July 2012, Vol. 239 No. 7


Industry Concerned About PHMSA Leak And Valve Studies

The Pipeline and Hazardous Materials Safety Administration (PHMSA) is about to embark on two studies which will be used by Congress to tee up (or not) new safety requirements related to leak detection and automatic and remote controlled shut-off valves (ASV/RCV). But gas transmission, distribution and hazardous liquid pipeline companies and their trade associations are uncomfortable with some of the parameters the PHMSA wants to set. For example, Jeffrey L. Maples, Director, Gas Operations, Paiute Pipeline Company, argues that PHMSA has broadened the two studies to include gas distribution pipelines.

The leak and valve studies were mandated by Section 8 of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 Congress passed last December. Section 8 requires PHMSA, a DOT agency, to prepare a report to Congress on leak detection systems and the Government Accountability Office (GAO) to submit a second study on automatic and remotely controlled valves. It appears, however, that PHMSA has decided to also do a study on valves. PHMSA held a public workshop on March 27-28 to gather industry input on how to structure the parameters of the two studies on which the report will be based.

Philip Bennett, managing senior counsel, Operations Safety, American Gas Association, calls the workshop “useful.” But he adds, “They provide little opportunity for technical discussion and no opportunity to resolve complex technical issues. Most of the substantive discussions on technical issues in the pipeline industry occur in the meetings held within the consensus development organizations like GPTC, ASME, API, AGA, NACE, and ASTM.”

In addition, Terry Boss, senior vice president of Safety, Environment and Operations at INGAA, says some of the comments made at the March workshop were conflicting. For example, one person argued real-time transient flow/pressure models were essential to internal leak detection systems and should be employed. Another opinion was these models may be almost useless on natural gas transmission systems.

“INGAA believes that these leak detection models do not reduce risk or reliably detect leaks on natural gas transmission systems due to the compressible nature of natural gas, the complexities of pipeline systems and transient gas flow, and the inherent, industry-available tolerances within measurement and other transducers that provide input into such models,” explains Boss.

The congressional language calls for PHMSA to look at two things: a) the technical limitations of current leak detection systems utilized by operators of hazardous liquid pipeline facilities and transportation-related flow lines, including the ability of the systems to detect ruptures and small leaks that are ongoing or intermittent, and what can be done to foster development of better technologies; and b)analyze the practicability of establishing technically, operationally, and economically feasible standards for the capability of such systems to detect leaks, and the safety benefits and adverse consequences of requiring operators to use leak detection systems.
PHMSA appears to be expanding the study beyond hazardous liquid lines to include gas transmission and distribution lines. “Paiute is unclear whether this is an oversight or if PHMSA truly intends to include gas distribution and transmission pipelines in the study,” says Maples. “Gas distribution and transmission pipelines are very different from liquid pipelines and should not be evaluated under the same study/criteria.”

With regard to the separate report on ASV/RCV, the 2011 Pipeline Safety, Regulatory Certainty, and Job Creation Act charges the GAO with conducting that study, which is supposed to focus only on high consequence areas and look at the swiftness of leak detection and pipeline shutdown capabilities, the location of the nearest response personnel, and the costs, risks, and benefits of installing automatic and remote-controlled shut-off valves. That report will be used by Congress to determine whether valves should be required on new gas transmission pipelines. The determination on whether to require a standard has to be made by December 2013. PHMSA has said it will do its own study of valves in addition to the GAO study. It is not clear if and how those two studies will be coordinated.

Congress required the valve study to include a cost/benefit analysis. Maples argues that the initial PHMSA study plan does not appear to consider or include the assumed costs of ASV/RCV installations. “Retrofitting existing transmission block valves can range in cost from $100,000 to $1 million,” Maples states.

“Retrofitting costs can fluctuate depending on the location (rural vs. highly urbanized) of the facilities to be retrofitted. The cost may include: asphalt restoration, traffic control, power supply, monitoring and controlling software/hardware, communication facilities, large traffic-rated vaults/fenced enclosures and disruption of service to customers.”

Natural Gas Credits For Electric Utilities At Issue In Clean Energy Bill
Introduction of a new clean energy standard bill in the Senate has set off a debate on how to treat natural gas. The Clean Energy Standard Act (S. 2146) introduced in May by 11 Democrats, including Sen. Jeff Bingaman (D-NM), retiring chairman of the Senate Energy Committee, would require that, beginning in 2015, the nation’s utilities sell a percentage of their electricity from clean energy sources – including renewable energy, nuclear power, biomass, coal with carbon capture and sequestration, and natural gas.

The legislation gives “credit values” to various forms of non-coal inputs. Zero-carbon sources such as new nuclear and renewables would get a full credit per kilowatt-hour produced. Advanced coal technologies, such as oxyfuel combustion, will get partial credit. Natural gas would get about a half-credit. Utilities that sell electricity at retail will acquire and turn those credits in to meet a standard that, overall, will start off being fairly easy to meet.

But at hearings in the Bingaman committee on May 17, Keith Trent, group executive and president of Duke Energy’s commercial businesses, said, “We have concerns with the concept of including natural gas in the program since it could lead to an over-reliance on this single fuel.” Duke is the third-largest operator of coal-fueled and nuclear-powered generation in the country. Trent said it is projected that between 30,000-60,000 megawatts of the country’s aging coal-fueled generation fleet will be retired by 2015 or shortly thereafter to meet existing and new environmental regulations.

“Construction of new nuclear units – which we know are highly competitive in the long run – and zero-emission wind and solar power plants will suffer if Congress gives natural gas another leg up,” Trent added. Duke is pursuing a license with the Nuclear Regulatory Commission to build a new nuclear power plant in South Carolina.
Short term the Senate bill has no chance of passage. Long term, the bill could have wings should Democrats reclaim the House in the 2012 elections and President Obama wins a second term. If Trent’s position on natural gas characterizes the view of the entire electric utility industry, gas producers and pipelines will have a major political fight on their hands.

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