As the week of the worst natural gas pipeline disaster in the U.S. drew to a close, with the last of the 12 victims dying on Friday, there was no clear indication when service would resume on any of the three lines making up the El Paso Natural Gas’ South Mainline that feeds 1 Bcf/d into the California market.

The ruptured 30-inch line 1103, and two parallel lines were shut in after the Aug. 19 blast at the Pecos River Crossing near Carlsbad, NM. The twelve dead were members of two local families who had been fishing and camping alongside the river. They were consumed in the blast and fireball that ripped open an 86-foot long trench, 20 feet deep and left a mass of twisted metal pipe.

Federal regulators found corrosion and thinning pipe walls on pipe fragments severed by the blast and responded with an order – one of the strongest in gas pipeline history – issued late Wednesday, four days after the accident, requiring extensive testing and repairs before any of the lines could go back into service. All three lines are around 50 years old. The line that ruptured had not been “properly inspected” in the 48 years since it was first installed, the chairman of the National Transportation Safety Board (NTSB) said last week.

El Paso officials say they had managed to make up about 500 MMcf/d of the lost capacity by drawing on storage, diverting gas to an alternate route and through customer cutbacks. The bottom line, however, is that every day the outage continues, storage for the already stressed California market and generators east of California is dropping by 500 MMcf/d and will have to be refilled. The market is measuring that loss with California border prices up about $1.50 since the accident.

The last victim of the explosion, who had been in critical condition throughout most of last week, died early Friday, making the El Paso explosion not only “the most serious gas transmission failure ever,” but tying it with the worst gas-related failure (a distributor) of all time, according to Stacey Gerard, associate administrator of the Department of Transportation’s Office of Pipeline Safety (OPS).

El Paso must provide “written documents [in] black and white in the hands of this department” spelling out testing results before the DOT can make a decision about restoring service on Line 1110, Gerard told NGI. Line 1110 apparently was the least affected of the three lines by the Aug. 19 explosion.

The NTSB last week cited internal corrosion as potentially one of the causes of the fatal blast.

“It’s possible that it [Line 1110] could be [re-opened] within a few days. But I don’t want to presume the outcome of those tests” being conducted by El Paso on its line, she said Friday. “It would not be correct to make any statements about when the line is going to open at this time. What has to happen is the results of the tests that we required have to be completed, and I’m not aware whether or not they’ve been completed yet. They should have been. We have to get the test results and decide if they are good. Then we need to [receive] a plan from the company on their re-start, and to my knowledge we have not received that either.” At this point, “it would be presumptive of anybody to say what’s going to happen next.”

The OPS order Wednesday was one of its most aggressive actions against a gas pipeline. It followed up on the immediate problem with the requirement that the pipeline later submit a plan to assess the 10,000 miles in the rest of the El Paso Pipeline system. Parent El Paso Energy operates 40,000 miles of natural gas pipeline throughout North America.

Gerard said the results of El Paso’s hydrostatic testing on Line 1110 “are good,” but she hadn’t yet seen the results of the OPS-ordered X-ray and ultrasound tests, or the plan for proceeding with the re-start of the line. “We were hoping that those results might have been final today [Friday].” She personally will make the final decision about when to restore service to the affected 2,000 feet of Line 1110, between Valve #6 and the Pecos River Compressor Station.

Before giving the go-ahead, Gerard noted “I’m going to want to hear our [Southwest] regional director and his engineers say that the test results were satisfactory, and that they have approved the plan to re-start.” Similarly, she declined to make any predictions about when the other two affected lines, 1103 and 1100, would be restored to service.

El Paso, which has declined to give details, has been posting notices on its bulletin board since last Sunday promising service will be restored within days. The last notice, posted Thursday, said it expected to re-open Line 1110 “early” this week. However, Gerard and other OPS officials wouldn’t commit to that timetable. From the OPS order, it appeared that once inspection and repair of pipe in the immediate Pecos River area is completed, regulators will allow the lines to return to service under reduced pressure while testing of the rest of the system continues.

There was consensus in the market that a drawn-out outage is highly unlikely. “California needs the gas too much, so there’s no way the politicians there are going to stand for depriving their state of gas supplies in what is often its hottest month of the year,” a marketer commented, summing up the feeling of many.

