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Natural Gas Council Urges Large-Volume Customers to Secure Firm Transportation Contracts

The U.S. trade associations that comprise the Natural Gas Council (NGC) said Monday industry practices contribute to the reliability and resiliency of natural gas, but if large-volume customers want undisrupted service and continuity they should enter into firm transportation contracts.

In a 27-page report, "Natural Gas Systems: Reliable and Resilient," the NGC said large-volume customers -- such as industrial and commercial users, power generators and local distribution companies -- should contract for firm transportation services, since pipelines may not have spare transportation capacity without them. Capacity availability would be even scarcer on peak days during the winter heating season.

"While the natural gas industry is committed to continuing its high level of reliability, there is an equally important component of assuring continuity of service that remains the responsibility of large-volume customers," the NGC said. "These customers should contract for the appropriate level of firm transportation service they require to ensure reliable service. Together, these two components -- operational reliability and contractual continuity of service -- make natural gas a secure, reliable and resilient choice for customers."

The NGC also touted natural gas as being relatively immune to weather-related events. Case in point, fewer than 100,000 U.S. gas customers experienced a service disruption in 2016. By comparison, 8.1 million Americans experienced power outages last year.

However, the council said that despite the low threats from weather, the industry is committed to cyber and physical security of its infrastructure. Physical security includes routine patrol and continuous monitoring of fenced-in infrastructure above ground, as well as regular industry briefings and workshops to discuss security concerns.

On cybersecurity, the NGC said the federal government has been partnering with the industry and states through the use of three Information Sharing and Analysis Centers (ISAC) to share a comprehensive analysis of the threats in the energy sector -- the Downstream Natural Gas ISAC, the Oil & Natural Gas ISAC, and the Electricity ISAC.

"The natural gas industry is not susceptible to widespread failure from a single point of disruption in the same manner as the electric system because of the dispersion of production and storage, its redundant characteristics from the extensive integrated pipeline and distribution network, and its low vulnerability to weather-related events," the NGC said. "The natural gas industry also has in place robust cyber and physical security protocols to minimize disruptions from man-made or computer threats, and has a resilient, interconnected system that allows it to come back online quickly in the rare case of a disruption."

The NGC includes the American Gas Association, the American Petroleum Institute, the Interstate Natural Gas Association of America (INGAA), the Independent Petroleum Association of America and the Natural Gas Supply Association (NGSA).

The white paper was originally produced to provide answers for a special assessment conducted by the North American Electric Reliability Corporation. The assessment examined the potential risks to the reliability of the electric grid from a single point of disruption on major natural gas infrastructure facilities -- including storage facilities, pipelines and liquefied natural gas terminals.

“Natural gas continues to experience such tremendous growth, both in supply and demand, that there’s tremendous thirst for knowledge from our customers about how we achieve reliability,” said NGSA CEO Dena Wiggins. “As an industry, we are proud of what we consider a remarkable record of reliability and wanted to produce a resource that explains the physical characteristics, operational practices and contractual obligations that make that record possible, along with information about programs underway to further strengthen our systems.”

INGAA CEO Don Santa concurred, adding that America’s natural gas pipelines “are the envy of the world.”

“The physical characteristics of both the natural gas resource and the pipeline delivery infrastructures make our nation’s natural gas system uniquely reliable,” Santa said. “In the aggregate, the United States’ many natural gas transmission pipelines comprise an interconnected, nationwide network that offers multiple pathways for rerouting deliveries in the event of a disruption.”

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