 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
Reauthorization of the Natural Gas Pipeline Safety Act and the Hazardous Liquid Pipeline Safety Act
Subcommittee on Energy and Air Quality
Mr. William J. Haener
Mr. Chairman and Members of the
Committee, my name is William J. Haener. I
am Executive Vice President -Natural Gas, of CMS Energy Corporation and
President of CMS Gas Transmission, its pipeline and field services division. CMS Energy Corporation has annual sales of more
than $6 billion and assets of about $15 billion throughout the U.S. and around
the world with businesses in electric and natural gas utility operations;
independent power production; natural gas pipelines, gathering, processing and
storage; oil and gas exploration and production; and energy marketing, services
and trading. CMS Panhandle Companies, a unit of CMS Gas
Transmission, operates over 10,800 miles of mainline natural gas pipeline
extending from the Gulf of Mexico to the Midwest and Canada.
These pipelines access the major natural gas supply regions of the
Louisiana and Texas Gulf Coasts as well as the Mid-continent and Rocky
Mountains. The pipelines have
a combined peak day delivery capacity of 5.4 billion cubic feet per day and 85
billion cubic feet of underground storage facilities. In addition, Consumers
Energy, an affiliate of CMS Gas Transmission, owns and operates a local
distribution company and an intrastate pipeline and storage company located in
Michigan. I
appreciate this opportunity to appear
at this oversight hearing before the Subcommittee today on behalf of the
Interstate Natural Gas Association of America (INGAA).
INGAA is the trade association that represents interstate natural gas
pipelines in the United States, the inter-provincial pipelines in Canada and
PEMEX in Mexico. These pipeline
systems transport 90 percent of the natural gas consumed in the United States
from the producing areas to the local gas companies. Millions
of Americans rely on clean, efficient natural gas to fuel homes and workplaces,
with no thought about the vast network of pipelines that criss-cross the country
transporting this abundant source of clean energy from the wellhead to the
burner tip. The companies that
build and operate interstate natural gas pipelines have created the safest mode
of transportation today-safer than highway, rail, aviation and marine
transport. This
record is the product of a great deal of hard work and dedication to
continuously improve the performance of our industry.
While the interstate natural gas pipeline industry has had only 31 deaths
and 91 injuries in the last sixteen years, we need to keep working to have none.
The interstate natural gas pipeline industry has a long-standing
commitment to target zero failures as evidenced
by our financial and physical investments not only in the facilities and the
people that operate them, but to research and development as well.
We have supported research and development of new technologies to help to
improve safety for over sixty years mainly through two research groups, the
Pipeline Research Council International (PRCI) founded by the natural gas
pipeline industry in 1952, and the Gas Technology Institute (GTI), formerly GRI,
which was organized in the '70s. We have voluntarily spent more that $100
million in the last five years, mainly through these organizations in the
development of improved technologies, materials, industry consensus standards
and operation and maintenance practices to improve safety.
I
want to commend this Subcommittee for holding this oversight hearing on pipeline
safety. I would like to give this
Subcommittee some background on our industry regarding pipeline safety as well
as an update on recent developments regarding integrity management, pipeline
security and other actions taken either by OPS or the interstate pipeline
industry over the last few years. BACKGROUND From
the inception of the natural gas pipeline industry in the 1930s to current day,
pipeline companies have utilized consensus standards to improve the level of
pipeline safety. In 1968, Congress
paved the way to adopting and augmenting these standards by passing the Natural
Gas Pipeline Safety Act and establishing the Office of Pipeline Safety (OPS). Currently,
natural gas pipeline operators monitor and control safety in many ways.
