This week’s Pipeliners Podcast episode features Keith Coyle of Babst Calland returning to the podcast to provide an update on the latest progress in the PHMSA rulemaking process for the Gas Gathering Rule.
In this episode, you will learn about the importance of how gathering lines are defined, the impact of the recently-updated API RP 80 that provides additional guidance on how to define gathering lines, what type of gathering lines need to comply with the PHMSA safety requirements in 49 CFR 192, how the transition to a new administration will impact the timing of the rulemaking being finalized, and more topics.
PHMSA Gas Gathering Rule: Show Notes, Links, and Insider Terms
- Keith Coyle is a Shareholder with the law firm of Babst Calland. Mr. Coyle is a member of the firm’s Washington, D.C. office and a Shareholder in the Energy and Natural Resources, Environmental and Transportation Safety groups and Pipeline and HazMat Safety practice. [Connect with Mr. Coyle on LinkedIn]
- Babst Calland is the current underwriting sponsor of the Pipeliners Podcast.
- Access the latest Babst Calland Alerts & Reports under regulatory updates in the Pipeliners Podcast Resources library.
- Listen to Keith’s previous podcast appearances discussing key pipeline regulations topics.
- PHMSA (Pipeline and Hazardous Materials Safety Administration) is the federal agency within USDOT responsible for providing pipeline safety oversight through regulatory rulemaking, NTSB recommendations, and other important functions to protect people and the environment through the safe transportation of energy and other hazardous materials.
- The PHMSA Gas Gathering Rule (Safety of Gas Transmission and Gathering Pipelines) was initiated in 2016 when PHMSA issued a notice of proposed rulemaking seeking comments on changes to the pipeline safety regulations for gas transmission and gathering pipelines. The proposed rule has advanced through various stages and was expected to be issued in 2019, 2020, and perhaps now in 2021 or 2022.
- 49 CFR 192 is minimum safety requirements for pipeline facilities and the transportation of gas by PHMSA-regulated pipeline.
- PHMSA issued FAQs in September 2020 to assist gas pipeline owners and operators in complying with the pipeline safety regulations in 49 CFR Parts 191 and 192.
- 49 CFR 192 is minimum safety requirements for pipeline facilities and the transportation of gas by PHMSA-regulated pipeline.
- Gathering Line is defined by PHMSA regulations as a pipeline that transports gas from an operating production facility to a transmission line or a main line. PHMSA classifies gathering pipelines as transporting gases and liquids from the commodity’s source (e.g. rock formations located far below a drilling site) to a processing facility, refinery, or a transmission line.
- API (American Petroleum Institute) represents all segments of America’s natural gas and oil industry. API has developed more than 700 standards to enhance operational and environmental safety, efficiency, and sustainability.
- API RP 80, along with API 1182, are designed to enhance safety and operational efficiency of large-diameter gathering pipelines. RP 1182 is complemented by the recently-released 2nd edition of RP 80. The recommended practices help ensure that integrity management practices are properly implemented to meet regulatory and safety needs.
- GPAC (Gas Pipeline Advisory Committee) is a federal advisory committee that reviews and provides non-binding recommendations on proposed regulatory initiatives to assure the technical feasibility, reasonableness, cost-effectiveness, and practicability of each proposal.
- The Pipeline Safety Act of 1968 was the first federal law authorized by the U.S. Congress to prescribe safety standards for the transportation of natural and other gas by pipeline, and for other purposes.
- FERC (Federal Energy Regulatory Commission) regulates, monitors, and investigates electricity, natural gas, hydropower, oil matters, natural gas pipelines, LNG terminals, hydroelectric dams, electric transmission, energy markets, and pricing.
- Regulated Onshore Gas Gathering Lines include Type A and Type B.
- Type A: Metallic and the maximum allowable operating pressure (MAOP) is more than 20% of SYMS, or non-metallic and MAOP is more than 125 psig.
- Type B: Metallic and the MAOP is less than 20% of SYMS, or non-metallic and MAOP is less than 125 psig.
