October 2010 Vol. 237 No. 10


Big Easy Offered Work, Networking And Fun For AGA Crowd

Jeff Share, Editor

NEW ORLEANS, LA.-There has never been a time when representing the energy industry has been an easy job. In fact, that’s probably an understatement in this year of the oil spill that has brought unprecedented attention to the petroleum industry.

But facing those challenges while knowing that you are helping to provide a life-saving commodity keeps the industry from being just a job for most. It also helps if you have the right leadership both internally and externally that is dedicated to public service and safety while providing the opportunity to network with and learn from your peers.

Maybe that’s why the American Gas Association’s 2010 Operations Conference was such a smashing success this past spring. Lori Traweek, senior vice president of operations for the AGA whose members now serve nearly 170 million users of natural gas, and the operating section committee members of her staff, hosted a record turnout (in a non-exhibition year) of 850 attendees. The host city of New Orleans was certainly a drawing card but fun was secondary to the inarguable importance of natural gas and its attendant issues.

The annual weeklong conference which now also attracts foreign operators was held shortly after the Deepwater Horizon disaster in the nearby Gulf of Mexico, casting a pall that was impossible to ignore.

Across the board there are significant operational issues that utilities and pipelines across the country must address. These substantive topics awaited consideration by attendees:

1. Implementation of the long-awaited Distribution Integrity Management Program (DIMP).
2. Affect of greenhouse gas (GHG) emissions on natural gas.
3. Continued development of the Operator Qualification (OQ) rule.
4. Game-changing shale play that has transformed the natural gas supply picture.
5. New technology including implementation of smart metering and advances in plastic pipe.
6. Safety issues and reducing the extent of excavation incidents.
7. Best practice approaches from peer operators.

In between sessions, attendees also had the opportunities to help restore some of the homes damaged in 2005 by Hurricane Katrina or help out at the Food Bank. Neither effort lacked for volunteers.

In an interview, Traweek, a member of AGA since 1989, discussed some of the key challenges facing gas utilities in 2010.

“In general, it’s continuing to deliver natural gas safely, reliably, cost-effectively in an environment in which natural gas consumption per customer is declining and yet being able to deliver the same service. More specifically, implementing the Distribution Integrity Management rule is certainly one of the issues that they’re all addressing,” she said.

Distribution Integrity
DIMP essentially formalizes a development process long familiar to operators as they try to assess where the highest risks are and then manage their system accordingly. Now, however, they are being required to document that development process, ensuring that they have collected and integrated all of the necessary data before deciding on an appropriate decision-making program acceptable to the regulators.

“We’ve been talking about this at the Operations Conference for several years so everyone’s actually gotten a head start on this,” Traweek said.

“The equipment and suppliers groups have been working to develop the software that might be required for the various risk assessment tools. I don’t believe there’s an operator out there just now waking up to it. Now it’s just a matter of getting it done.”

Another challenging issue for operators is coping with the Environmental Protection Agency’s growing focus on reporting greenhouse gas emissions reporting.

“Again, overall it’s just trying to manage the operations side of the business in a declining consumption per customer environment,” Traweek said. “They have to keep their costs down but can’t sacrifice safety and reliability.”

In addition to the GHG reporting rule, PCBs are on the EPA agenda and AGA wants to make sure that any modifications to those rules are reasonable, she added.

Pipeline Safety Reauthorization
Concerning the regulatory/legislative arena, Traweek said a top item on AGA’s operations agenda concerns the pipeline safety reauthorization package which is up for congressional action this year. Although hearings are being held before congressional committees, it’s uncertain whether the reauthorization will come this year or be carried over till next year. Regardless of when the Pipeline Safety Act is renewed, Traweek said AGA wants to ensure there is “reasonable and effective implementation” similar to what is expected of distribution integrity and other Pipeline and Hazardous Materials Safety Administration (PHMSA) regulations.

Another high priority never far from any operator’s mind is excavation damage prevention. Traweek said members are working with the Common Ground Alliance on best practices along with individual states and the Department of Transportation to maintain strong enforcement of excavation damage.