These safety measures include, but are not limited to the use of high
quality pipelines materials and corrosion coatings, the use of cathodic
protection (a low voltage electric charge) to prevent corrosion of below-ground
pipelines, ground and aerial surveys to identify and report unusual activity or
to detect leaks through use of gas detectors or discoloration of plants and
grasses, hydrostatic pressure testing of new and existing facilities, the use of
internal inspection devices (smart pigs) and by following all of OPS's
prescriptive regulations. For
example, natural gas pipeline operators are required to constantly monitor the
area around the pipeline for changes in population density, a process commonly
known as class location analysis. These
categories of population density or "class locations" range from rural
(Class 1) to heavy urban (Class 4). Natural
gas pipelines are required to increase the level of safety of pipelines as the
population density around a pipeline increases. When these changes occur, the pipeline operator is required
to insure that the installed pipeline design characteristics are commensurate
with the new class location design requirements.
If it does not meet these requirements, the installed pipe is replaced
with new pipe with the appropriate design characteristics or the operating
pressure is reduced to increase the safety margin and the frequency of
inspections within the new class location is increased.
OPS has refined these regulations over the years as additional knowledge
is gained. I
also want to assure you that interstate natural gas pipelines' practices are
continually being inspected by OPS. As
an example, the Panhandle Companies pipeline systems have been inspected by OPS
nineteen (19) times, which required approximately
forty-eight (48) days over the last two years. PIPELINE
INTEGRITY RULE As
we have stated in our comments to OPS, INGAA and its member companies support
development of a natural gas pipeline integrity rule.
We are pleased that OPS has released a Notice of Proposed Rulemaking (NOPR)
on the definition of "high consequence areas" as an important component of
the natural gas integrity rulemaking process.
The comment period on this NOPR closed last week.
INGAA, as well as members companies and others, have provided what we
hope are constructive comments in an effort to insure that the rule is
practical, workable and enforceable. We
hope that we will see a NOPR on the integrity rule itself in April or May.
We would like to have this rulemaking process finalized sometime this
fall. While
integrity management has always been a key component of our business plan, the
interstate natural gas pipeline industry recognizes the need for a technical
standard with greater emphasis on risk analysis and sophisticated risk
assessment that will provide a comprehensive, systematic and integrated program
to further improve the safety of pipeline systems.
The standard should provide a consistent process that an operator of a
pipeline system can use to assess and mitigate risks in order to reduce both the
likelihood and consequences of incidents. It
should require documentation that the inspections, and any necessary follow-up,
have been performed. It should also
provide a method to enable an operator to allocate resources for prevention,
detection and mitigation activities that will result in improved safety and a
reduction in the number of incidents. Over
the past few years, the natural gas pipeline industry, along with the American
Society of Mechanical Engineers, the National Association of Corrosion Engineers
and others, has undertaken a number of technical initiatives to provide answers
and solutions to the engineering and scientific issues related to the integrity
process. After two years of
intensive work by a number of technical and scientific experts under the
auspices of the Gas Technology Institute, 20 reports have been issued that now
provide the technical basis for an integrity management standard. These reports have been shared with OPS and the state
pipeline safety regulatory bodies. The
American Society of Mechanical Engineers has just now issued a comprehensive
standard for natural gas pipelines regarding integrity inspections.
As OPS develops their integrity rule for natural gas pipelines, OPS can
chose to adopt this standard in whole or in part. During
the course of these initiatives, INGAA has assessed the effectiveness of our
present integrity management practices from three perspectives--scientific
analysis, impact on consumers and actual results.
As a result, INGAA has recommended to OPS that three alternative methods
be used to assess the integrity of pipeline systems on a periodic basis:
hydrostatic testing, use of internal inspection devices (smart pigs) and direct
assessment. Each of these methods
has advantages and disadvantages. For
example, although hydrostatic testing is a useful tool to prove structural
integrity, a pipeline must be taken out of service for a number of days and
sealed off during the test. Water
is pumped into the pipe and pressurized to approximately 125 percent of the
design operating pressure of the pipeline. This pressure is maintained for at
least 8 hours and the pipeline is checked for water leaks.
At the conclusion of the test, the water is released in a manner that
ensures safety and compliance with approved environmental requirements; the
pipeline is then dried and placed back in service. Internal
inspection devices or smart pigs provide another integrity assessment tool. They
have been in use over the last two decades. Smart pigs are large cylindrical vehicles containing
sophisticated sensors and data collection devices that measure the wall
thickness and internal geometry of the pipe.
