October 2018, Vol. 245, No. 10



Regulator Reconsiders Class Location Method 

Federal regulators are taking another look at the pipeline industry’s request to essentially eliminate the class location method for assessing the need for pipe replacement and replace it by expanding integrity rules beyond high consequence areas (HCA). 

The Pipeline and Hazardous Materials Safety Administration (PHMSA) published an advanced notice of proposed rulemaking (ANPR) at the end of August to that effect, but the notice appeared to indicate that the PHMSA under President Trump might not be any more sympathetic to the pipelines than PHMSA under President Obama.

The Interstate Natural Gas Association of America (INGAA) has been pressing for changes to the class location requirements for much of the past decade. 

“INGAA strongly supports a common-sense update to the class location change regulations that will enable increased deployment of modern integrity assessment technologies and processes,” said Don Santa, president and CEO of INGAA. “Despite dramatic engineering and technological shifts that have occurred since 1970, the class location change regulations have never been substantively revised.”

PHMSA submitted a report to Congress in 2016 casting doubt on the benefits of ditching the class location requirement, which the INGAA calls “obsolete.”  

The report, which was submitted to Congress in April 2016 concurrently with the publication of a notice of proposed rulemaking (NPRM), titled “Safety of Gas Transmission and Gathering Pipelines,” noted the application of IM program elements, such as assessment and remediation timeframes, beyond HCAs would not warrant the elimination of class locations.

On Aug. 30, PHMSA continued to express doubts about replacing the class location system: 

“PHMSA is concerned … some issues that result in pipeline failures, including poor construction practices and operational maintenance threats, are not always being properly assessed and mitigated by operators, whether due to lack of technology or other causes. 

Further, as the incident at San Bruno in 2010 showed, operators may not have traceable, verifiable, and complete records of pipe properties, such as pipe material yield strength, pipe wall thickness, pipe seam type, pipe and seam toughness, and coating quality, that are critical and necessary for IM processes and pipeline safety in Class 3 and 4 locations and HCAs where there are higher population densities.”

Increases in population force an interstate pipeline to confirm safety factors and recalculate the maximum allowable operating pressure (MAOP) of the pipeline. 

If the MAOP per the newly determined class location is not commensurate with the present class location, current regulations require that pipeline operators (1) reduce the pipe’s MAOP to reduce stress levels in the pipe; (2) replace the existing pipe with pipe that has thicker walls or higher yield strength to yield a lower operating stress at the same MAOP; or (3) pressure test at a higher test pressure if the pipeline segment has not previously been tested at the higher pressure and for a minimum of eight hours.

INGAA argues that when a class location change occurs, the current regulations may require operators to replace the existing pipe even when an integrity assessment has shown it to be in safe, operational condition.  

In a submission to PHMSA, INGAA estimated gas transmission pipeline operators incur annual costs of $200-$300 million nationwide replacing pipe solely to satisfy the class location change regulations.

Congressional legislation since the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, signed by President Obama in January 2012, has instructed PHMSA to evaluate whether IM system requirements, or elements thereof, should be expanded beyond HCAs. Like much else at PHMSA, the regulatory process on this issue has unrolled very slowly. 

Santa believes when the gas integrity rule is issued in final form, which is expected to be soon, it will remove the need for the class location method.

“These pending integrity regulations provide requirements for using modern pipeline assessment technologies, which are often a more effective, more efficient and less disruptive means of assessing and confirming pipeline safety,” Santa said.

Richard B. Kuprewicz, president, Accufacts Inc., who has been critical in the past about eliminating the class location method, is still a skeptic but thinks once the proposed “Safety of Gas Transmission…” rule becomes final, and is successfully implemented, he might revise his thinking. 

“The proposed new IM rule had improvements and reflect reasonable compromise to efficiently improve safety, but it isn’t a regulation yet,” Kuprewicz said. “Until we see real improvement in IM practices and measure improved safety performance, class location and the additional safety factors it mandates are warranted.”

Moving to Speed Approvals

FERC Chairman McIntyre announced steps to speed up environmental reviews of LNG applications as the White House Council on Environmental Quality (CEQ) undertakes a rulemaking to potentially revise portions of the National Environmental Protection Act (NEPA). FERC is in some circumstances hamstrung from approving LNG (and transmission pipelines) projects because of current NEPA requirements. 

In listing some of the changes FERC is making with regard to LNG applications, which include a new memorandum with PHMSA, McIntyre also listed a number of LNG project regulatory schedules that ostensibly will lead to the completion of environmental reviews at a faster pace than otherwise would have been the case prior to the reforms.

Sandra Safro, partner and energy practice group leader at K&L Gates, which represents a number of LNG projects in various stages of approval at the FERC, said, “We’ve been aware for a little while that there have been staff shortages in the engineering staff at FERC.” 

Katharine Ehly, senior policy advisor for the Natural Gas Supply Association and Center for LNG, added, “We would like to see the FERC process move faster, but we also understand the constraints FERC has been dealing with.” 

One of the 12 projects McIntyre announced schedules for was the Alaska LNG project. Frank Richards, senior vice president, Alaska Gasline Development Corporation (AGDC), which is building the Alaska LNG project and an affiliated 800-mile, 42-inch natural gas pipeline, wrote to the Council of Environmental Quality, which is considering changes to the NEPA:

“AGDC has experienced firsthand how the NEPA process can be affected by agency policy, subjective decision making at the staff level and out-of-scope agency comments. AGDC recognizes the importance of a thorough NEPA analysis, however, the current process lacks consistency and predictability.”  P&GJ


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