Expedited permitting to carry out repairs on natural gas pipelines is the biggest challenge facing pipe operators as they try to comply with the Office of Pipeline Safety’s (OPS) integrity management rule, an industry official representing gas distributors and municipal utilities told Senate lawmakers Tuesday.

The integrity rule, which was issued by the Department of Transportation’s OPS earlier this year, requires repairs to be completed either immediately or within one year after discovering a problem on a pipeline. If a repair is not completed by the deadline, the pipe operators must reduce pressure and throughput on the affected line by 20% until the repair can be completed.

“We are concerned that widespread, long-term pressure reductions would restrict supply and drive prices up,” said Earl Fisher of Atmos Energy Corp. on behalf of the American Gas Association (AGA) and the American Public Gas Association (APGA) during a Senate Commerce Committee hearing examining the new integrity management rule.

“Our members estimate they must perform about 110,000 integrity inspections requiring excavation on intrastate pipelines (five inspections per mile on average) over the next seven years. That means there will be about 15,000 inspections per year requiring a test hole…We do not yet know what percentage of these will require further excavation to repair the line,” he noted. Fisher said each excavation will require a permit whether or not a pipeline is repaired or replaced.

“The bottom line is that there are too many of these projects to use the traditional, time-consuming process for obtaining individual permits for each and every site. Congress wisely recognized this should not be allowed to happen and…directed federal agencies to develop a streamlined process to ensure that permits are given in time to allow timely repairs” on pipelines.

Federal agencies have made some progress in streamlining their permit process, Fisher said. In December 2002, FERC and other federal agencies entered into a memorandum of understanding (MOU) to coordinate and accelerate the way to process permits for the construction of new interstate gas pipelines, as well as permits for maintenance and repairs of interstate pipes. Although AGA supported this move, “the 2002 FERC MOU does not cover integrity repairs on intrastate pipelines because they are not certificated by FERC,” he noted.

The MOU addresses the need to expedite integrity repairs that must be done “immediately” under the integrity rule, and it sets out the “general framework for authorizing other repairs to proceed without site-specific permits,” Fisher said. “However, we are very concerned that there are no details in the MOU regarding how this will work.”

Rather, the MOU delegates this “difficult and essential task” to an interagency task force chaired by the White House Council on Environmental Quality. “This group has little time remaining to develop a working process to streamline repair permits. Our members are on a tight schedule for beginning their integrity testing and first phase of repairs, and they will need timely authorization to begin this important public safety work.”

The OPS integrity rule requires inspections of interstate and intrastate gas pipelines located in the riskiest high-consequence areas within five years and less risky areas in next five years, as well as re-inspections every seven years. High-consequence areas for gas pipelines generally are considered high-density population areas.

The nature of utility-owned gas pipelines requires that more than half of them to be inspected using direct assessment methods under the integrity rule, Fisher said. Direct assessment is an alternative to smart pigging or pressure testing. It comprises a variety of screening and examination techniques to locate and identify potential problems in a pipeline, such as corrosion.

“Direct assessment is estimated to cost between $7,000 and $15,000 per mile of pipeline examined, not including any necessary excavations. The latter can cost from $2,500 to $250,000 per excavation, depending on location,” he noted.

A number of gas pipeline operators already have begun implement the integrity rule and others will start their assessment by the June 17 deadline, according to Fisher. He estimated that about 30,000 miles of pipelines operated by gas distribution utilities will have to be assessed under the integrity rule.

In total, “for gas distribution utilities, estimated costs of compliance with this rule will exceed $3 billion in 20 years, not including integrity management pass-through costs from their gas transmission suppliers upstream, repairs, modifications, and changes in operations that may be necessary to maintain the reliability of gas supply in the face of large scale pipeline inspections and testing.”

Lastly, Fisher expressed concern over the Department of Transportation’s (DOT) proposal to move OPS into the Federal Railroad Administration. “Indeed, we cannot understand the rational for wanting to make any move that could jeopardize [the] positive momentum” at the OPS in implementing the pipeline integrity rule and ensuring increased pipeline safety, he said.

If the agency is doing so well, Sen. Frank Lautenberg (D-NJ) questioned why then was the DOT considering re-locating OPS. OPS spokeswoman Patricia Klinger said the proposal to move OPS to the Federal Railroad Administration was first made either in late December or in early January. “My understanding is that it is still being considered,” she told NGI.

The Bush administration and Capitol Hill “will shape and guide the process” with respect to the proposed reorganization, she noted.

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