The information a pig run provides is used to determine the structural
integrity of the pipe. Smart pigs
have a limited application because they can typically only be utilized in
pipelines with a constant inside diameter and they have difficulty traversing
around sharp bends. Much of the
industry's pipeline system was designed and constructed long before the
concept of smart pigging was developed. Such
pipeline systems contain reduced-sized valves and lack the facilities required
for launching and receiving smart pigs. Because of these restrictions, only
about 30 percent of interstate natural gas pipelines are designed or have been
modified to be piggable, i.e., capable of accommodating the passage of a smart
pig. Approximately 25 percent more
can be made piggable by adding launchers and receivers, i.e., the facilities
required to insert and remove a smart pig from the pipeline, and minor
modifications (we expect a great deal of this will be made piggable as a result
of the rule). Another 43 percent
can only be made piggable with very extensive modifications (changing out of
pipes, valves, bends, etc), while 2 percent cannot be pigged at all.
After modifications are made, the smart pigging of a pipeline can be
completed with the pipeline in-service and only requires a pressure reduction at
the time of inspection. Hydrostatic
testing and modifying a pipeline to make it "piggable" require that the
pipeline be taken out of service for a period of time (average 18 days for the
former and 30 days for the latter). The
third integrity assessment process is the direct assessment inspection process.
In this instance, electronic measurements of the pipeline--including data
from the cathodic protection system--are combined with statistical methods to
identify portions of a pipeline to be excavated and exposed.
The pipeline is visually inspected for loss of coating, external
corrosion, etc, measurements are made to detect the presence of internal
corrosion and other tests are performed. This
occurs while the pipeline remains in service, though often at a reduced
pressure. This avoidance of
pipeline downtime is a critical factor in many system operations. The
rule should permit pipeline operators to avail themselves of new technology as
it becomes proven and practical. New
technologies may improve an operator's ability to prevent certain types of
failures, detect risks more effectively or improve the mitigation of risks.
As I had mentioned earlier, the natural gas pipeline industry has spent
approximately $100 million over the last five years on pipeline safety and OPS
is obtaining additional funding this year for R&D.
INGAA is also working to obtain funding for DOE pipeline R&D.
A coordinated effort amongst all of these organizations will be
imperative to insure that available research funds are optimized in order to
bring new technologies to bear on the challenges that face the industry. Congress
should not mandate that the rule require a specific frequency of inspection,
such as five years, as this can have detrimental effects on the consumer, does
not have technical justification and has minimal safety impact.
The GTI report prepared by Battelle, "Proposed Re-Verification
Intervals for High-Consequence Areas" asserts that, under worse case
conditions, a periodic re-verification interval of 15 years would be
scientifically and structurally appropriate for 95 to 98 percent of all natural
gas pipelines. Energy
and Environmental Analysis, Inc. has prepared a new report called "Consumer
Effects of the Anticipated Integrity Rule for High Consequence Areas" for the
INGAA Foundation. This study
reports that the price impact to consumers due to pipeline capacity reductions
is the sum of mainline and delivery lateral impacts and is dependent on the
frequency of testing. Under the
best circumstances, the projected impact ranges from $6.3 billion for the
14-year inspection cycle to $17.6 billion for the 5-year inspection cycle.
These costs, for the most part, would result when demand for natural gas
is high and the pipeline capacity to deliver the natural gas is not available
because of these inspections or modifications.
These costs would be incurred by consumers on pipelines that run at high
capacity and/or on laterals that are the sole source of supply for a local
distribution company, gas-fired electric generation or an industrial load. There
are additional costs to consumers that are not accounted for in the study.
The study does not include the cost to the pipeline companies or local
distribution companies of implementing the integrity management rule.
These costs are expected to be $2.5 billion over 10 years for
transmission pipelines and $4.5 billion over 10 years for local distribution
companies. The study also does not
include cost impacts to industrial users such as the need to reduce output or
shut down a plant due to lack of needed capacity during integrity inspections. In
spite of this point, I do want to emphasize that the industry can and will
support the integrity management rule.
