On June 22, 2016, the President signed into law the PIPES Act, reauthorizing the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) federal pipeline safety program through fiscal year 2019. Among several amendments to the Pipeline Safety Laws, the PIPES Act provides PHMSA with significant new authority to issue industry-wide emergency orders and requires PHMSA to develop underground gas storage standards. Babst Calland’s Pipeline and HazMat Safety team has prepared a Pipeline Safety Alert offering observations on some of the key provisions in the PIPES Act.
On June 15, 2016, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued an advisory bulletin to pipeline operators related to the effectiveness of coating and corrosion control measures on buried, insulated pipelines. PHMSA’s advisory bulletin responds to a recent pipeline failure and oil spill in California. The failure involved a buried oil pipeline coated with coal tar urethane and covered with tape wrapped foam insulation. The pipeline was insulated because it carried high-viscosity crude that required heat in order to transport. PHMSA found that the pipeline ruptured because of external corrosion that occurred under the pipeline’s coating system. PHMSA also found that this corrosion was facilitated by wet dry cycling. PHMSA’s Failure Investigation Report is here.
PHMSA indicates that corrosion under insulation (CUI) is an integrity threat that is difficult to address through conventional cathodic protection systems and can lead to accelerated corrosion and stress corrosion cracking. PHMSA recommends that operators review their operating, maintenance, and integrity management activities to ensure that their buried, insulated pipelines have effective coating and corrosion control systems. PHMSA recommends that operator procedures consider the need for corrosion control systems that prevent moisture buildup, coatings that avoid cathodic protection “shielding,” advanced ILI data analysis to account for CUI, ILI data analysis and excavations to accurately assess corrosion as outlined in API Standard 1163, and additional or more frequent reassessment intervals for pipelines with known susceptibility to moisture retention.
For more information please contact Jim Curry, Keith Coyle or Brianne Kurdock of our Pipeline and HazMat Safety Practice.
On June 13, the U.S. Senate unanimously approved the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (PIPES Act) legislation that reauthorizes the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) federal pipeline safety program through fiscal year 2019 and contains a number of amendments to the Pipeline Safety Act. The U.S. House of Representatives passed the PIPES Act last week, and the bill will now be sent to the President for his signature.
Among the more noteworthy provisions, Section 12 of the PIPES Act requires PHMSA to develop underground gas storage standards within two years and authorizes the collection of user fees from operators of these facilities. Section 16 also provides PHMSA with significant new authority to issue industry-wide emergency orders if an unsafe condition or practice results in an imminent hazard, meaning a substantial likelihood that death, serious injury, severe personal injury, or a substantial endangerment to health, property or the environment may occur. PHMSA may use emergency orders to impose operational restrictions, prohibitions or safety measures. While PHMSA can issue these emergency orders without a prior hearing, the legislation provides for an expedited process of administrative and judicial review.
Stay tuned for further updates once the PIPES Act of 2016 is signed into law.
According to a report by the Charleston Gazette-Mail, TransCanada will be purchasing Columbia Pipeline Group for $13 billion. TransCanada had previously proposed the Keystone XL pipeline, and owns more than 42,000 miles of pipeline in North America. TransCanada will acquire about 15,000 miles of pipeline, as well as processing and underground storage facilities, through the purchase of Columbia.
On February 18, 2016, Pennsylvania Department of Environmental Protection (PADEP) Secretary John Quigley held a press conference to announce the release of the final Governor’s Pipeline Infrastructure Task Force (PITF) Report. Secretary Quigley stated that the final report contains only minor modifications to the draft report, but adds an executive summary and appendices. The final report includes all draft recommendations, including 11 that do not appear to have garnered majority support from the task force members in weighted voting. Appendix C to the final report assigns various government entities and/or industry with responsibility for following up on each individual recommendation.
Keith Coyle, a shareholder in Babst Calland’s new Washington, D.C. office and member of its Pipeline and HazMat Safety Practice Group, served on the Task Force.
As reported by The Scranton Times-Tribune, Pennsylvania State Representative Scott Petri (R-178th Leg. Dist., Bucks County) recently introduced legislation that would allow the Turnpike Commission to grant pipeline operators the right to use its existing right-of-way for the construction of parallel gas pipelines in exchange for a transmission fee. Representative Petri asserts that passage of the bill will ultimately generate state revenue and minimize the impact of transmission line development on private property owners. Although the Turnpike Commission has not yet determined how much of the state’s 550 mile turnpike system may be suitable for parallel gas pipelines, the proposed legislation comes at a time when midstream development and operations in the Marcellus Shale are on the rise, as state officials predict that thousands of miles of new pipelines will be needed to transport gas to new markets. Representative Petri also suggests that Interstates 80 and 79, which span 311.07 miles and 182.72 miles in Pennsylvania, respectively, could provide additional opportunities for parallel gas pipelines upon federal approval.
Energy Transfer Partners LP announced that it will invest $1.5 billion for a new pipeline system and processing facilities to serve the Marcellus Shale in and around Butler County, Pennsylvania. The new facilities are expected to be operational by mid-2017. Natural Gas Intelligence reported that the pipeline and facilities are part of a long-term natural gas gathering agreement between ETP and EdgeMarc Energy to serve EdgeMarc’s active wells in the region, but the facilities are also expected to accept third party gas in the future. The project plans include over 100 miles of high pressure pipeline and a cryogenic gas processing plant that will be located in western Pennsylvania near Butler County, providing an additional 440 MMcf/d of gathering capacity in the area. The plant will deliver gas to ETP’s Rover pipeline, which is expected to deliver gas to markets in the Midwest, Great Lakes and Gulf Coast regions beginning in 2017. ETP’s pipeline will also deliver natural gas liquids to the Marcus Hook Industrial Complex on the Delaware River, which is being repurposed for natural gas liquid storage, processing and distribution to foreign and domestic markets.
