September 2016, Vol. 243, No. 9


Pipelines Support ‘Ends’ of PHMSA Proposal, Not the ‘Means’

Pipelines Support ‘Ends’ of PHMSA Proposal, Not the ‘Means’

Broad pipeline industry opposition to several aspects of the newly proposed transmission pipeline regulations is as much about methane emissions as it is about safety. The proposal from the Pipeline and Hazardous Materials Safety Administration (PHMSA), issued in April and ostensibly responsive to both congressional requirements and recommendations for the National Transportation Safety Board, has as its key requirement the use of hydrostatic testing on a number of categories of pipelines.

The requirement would force the industry to establish or re-establish maximum allowable operating pressure (MAOP). But the need for “blowdowns” to achieve that hydrostatic testing would create new methane emissions estimated to be 1,400 tons of methane pollution, according to the M.J. Bradley consulting firm which produced a report on behalf of the Environmental Defense Fund and Pipeline Safety Trust.

Those new methane emissions run counter to Obama administration policies on greenhouse gas emissions of which methane is the most lethal. The Environmental Protection Agency issued a final rule earlier this year which went into effect in August, requiring transmission pipelines to reduce methane emissions by repairing leaks in compressors and pneumatic controllers.

But it is not just the potential new methane releases that worry transmission lines. The requirement that a hydrostatic “spike” test be used to verify MAOP pipelines constructed before 1970 or which have experienced a reportable in-service incident has most companies up in arms.

Also roiling the waters is a requirement to verify materials in high-consequence areas (HCAs). That would have to be done through a mixture of destructive and non-destructive tests whenever a pipe segment is exposed. The proposed rule is specific with regard to the number of excavations a company must make, and lists specific tests that must be performed such as determining diameter, wall thickness, yield strength, ultimate tensile strength, Charpy v-notch toughness, chemical properties, seam type and coating type.

Kenneth Christman, Assistant General Counsel, NiSource Corporate Services Co., argues the language in the materials verification section should be modified to permit operators to determine the required number of excavations on the basis of random sampling and highly reliable statistical analysis that achieves a 95% confidence level.

In addition to the new MAOP and material verification requirements, the proposed rule creates a first-time testing program for gathering lines 8 inches in diameter and greater with steel lines which have an MAOP that is equal to or greater than 20% specified minimum yield strength (SMYS), or non-metallic lines which have an MAOP greater than 125 psig. The rules would also expand integrity management requirements to a new category of pipelines called Moderate Consequence Areas (MCAs) and clarify response timelines and triggering events for pipeline repairs.

The industry views the proposed regulation as a lose-lose proposition, not because it opposes additional safety measures, but because it will result in substantially greater methane emissions and little additional safety, and at a substantial cost to transmission companies. Rick Kivela, director, Operational Compliance, Spectra Energy Partners, LP, says the “concepts” in the proposed rule align well with the 2011 INGAA Guiding Principles and Integrity Management Continuous Improvement (“IMCI”) Action Plan.

But at the same time Kivela opposes the way almost all of those concepts are implemented. “Many of these requirements appear to be technical exercises seeking perfection that have been written without appropriate consideration of clarity, consistency and practicability,” he says. “As a result, many of the proposed requirements are impracticable to implement, overly complex, ineffective, conflicting, resource-intensive, and extremely expensive without a corresponding safety benefit.”

Not surprisingly, the Pipeline Safety Trust, the prominent advocacy group, not only supports the proposed rule, but also believes it doesn’t go far enough. “It fails to address matters we believe are critical to improving pipeline safety, such as the creation of prescriptive standards for the placement of remote control and automatic shutoff valves, and standards for leak control systems on pipelines and associated facilities,” the group says.

Moreover, the Trust takes numerous shots at the transmission industry, arguing at one point that the Trust is “quite frankly, horrified at the number of miles of pipeline that are subject to integrity management rules for which operators have no verifiable information about their characteristics. To put it bluntly, after a decade of integrity management, they apparently don’t know what’s in the ground.”