However, what we need is flexibility in timing and methodologies to make
sure our inspections and repairs occur when the demand for natural gas is lower.
That way we can work with our customers to assure that they have
alternate supplies or sufficient storage to meet their short-term needs and
allow us to use the technology and processes that are effective.
OPS
has received a significant increase in their budget over the last two years.
This will enable them to improve their risk analysis and risk assessment
protocols as well as improve the training that they give their inspectors and
state inspectors to better prepare these inspectors to oversee implementation of
the integrity rule by pipeline companies. It
is clear that OPS has the statutory authority to implement these rules, given
the fact that they have issued rulemakings for hazardous liquid pipelines and
are moving forward on a rule for natural gas transmission pipelines.
INGAA encourages OPS to move quickly on this rule. OPERATOR
QUALIFICATION STANDARDS The
Operator Qualification rule required that pipeline operators must have a written
qualification program by April 27, 200l. This
new program is expected to enable OPS to document that employees who operate and
maintain the pipeline are and continue to be qualified for these tasks.
The interstate pipeline industry is currently in the process of
completing the initial qualification of individuals performing covered tasks and
the deadline for this effort is October 28, 2002.
INGAA and its member companies have also developed a common methodology
to qualify contractors and service providers, so we can be effective and
efficient at verifying their qualifications. PIPELINE
ACCIDENT REPORTING BY CAUSE The
natural gas pipeline industry has been reporting detailed information regarding
pipeline accidents by, in essence, five categories of causes-outside force
damage, construction/material defect, external corrosion, internal corrosion and
a category called "other" since the inception of the OPS program.
We have been and continue submitting an annual report to OPS regarding
all accidents that occurred within that year along with an inventory of our
pipe. This information has been
used by OPS and the industry for extensive data analysis and trending. OPS
has now adopted a more detailed and specific reporting system.
This new system will have 25 categories.
These categories are basically grouped into three headings:
time dependent-examples are internal and external corrosion; time
independent-examples are third party damage, operator excavation damage and
earth movement; and stable-such as pipe manufacturing or construction defects.
This will provide both OPS and the industry with more specific
information on causes of accidents to better refine our risk assessment
technologies and to make other necessary changes to further mitigate accidents. COMMUNICATIONS INGAA
is sensitive to the importance of public perception.
The demand for natural gas is
growing and is anticipated to increase 32 percent (from 22.8 Tcf today to 30 Tcf)
by about 2010 to 2012. The current
natural gas pipeline infrastructure cannot support this increase in demand.
New pipelines will need to be built. The current environment
provides both opportunities and challenges for growth of natural gas use.
INGAA and its member companies are undertaking a project to improve our
communications with the public. We
are convening member company representatives to collect and develop "best
practices" that will then be deployed by holding industry workshops.
We will also be working with OPS/RSPA and FERC.
Out of these efforts, we expect to improve our communication with the
public so that they can better understand pipeline safety and other issues.
We hope to complete this effort before the end of this year. PIPELINE
SECURITY In
the wake of the September 11 attacks, our industry immediately increased
security and began an assessment of ways to reduce and respond to terrorist
threats. As part of this effort,
INGAA formed a Board Task Force, which I chair, to oversee the security efforts
for interstate natural gas pipelines. The
focus is on critical onshore and offshore pipelines and related facilities, as
well as liquefied natural gas (LNG) facilities.
We have reached out beyond our membership to others in the industry who
have these types of natural gas transmission pipeline facilities and included
them on the task force. To
date we have ensured that every INGAA company has designated a member of its
senior management and made them responsible for security. Our task force has assessed our industry security practices,
given the new threats, and are developing common risk based practices that can
be utilized by our members. These
practices will cover preparation (having a plan), detection, deterrence,
response to an incident and recovery from an incident.