- MAOP was included in a bulletin issued by PHSMA informing owners and operators of gas transmission pipelines that if the pipeline pressure exceeds MAOP plus the build-up allowed for operation of pressure-limiting or control devices, the owner or operator must report the exceedance to PHMSA on or before the fifth day following the date on which the exceedance occurs. If the pipeline is subject to the regulatory authority of one of PHMSA’s State Pipeline Safety Partners, the exceedance must also be reported to the applicable state agency.
- Integrity Management (Pipeline Integrity Management) is a systematic approach to operate and manage pipelines in a safe manner that complies with PHMSA regulations.
- Class location is an onshore area that extends 220 yards on either side of any continuous 1 mile of pipeline. Also, each unit in a multi-unit building is counted as a separate building. [View this detailed presentation on how to determine class location.]
- Class 1: Offshore, or has 10 or fewer buildings for human occupancy (e.g., rural).
- Class 2: More than 10 buildings, but less than 46.
- Class 3: More than 46 buildings; or an area where the pipeline lies within 100 yards of a place where people gather (20 or more people, at least 5 days a week for 10 weeks in any 12 month period).
- Class 4: Buildings with 4 or more stories above ground are prevalent.
- The new PHMSA Gas Gathering Rule is primarily designed to:
- Extend PHMSA’s reporting requirements to all gas gathering lines, whether regulated or not.
- Address the definition of onshore gas gathering lines under PHMSA’s regulations.
- Establish risk-based safety standards for a subset of Class 1 gas gathering lines.
- PIR (Potential Impact Radius) is defined by PHMSA (49 CFR subpart 192.903) as the radius of a circle within which the potential failure of a pipeline could have significant impact on people or property.
- PIPES Act of 2020 (Protecting Our Infrastructure of Pipelines and Enhancing Safety) reauthorized the U.S. DOT PHMSA pipeline safety program through fiscal year 2023.
- The CRM Rule (Control Room Management Rule as defined by 49 CFR Parts 192 and 195) introduced by PHMSA provides regulations and guidelines for control room managers to safely operate a pipeline. PHMSA’s pipeline safety regulations prescribe safety requirements for controllers, control rooms, and SCADA systems used to remotely monitor and control pipeline operations.
PHMSA Gas Gathering Rule: Full Episode Transcript
Russel Treat: Welcome to the Pipeliners Podcast, episode 179, sponsored by P.I. Confluence, providing software and implementation expertise for pipeline program governance applied to operations, Pipeline Safety Management, and compliance, using process management software to connect program to implementation. Find out more about P.I. Confluence at piconfluence.com.
Announcer: The Pipeliners Podcast, where professionals, Bubba geeks, and industry insiders share their knowledge and experience about technology, projects, and pipeline operations. Now, your host, Russel Treat.
Russel: Thanks for listening to the Pipeliners Podcast. I appreciate you taking the time. To show the appreciation, we give away a customized YETI tumbler to one listener each episode. This week our winner is Jacob Brown with Marathon Pipe Line. Congratulations, Jacob, your YETI is on its way. To learn how you can win this signature prize, stick around until the end of the episode.
This week, Keith Coyle returns to the Pipeliners Podcast and we’re going to be talking about what’s next for the PHMSA Gas Gathering Rule. Keith, welcome back to the Pipeliners Podcast.
Keith Coyle: Thanks for having me again, Russel. I always enjoy doing the show.
Russel: I’m sure every pipeliner is eager to hear about what new regulations are headed towards them in the future here. That’s what we’re going to talk about, one of the big ones, the gas gathering line.
Keith: Yeah, this one is a big one and it’s one that’s been around for quite a while. Maybe we’ll see it come to a close in the not too distant future.
Russel: I think a good place to start this conversation. I know we’ve talked about this before on other podcasts, but as a reminder, what’s a gathering line?
Keith: A gathering line is generally defined in PHMSA’s regulations as a pipeline that transports gas from a current production facility to a transmission line or main. That definition is pretty old. It dates back to a final rule that PHMSA issued in 1970. It was a source of controversy for quite a while.
There were some efforts in the 1970s to revise that original definition, to address some ambiguities that are embedded in it. Terms like production facility that still weren’t defined at the time in 192. Then, some other questions about what qualifies as a transmission line or a main.
