Federal Fracking Initiatives Starting To Gel; PHMSA Reforms Uncertain; DOE Allowing More LNG Exports

July 2011, Vol. 66 No. 7

Future of PHMSA regulatory reform efforts uncertain
The American Gas Association gave a rhetorical raspberry to the Obama administration's ballyhooed 21st Century regulatory reform agenda announced in late May. Federal regulatory agencies will be re-examining current rules to see whether they are still justified.

The Pipeline and Hazardous Materials Safety Administration (PHMSA) is taking a non-committal approach to the AGA's request that it incorporate the latest version of ASTM D2513-09a Standard Specification for Polyethylene (PE) Gas Pressure Pipe, Tubing, and Fittings into its pipeline standard, which now cites the 1999 and 1987 versions of the ASTM standard.

"Operators cannot take advantage of the properties of modern plastic pipe with a standard that is decades old," says Christina Sames, vice president, operations and engineering, AGA. "The use of this obsolete standard is inconsistent with the stated goal of Transportation Secretary LaHood to modernize the nation’s pipeline infrastructure."

In its response to the AGA request, PHMSA said it will look for ways to address the AGA concerns "in the safest and most efficient manner possible." An AGA official says his group is not satisfied with that response.

PHMSA's somewhat un-ambitious regulatory reform agenda -- it responded in a non-committal manner to many industry requests –seems to contrast with the more muscular reactions of other agencies, all of whom were responding to President Obama's initial Executive Order issued on Jan. 18, called “Improving Regulation and Regulatory Review.” It stated that: "Some sectors and industries face a significant number of regulatory requirements, some of which may be redundant, inconsistent or overlapping." He ordered all federal agencies to promote "simplification and harmonization."

DOE allows wider exports of domestic gas as LNG
With domestic supplies of natural gas overwhelming domestic demand, LNG terminals -- in a dramatic reversal from just a few years ago -- are looking to build liquefaction facilities and export, not import. Evidence of that turnaround is Department of Energy approval of the first such LNG export application -- albeit conditionally -- from Sabine Pass Liquefaction LLC, on May 23. Sabine Pass, owned by Cheniere Partners, will not export liquefied domestic gas until at least 2015, if then. But the DOE's go-ahead is the first time the department has allowed a domestic terminal to export U.S. gas to countries with which the U.S. does not have a Free Trade Agreement.