.gov/staticfiles/PHMSA/DownloadableFiles/Pipeline/Regulations/GORRPCCS.pdf.