That general definition was subject to some review and scrutiny in the 1970s. Then, there was another effort in the 1990s and heading into the 2000s where the American Petroleum Institute actually came up with a recommended practice, API RP 80, that provides additional guidance on how you define what a gathering line is for purposes of the Part 192 rules.
That’s where things stand today. For onshore gas gathering lines, you’re primarily looking at the provisions in API RP 80 to determine if a pipeline qualifies as a gathering line. Subject to certain additional regulatory overrides and limitations.
Russel: Yeah, and I think it’s important to note, too, that RP 80 is in the process of being updated. I know it’s pretty close. I’m not really familiar with where RP 80 is at the moment, but would you happen to know?
Keith: Yeah. API actually launched an initiative to come up with a second edition of RP 80. That was successfully concluded. API formed a working group and a task force. They made some revisions to the first edition of RP 80.
They published a second edition of RP 80, it might have been last year that’s now out and published. Unlike the first edition, the second edition has not yet been adopted into the Part 192 regulations, so we’re still working with that first edition.
I know with API, the intent in coming up with that second edition was to provide a new version that could be incorporated into PHMSA’s rules.
Russel: Certainly in the GPAC meeting there was a lot of discussion about aligning the publication of the PHMSA gas gathering rule with the publication of the new RP 80.
Keith: RP 80 is a complex document. RP 80 itself requires you to make two basic determinations. Where do production operations end in a pipeline system and gathering operations begin? Then, where does the gathering function end on the other side of it? It gives you five possible end points in determining where gathering operations end.
It’s a pretty complex standard to work through. I think the reason for that complexity is because we have a wide variation of gathering systems in terms of configuration and operating characteristics throughout the United States.
It’s been challenging to come up with a uniform or a very simple definition of what a gathering line is given all the complexity that you see in production and gathering systems depending on the area of the country that you’re in and the date that the system was installed. There’s just a lot of variability in operations.
Russel: Absolutely. Anybody that works around this business knows that to be true. There’s actually a whole lot more variability than there is commonality in how gathering systems are put together.
Keith: It’s been a challenge. You can look at the history. PHMSA came up with this original definition in 1970, and it’s been the source of controversy for the past 50 years. API launched this effort to develop the first edition of RP 80 in the late ’90s and early 2000s to provide some additional concepts. They took another look at the first edition most recently and came up with an update.
It’s been challenging. A lot of effort has gone into trying to figure out the right solution. We’re getting closer to that, but it’s going to take a little more time.
Russel: Next question here, Keith, is gathering lines are generally intrastate, not interstate, so what authority does PHMSA have for the regulation of gathering lines?
Keith: With gathering lines, PHMSA’s statutory authority has always extended to the transportation of gas and gathering lines. There was an exemption, an historical exemption, that Congress included in the 1968 Natural Gas Pipeline Safety Act that limited PHMSA’s authority to regulate rural gathering lines.
At the time in 1968 when Congress was looking at the original Pipeline Safety Act, they took a look at the safety record for rural gathering lines, which at the time tended to be smaller diameter, lower pressure lines. At that time, they made a judgment which was basically we don’t think that these rural gathering lines present a sufficient risk to warrant regulation at the federal level. There was actually a statutory prohibition that was put into the Pipeline Safety Act that prevented PHMSA from regulating any rural gathering lines for several decades.
In the 1990s, Congress took another look at that statutory exemption and decided to relax it a little bit, and they gave PHMSA the authority to regulate rural gathering lines if they considered certain factors and established regulations for rural gathering lines in a rulemaking process.
Today, as in 1968, the overwhelming majority of rural gas gathering lines in the United States are not subject to regulation by PHMSA. Originally, it was the result of a statutory prohibition. Today, it’s the result of a regulatory exemption that has largely left those lines outside the scope of PHMSA’s rules.
Russel: As we talked in the last time we had this conversation, what’s really driving this change is the shale plays and the fact that you’ve got larger-diameter, higher-pressure lines that tend to look more like a classical transmission line than a classical gathering line.
Those lines present more risk, and there’ve been some incidents and issues around those lines. Consequently, that’s what’s driving this regulatory requirement or the mandate from Congress to look at this stuff.
