Major New Pipeline Safety Program Being Readied By PHMSA

December 2013, Vol. 68 No. 12

The federal pipeline safety agency is opening up a new front in its efforts to improve gas and oil pipeline safety. The Integrity Verification Process (IVP) previewed this summer by the Pipeline and Hazardous Materials Safety Administration (PHMSA) would be an "add-on," and a very costly one at that, to the existing Integrity Management (IM) program which obligates pipelines to test segments in "high consequence areas (HCAs)." There are 18,000 miles of pipeline in HCAs.

This IVP would cover nearly 91,000 gas transmission miles (about 30 percent of the total interstate mileage), including some segments already covered under the IM program. But the brunt of those miles would be in a new classification called "Moderate Consequence Areas (MCAs)" which have not been included in the IMP. The idea is for interstate companies to verify characteristics such as maximum allowable operating pressure (MAOP) and construction materials for what are called "grandfathered" pipelines – i.e. those pre-1970 for whom MAOP was never established.

Despite it being one of the biggest regulatory programs being developed by the federal government, the IVP has flown under the congressional radar. That may be in part because neither interstate nor intrastate gas nor hazardous liquid companies have been publically commenting or questioning the proposed new regulations – at least not yet. A final rule appears to be a few years off. But when that final rule arrives, "the integrity management program will probably pale in comparison," says one industry insider.

Eric Amundsen, vice president, technical services, Energy Transfer Partners, says, "The rule addressing MAOP and grandfathered pipe will be very significant. It is one we are watching very closely, and we plan to be very pro-active about it." About 5,000 miles of ETP's total 18,000 would fall under the IVP rule.

The American Gas Association has estimated that testing will cost its member $27.1 billion, three times the cost of the original intrastate IM program. Tal Centers, Jr., division vice president for System Integrity & Operations Support at Center Point Energy-Gas Operations, says the testing will take an "historic effort."

There is no estimate of what that requirement would cost the interstate natural gas industry. But the industry has been throwing around informal numbers in the neighborhood of $50 billion. The final cost will depend on the intricacies of the testing requirement.