On May 27, 2015, Pennsylvania Governor Tom Wolf announced the formation of a task force to help the Commonwealth, the natural gas industry and communities partner for the development of new pipeline infrastructure to allow natural gas and related byproducts to more effectively reach the market. The task force will focus on creating a series of best practices for the planning, siting and routing of pipelines. It is projected that Pennsylvania may see the construction of up to 25,000 miles of gathering lines in the next decade, and possibly another 4,000 to 5,000 miles of midstream and transmission lines. John Quigley, the acting Secretary of the Pennsylvania Department of Environmental Protection, will serve as chairman of the task force. The Governor will seek representatives from state agencies, the legislature, federal and local governments, the pipeline and natural gas industries and environmental groups to join the task force. Some of the goals of the task force are to plan construction practices that reduce environmental impact, establish a predictable and efficient permitting process, develop long-term operations and maintenance plans and engage in meaningful public participation.
The White House recently released a report from the first Quadrennial Energy Review (QER), focusing on U.S. energy transmission, storage and distribution infrastructure. In January 2014, President Obama directed the administration to conduct the QER as part of his Climate Action Plan, in order to provide a “multi-year roadmap for U.S. energy policy”. This first QER report includes a recommendation for the U.S. to invest in the modernization of its aging energy infrastructure, including accelerating pipeline replacement and the maintenance of natural gas distribution systems. The QER report indicates that such investments will increase the safety, security, resiliency and reliability of the U.S. energy infrastructure while promoting economic, consumer service, climate protection and system reliability benefits.
FuelFix.com reports that the U.S. District Court for the Middle District of Pennsylvania recently ruled that the Constitution Pipeline can be built across seven northeastern Pennsylvania properties despite the fact that the respective landowners had not agreed to the construction. The Constitution Pipeline is a 124-mile pipeline project designed to transport Marcellus Shale gas from Pennsylvania to New York and New England. It would connect with the existing Tennessee and Iroquois pipelines in New York. Its partner companies, including Williams Partners LP and Cabot Oil & Gas Corp., sought access to 130 properties in Pennsylvania and filed condemnation proceedings regarding 20. Agreements were reached with 13 of the 20 landowners. Judge Malachy Mannion ruled that the pipeline has the necessary permits from the Federal Energy Regulatory Commission, and that it serves the public interest by increasing gas pipeline capacity. Judge Mannion also noted that the landowners stood to gain adequate compensation from the pipeline’s owners. A spokesman for Williams stated that the group hopes to begin construction by June 1st after obtaining additional permits and posting the necessary bond.
Ohio landowners are opposing the use of eminent domain in the construction of a 76 mile pipeline between Columbiana County and Monroe County. The OPEN pipeline would connect to the Texas Eastern Pipeline and was recently approved by the Federal Energy Regulatory Commission (FERC). After receiving approval for FERC, the pipeline owner began issuing eminent domain notices to landowners who did not grant easements across their property. Two landowners, Roger and Lana Barack, are teaming with an advocacy group called the Ohio 1851 Center for Constitutional Law to oppose the eminent domain proceedings. The groups claims recent federal court decisions state that Congress may not delegate its power, including the power to seize property, to purely private companies.
StateImpact reported that the Federal Energy Regulatory Commission recently approved an addition to the interstate Transco pipeline that will transport Marcellus shale gas to New Jersey, where there is a high demand. The approval comes after several other pipeline expansions to New York and New England were recently approved. The Leidy Southeast line will total approximately 30 miles in Pennsylvania and New Jersey and is scheduled to be completed by late 2015.
The Roanoke Times reports that Mountain Valley Pipeline LLC will be hosting 14 “community open houses” in several counties throughout the region where they have proposed a 300-mile interstate natural gas pipeline. If approved by the Federal Energy Regulatory Commission (FERC), the pipeline will deliver natural gas produced from wells in Pennsylvania, West Virginia and Ohio to Pittsylvania County, Virginia. Mountain Valley spokesperson Natalie Cox stated that up to 30 representatives from Mountain Valley who are subject matter experts in their particular area of the project will be present at the open-houses. The first four open-houses are scheduled for this week and will consist of various stations focused on specific topics as opposed to formal presentations. Representatives from FERC will also be in attendance to answer questions about the proposed pipeline.
StateImpact, a reporting collaboration supported by NPR, that the Federal Energy Regulatory Commission has approved a proposed interstate pipeline that would transport Marcellus Shale natural gas from Pennsylvania to New York and New England markets. The 30-inch pipeline would cover 124 miles, connecting gas production in Susquehanna County, Pennsylvania to existing transmission lines in New York. The pipeline will be operated by subsidiaries of Williams Partners, Cabot Oil and Gas, Piedmont Natural Gas, and WGL Holdings. The Pennsylvania Department of Environmental Protection, the U.S. Army Corps of Engineers and the New York Department of Environmental Conservation must still issue final permits.
Southwestern Energy Company and Detroit-based DTE Energy Company have made a deal to expand DTE’s natural gas gathering system in Susquehanna County, PA by 50%. The Bluestone Gathering System delivers gas from the Marcellus shale in Pennsylvania through the Millennium Pipeline in Broome County, NY and the Tennessee Gas Pipeline in Susquehanna County. According to Nasdaq, the new agreement will increase Southwestern’s transportation capacity on the Bluestone Pipeline, which currently ships up to 0.8 Bcf per day and will increase to 1.0 Bcf per day by mid-2016. The plan for increased infrastructure is significant for Southwestern, which recently acquired 413,000 net acres and 1,500 wells in southern Pennsylvania and northern West Virginia from Chesapeake Energy Corporation and had an increase of 47% in gas production over the past year.