The good news for the industry is that PHMSA will not be issuing a final rule anytime soon, certainly not during the waning days of the Obama administration. Whether the next president is Hillary Clinton or Donald Trump, PHMSA may well get alternative marching orders from the new White House compared to what it received from the Obama White House. Certainly a Trump administration would drastically revise this proposal and undoubtedly accept some of the alternative methods groups like INGAA proposed for meeting the various congressional and NTSB mandates and recommendations.

API all but promised to file a lawsuit if the proposed rule is finalized in anything resembling its current shape. “Taken together, the changes proposed in the notice of proposed rulemaking are arbitrary, capricious, and contrary to the law,” it said. “As drafted, the NPRM (notice of proposed rule making) will almost inevitably lead to prolonged challenges because of the errors and inconsistencies in this expansive rulemaking.”

The required establishment and re-establishment of MAOP on thousands of miles of pipeline, both interstate and intrastate, has caused the most controversy. Transmission companies and INGAA argue PHMSA severely underestimates the number of pipeline miles which would be subject to blowdowns, and therefore the cost of the new regulations and the methane emissions created.

The specific sections of pipeline for which PHMSA is proposing that MAOP must now be established include:

  • Pre-1970 pipe in high consequence areas (HCA) operating at greater than 20% of specified minimum yield strength (SMYS).
  • Any pipe in an HCA, or in a Class 3 or 4 non-HCA, for which PHMSA has “inadequate records” on MAOP.
  • Any pipe in a Class 3 or 4 area that has never been tested.
  • Pipe in newly designated MCAs.

INGAA has no problem with hydrostatic pressure testing of those pipelines. But it does oppose the PHMSA requirement that a “spike” pressure test be used. “Spike testing is not an appropriate technique for MAOP reconfirmation and will result in unintended negative consequences without improving pipeline safety,” INGAA said in its comments. “Spike testing is an aggressive and destructive test that should be used only where time-dependent threats, such as a significant risk of stress corrosion cracking (SCC) exists. Spike testing yields no added benefits from an MAOP establishment perspective, yet it imparts significant stresses on the pipeline, its components, and the testing equipment.”

PHMSA estimated about 70% of 11,757 miles of transmission pipeline required to have MAOP established would do so through direct assessment and that hydrostatic pressure testing would be used on only 1,283 miles of pipe with the remaining 2,226 being upgraded so they could be inline inspected. INGAA estimates that 4,177 miles of interstate pipelines and 4,840 miles of intrastate pipeline would be blown down for pressure testing. That is a big difference, obviously.

The M.J. Bradley analysis soft pedals the methane emissions saying: “The additional estimated 1,353 annual metric tons of methane emissions related to the testing requirements under the new PHMSA rule could therefore increase annual transmission system methane emissions attributed to routine maintenance/upsets by less than 1%, and could increase total annual transmission system methane emissions by less than 0.1%.”

The Bradley estimate is based on the number of miles PHMSA estimates will require blowdown. INGAA doesn’t produce a figure on total methane emissions but estimates what methane emissions would be from a 10-mile segment at various blowdown pressures.

Given the differences of opinion between the industry and PHMSA about the number of miles of pipeline affected by various provisions and the difficulty of implementing some of the prescriptive requirements, it is no surprise that the estimates of the cost to the industry are far apart. The API challenged the costs and benefits computed by the PHMSA in its regulatory impact analysis:

“When these items are properly accounted for, the total cost of the proposed rule increases by more than 50 times from $597 million to $33.4 billion and benefits decrease from a midpoint estimate of $3.5 billion to $437 million (all numbers are net present value over 15 years at 7% discount rate).”

NiSource estimates that at a minimum over the next 15 years it will spend an incremental $1.9 billion dollars in capital, and $175 million in O&M on its transmission line assets, complying with these new requirements.

The M.J. Bradley report, however, says that interstate and intrastate operators can use five options to reduce total blowdown methane emissions by 50-90% and can recover the natural gas they expel during blowdowns, whose revenue will be greater than the costs of compliance with the proposed rule.

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