May 2014, Vol. 69 No. 5
Washington Watch
Legislation Would Eliminate DOE Approval Of LNG Exports
There appears to be bi-partisan support for legislation allowing LNG exports to more countries without the need for Department of Energy approval.
Bills introduced in March by both Republicans and Democrats in the House and Senate, seek to ride political momentum gained from Russia’s takeover of Crimea and its use of natural gas deliveries as a threat to the new Ukrainian government.
Close-to-identical bills proposed by Rep. Cory Gardner (R-CO) and Sen. Mark Udall (D-CO) would allow U.S. companies to export LNG to countries in the World Trade Organization without waiting for the Department of Energy to approve those exports, as is now required. Currently, only exports to countries with which the U.S. has a free trade agreement (FTA) can be made without DOE approval.
The U.S. has FTAs with 18 countries. The WTO has 159 members.
Senate Republicans have a somewhat less ambitious bill than Udall’s. Sens. Lisa Murkowski (AK), John Barrasso (R-WY) and John Hoeven (ND) proposed an amendment to the unemployment insurance extension bill on the Senate floor in early April which requires the DOE to automatically approve applications to export LNG to Ukraine, Japan and NATO member countries.
The bills are not only a response to Russia’s use of natural gas as political leverage over Ukraine, and potentially Europe, but also a reaction to the slow rate of DOE approvals of LNG exports, particularly those to non-FTA countries, which requires the Energy Department to determine that the exports are in “the public interest.” Exports to FTA countries are automatically classified that way, and are approved pro forma by the DOE.
API Considers New Voluntary Recommended Practice For Pipeline Safety
An American Petroleum Institute (API) advisory committee released a draft “recommended practice” describing a safety management system (SMS) for natural gas and liquid pipelines at a meeting sponsored by the Pipeline and Hazardous Materials Safety Administration (PHMSA) in late February. The API was taking comments through April 11 and will approve RP1173, in some form, later this year.
Ron McClain, president, products pipelines at Kinder Morgan, chaired the committee which worked over the past year and a half to draft RP1173. Representatives of liquid and gas companies sat on the committee, as did association executives such as Scott Currier, director of operations, safety and integrity, INGAA. Peter Lidiak, pipeline director at the API, is coordinating the integration of comments into a final RP1173.
The National Transportation Safety Board (NTSB) recommended the API develop a pipeline safety system as part of its report in 2012 on the 2010 Marshall, MI, pipeline spill where an Enbridge liquids pipeline burst spilling 1 million gallons of oil into the Kalamazoo River. The NTSB attributed systemic flaws in operational decision-making to a “culture of deviance.” The NTSB also cited the PHMSA’s weak regulations regarding pipeline assessment and repair criteria as well as a cursory review of Enbridge’s oil spill response plan as contributing to the magnitude of the accident.
Besides urging the API to adopt a safety management standard similar in scope to the API’s existing RP750, Management of Process Hazards, the NTSB also urged the PHMSA to revise federal regulations pertaining to assessment of pipeline crack defects. A year after those Enbridge report recommendations were made, then PHMSA Administrator Cynthia Quarterman wrote to NTSB Chairman Deborah Hersman that PHMSA preferred to incorporate current industry consensus standards into current federal regulations rather than undertaking an overhaul of the regulations. She said PHMSA was developing a proposed rule (NPRM) called “Pipeline Safety: Safety of On-Shore Hazardous Liquid Pipelines” to be published at the end of calendar year 2013. However, it has not been published yet.
There is a chance PHMSA would reference RP1173, once adopted by the API, in federal regulations, meaning companies could be fined for not adhering to the elements in its 10 categories. Or PHMSA could develop a new federal standard based on the recommended practice. “The indication from the PHMSA is that they will wait to see how operators employ RP1173 before deciding whether to make it part of federal regulations,” explains Lidiak.” But making it a federal standard is never off the table.”
RP1173 provides 10 elements which pipeline companies are expected to use as guidelines for measuring their current programs. Those elements are things such as leadership & management commitment, stakeholder engagement, risk management and operational controls.
Obama Administration Methane Strategy Light On Potential Regulation
The Obama administration methane strategy announced in March treads lightly on potential future regulation, especially with regard to the natural gas sector, which is already covered by a 2012 Environmental Protection Agency (EPA) rule mandating reductions in volatile organic chemicals (VOCs). Methane is not a VOC, but the EPA says gas operations will reduce methane flaring as a side benefit of the new control technologies required by that rule, to the tune of 33 million tons of carbon pollution per year. In 2012, methane equivalent to 127 million tons of carbon dioxide pollution was emitted from production, processing, transmission, storage, and distribution of natural gas. Thirty-two million tons were emitted from production and refining of oil.
The White House says it may turn to the EPA again for further regulatory help reducing methane emissions, but such action appears destined to affect the oil side of the business. Any action will be based on a series of white papers on technical issues which will be produced this spring. They will cover emissions and control technologies that target both VOC and methane – with particular focus on oil and co-producing wells, liquids unloading, leaks, pneumatic devices and compressors.
The Department of Interior has already opened a slow-moving regulatory effort to revise Bureau of Land Management regulations related to flaring of methane on federal lands. The current regulation was published in 1980. It is clearly out of date. But the BLM has been working episodically on this issue for three years and has not yet produced a regulatory document, nor is it likely to do so anytime soon. Steven Wells, the BLM official in charge of the issue, says, “We are early in the process, but it has the eye of the administration, so I presume we will need to spend time on it with our staff.”
Other long-term, non-regulatory projects included in the methane strategy include revamping the Natural Gas STAR program at the EPA. It is a voluntary program, initiated in 1993, signed up for by all elements of the natural gas industry, from producers, to distributors to transmission companies. The Natural Gas STAR Program offers technical documents covering a wide range of recommended technologies and practices that have various implementation costs and anticipated payback periods. The Obama methane plan promises a “bolstering” and “enhancing” of STAR, leaving the impression the program’s accomplishments have been less then stirring.
The methane strategy also talks about a “proposed” new, $4.7 million DOE program to speed development of technologies for leak detection and monitoring, pipeline leak repair without having to evacuate gas from the pipelines, smart pipeline sensors, and compressor controls. The program will be aimed at accelerating the commercialization of advanced pipeline inspection technologies.
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