We are categorizing those facilities that are critical either to the
operation of the pipeline or in areas where there is high population density
near the pipeline. We are also
categorizing those facilities that are critical to public service, i.e.; provide
needed service to the military, government, industrial complexes, electric power
plants and communities. INGAA
has been working with our customers and suppliers, AGA, APGA, EEI and API to
develop a common understanding and nomenclature for threats and security
practices. We are working with DOT and DOE and others in the natural gas
industry on consensus security practices that all pipelines will implement.
This should be completed later this spring.
We have determined that we can be more prepared to respond to a terrorist
incident if we formalize cooperation among companies on spare parts exchange.
Additionally, we are assessing the need for separate regional inventory
systems of critical items. We are
also reviewing the effectiveness of our present communications concerning
security with the public, local emergency planning committees, local, state and
federal law enforcement and government officials.
We are working cooperatively with a number of federal departments and
agencies including the Office of Pipeline Safety, DOE, FERC, the FBI, Homeland
Security, and CEQ. INGAA would like
to work with the Committee so that any legislation regarding security reflects
the efforts being made with government agencies and others in the natural gas
industry. We
are also currently working with the Administration on issues that need
resolution and that may require assistance from Congress.
The first issue is the need to have pre-approved permit waivers for
response and recovery to a terrorist attack.
If a facility experiences a terrorist attack, it will become a crime
scene and we will be denied access. However,
the need will exist for us to continue transporting natural gas and we will have
to quickly find a new site upon which to rebuild at the minimum, a temporary
facility. Physically, we can
reconstruct quickly and we are verifying the availability of the needed spare
equipment, but we need a quick permit approval process to expedite the
reconstruction. Our
second issue is the possible implication of antitrust law to industry/regional
planning to deal with supply disruptions as well as development and coordination
of a critical spare parts inventory. We
are currently performing a review of antitrust implications and are preparing to
talk to the Department of Justice and others about what flexibility we may have
under the laws to participate in regional table-top tests to better coordinate
planning for and reaction to a terrorist event. Our industry needs to be assured that we can communicate
among pipelines, with producers, our customers and others to ensure the flow of
natural gas in the event of a significant incident. Finally,
under these extraordinary conditions, INGAA has concerns with the tension
between the need to restrict access to sensitive pipeline infrastructure and
operational information and the public's right to know.
We want to make sure that this sensitive information about pipelines is
exempt from disclosure under the Freedom of Information Act (FOIA) and,
therefore, will not able to be distributed or displayed to permit easy access by
terrorist groups. This type of
information includes detailed pipeline maps, information that can make a
specific area attractive to a terrorist (such as pipeline locations near
hospitals, schools, etc.), and engineering information that identifies the
strategic importance of a pipeline facility including schematic flow charts.
We need assurance that FOIA specifically exempts the release of critical
energy infrastructure information. If
not, once an agency releases the information for legitimate requests under FOIA,
it cannot prevent its release to any other requestor-even a terrorist. But
we also need to make sure that those who have the "need to know" about a
pipeline in their local area have adequate access to information. This includes emergency responders, our neighbors who live
next to a pipeline, and key state and federal officials. However, under FOIA, once the information is released to
them, it is then considered to be "public" and released to anyone who asks
for it. For example, a recently
published National Environmental Policy Act (NEPA) report for a new pipeline
shows exactly where the pipeline is in relationship to schools, hospitals, etc.
Although it is clearly of importance to a community to know where there
is underground infrastructure, such information, in the wrong hands, could pose
a security threat. Pipelines and our regulators need to walk a fine line to
assure that those who need the information get it (perhaps with requirements
that they can't release it or put it on their websites) while limiting general
distribution of detailed information so that it does not get into the wrong
hands. There
are other issues on which we are working with the Administration and hope that
they will be resolved. We are
pleased about the recent announcement by the Head of Homeland Security Governor
Tom Ridge regarding a government-agreed upon alert system and the use of comment
nomenclature. This is a good step
forward. CONCLUSION I
want to thank this Subcommittee for inviting me to testify today. INGAA and its member companies take pipeline safety and
security as top issues of importance. We
want to work with this Subcommittee and the full Committee to obtain sound
pipeline safety reauthorization legislation in this Congress.
|
|||||||||||
|