Keith: If you asked PHMSA or the state pipeline safety program regulators that have gathering lines, the answer that they would give you about why things are different today is because of the development of larger-diameter, higher-pressure gas gathering lines in the nation’s shale plays. Because there isn’t a lot of data — federal data anyways — there’s some dispute about how extensive these large-diameter, high-pressure lines really are. I don’t think there’s any debate that there are at least some of these lines out there in the U.S. that are operating that certainly have characteristics that look more like transmission lines.
There’s a little bit more nuance or ambiguity as to how extensive those lines are, where those lines are located in gathering systems. Are we talking mostly about outlet lines from gas processing plants? Are we talking about backbone lines and gathering systems? There’s definitely a lot of debate about how extensive they are.
That’s the thing that PHMSA and the state pipeline regulators would point to is saying this is what’s different today than what we saw in 1968, or 1990, or even 2006 when they created the current rules.
Russel: Fundamentally, and this is probably way over-simplistic, but to my mind, it’s larger diameter, higher pressure. It’s really that simplistic. I know when you actually try to take a rulemaking and apply it, it’s never that simplistic. From an egalitarian standpoint, just what are they trying to do, they’re trying to take these higher risk lines and get them under appropriate governance.
Keith: Gathering lines, the sector itself, the midstream sector, gathering line operators, they’re subject to a little bit different regulation in terms of public utility status.
So, when we’re talking about gas distribution lines, we’re talking about lines that are generally going to be subject to regulation by a state utility commission. They’re going to have ratemaking — things like that — to recover cost. Same things when you’re talking about interstate transmission lines, which are going to be subject to FERC regulation with ratemaking.
Gathering lines, for the most part, are not treated as public utilities in most jurisdictions, so they’re not subject to that economic, public utility-type regulation that you see on distribution or transmission.
The market function, the commercial aspects, and, quite frankly, the cost-benefit — the impact is much different when you start talking about regulating gathering lines versus regulating some of the other sectors that are subject to public utility-type regulation for economic purposes.
Russel: That makes sense. Just to set context for the next phase, what kind of regulations currently apply from a PHMSA standpoint to gathering lines?
Keith: PHMSA established its current rules for onshore gas gathering lines in 2006. Those rules established a two-tiered, risk-based regime for regulation.
There are two categories of what are known as regulated gathering lines. The first category is known as Type A gathering lines. These are going to include higher-stress gathering lines that are located in more populated Class 2 locations, Class 3 locations, or Class 4 locations.
The regulations that apply to Type A gathering lines are basically all of the transmission line requirements except for the IM requirements and some other provisions. For the most part, if you’re operating a higher-stress Type A line, you’re in a higher risk category. You’re in a more populated area. You’re going to be subjected to transmission rules except for IM and some other provisions.
The other category of regulated lines are known as Type B gathering lines. These are going to be lower stress lines. They’re still going to be in those more populated Class 2, Class 3, or Class 4 locations. You’re going to have to follow transmission design, installation, construction, and testing.
As for the rest of the code, you’re only going to be dealing with certain discrete requirements in terms of O&M, operation and maintenance, or damage prevention, or public awareness. You’re not going to get the full panoply of transmission line requirements on the back-end for a Type B line because those lines are lower-risk lines. We’re talking about a leak versus rupture scenario, low-stress lines.
As I said earlier, most of the gathering lines in the United States are in Class 1 locations. These are going to be rural, sparsely populated locations. Those lines are not currently subject to regulation under the PHMSA rules right now.
PHMSA estimates that something like 400,000 miles of gathering lines in the United States are Class 1, give or take. We’re not really sure. We don’t have hard, firm data on that.
In terms of the regulated Type A and Type B, probably something like 10,000 to 12,000 miles, something like that, so a very small subset of Type A and Type B lines in terms of gathering. The overwhelming majority are Class 1, unregulated, gas gathering lines.
Russel: Interesting. What is getting added? What are the additional provisions in the rules? If I’m a gatherer, and I’ve looked at this, and I know that I have lines that are going to become regulated under these new requirements, what am I going to be getting asked to do that I’m not currently doing?
Keith: When PHMSA started this rulemaking process back in 2011 and then provided some more context when it did the proposed rule in 2016, they were only looking to regulate a subset of Class 1 gas gathering lines.