Traweek said operators are also looking at plastic pipe and couplings as part of distribution integrity and ensuring they are using the best approaches on gathering data on both.

Safety is obviously an area that utilities never take for granted and in addition to being a staple of AGA’s successful Best Practices program, in recent years AGA has enacted a number of initiatives that have risen to the board level. Operators now hold a safety leadership summit every year which addresses four areas: natural gas utility employees, contractors, the public and customers.

Effect Of Disaster
In the back of everyone’s mind – especially for association members representing operators – what will their relationship be with regulators and lawmakers following the Deepwater Horizon? It took many years of hard work for the pipeline industry to create an effective working relationship with government officials. It seems unlikely that will fall apart, Traweek said.

“I know there is concern that the industry and the regulatory agencies might be too close, but there has always been a good, healthy exchange of information between state and federal regulators, industry and the public – especially coming out of distribution integrity. It was such a great effort on behalf of all the stakeholders to try and understand the issues and as a result adopt regulations that would be effective. I just don’t see that changing because of the spill,” Traweek said.

Traweek credited former DOT administrators Stacy Gerard, Rich Felder and Admiral Thomas Barrett for being even-handed and fair in their approach to the pipeline industry. This dates back to the beginning of the Operator Qualification rule when many in the industry still felt the DOT lacked a true understanding of the industry they were charged with regulating.

“OQ was the first rule where you had all the stakeholders having good discussions before the rule was issued. The rule that emerged really reflected a much better understanding of the operation. That carried through into transmission integrity where a risk-assessment quality team was put together as they were developing those rules and later into distribution integrity.

“There was such terrific dialogue about issues, the risks involved and what needed to be done about it. The DIMP rule reflected that exchange and the result is a good rule. No one got everything they wanted but it was a very healthy discussion and that’s all that one can ask for.”

As a result, there has been little rancor at the pipeline safety hearings on Capitol Hill.

“You have all of the stakeholders saying that things are working well. There are good regulations and we need to make sure that they are implemented and that they work. I’ve never seen a pipeline safety hearing where every stakeholder – not just the industry or the states or the public – but all of us say pretty much the same thing.”

In fact, the utility industry can point to the DIMP and OQ rules to show that they are indeed focused on preventing catastrophic accidents. From the distribution perspective the responsibility will first fall within operator qualification. Then distribution integrity management will ensure that the right processes are in place to manage the system, Traweek explained.

One issue that seems to have become moot concerns skilled manpower. The financial collapse has caused an untold number of trained employees to continue working beyond retirement age. In recent years, the AGA along with the nuclear industry and the Edison Electric Institute set up the Energy Workforce Development Center which is designed to grow the pool of trained workers in the energy sector. This won a grant from the Gates Foundation targeted toward identifying and implementing best practices at the state level for low income 18-25 year olds for energy industry jobs, Traweek said.

The federal Department of Labor now recognizes jobs in the natural gas, electric and nuclear utilities industries as part of its “career clusters” path designed to assist school guidance counselors who try to encourage students to consider energy industry careers. (See getintoenergy.com. for more information).

“With all of these initiatives under way, I think we’re going to be just fine although we can’t take our eye off the ball,” Traweek said.

One area that could use improvement is a robust research and development program needed for end-use technologies for natural gas.

“I think there is an opportunity for the federal government to look at how it can step up in terms of putting more R&D dollars into technologies. When you look at trying to explore every option out there to improve the environment or energy efficiency, we should be exploring carbon capture sequestration and renewables, but also new gas technologies because we have a supply out there that most will say is 100-120 years.

“Why wouldn’t we want to make sure that we have a robust R&D program that is going to lead to end-use technologies that will use this valuable resource that we have? We would suggest there be a program similar to what is being proposed for carbon capture sequestration where, in our case, there would be a small surcharge on the customer bill that would help fund an R&D program to help develop the technologies we’re going to need for the future to make the most out of natural gas,” Traweek said.

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