California officials are openly unhappy with the National Transportation Safety Board’s (NTSB) projected 18-month timetable for the investigation of last Thursday’s natural gas pipeline explosion, which killed at least four and left several people still unaccounted for. Officials are pushing Pacific Gas and Electric Co. (PG&E) and their own investigators to accelerate inspections and investigations that will eventually include all of PG&E’s pipelines in the state.
Speaking at an energy conference in San Francisco Monday, the California Public Utilities Commission (CPUC) member charged with overseeing natural gas issues, Timothy Alan Simon, said acting governor Lt. Gov. Abel Maldonado “is really not pleased” with the NTSB timeline and has ordered the CPUC to accelerate its investigative role. “We’re working with the NTSB in doing that,” Simon said.
CPUC President Michael Peevey ordered that PG&E evaluate all of its gas transmission lines for safety, said Simon, noting that he is the assigned CPUC commissioner on the gas portion of PG&E’s ongoing general rate case and those settlement discussions will definitely be impacted by the San Bruno incident.
“We’re in settlement talks, and clearly they are going to be impacted by this tragic event, and I am looking at what orders that I will issue to ensure that there are no decisions made on PG&E’s backbone transmission system that would in any way affect or hamper what is currently under investigation.”
Simon referred to a CPUC order Sunday that PG&E canvass its 5,700 miles of transmission pipelines, focusing most on pipeline traversing residential areas such as the neighborhoods in San Bruno. And PG&E reported that it has lowered transmission pipeline pressures by 10% for the three lines going through the San Bruno/San Mateo County area. Meanwhile, three different sections of the damaged transmission line have been confiscated by NTSB and sent for laboratory testing. The agency is trying to determine if it was corrosion, a poor weld or recent adjacent construction near the pipeline that might have contributed to the cause of the explosion.
NTSB also asked for the public’s help to determine if any residents reported to PG&E the presence of gas odors in the area in the days before the blast. No one has actually said publicly they contacted the utility, and PG&E customer service records do not show any calls from customers in San Bruno complaining about gas odors, the utility said.
In the aftermath there are four areas of escalating conjecture: (1) what caused the 55-year-old, 30-inch diameter steel transmission pipeline to fail? (2) Were there numerous calls from residents smelling gas in the area for days prior to the blast and what was the utility’s response? (3) What will this mean to future state and federal oversight of the gas pipeline infrastructure? and (4) What will it eventually do to the financial standing of the utility parent company, PG&E Corp., which lost more than $1 billion in market value on Friday?
PG&E utility President Christopher Johns said on Saturday the transmission pipeline that failed had been inspected in its entirety last year. The utility is now reinspecting all three of its transmission pipelines in San Mateo County.
As the NTSB led the investigation, along with counterparts from the CPUC and the utility, these questions and others arose from the ashes of the 37 homes destroyed last Thursday evening when the explosion and fire ripped through the suburb south of San Francisco, just northwest of its international airport (see Daily GPI, Sept. 13).
Structural engineering experts from the University of Southern California were quoted by news media as saying high-pressure gas pipelines are designed “to avoid exactly this kind of failure” and suggesting that the need to determine the cause is “urgent” because of what that information will mean for the ongoing maintenance and operation of tens of thousands of miles pipeline across the United States.
What does this bode for future regulation and laws governing the natural gas pipeline sector? Simon would not speculate, but state elected officials were quoted in various news media throughout California as saying this is a “wake-up call.” The state Senate Energy Committee Chairman, Sen. Alex Padilla, told the Los Angeles Times “California needs to do more to protect the public and meet the highest safety standards.”
Other state officials said PG&E looked culpable, and news media cited other recent pipeline accidents, such as the Christmas Eve 2008 pipeline explosion east of Sacramento that resulted in one fatality (see Daily GPI, Jan. 2, 2009). That one involved a residential distribution pipeline, which operates at considerably lower pressure than a major transmission pipeline like the one the failed in San Bruno. The NTSB eventually attributed the cause of the 2008 incident to substandard pipe.
On Saturday Maldonado wrote Peevey saying he was expecting the state regulatory commission “to take immediate action to ensure the safety of gas transmission pipelines throughout California.” He also charged the CPUC with addressing five areas:
Long-term utility critics, such as The Utility Reform Network (TURN), were quick to tell news media that PG&E has a checkered past, citing the fact that in the Rancho Cordova incident in late 2008, the utility was criticized for a slow response to a customer’s complaints about the situation. Since then, PG&E has pledged to be more prompt, but TURN said San Bruno may prove again that the company is failing to improve response times when customers suspect gas leaks.
Based on Friday’s reaction on Wall Street (in which PG&E lost almost $1 billion in market value as its stock tumbled 8.4% $4.03/share to $44.21/share), how much ultimate liability for the incident the utility has to sustain could have a devastating impact. The company indicated in a Securities and Exchange filing that it has $892 million in liability insurance, and compared to previous pipeline incidents that would appear to be enough, but the San Bruno damage is still unknown in its overall scope.
An analyst said only an ultimate finding of negligence on PG&E’s part would prevent the utility and its holding company from applying the liability insurance coverage, and other analysts indicated they thought the initial reaction of investors last Friday was a “panic and an overreaction” perhaps. It likely will take days and weeks — if not months — to clarify the situation.
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