The need to regulate the more than 425,000 miles (683,971 km) of natural gas gathering pipelines throughout the United States for the first time stems from more than governmental fiat. It is tied to the transformation of the energy industry in the 21st century and the pipelines that supply increasingly complex markets.
With the widespread use of hydraulic fracturing (fracking) during the past 15 years, gas volumes extracted and transported through gathering pipelines have swelled significantly.
As an offshoot of the fracking revolution, gathering line diameters, operating pressures, and associated risk factors have become similar to larger interstate transmission lines. Many reputable industry groups, led by the American Petroleum Institute (API), question the science and cost/benefit analyses behind the new rules, preferring what they call “fit-for-purpose” regulations instead.
“API supports the overall objectives of this rulemaking process, namely, establishing reasonable, risk-based safety standards for large diameter, high pressure gas gathering lines in Class 1 locations,” according to API’s Robin Rorick, vice president for midstream policy issues. “However, the safety record demonstrates that smaller diameter pipelines do not present sufficient risk to warrant application of the current proposed gathering line requirements. U.S. pipelines deliver products to Americans safely and reliably, and our industry is committed to its goal of operating with zero incidents through robust safety programs.”
Authors of the regulations at the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) understandably view the new requirements differently.
PHMSA officials see the new regulations as a series of firsts, more than a decade in the making, which puts all U.S. onshore gas pipelines under federal oversight. “The rule, initiated more than 10 years ago, expands the definition of a ‘regulated’ gas gathering pipeline that is more than 50 years old,” PHMSA said in issuing its Final Rule late last year.
“It will – for the first time – apply federal pipeline safety regulations to tens of thousands of miles of unregulated gas gathering pipelines. The final rule will – also for the first time – require pipeline operators to report safety information for all gas gathering lines, covered by federal reporting requirements.”
PHMSA published its Final Rule on Nov. 2, 2021, as the latest global climate conference was winding down in Glasgow, Scotland, significantly expanding reporting and safety requirements for operators of gas gathering pipelines, including lines that were previously unregulated.
The federal pipe regulations, along with the Environmental Protection Agency’s (EPA) proposed Clean Air Act rulemakings for the oil and gas sector issued the same day, “further demonstrate the Biden administration’s overall commitment to action on climate change,” PHMSA officials emphasized. “The Final Rule requires operators to implement Part 192 requirements for certain newly regulated gas gathering lines located in Class 1 locations and requires Part 191 incident and annual reporting for all onshore gas gathering pipelines, regardless of location.”“Pipeline safety is of paramount importance and critical to a pipeline company’s ability to construct and their social license to operate.” – North American Midstream Infrastructure – A Near-Term Update Through 2025, Interstate Natural Gas Association of America
PHMSA officials stress that the new regulations are aimed at eliminating past incidents on gathering pipelines that have caused fatalities, injuries and what they call large amounts of greenhouse gas (GHG) emissions, citing tragedies in Oklahoma, Texas and Pennsylvania over the past 12 years.
More than 1,000 metric tons (1,102 U.S. tons) of high-global-warming-potential methane gas are emitted, on average, with each pipeline rupture, according to PHMSA. A single rupture from a large, high-pressure gas pipeline can release more than 1,300 metric tons (1,433 US tons) of methane emissions into the atmosphere.
While this part of the Biden administration at PHMSA continues to push ahead, elsewhere the Federal Energy Regulatory Commission (FERC) in late March pulled back on moving ahead with a new policy on natural gas infrastructure projects.
Biden-appointed FERC Chairman Richard Glick expressed continued support for gas reforms, although two new policy statements on the 23-year-old federal infrastructure certificate process and a new policy on assessing GHG emissions have been redesignated as “draft” documents and held for further review. The regulatory commission’s initial drafts drew heavy criticism from lawmakers and industry alike, along with the two Republican-appointed members of the commission.
In April, operators, particularly small ones who are thought to be the most vulnerable, were scrambling to meet the first reporting deadline in mid-May and prepare for the full implementation of the new regulations beginning March 15, 2023. New requirements include documenting construction and design of any new pipe, corrosion control on existing lines, damage prevention programs, emergency plans, public awareness programs, marking all pipelines, and leak detection and repair.
The scope of the challenge can be seen when realizing that the new PHMSA requirements include identifying all pipe locations, materials and maximum allowable operating pressures (MAOP). The needed geographic information system (GIS) for that is difficult to imagine.
