Operation and Maintenance

The Government Accountability Office (GAO) issued a report on August 4, 2017, titled “Pipeline Safety – Additional Actions Could Improve Federal Use of Data on Pipeline Materials and Corrosion.”  The 55 page Report, prepared in response to a Congressional mandate in the 2016 Pipeline Safety Act reauthorization, summarizes pipeline materials, training and corrosion prevention technologies for gas and liquid pipeline facilities and analyzes PHMSA use of corrosion and material data to inform its inspection priorities. The Report recommends that PHMSA review, document and validate the way in which it identifies the highest risk pipelines for inspection, but makes no significant new findings, and the recommendations are largely consistent with initiatives that PHMSA already has begun.

The Report notes initially that pipelines carrying hazardous liquids or gas have the lowest incident rate of other transportation modes.  For oil and gas pipelines from 2010 to 2015, GAO’s assessment of PHMSA incident data attaches the highest single cause as corrosion (22%), followed by “equipment failure” (21%), “natural or outside force” (16%) and “excavation damage” (14%).  PHMSA tracks causal data somewhat differently, however, grouping “equipment failure” and “material/weld failures” together in a single category, which is reported by operators to be the largest cause of significant incidents in the past 5 years.  By comparison, the GAO Report links corrosion (22%) with “material, pipe or weld failure” (12%), although it is a very different failure mechanism from corrosion, to be the estimated cause of nearly one-third of all oil and gas significant incidents.

Continue Reading GAO Report Critical of PHMSA Inspection Priorities

Oil and gas discoveries in various shale plays around the U.S. over the past decade have led to an increased rise in the number of transfers and acquisitions of pipeline assets, including pipelines serving processing plants, producers, storage facilities, and those associated with power plants and other industrial users.  Changes in global and domestic energy markets have continued that trend.  Prudent operators routinely request and review documentation as part of their due diligence in making acquisitions, but it is becoming increasingly important that certain records be located during due diligence or factored into the transaction if such records are lacking and must be recreated.  Decision makers involved in pipeline acquisitions should involve pipeline safety managers or counsel early on in the process to allow sufficient time to include pipeline safety records review as part of the transaction; to do otherwise can be a costly mistake that carries significant liability risk.

Continue Reading Due Diligence: Critical Component of Pipeline Acquisitions

On December 19, 2016, PHMSA issued an interim final rule (IFR) to establish for the first time  minimum federal safety standards for underground natural gas storage facilities.  The rule was issued in response to the 2015 Aliso Canyon storage leak that lasted almost four months,  and a subsequent Congressional mandate to issue federal standards for underground storage.  Among other things, the IFR incorporated by reference (thereby making them mandatory) two American Petroleum Institute (API) Recommended Practices (RPs) regarding underground natural gas storage in salt caverns and reservoirs: (1) API RP 1170, “Design and Operation of Solution-mined Salt Caverns Used for Natural Gas Storage,” (July 2015); and (2) API RP 1171, “Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs,” (Sept. 2015).  API finalized both of those RPs in response to the Aliso Canyon incident.

Continue Reading PHMSA to Reassess Underground Natural Gas Storage Rule

The Gas Pipeline Advisory Committee (GPAC) will meet [Notice of advisory committee meeting] in Washington, D.C. early next month to convene the second public meeting regarding PHMSA’s proposed gas rules, often referred to as the gas mega rule.  The meetings will be focused on key proposed revisions to 49 C.F.R. Part 192 natural gas rules, including expanded integrity assessment requirements, revised integrity assessment and repair criteria, records, material documentation, corrosion control, and the integrity verification process (IVP) for segments that are currently grandfathered under the rules.  The meetings are scheduled for Tuesday and Wednesday, June 6-7, 2017, from 8:30 a.m. to 5:00 p.m.

Continue Reading Technical Advisory Committee Meeting Scheduled on Gas Mega Rule

President Trump has issued 30 Executive Orders and 28 Executive Memoranda since taking office on January 20, 2017, despite his failure to pass any major laws.  That is more Executive Orders than any President has issued in the first 100 days since World War II.  Nearly one fourth of these executive actions have affected the pipeline industry, either directly or indirectly, as noted below:

Continue Reading The First 100 Days: Executive Directives Impacting the Oil & Gas Pipeline Industry

Industry trade groups anticipate construction delays and cancelations, higher costs, and consumer impacts if the Trump administration’s January 24, 2017 Executive Memorandum, requiring that all new and repaired pipe be made in the U.S., is implemented. In comments filed to the Department of Commence by oil and natural gas industry trade associations, INGAA, AGA, GPA, API, and AOPL, the associations point out numerous challenges presented by the directive and various exclusions and exceptions that would need to be carved out. At the same time, the trade groups committed to engaging with the executive branch, regulators, and steel manufacturers to promote job growth and affordable energy in the U.S. Continue Reading Industry Responds to U.S. Made Pipe Directive

In an April 18, 2017 letter, EPA Administrator Scott Pruitt stated that the Agency will reconsider final rules governing new sources of methane emissions from the oil and gas industry. This decision was prompted by issues raised in petitions for reconsideration filed by a number of groups—including API and the Texas Oil and Gas Association—concerning EPA’s final rule amending the oil and natural gas sector New Source Performance Standards (NSPS) (the Final Rule), which was published on June 3, 2016 and became effective August 2, 2016. Under Clean Air Act Section 307(d)(7)(B), the Agency must convene a proceeding if a petition for reconsideration raises issues that are of central relevance to the rule and arose after the public comment period closed or were impracticable to raise during the public comment period. Continue Reading EPA Reconsiders and Stays Compliance with Oil and Gas Methane Rule

Oil and gas provides nearly two thirds of all energy used in the United States, which is primarily transported by pipelines.  The United States currently has roughly 2.8 million miles of pipelines.  Most of this infrastructure is buried, but aboveground components exist along pipeline routes, including pump stations and valve stations and compressor stations as well as other aboveground equipment and facilities.  Historically, incidents of pipeline sabotage have been rare but in just the past year, they have increased in response to high profile pipeline construction projects.  These attacks are well coordinated and appear to be well funded.  Impacts could be catastrophic to public safety, the environment, and reliability of energy infrastructure in the United States.  The federal government has expressly designated oil and gas pipelines as critical energy infrastructure for increased protection and current law provides for significant penalties and imprisonment for those who attempt to damage these facilities.  Continue Reading Protecting Critical Energy Infrastructure from Pipeline Sabotage

Last December, PHMSA issued an interim final rule (IFR) to establish—for the first time ever—minimum federal standards for underground natural gas storage facilities.  The IFR imposes significant new requirements in a short timeframe for “downhole facilities,” including wells, wellbore tubing and casings at underground natural gas storage facilities.  Those rules became effective in late January and most recently, PHMSA finalized user fees to fund a training program for inspectors with oversight of underground storage facilities and other guidance materials.  While PHMSA moves forward in regulating these facilities, the State of Texas, INGAA, and AGA have challenged the rule and commenters have criticized the rule as rushed, poorly drafted, and unrealistic. Continue Reading Underground Natural Gas Storage: Regulations and Fees Move Forward Despite Appeal and Criticism

During the campaign, President Trump promised to remove two regulations for every new one enacted. On Monday, January 30, 2017, he sought to make good on that promise by signing an Executive Order (EO), titled Reducing Regulation and Controlling Regulatory Costs. Continue Reading Agencies Instructed to Withdraw 2 Regulations for Every 1 Proposed in Executive Order