With segments of the three lines down, El Paso customers were forced last week to scramble for capacity elsewhere. The pipeline was making up some of the shortfall by drawing the maximum, 200 MMcf/d from its Washington Ranch Storage Field downstream of the accident. Increased use of other pipelines, allocations and cutbacks by customers, and the fact that weather had moderated in California helped ease the supply situation. One of the key bypasses around Pecos River Station is the 36-inch Line 1600, a lateral that takes gas from the Waha Station to a mainline interconnect downstream of both Pecos River and Washington Ranch.

The primary market impact from the El Paso explosion was to push basis for the Southern California border to unheard-of heights that are expected to yield a September index easily surpassing $6.

The supply shortfall was having a more immediate impact in August swing quotes for the border that reached into the $6.70s Friday.

For August, border basis quotes ranged from plus 60 to plus 91 and averaged plus 80.25. They began last week in the plus 110s due to the El Paso capacity constraints and a combination of California’s recent power woes and the fact that September is usually the state’s hottest month of the year. But Thursday, after it became apparent that El Paso may not be able to restore even a portion of the lost South Mainline capacity immediately, basis quotes shot up to plus 170 and higher, to be followed Friday by reports of plus 200.

Because of the internal corrosion discovered on the failed section of pipeline (Line 1103), the OPS last week in its order directed El Paso to submit a corrective action plan for OPS approval that “will identify all areas on approximately 330 miles of pipeline that may be subject to internal corrosion.” The 330 miles is a combined amount on all three lines, and includes the majority of El Paso’s facilities in New Mexico to the Texas border.

“…[W]e’re going to be in the process of gathering data for at least several weeks in the area 50 miles in either direction [of each line]. We’re focusing on that area because based on their proximity to production facilities we would think that we’d have a higher likelihood of corrosive elements being present in those areas,” Gerard said. “That information will give us the best idea about if other actions will be required or needed” against El Paso.

The corrosive action plan requires El Paso to conduct inspection, assessment, and repair or replacement of all damaged areas. “Based on the results of these and other tests, El Paso must develop a plan to assess the integrity of the remainder of its 10,000 mile pipeline system.” Gerard said OPS required the review of the entire El Paso system because “while the indications from this accident are pointing in a particular direction [internal corrosion as being one of the causes], we have to be concerned about the system-wide integrity issues.” She said no timetable “at this time” has been established for when El Paso must complete its system-wide assessment.

Even if El Paso passes all the tests and OPS allows it to return to service, each of the three lines will be subject to a 20% pressure restriction. The restriction will be reviewed in 10 working days, and may be removed upon the receipt of more information about the factors that contributed to the Aug. 19 explosion.

The OPS issued the seven-page corrective action order after it determined that the El Paso lines were hazardous. El Paso was notified of the order last week, and it has 10 days to request a hearing to be held in either Houston or Washington DC. If El Paso fails to comply with any part of the order, it could face civil penalties of up to $25,000 a day, and the case could be referred to the U.S. Attorney General for “appropriate relief” in the U.S. District Court, according to Gerard.

Within 90 days, El Paso will be required to submit to the OPS Southwest regional director an “analysis of the continued safe operation” of the three lines “based on the testing and inspection required under this order.”

Preliminary investigations of ruptured Line 1103 by the NTSB indicate that “significant internal corrosion was visible on the failed section,” and “may have been a contributing factor in the line failure,” the OPS order said. Because of this, “the possibility of internal corrosion on other lines in the area is a safety concern.” The NTSB declined to speculate about any other possible causes for the blast.

“We’re only dealing with the facts…Right now, we’re documenting the pipe itself and surveying the land. We’re going to look at the chronology of when the [emergency] calls came in….. document damage to vehicles, and injuries,” said NTSB spokesman Keith Holloway. “Probably at this point we’re looking at nine months to a year, maybe more” before the results of the investigation are publicly disclosed, he noted.

The ruptured pipeline segment, which was constructed in 1952, “had never been inspected with an internal inspection tool or hydrostatically tested in all that time,” said NTSB Chairman Jim Hall, who toured the site of the fatal explosion last week.