Tom Meek, vice president for compliance operations at Houston-based software company, Veriforce, knows operators who are seeking outside assistance and bringing in engineering help to review historical construction records, material identification records and then actually identifying precise locations. It is essential for any damage prevention program, or emergency plan directions, to let an operator know exactly where each valve is and which valves to operate to mitigate any given situation.
To appreciate the scope of the task facing the operators, Meek said it helps to remember that people will be needed to mark hundreds of thousands of miles of gathering pipelines now being added under regulation.
“Imagine what sort of overall work force that will take,” said Meek, whose firm supplies software that provides in-the-ditch information on the qualifications of both pipes and workers. “The same is true with leak surveys or any type of mapping. Just thinking about line-of-sight markers for all of that pipe is a tremendous undertaking, and I’m sure firms will have to hire help,” Meek said.
According to the energy consulting firm ICF’s outlook completed in late 2020 for the Interstate Natural Gas Association of America (INGAA) Foundation, gas gathering and other PHMSA-added regulations will capture a lot of the industry’s focus for the next 15 years.
“Pipeline safety will continue to be an important focus for pipeline companies as they continue to respond to the new PHMSA rules,” ICF’s report notes, adding this should mean increased investment in safety, particularly now through 2023.
More miles of pipe are in play for reconfirming MAOPs and expanding inline inspection/maintenance requirements. INGAA and others are reminding operators that in the next 18 months there will be greater emphasis on valve automation, rupture detection and more use of integrity management in lieu of pipe replacement for class location changes.
As a Washington, D.C.-based energy trade association, INGAA has refrained from taking a public position on the gathering line regulations, Communications Director Abigail Miller said. She called the new regulations “outside INGAA’s jurisdiction.”
For some time now, midstream operators have begun assembling manuals and data aimed at dealing with the new requirements and beginning initial reporting that kicked off May 16 this year. There are no exemptions to the new rules.
Gathering line operators now must report all incidents. Next year annual reporting requirements will kick in, providing a retrospective on 12 months of operations. “It’s a requirement that people will need to begin recording currently, but the actual annual document won’t be due until March in 2023,” Veriforce’s Meek said.
The new requirements will be dependent on the proximity to dwellings, adhering to the federal categorization that designates rural and sparsely populated areas as Class 1 locations, and densely populated areas as Class 4. Some of the new requirements PHMSA are grouped in seven major categories, all of which are typical requirements for transmission pipelines that now also will be required of gathering lines:
- Corrosion control measures
- Damage prevention measures
- Public awareness programs
- Maximum allowable operating pressures
- Installation and maintenance of mile markers
- Leakage surveys
- Development and implementation of emergency response plans
With the changes, PHMSA unabashedly has expanded its oversight of previously unregulated gathering lines. The agency notes that, historically, it required larger gathering lines located in what have been designated as Class 2, 3, or 4 locations that operated at higher stress levels (Type A lines) to comply with most of Part 192 federal requirements.
For pipelines that operated in these locations (except for certain Class 2 locations) at lower pressures (Type B lines), PHMSA required operators to comply with a more limited set of the Part 192 requirements. Under this scheme, PHMSA excepted rural gas gathering lines in Class 1 locations.
Now PHMSA has created a third category of regulated gas gathering lines – Type C lines. Type C lines are gathering lines in Class 1 locations that are 8.625 inches (219 mm) or greater in diameter and are (1) metallic, with a MAOP producing a pull on the internal pipe walls from pressure, or “hoop stress,” of 20% or more of specified minimum yield strength; (2) metallic, with an MAOP greater than 125 psig 8.62 bar) if the hoop stress is unknown; or (3) nonmetallic, with an MAOP greater than 125 psig.
Within the category of Type C lines, PHMSA has imposed certain requirements for operators based on the “scale of risk associated with the particular characteristics of the pipeline.” Operators of Type C lines with an outside diameter of 8.625 inches or greater will be required to comply with the above-listed new requirements.
For the first time, all operators of onshore gas gathering lines are now required to report incidents and file annual reports under Part 191 of the new regulations. PHMSA defines a new category of reporting-only gathering lines, Type R lines, which include any onshore gas gathering lines in Class 1 or Class 2 locations that do not meet the definition of Type A, Type B, or the new Type C lines (addressed above). Type R line operators will be required to comply with certain incident and annual reporting requirements in Part 191.
According to PHMSA, these reporting requirements “are necessary to evaluate the safety risks on gas gathering systems and determine what, if any, additional measures may be warranted to reduce those risks.” These reporting requirements do not apply to offshore gathering lines. To assist operators with these new reporting requirements, PHMSA issued new annual report and incident report forms.
