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NatGas Pipeline Security Defended, Challenging Coal, Nuke Bailout

Pushing back against a Department of Energy (DOE) plan to bail out less competitive coal and nuclear power generators, oil and natural gas trade groups on Wednesday defended the pipeline industry’s cybersecurity efforts.

The report, backed by the Oil and Natural Gas Sector Coordinating Council and the Natural Gas Council and issued Wednesday, all but directly challenged the DOE’s premise that compensating coal and nuclear plants is necessary to protect grid resiliency.

“Various federal agencies have stated or represented that natural gas pipelines are more vulnerable to cyberattacks than other energy infrastructure,” the report stated. “These statements are not based on evidence and have not been substantiated.”

The intelligence community and industry cybersecurity experts share information on an ongoing basis, and “threat mitigations continue to be incorporated into the cybersecurity programs of companies in the natural gas sector.”

Pointing to a “misconception between cyber threats and vulnerabilities in the calculation of risk to natural gas pipelines,” the report noted that gas pipeline companies manage cybersecurity to protect the automated digital control systems they use. These systems aren’t “unique or new to pipelines; they are prevalent across the entire energy landscape, including at coal and nuclear power generation facilities.

“...Furthermore, the natural gas system is highly resilient because the production, gathering, processing, transmission, distribution and storage are highly flexible and elastic -- characterized by multiple fail-safes, redundancies and backups. Pipeline companies have in place layers that protect against cascading failure, which also include mechanical controls that are not capable of being overridden” through a cyber attack.

The report called for continued voluntary public-private collaboration rather than “compulsory standards or regulations” to allow the industry to remain flexible in adapting to ever-changing threats.

Comments from Secretary Rick Perry and DOE documents reportedly have shown the agency seeking to use national security -- including cyber threats -- as a rationale for payments to less competitive but “fuel secure” coal and nuclear units that might otherwise retire.

Although trade associations representing the oil and gas industry are adamantly opposed to such bailouts, President Trump has been a vocal supporter of the coal industry since his campaign for the White House. Perry had argued that a notice of proposed rulemaking presented to FERC last September was a necessary bulwark to maintaining grid resiliency, but the Federal Energy Regulatory Commission unanimously rejected the rulemaking in January.

Speaking at a gas industry conference in Washington, DC, FERC Commissioner Cheryl LaFleur recently criticized the grid resiliency proposal as “commercially motivated.” Speaking a the North American Gas Forum, hosted by Energy Dialogues, she said, “The way competitive markets work, things that are better and cheaper win.” The arguments for compensating the less competitive plants have generally focused on “resilience or criticism of some aspect of dependence on natural gas for generation. Some of it is sensible,” such as concerns about having too many power plants relying on one pipeline.

The Natural Gas Council, whose members include the American Gas Association, American Petroleum Institute, Interstate Natural Gas Association of America, Independent Petroleum Association of America and Natural Gas Supply Association, said the report is aimed at providing “insight for policymakers” into the oil and gas industry’s “comprehensive” cybersecurity programs.

“Safety is the top priority for the associations that make up the Council and the companies they represent,” the Council said. “Individually and through numerous levels of industry collaboration and the sharing of best practices, the industry has developed comprehensive approaches to cybersecurity to keep America’s energy infrastructure safe and operating reliably.”

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