August 2016, Vol. 71 No. 8
Washington Watch
Pipeline Safety Bill Becomes Law; New Proposed Regs Become More Significant
The Environmental Protection Agency’s (EPA) new rule requiring transmission pipelines to plug methane leaks at compressor stations includes some softening of earlier-proposed requirements, but will still impose substantial costs as companies move to repair leaks at new or modified compressors and controllers. The rule was issued under the Clean Air Act, and represents the Obama administration’s next step in limiting greenhouse gas emissions, of which methane is the most environmentally hazardous. Natural gas pipeline companies will have to both reduce methane emissions and plug equipment leaks when they become apparent.
In terms of concessions that the EPA made, it decided to not finalize requirements for pneumatic pumps used at compressor stations, because available information was not reliable. In a statement, Don Santa, president and CEO of the Interstate Natural Gas Association of America (INGAA), said that while he is disappointed the EPA proceeded with the rule, he was pleased “that EPA listened to our concerns about the time frame for repairs at compressor stations.”
Kyle Isakower, vice president of regulatory and economic policy, American Petroleum Institute, said, “It doesn’t make sense that the administration would add unreasonable and overly burdensome regulations when the industry is already leading the way in reducing emissions. Imposing a one-size-fits-all scheme on the industry could actually stifle innovation and discourage investments in new technologies that could serve to further reduce emissions.”
Pipelines must use a technology known as optical gas imaging to conduct a leaks survey. Optical gas imaging equipment uses a special camera to “see” emissions of methane and VOCs. Owners/operators may use Method 21 as an alternative to optical gas imaging. For new and modified compressor stations, operators must conduct the initial survey within one year after the final rule is published in the Federal Register, or within 60 days of the startup of a new or modified compressor station, whichever is later. Monitoring must be repeated quarterly following the initial survey.
Santa said the INGAA remains very concerned about EPA’s insistence on quarterly monitoring at compressor stations. Moreover, he is disappointed that the value of EPA’s decision to allow a more economic leak-detection method – Method 21 – was undermined by the very low leak threshold of 500 ppm.
“The rule does nothing to integrate new scientific data on methane emissions from this sector, which clearly shows that very few large leaks account for the vast majority of emissions,” added Santa. “Rather, EPA accepted a leak detection and repair approach, which is much more costly and less effective than the directed inspection and maintenance (DI&M) approach proposed by INGAA.”
The EPA does not break out what it thinks will be the cost of compliance to the transmission industry. Rather, its estimate includes a number of sectors within the oil and gas industry, such as hydraulically fractured gas well completions and equipment leaks at natural gas processing plants. Those sources have emission limits for volatile organic chemicals, but not GHGs. That said, the total capital cost, not reduced to account for methane capture, would be $250 million in 2020 and $360 million in 2025.
Faster Approval Of LNG Exports Close To Passage
The House passed a bill (H.R. 4909) which would require the Department of Energy to make a decision on an application to export liquid natural gas (LNG) within 30 days after either of two federal agencies completes an environmental review of the project. Those agencies are the Federal Energy Regulatory Commission and the United States Maritime Administration. The provision was dropped into a much larger, must-pass bill called the Fiscal 2017 National Defense Authorization Act (NDAA). It passed the House by a vote of 277-147 with bipartisan support, which bodes well for its prospects in the Senate.
The Senate will almost certainly pass a fiscal 2017 defense authorization bill. It is not clear whether the LNG provision will be included in that bill. If not, it will be an issue for the House-Senate conference committee. But the Senate has already passed an energy bill (S. 2012) which includes an amendment that would force the DOE’s hands after 45 days.
The LNG export applications at issue are those for export to countries with which the U.S. has no free trade agreement. Where such agreements do exist, the DOE essentially approves the export application automatically. But applications to non-FTA countries have often been held up for years at the DOE.
“U.S. LNG exports will create American jobs, significantly strengthen the global energy marketplace and bolster our strategic alliances,” said American Petroleum Institute Executive Vice President Louis Finkel. “Action by the U.S. House of Representatives to approve LNG exports provisions as part of the defense authorization bill further cements the critical role U.S. energy plays at home and abroad.”
Domestic manufacturers have opposed the speeding up of LNG export approvals to non-FTA countries for fear that some of the cheap gas they are enjoying will be diverted abroad, where it attracts higher prices.
Electronic Reporting To OSHA For Utilities, Construction
The new requirements from the Occupational Safety and Health Administration (OSHA) just keep coming. A few months ago, it was the silica final rule. Now the agency says companies will have to send injury and illness reports which they already prepare to the agency in electronic form. The rule has different requirements depending on a company’s size. Businesses with 250 or more employees must send their Forms 300, 300A and 301 to OSHA or OSHA’s designee on an annual basis. Smaller companies with 20 or more employees but fewer than 250, in certain designated industries, will have to electronically submit information from Form 300A. Those designated industries include utilities and construction.
There will apparently be two options for reporting. One would be an OSHA developed web-based reporting system where companies go online and fill out forms. The other would be companies using the same web portal but transmitting forms they have already prepared with their own software. The initial reporting deadline is Jan. 1, 2017, so there is a lot to be done to clarify these data reporting issues in the next few months.
OSHA estimates that this
final rule will have economic costs of $15 million per year, including $13.7 million per year to the private sector, with costs of $7.2 million per year in electronic submission for affected establishments with 250 or more employees, and $4.6 million in electronic submission for affected establishments with 20 to 249 employees in designated industries. With respect to the anti-discrimination requirements of this final rule,
OSHA estimates a first-year cost of $8 million and annualized costs of $0.9 million per year. UC
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