June 2011 Vol. 238 No. 6

Business Meetings & Events

INGAA Foundation Reinforces Pipeline Safety Stance

Erin Nelsen & Carol Freedenthal

The Interstate Natural Gas Association of America Foundation met April 6-8 at the Las Colinas Four Seasons resort in Irving, TX with a tight schedule focusing on pipeline safety, public outreach and preparing for an uncertain future. Attendance was strong, although not a record, with 175 participants.

Several speakers used the opportunity to discuss the complicated relationship between pipelines and politics. John Hofmeister, author of _Why We Hate the Oil Companies_ and retired CEO of Shell Oil, called for an apolitical regulation agency for pipelines and energy in the model of the Federal Reserve Board and monetary policy.

Don Santa, president of the INGAA Foundation, summarized current concerns and possible legislation under discussion in Washington, DC. Jeff Wiese, associate administrator for PHMSA under the Department of Transportation, made the case that when it comes to avoiding accidents across the bell curve of companies, “a strong regulator is the best line of defense.”

Another hot topic was the best way to reach out to the public, especially in light of 2010’s high-profile accidents and heightened popular interest in methods at work in shale plays. Carl Weimer, head of the public interest group the Pipeline Safety Trust, spoke on the differences between industry perceptions of failures and public perceptions, and the roles available for non-industry stakeholders in pipeline safety. Susan Waller of Spectra Energy related lessons learned from Spectra’s recent high-profile pipeline construction project to connect Marcellus resources to the New York-New Jersey market.

The meeting’s Planning and Studies session was extremely well-attended and fostered vigorous debate as all members present ranked proposed studies for their relevance and benefit to the foundation’s goals. Ten new studies were selected for further development, including a messaging program aimed to educate stakeholders on the true relationship between pipeline age and risk for failure, and an outreach effort toward emergency responders and the public, with the intention of including social media.

“I’m very pleased with the meeting,” said Dan Martin, chairman of the INGAA Foundation and senior vice president of pipeline safety for El Paso Corporation.

“We had a lot of items [on the agenda] that presented the challenges and opportunities that we had,” he said, citing discussions on pipeline safety, new energy sources and infrastructure forecasts as particularly important to the future of natural gas.

“For the next generation, we’d better get it right now for the people coming behind us to make sure there are a lot of opportunities for this great fuel source.”

Foundation members also stressed the importance of the five guiding principles INGAA adopted in March, which aim to focus safety efforts and promote best practices for incident prevention. They are:

1. Our goal is zero incidents – a perfect record of safety and reliability for the national pipeline system. We will work every day toward this goal.
2. We are committed to safety culture as a critical dimension to continuously improve our industry’s performance.
3. We will be relentless in our pursuit of improving by learning from the past and anticipating the future.
4. We are committed to applying integrity management principles on a system-wide basis.
5. We will engage our stakeholders – from the local community to the national level – so they understand and can participate in reducing risk.

Priority issues established for the task force include developing an inventory and enhancing protocols to manage integrity for pipelines built prior to PHMSA regulations. Another includes technology development and deployment as the task force seeks to improve crack-detection tool capability; developing protocols for material threat management; working with PHMSA to produce an R&D roadmap; and defining assessment alternatives for non-piggable pipelines.

The task force also will look for ways to apply safety culture principles to drive and enhance safety practices across the industry.

White Paper On Transportation Efficiency
As nearly all U.S. natural gas is moved from production sites to consuming markets through pipelines, the efficiency of these transporters in today’s rising energy markets is increasingly important.

The INGAA Foundation has released a white paper entitled “Interstate Natural Gas Pipeline Efficiency” that covers the full spectrum of pipeline efficiency from all aspects – historical, technical, economic and operating philosophy or business viewpoint.

The history goes back to the beginning of long-distance, interstate natural gas pipelines starting in the 1920s. A copy of the report is available at www.ingaa.org.

The transportation system from the producing regions and gathering systems to either the city gate, electric generating plants, or other large consumers is comprised of interstate and intrastate pipelines. The U.S. and Canadian pipeline network is made up of various stages of pipelines. Based on 2008 date, it includes approximately 38,000 miles of gathering pipelines. Transportation pipelines surpassed 300,000 miles with the interstates having 217,000 miles. In 2007, U.S. interstate pipelines transported 36 Tcf of natural gas for customers while actual use by consumers in the country was 21.3 Tcf. The final leg of local utilities that pick up the gas at the city gate makes up the last sector of the system.

Pipeline transportation of natural gas is the most effective and efficient delivery system to bring gas from the production field to consumer. To gain some perspective, when viewed in equivalent energy terms and transport distances, natural gas pipelines use an average of 2-3% of throughput to cover frictional loses. Electric transmission lines lose 6-7% because of electric resistance.

When talking of “efficiency” of interstate natural gas pipelines, it can be viewed from two major perspectives – economic efficiency and transportation efficiency. The economic efficiency is strictly dollars and cents – a measure of the customer’s delivered costs compared to the cost of the natural gas. Fuel costs and transportation rates are included.

The transportation efficiency is a broader measure and takes into consideration the energy used (both natural gas and/or electric energy for driving the compressors and other system equipment) to transport the gas, the overall system design (the hydraulic efficiency), how the system is operated and the efficiency of individual components such as compressors and other equipment.

Economic efficiency is an important element of the transportation efficiency as there are times the pipeline cannot take advantage of changes that would improve transportation efficiency because its customers will not pay the additional costs for equipment or systems changes or because the customer has specific needs that are opposite to best-operating conditions.

No question pipelines would like to be as efficient as possible. But, the need to provide reliable and flexible service to match the customer’s requirement can work against the most efficient operation.

As an example, the report notes that pipeline companies will often agree to deliver gas at sufficiently high pressures to save the distribution company from having to install additional compression equipment. By operating at the higher pressure than optimum, efficiency is hurt but the customer satisfaction is important.

Further, the competitive nature of pipeline transportation, particularly in parts of the country where more than one pipeline serves the area, plays an important role in pipeline efficiency.

In outlining the changes that have occurred to pipelines through time to increase efficiency, the report looks at the changes in the natural gas industry going from wellhead decontrol and pipeline restructuring. The pipelines were a major player in taking the benefits from the 1978 Act and the report tells how a network of competitive, open-access pipelines made the market more efficient under the new rules.

Some of the key conclusions that can be drawn from the report are as follows:

1. Each pipeline system is the unique result of its age, geographic location, original design and changes, and shifting supply/demand patterns.
2. The interstate pipeline industry has continually invested in advances in pipeline and compressor technologies that have improved the overall efficiency of the overall network.
3. The greatest opportunity for maximizing efficiency is in the initial design and construction phases.
4. Design efficiency and operating efficiency are not the same. Desired operating conditions such as lower flows may cause inefficiencies but be needed to meet market demands.
5. Several key issues are important in a pipeline’s decision to make investments for efficiency improvements, ranging from ability to integrate new equipment, impact reliability, costs both in capital and operations including fuel costs, and willingness of customers to fund the investment.

The report discusses the impact of the continually changing competition, regulatory measures, etc. that play a role in making changes to improve efficiency. Further, it covers the changes occurring as wind and solar grow and make need for quick supply of natural gas for power generation when the natural resources are not conducive to meeting power demand.

The almost 50-page report is an excellent source for pipeline history, recording and documentation of the pipeline system evolution and discussion of the social, economic, market and regulatory pressures on interstate natural gas pipeline operation.

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