“Although this section of pipeline as configured could not accommodate an internal inspection tool, it could have been pressured tested or examined by other means,” he noted. Federal regulations currently do not require such testing, Hall said, but the NTSB has been urging mandatory testing requirements such as internal inspections and pressure tests since 1987. The DOT “is considering requirements right now for additional integrity assessment tests,” Gerard noted.

“No American would want to use any transportation vehicle that would not be properly inspected for 48 years, nor should we have pipelines traveling through any of our communities in this condition,” Hall commented.

Merrill Lynch analyst Donato Eassey said he, too, was concerned about the inability of the El Paso line to accommodate smart pigs due to “certain valves and certain configurations.” As a “longer term solution,” he thinks El Paso should consider reconfiguring its line so it can do smart pigging, a state-of-the art test for detecting internal corrosion.

Gerard echoed that sentiment. “Long-term, what we’ll be looking for is the ability of these segments to be able to be tested in the manner that [NTSB] Chairman Hall referred to, by internal inspection instruments which were not available to us because of the configuration” of El Paso’s system.

The damaged section of pipe (Line 1103) last week was sent to Washington, DC for additional examination. El Paso reported it conducted a corrosion test on the pipe in question in February. A patrol inspection, or visual inspection, also was conducted on the above-ground portion of the pipes Aug. 2 by El Paso.

Gerard told NGI that the OPS had performed 20 inspections of the three affected lines during the past five years, and was in the process of another one at the time of the explosion. As for El Paso’s overall compliance record, she said the OPS imposed a $10,000 penalty in 1992 with respect to the pipeline’s external corrosion monitoring, and initiated non-penalty actions in 1997 and 1985 that addressed El Paso’s unclear written operating procedures and the adequacy of employee training for emergencies, respectively.

One knowledgeable source provided his analyis of the blast: The structure of the crater made the rupture “look like a line integrity problem from the way it blew out. The earth can harbor leaking gas for a while until eventually everything all goes up at once.

“People nearby would not have detected anything because gas is odorless in long-haul lines; the mercaptan odorant is not added until it gets to the local distribution stage. Pipeline safety surveyors usually will look for dead vegetation in the vicinity to detect a leak, but this was a desert area with very little vegetation.

“It is easily possible for escaping gas to hug the ground for the approximate 500-foot distance to the victims’ campsite and seek an ignition source there. It is a normal tendency for gas leaking into the atmosphere to stay close to the ground, and that tendency would have been amplied by the chilliness of the pre-dawn desert.”

The source went on to say, “I think there will be lot more of this [ruptures] in the future with many pipes becoming at least 40-50 years old.” El Paso was unlucky in experiencing one of the early incidents, he said, because the situation applies to other lines with old pipe. Pipelines used to spend a lot more money on maintenance when regulation was tighter and they were still paying for depreciation, he said. “Now they’re more purely for-profit companies after having written off their [depreciation] costs many times over.”

The age of the gas infrastructure in the United States became a central issue last week. “The one similarity in all these pipe explosions has been that the pipes were built in the 1950s and 1960s. We are concerned about the aging pipe system,” Hall noted. “Our pipeline infrastructure is being stressed today more than ever. We’re putting through more molecules than ever to meet demand, and the 50-year-old systems may not be up to the task,” agreed Merrill Lynch’s Eassey. It was pointed out that many of these lines now run through suburban sprawl that has built up since they were installed.

But Jerald Halvorsen, president of the Interstate Natural Gas Association of America (INGAA), doesn’t think 50 is too old for a gas pipeline system. “I think there’s no reason a pipeline can’t last for 70 or 80 years under ideal circumstances.”

Reaction in Washington to the rupture on the El Paso system continued throughout last week, as Rep. John Dingell (D-MI) called on the General Accounting Office (GAO) to look into the causes of the fatal pipeline blast.

“With the recent tragic explosion in New Mexico, I would appreciate your agency’s assistance in reviewing the causes of the explosion as the National Transportation Safety Board’s investigation unfolds, and the implications they would have” on the recommendations that GAO made in a June report about the OPS, wrote Dingell in a letter last Thursday to GAO Comptroller General David M. Walker.