These would be Class 1 lines that meet a certain diameter threshold. What PHMSA originally proposed was eight inches or greater. We’ll talk a little bit later about where that diameter threshold may shake out.
They were still only focusing on the higher stress or high-pressure lines. PHMSA was not looking to regulate all 400,000 miles of Class 1 gas gathering, at least not in terms of substantive regulatory requirements.
What they did originally propose was to pick up eight inches or greater, higher-stress lines, and to basically have those lines follow the requirements for Type B gathering lines, those lower stress gathering lines I talked about earlier, plus emergency response requirements.
There’s a lot of nuance that’s folded into what provisions in the Type B regulations would apply, how do you deal with issues related to existing pipelines that are grandfathered, setting maximum allowable operating pressure (MAOP), those types of things.
Basically, what PHMSA was looking at doing was, within the Class 1 universe, starting to regulate some of those lines, trying to make a differentiation based on risk on what lines they would pick up in the initial tranche, and then essentially making operators follow the Type B rules plus emergency response requirements.
Russel: This PHMSA gas gathering rule, I’ve read it. I’ve gotten clear on Class 1, 2, 3, 4, and Type A and B on several occasions. I’m unable to retain that information. [laughs] Let me ask some specific questions. Is any of this going to require a gatherer to do transmission style integrity management?
Keith: No. That is off the table for Type A, Type B, and whatever rules get pushed down to Class 1.
Russel: Is there going to be any regulatory requirement, or do you interpret the regulations that these lines would fall under Control Room Management?
Keith: For the Type A lines, that’s possible because they’re subject to all of the transmission rules except for IM and some other limited provisions. Now, within the Control Room Management requirements, there are also some other exceptions in terms of Control Room Management full, versus CRM light.
Russel: I’ve looked at that, Keith. I don’t think there’s anything in there that would cause a gatherer to be exempted. I’ve looked at that several times in some specific cases for gathers we’ve worked with.
Keith: Yeah, we’ve seen in some cases it could be the light version due to absence of regulated compression, as opposed to the full version. For the Type B lines, because the CRM Rule is not one of the specifically listed regulations, the Type B lines are not subject to CRM. The same would follow for whatever Class 1 pipelines come in as well.
Then, there’s some other interesting questions about — let’s say I’m an operator of an existing Class 1 gas gathering line. The federal government, PHMSA, comes and pushes down this whole new set of regulations onto my system. There are provisions in the Pipeline Safety Act that prohibit PHMSA from retroactively applying certain kinds of safety standards to existing pipelines. That would include design standards, construction standards, and initial testing standards.
If you’re out there and let’s say you have an 8” high-stress line that ends up getting regulated, you should be grandfathered under the final rule from compliance with design, construction, and initial testing.
One of the other things that PHMSA has generally proposed when it has extended jurisdiction to a new category of lines is allowing for grandfathered maximum allowable operating pressure determinations.
That’s where PHMSA has said, for existing non-jurisdictional lines that become jurisdictional, we will allow an operator to base its maximum allowable operating pressure on the highest actual operating pressure experienced in the five years prior to the rule.
That’s what they did when they originally started to regulate in the early ’70s. They did the same thing when they established the current rules in 2006 for gas gathering.
They’ve proposed the same thing in this rulemaking proceeding whereby if a Class 1 line were to become regulated under the rule, you could set your maximum allowable operating pressure based on the highest pressure experience in the five years prior to the rule.
Russel: Right. Again, this is probably overly simplistic. But the way I break this down is if I have some of these lines, I’m probably going to have to do something in the Control Room Management domain, assuming they’re Type A.
I’m certainly going to have to do some things around record-keeping and MOP determination to set a baseline. Then I’m going to have to look at my O&M and my emergency response and upgrade them to bring in the things that are required.
Those are the fundamental things you have to do. Am I missing anything? Or is that pretty much it?
Keith: No, I think that’s right. For the existing pipelines that become regulated Class 1, you’re looking at some additional operation and maintenance requirements. You may already be doing those requirements just as a prudent operator, but now they’re going to become a compliance obligation subject to potential enforcement by PHMSA.
