A major interstate natural gas pipeline group on Tuesday called on a House subcommittee to consider granting pipelines an antitrust waiver so that they can coordinate their integrity assessments and repair activities to avoid spikes in already-high gas prices and service disruptions.

A report prepared by The INGAA Foundation in 2002 found that the congressionally mandated pipeline inspections of high-density population areas and less-risky areas over a 10-year period would raise consumer gas prices by about $1 billion per year over the period, said Paul Koonce of Dominion Energy, speaking on behalf of the Interstate Natural Gas Association of America (INGAA).

These costs are not associated with the actual cost of inspections and repair activities, he said during a hearing of the House Energy and Commerce’s subcommittee on energy and air quality, which reviewed the impact of the pipeline safety reform law enacted by Congress in late 2002. “Rather, the study looked only at the ‘costs to consumers due to deliverability constraints’ and their effect on the natural gas commodity markets downstream.”

One way to minimize these unintentional price spikes is to allow the coordination of inspection and repair activities among various competing pipeline operators, Koonce told lawmakers. He asked the House panel to consider removing the antitrust prohibition against such coordination.

Without a waiver, Koonce cautioned that “it is possible and even likely that multiple pipelines serving a given market could be down for inspections/repairs at the same time, causing significant price increases and even service disruptions for that market.”

The waiver is particularly important given that demand for gas is high nearly all year round now, he said. “In past years, pipelines were able to perform most maintenance and repair activities during the warm months of the year, when natural gas demand was relatively low…In today’s natural gas market, however, demand not only peaks during the cold winter months, but also during hot summer months, due to the increase use of natural gas to generate electricity. This means that there are fewer weeks of the year when maintenance and repair can take place without impacting customers in some manner.”

Koonce also stressed the need for federal and state agencies involved in permitting pipeline inspection and repair activities to do so on a coordinated and expedited basis. “A signal from Congress as to the importance of approving these permits in a timely manner will be critical to the success of the Pipeline Safety Improvement Act of 2002,” he noted.

“We anticipate that our industry will be required to make significant modifications to our pipeline facilities over the next eight years in order to accommodate internal inspection devices. The construction of smart pig launchers and receivers, for example, as well as replacing pipeline bends, segments and valves that cannot accept internal inspection devices may require permits from federal and state authorities.”

In 2002 the Federal Energy Regulatory Commission, the lead agency for approving pipeline projects, led an effort to create and sign a memorandum of agreement (MOU) between all of the federal agencies associated with any permitting activities for pipelines, including the Corps of Engineers, the Environmental Protection Agency and the U.S. Fish and Wildlife Service. This MOU commits the agencies to concurrent review of a pipeline construction application, Koonce said.

“We are hopeful that this MOU can also be applied to integrity management-related activities,” he noted. The MOU does not include state agencies, who Koonce said “are often the most intransigent in terms of approving permits on a timely basis.”

The pipeline safety law requires each gas pipeline operator to carry out a risk analysis and develop an integrity management plan for pipelines in high-consequence areas (HCAs) by Dec. 17 of this year. The law also required operators to begin integrity assessments on their pipelines in mid-June. The “highest priority” fifty percent of an operator’s HCAs must be inspected within five years (by December 2007), and the remaining 50% must be inspected in the subsequent five years (by December 2012).

An INGAA survey has found that gas pipelines are inspecting pipe segments located in both HCAs and non-HCAs, according to Koonce. For example, one pipeline, in carrying out inspections on about 10 miles of pipe located in HCAs, also had to inspect 250 miles of non-HCA pipe adjacent to those sections, he said.

“The reason for these assessments going beyond the HCA requirement is simple. The vast majority of our pipelines are going to be inspected with internal inspection devices, commonly referred to as ‘smart pigs,'” which require special launcher and receiver facilities to be built to both introduce a smart pig into a pipeline and remove it at some point downstream, Koonce noted.

“The most practical place (and often the only place) to construct these launcher/receiver facilities are at compressor stations, which are typically located about 75 to 100 miles apart along a pipeline. The pipeline segment between compressor stations may have a few, discrete miles of HCAs, but in order to inspect the five or six miles of HCA pipe, the entire 75 to 100-mile segment between the stations will be inspected by the smart pig.”

INGAA estimated that about 6% of total natural gas transmission pipeline mileage is actually located in HCAs, but in order to assess the integrity of this 6% of pipeline mileage, about 60% to 70% of total interstate pipeline mileage will have to be inspected.

An official with the Pipeline Safety Trust called on a House subcommittee to require all natural gas and liquid transmission pipelines to undergo inspections within 10 years, not just those located in HCAs.

Many believe that the pipeline safety law passed by Congress in 2002 mandated inspections of all pipelines over a 10-year period, but that wasn’t the case, said Breean Beggs, a board member of the trust, a clearinghouse for information about pipeline safety nationwide, and an advocacy group for safety improvements.

“Because the [law] only requires integrity assessments in high-density population areas, and because [the Office of Pipeline Safety’s] definition of such areas only includes an estimated 7% of the total mileage of gas transmission lines, only a small percentage of pipelines will ever be tested,” he testified.

Based on the OPS’s definition of high-consequence areas (HCAs), Beggs said pipeline inspections won’t be required in the Carlsbad, NM, area, where El Paso Natural Gas’s South Mainline ruptured in August 2000, killing 12 people and ultimately costing consumers and estimated $17.5 million a day.

“Because of the narrow definition of high-consequence areas, many of them [pipe threats] will not be found in a planned methodical fashion by inspection and repair. Instead, they will be discovered the hard way by endangering communities with pipeline failures and abruptly depriving downstream communities of their energy supplies. Congress needs to address why there is no urgent requirement to find and remedy these immediate threats as soon as possible,” he said.

“Many in Congress seem to think they passed a bill that requires all pipelines to eventually get inspected. That was not the way the actual law got written, but if that was Congress’s intent then it is time for them to go back and correct this massive oversight,” noted Carl Weimer, executive director of the trust, in a press statement.

The Pipeline Safety Trust was begun in the summer of 2003 with $4 million from a court settlement stemming from the 1999 Olympic Pipe Line explosion near Bellingham, WA. The families of two young boys killed in the blast started the trust.

But the industry’s safety record has improved since the El Paso and Olympic blasts, said Koonce. In 2002 and 2003, there were no fatalities or injuries associated with accidents on interstate gas pipelines in HCAs. Four accidents occurred that resulted in injuries to a pipeline employee and three pipeline contractors during this period, but they occurred on gas pipeline segments located in rural areas.

On a related issue, Koonce said INGAA was opposed to the Department of Transportation’s (DOT) proposal to merge the OPS with the Federal Railroad Administration (FRA). “Our concern is that the OPS would lose its focus and effectiveness if it were to be subsumed into the much larger FRA…OPS has made great strides in improving its performance over the last five years.”

Instead, INGAA supports the creation of a new Pipeline Safety Administration at DOT, as proposed by House Transportation and Infrastructure Chairman Don Young (R-OK) in legislation introduced in June.

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