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Changes ahead

Hydrocarbon Engineering,


This is an abridged version of the full article from Baker Botts, which was published in the December 2012 issue of World Pipelines, available for subscribers to download now.


In response to high profile natural gas pipeline incidents in California and Pennsylvania, the US Congress passed pipeline safety legislation in December 2011. The new law requires significant changes to pipeline safety regulations administered by the Pipeline and Hazardous Materials Safety Administration (PHMSA). PHMSA is now studying potential regulatory changes regarding the use of leak detection systems, the use of remote or automatic pipeline valves, integrity management requirements, regulation of gas gathering lines, and revisions to emergency response protocols.

Pipeline safety, regulatory certainty, and Job Creation Act of 2011

On 9th September, 2010, in a residential neighbourhood of San Bruno, California, a natural gas pipeline ruptured. Following the initial explosion, a tower of flame reaching several hundred feet burned for more than 90 minutes as the pipeline operator worked to close manual valves to isolate the rupture. Eight people died and 66 people were injured. The incident destroyed 38 homes and damaged another 70.

The San Bruno explosion was followed by another natural gas pipeline explosion in Pennsylvania. In response to those explosions, and to an earlier oil pipeline leak in Michigan, Congress enacted the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (‘Pipeline Safety Act of 2011’ or ‘Act’). The law, which received broad bipartisan support, increases civil penalties, creates new obligations for pipeline operators, and requires PHMSA to study possible regulatory approaches to address safety concerns raised by the pipeline incidents. PHMSA is now implementing the requirements of the legislation.

PHMSA’s responsibilities

PHMSA, part of the US Department of Transportation, regulates natural gas and hazardous liquid pipeline facilities by monitoring compliance with minimum federal safety standards, requiring annual operational and incident-related reporting, and enforcing penalties for pipeline safety violations. The federal standards for natural gas pipeline facilities cover pipeline materials, design, construction, inspection, operation, maintenance, testing, emergency response, and qualifications of personnel. Similar regulations apply to hazardous liquids pipeline facilities, including oil pipelines. PHMSA conducts inspections and initiates enforcement actions to ensure compliance with its regulations. PHMSA’s jurisdiction is very broad, covering approximately 2 387 000 miles of onshore and offshore natural gas pipelines and another 175 000 miles of onshore and offshore hazardous liquids pipelines.

Proposals for stricter standards

The Pipeline Safety Act of 2011 was one of several actions to strengthen pipeline safety regulations in response to recent pipeline safety incidents. On 18th August, 2011, PHMSA issued an Advance Notice of Proposed Rulemaking (‘Advance Notice’) proposing broad revisions to the regulations governing gas transmission pipelines. On 26th September, 2011, following its investigation of the San Bruno incident, the National Transportation Safety Board (NTSB) issued written safety recommendations to PHMSA.

PHMSA's Advance Notice of Proposed Rulemaking

PHMSA’s Advance Notice requests comments on possible changes to PHMSA’s integrity management regulations, the use of remotely operated valves, corrosion control requirements, and regulation of gas gathering lines and underground storage facilities. PHMSA did not propose specific requirements, but instead requested public comment on current industry practices, the potential effect of new regulations on safety and cost, and the best way to implement new regulations.

The Advance Notice discussed possible revisions to regulations exempting pre-1971 pipelines from pressure testing, and considered ways to improve data through more regimented collection and verification. It also considered revising the definition of high consequence area (HCA), which is intended to identify areas where a pipeline release could have significant consequences on health and safety. Currently, pipeline operators must take specific steps to ensure the pipeline integrity where a release could affect an HCA. PHMSA also proposed that gas transmission pipelines accommodate inline inspection tools, use remote or automatically controlled block valves, and conduct corrosion threat analysis for every pipeline segment. PHMSA solicited comments on how pipeline operators currently assess areas of increased risk and how they use such risk assessments to implement integrity management practices in HCAs. PHMSA noted that the information could be used to help develop repair criteria in non-HCAs, methods of risk-tiering to give priority to repairs in HCAs, and industry-wide risk assessment models.

NTSB recommendations

The NTSB’s investigation of the San Bruno explosion concluded that the rupture was caused by a fracture in a partially welded longitudinal seam. The NTSB report found the fabrication of the pipe and welding of the seams to be defective, but also criticised the operator’s pipeline integrity management programme for failing to detect and repair or remove the defective pipe. Further, it found that the harm from the incident could have been mitigated if additional automatic or remote shut-off valves were closer to the rupture site and if the operator had adequate emergency procedures.