The June GAO report, combined with a report by the DOT’s Inspector General, prompted Dingell at the time to call for a “thorough review and restructuring” of OPS (see Daily GPI, June 20). The GAO report painted a picture of OPS as an agency that was soft on pipeline safety violators, failing to take aggressive enforcement action and impose stiff penalties. At the same time, it reported that the number of natural gas and hazardous liquids pipeline accidents resulting in death, injury of more than $50,000 in damages rose 4% annually in the past decade.

Meanwhile, Merrill Lynch’s Eassey said the industry is in a “kind of wait-and-see [mode] as far as what the NTSB and DOT will come up with…” The best scenario for El Paso, he believes, is that “they have been in compliance and that they can demonstrate that the pipe that they have there is still structurally sound and can be operated.” But, he confessed, “there is a concern. The concern is that for some reason they weren’t in compliance. However, we don’t know that for sure……Maybe this pipe is of the vintage that it now needs to be replaced.”

Most analysts and industry sources say the fallout from the El Paso tragedy is just beginning. “FERC has said they’re concerned about what this is going to do to the certificate process. Every time we have a pipeline project proposed, there’s going to be a big debate on this stuff. If you’re going to block a pipeline, it [the El Paso explosion] is one more thing to throw out there…..This gives them [especially landowners] a little more ammunition,” said INGAA’s Halvorsen. In fact, a landowner group in Wisconsin last week cited the New Mexico tragedy as further reason to block the proposed Guardian Pipeline.

Also, the pipeline industry is going to see Congress pass a pipeline safety reauthorization unlike anything it’s seen before, observers said. “I think you will very definitely have a very strong pipeline safety bill passed and signed into law [this year]. I don’t think there’s any doubt in that,” Halvorsen noted. When Congress reconvenes in September, he said he expects to see more hearings on the issue in both the House and Senate (see Daily GPI, Aug. 22).

Gerard said NTSB’s Hall and Kelley S. Coyner, head of DOT’s Research and Special Programs Administration, discussed the issue with El Paso Natural Gas President John W. Somerhalder II last week. “…[T]his tragic accident further dramatizes the need to get this legislation passed in this Congress. I know they talked to Mr. Somerhalder about the importance of his supporting passing that legislation,” she noted.

“This just sadly proves why Congress needs to act as soon as it returns [on Sept. 5] to pass the Pipeline Safety Improvement Act before any more innocent lives are taken,” said a spokeswoman for Sen. John McCain (R-AZ).

In June, Chairman McCain’s Senate Commerce Committee voted out the Pipeline Safety Improvement bill that would, among other things, give states inspection and oversight authority over interstate pipelines; require interstate pipelines to consult with states about their integrity plans; create stiffer penalties for pipeline safety transgressors; and offer protection to whistle-blowers who report pipeline violations. McCain proposed the aggressive safety bill following the product pipeline explosion in Bellingham, WA, that killed three in June 1999.

“McCain has always been determined to pass this bill this year, but this obviously sadly strengthens that resolve,” she said. He “will make a determined effort for this to happen,” but whether it’s brought up for a vote on the Senate floor will be up to Senate Leader Trent Lott (R-MS), the McCain spokeswoman said. Pipeline safety legislation “is not as far along in the House as it is in the Senate,” said Halvorsen, because two committees share jurisdiction, but he believes they are “poised to…..do something” soon.

Locally, Carlsbad Mayor Gary Perkowski said that he wanted to find out what happened to keep it from ever happening again. That reaction was echoed by New Mexico Gov. Gary E. Johnson. “I have a lot of questions. What is the reliability of these pipelines? What went wrong? Was it preventable?”

El Paso last week was working with family members to take care of their immediate needs, including hotel accommodations, food, travel arrangements and medical treatment. The company also was providing additional services as needed.

“This is a tragic accident and our heartfelt condolences go out to the families involved,” said El Paso Energy President William Wise. He said the company was working with the NTSB “to investigate diligently all matters surrounding this accident and to establish its cause as quickly as possible.”

Prior to the explosion on El Paso, only one death occurred in the 40 transmission pipeline accidents that were reported between Jan. 1 and June 30 of this yea, according to the OPS. Fourteen were caused by either external or internal corrosion; 11 were damaged by outside forces; three were due to construction or material defects; and 10 were unknown. Eleven people had been injured through June.

Susan Parker, assisted by NGI’s news and price survey staff

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