In 2021, there were 274 serious pipeline incidents reported, resulting in more than $187 million in damages, according to industry statistics. As gas demand recovers post-pandemic, so will the risks of serious injuries or fatalities to oil/gas workers. PHMSA officials maintain that their new gas gathering rules and requirements calling for initial compliance by November 2022 are aimed at boosting pipeline safety by reducing systemwide risks.
Operators will now not only have to qualify their employees and contractors but also document that their employees and contractors have read and understand their specific company procedures. Rather than waiting until the rule comes into effect, consulting firms like Veriforce are urging operators to begin preparing now. “With the right tools, operators can gain a holistic view of how their workforce is meeting the new standards,” said Veriforce’s Meek.
According to Meek, one of the key requirements will be operator qualifications, requiring that people working on regulated lines to have the proper qualifications. So, the regulations mean more jobs, and the people performing the jobs will be highly qualified.
“I’ve already seen with the increased volumes of work, gathering line companies actually adding head count to comply with the new regulations instead of using a third party,” Meek said. “A lot of the work is going to be ongoing maintenance – emergency plans, public awareness, leak surveys, etc. They will need more corrosion technicians, and they want quality workers.”
Like added investment, applying new technology will also be an offshoot of the new regulations, and Meek said he already sees various technology advances being applied by operators. “It is already occurring; there are multiple ways to do leak surveys, and one is the use of drones, for example,” he said. “There is also some interesting laser technology and sampling of pipe while it’s in service. Yes, technology is definitely going to play a role.”
That includes the technology for mapping and identifying where the pipes are located, according to Meek. He cites the growing need to be able to use smart devices in the field.
“You can use those same devices to scan a code for a worker in the ditch that gives all the qualifications of the pipeline and/or the persons doing the work,” he said. “That is one of the value-added things that is being done by companies like Veriforce.”
In the face of this added search for investment and new technology solutions, operators are facing more global economic uncertainty lingering from the pandemic and Russia’s war in the Ukraine. In April this year, during the first of the energy 1Q2022 earnings conference calls, Halliburton CEO Jeff Miller said that North American oil/gas equipment is “almost sold out” this year already.
As a result, Miller said North America’s top fracking company has raised its prices on equipment to keep up with inflation and supply chain issues, and Halliburton will continue to move in that direction in coming quarters. The service company CEO sees “sticker shock” across the entire energy sector.
If not shock, there are at least concerns about the added regulation in leading production areas such as the Permian Basin in Texas and New Mexico, and the Bakken Shale play in North Dakota, with inflation worries and concerns that the new maintenance requirements in the gathering systems may cause some periodic outages or shortfalls.
“From my knowledge, the PHMSA regulations could very well cause operating cost increases, but with 8.5% inflation, what isn’t causing price increases these days,” asked Stephen Robertson, executive vice president at the Permian Basin Petroleum Association. “Raw material (steel and sand) finished products (tubular goods and equipment), and a very tight employment market are all concerns causing additional cost increases throughout operations. Specifically, as to the takeaway capacity [in the basin], I have not heard of any concerns except for possible short-term outages because of maintenance events.”
Representatives at the North Dakota Petroleum Association, the state Pipeline Authority and Department of Mineral Resources (DMR), indicated there is not a lot of analysis that has been made public yet on what impact the new gathering regulations might have on operators in the Bakken. A spokesperson for DMR Director Lynn Helms told P&GJ that more time is needed to determine if the new rules will have a significant impact. “It’s likely there will be a large impact for some operators that are required to do additional reporting,” the spokesperson for Helms indicated.
API’s Rorick said PHMSA “ignored the substantial cost associated with the new rule and did not conduct a compliant and rational risk assessment” during its cost-benefit analysis. He touts the need for having “a clear and consistent rulemaking process” in place to help ensure that needed infrastructure can be built.
In response to a question from P&GJ, an API spokesperson indicated that the Washington, D.C.-based organization is continuing to monitor the rule but does not plan to issue any additional guidance on the implementation of the new gas gathering line regulations at this time. “While all operators will be impacted by the new regulations, smaller producers and operators of gathering lines will be impacted the most. With fewer resources to come into compliance, some may consider terminating operations.”
Veriforce’s Meek sounds a lot more bullish, saying “most all operators are doing the right thing; it is just a matter of being very precise with the federal regulators. Keep in mind the pipelines themselves want to make sure their pipelines don’t hurt any people or the environment. They have the greatest motives of all to do the right things.”