The NTSB issued specific recommendations to PHMSA covering emergency response protocol, use of leak detection systems, automatic shutoff and remote control valves, inline inspection, and defects in pipe manufacture or installation. The NTSB also recommended eliminating the exemption from hydrostatic pressure testing for gas transmission pipelines constructed before 1971, and recommended revising integrity management protocols to implement a performance-based process for assessment and audits. PHMSA is required by law to respond to the NTSB recommendations, although it is not required to adopt them.

Implementing the Pipeline Safety Act of 2011

Many of the requirements of the Act reflect the changes proposed by PHMSA’s Advance Notice and by the NTSB’s recommendations.

PHMSA implementation

PHMSA has taken several steps toward implementing the requirements of the Act. First, on 13th August, 2012, PHMSA issued a Notice of Proposed Rulemaking (NOPR) proposing to modify its regulations to reflect the statutory increase in civil penalties that became effective on 3rd January, 2012. PHMSA also proposed to amend its regulations to formalise its existing notice and hearing procedures.

PHMSA has begun revising forms to collect the information necessary to generate the reports directed by Congress. Even before passage of the Act, PHMSA began holding meetings to collect information and discuss improvements to pipeline safety. Over the last 18 months, the PHMSA meetings have focused on improving (a) pipeline risk assessment and recordkeeping, (b) pipeline emergency response, and (c) leak detection systems and automatic/remote control valves. A data workshop was held in October which considered performance measures for integrity management practices.

To facilitate information collection, PHMSA proposed revisions to incident report forms (to collect additional information on certain characteristics of the pipe involved in an incident) and to annual report forms (to collect information on maximum allowable operating pressure verification and the methodology used to determine that pressure). Following up on those proposals, PHMSA issued an advisory bulletin in May 2012 reminding operators to ensure that their pipeline records are sufficient to verify the maximum allowable operating pressure for each pipeline segment. The bulletin further advised that PHMSA will address, and most likely eliminate, the hydrostatic testing exemption for pre-1971 pipelines following collection of the 2013 gas transmission and gathering pipeline system annual reports.

PHMSA has also made progress in responding to the NTSB safety recommendations arising from the San Bruno explosion. In April 2012, the NTSB acknowledged that the proposals in the Advance Notice, if ultimately implemented through final regulations, would satisfy most of the NTSB’s recommendations.

Impact of new rules

The Act will have an impact on PHMSA’s enforcement obligations. Some of those changes are occurring now, such as the procedural rules proposed in the 13th August, 2012 NOPR and the verification of records relating to the operating pressure of pipeline facilities as described in the May 2012 advisory bulletin. The effective dates for other regulatory changes are still several years off, but they may have a significant impact on the manner in which pipelines are operated and maintained. Before implementing any changes, PHMSA will solicit additional information from operators and provide an opportunity to comment on proposed new regulations.

Conclusion

The pipeline safety regulatory landscape in the US is shifting. The Pipeline Safety Act provided legislative support for the concepts that had been previously identified in PHMSA’s Advance Notice, making reform of many pipeline regulations a virtual certainty. Increased PHMSA enforcement is also likely. The doubling of maximum civil penalties and the codification of the administrative enforcement process suggest that increased enforcement may precede other regulatory reforms described in the Act and outlined by PHMSA and the NTSB. However, by requiring PHMSA to study certain issues before issuing regulations, the Act may actually have delayed the implementation of more stringent pipeline safety regulations. Further, Congress has not yet increased funding to hire additional staff despite PHMSA’s increased regulatory responsibility. While a comprehensive revision of PHMSA pipeline safety regulations may be delayed, there is little doubt that significant changes are coming.

This is an abridged version of the full article from Baker Botts, which was published in the December 2012 issue of World Pipelines, available for subscribers to download now.

Written by Kirk K. Van Tine, Partner, Jessica Fore, Senior Associate, and Kyle Wamstad, Associate, Baker Botts, L.L.P., USA.

Read the article online at: https://www.hydrocarbonengineering.com/special-reports/03122012/oil_and_gas_pipeline_safety_and_risk_assessment_developments_in_the_us/


 

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