PHMSA Proposed Regulations Will Have Big Impact on Pipeline Operators

Posted by James Moore on Friday, July 29, 2016

Pipeline sign in cornfield

In April of this year, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a notice of proposed rulemaking (NPRM) that would significantly modify and add to the current regulations set forth by 49 CFR Part 192 (Part 192). Four years in the making, the NPRM is the result of directives from Congress in the 2011 Pipeline Safety, Regulatory Certainty, and Job Creation Act. The NPRM covers a broad range of topics and proposes more stringent regulations on records verification, Maximum Allowable Operating Pressure (MAOP) verification, and integrity management, among others. It also proposes to change the definition of gathering lines. Below is a brief summary of a few of the more notable topics in the NPRM. If you enjoy reading legal documents, you can check out the NPRM in its entirety here.

Material Records Verification

The NPRM proposes to add a new section to Part 192 – §192.607 – that will require all transmission line operators to verify that their material records are “verifiable, traceable, and complete” for material installed in High Consequence Areas (HCA) or class 3 or class 4 locations. The records must include (among other properties) the original material test reports that verify the yield & tensile strength of the steel. If these records are unavailable, the operator may be required to excavate the lines at specified intervals and perform tests to substantiate the strength of the steel. It’s possible that these tests will require spool cut-outs, consequently resulting in shutdowns and disruption of service; however PHMSA will entertain the idea of non-destructive testing if the methods are backed by metallurgical experts.

Other required records, some of which appear to apply more broadly than lines within HCA or class 3 & 4 locations, include class location determination documentation (including reports that describe methodology used in completing the class location determination), original pipe design information (hoop stress calculations, external load analysis, etc.), manufacturing standards, and pressure ratings of components. According to the NPRM, operators have 180 days to submit a material verification plan once the final rule is passed.

MAOP Verification

Similar to the verification of material records, the proposal for MAOP verification mostly applies to transmission lines in HCA and class 3 or 4 locations. The proposal would require operators to re-establish the MAOP where records are not verifiable, traceable, and complete. These records include pipe specifications and mill test reports, class location design factors, and pressure test records. One of the major points of this proposal is that it will also apply to certain lines where the MAOP is established under the grandfather clause (§192.619(c)) – MAOP validation through pressure testing or other measures will likely be required of these lines. According to the NPRM, operators must submit an MAOP verification plan within one year of the final rule. Of the locations that meet the conditions requiring MAOP verification, action must be taken on 50% of the mileage within eight years of the final rule, and 100% of the mileage within 15 years of the final rule.

Definition of Gathering Lines

The NPRM proposes to dismiss the use of American Petroleum Institute (API) Recommended Practice 80 (RP 80) as the standard for defining gathering lines vs. non-regulated production lines. I won’t get into the details on the proposed new definition here, but it’s safe to say that it would result in the gathering function beginning much closer to the well pad, and likely even on the well pad where multiple wells are drilled (which is the case in the majority of shale well pads.) This would result in a considerable portion of previously exempt production lines to now fall under the scope of Part 192 regulations. The NPRM also proposes to repeal the long-standing exemption for rural (class 1), low-pressure gathering lines, and to extend federal reporting requirements to all gathering lines, whether regulated or not.

So what’s next if you’re a pipeline operator?

Several topics in the NPRM, particularly those summarized above, are facing heavy industry opposition and are being dismissed as unreasonable and overly-prescriptive. PHMSA’s Regulatory Impact Analysis indicates the benefits of the NPRM to far outweigh the costs, but questions have been raised to the validity of the data used in the analysis from industry members. The comment period for the NPRM has closed, and assuming PHMSA will take submitted comments into account, it’s likely the final rule will be less stringent than what is proposed in the NPRM, but to what extent will not be known, until the final rule comes out, which is expected in early 2017.

It will be a few months until the final rule comes out, but now is a good time to start preparing for these inevitable changes. It is safe to say that some action of varying degrees will be required by all transmission line operators, and in many cases, retroactive measures will be required in order to operate within compliance. The NPRM is long and complex, and is a lot to digest given the short timeframe; I’ve only covered the tip of the iceberg in this summary. We have read through the NPRM (and the 549 page advanced release) and will stay on top of the changes as they develop – so if you don’t already have a plan in place, we’d be happy to sit down with you to go over these regulations and help you prepare accordingly.

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Categories: Oil & Gas Infrastructure

Tagged: Pipelines  |  Natural Gas  |  Engineering  |  Regulations

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