Russel: My interpretation of that is always, yes, I’m doing the work, but now I have to document that I’m doing the work. I have to document how I’m doing the work. Then I have to document that I did the work.
Keith: Then document it again.
Russel: Document how I do the documentation.
Keith: It’s stuff that you are doing now as a matter of discretion or a matter of prudence becomes a matter of legal obligation. That’s just a different world to operate in.
You’re going to have to be more concerned about record-keeping. You’re going to have to have procedures in effect and those procedures are going to be subject to review and potential enforcement.
In terms of stuff that — if you’re in the Class 1 world right now and you’re unregulated — what are the biggest impacts to you? The first impact is going to be that you’re going to become regulated by PHMSA.
If you have all Class 1 gathering right now, you’re not regulated at all. You’re going to have to do reporting requirements.
Russel: That’s the biggie. That’s the biggie for those producers and gatherers that have systems that are wholly unregulated that are going to become regulated that all of the sudden they go from being completely unregulated, now they’re a regulated operator.
Those are the guys that, I think, at least in my experience with the customers we’ve worked with, they’re the ones that are the most concerned because it’s a whole new world.
Keith: Right. Those companies don’t have a DOT PHMSA compliance department. They haven’t been reviewing the 192 rules since 1970. All of this stuff becomes new to them. Right?
You’re looking at these new rules. They’re not always the clearest rules. This isn’t something you have a lot of experience with. Now you’re filing reports with the regulator. Now you’re doing incident reports, annual reports. You’re documenting O&M activities.
It’s an entirely different experience to what you’re used to. There are burdens associated with that and things you’re probably going to have to pay attention to that you not necessarily have been in the past. It’s a change.
One other difference is now you’re going to have an inspector from the federal government or a state showing up and asking you questions and subjecting you to audits and inspections that you didn’t have before.
If you were a Class 1 gathering line operator, you had an obligation to make sure that that judgment was accurate, that you were actually in a Class 1, that you were actually operating a gathering line, but beyond that, there was no other oversight or jurisdiction of your assets.
Now if you’re Class 1 and you end up being regulated, someone from the federal government or the state is going to be overseeing your operations and potentially doing inspections and enforcement. If you’ve never had that experience, that’s very different, too. That takes a little bit of getting used to.
Russel: Yes. No doubt. The question I was going to ask is where is the rule in the process?
Keith: The rule is still moving along. The proceedings started in 2011 with an advanced notice of proposed rulemaking (ANPRM). We had a proposed rule in 2016. They presented that proposed rule to the Gas Pipeline Advisory Committee. That’s the federal advisory committee that reviews and provides nonbinding recommendations on PHMSA rules in 2019. They’ve gotten through quite a few steps in the rulemaking process.
What’s left is the development of the text of the final rule and the preamble, the final versions of the supporting rulemaking documents. PHMSA would have to send those documents to the Secretary of Transportation for review and approval.
If that review and approval is positive, then they send it over to the Office of Management and Budget for further review, primarily for cost-benefit economic impacts, that sort of thing. If you clear the OMB process, then it can go back to the Department of Transportation and PHMSA for issuance of a final rule.
There’s still some steps, but in terms of the big hurdles, they’ve gotten through a lot of the big hurdles. They did a rulemaking proposal. They presented it to the GPAC. They got a vote. Now they need to write the final rule, get it through the Secretary’s Office and through the Office of Management and Budget, and then they can publish the final rule.
Russel: What’s your best guess for the date this’ll get published? I’ll qualify this on your behalf. I’m asking Keith to make a guess. This is a guess and only a guess. [laughs]
Keith: If I was a betting man, I would bet the over. There was a time when I was trying to tell people this rule might be out in 2018. This rule might be out in 2019. Now it’s 2021.
There is a sense of urgency to get this rulemaking done. There was a rulemaking mandate included in the 2020 Pipeline Safety Act that passed in December directing PHMSA to finish the rulemaking process within 90 days. That 90 days have come and gone.
It remains to be seen if PHMSA will be able to get it done in 2021, or will it come in 2022? I would be hard-pressed to say it’s going to go beyond that just because there is a lot of scrutiny on getting this rulemaking finished.
Now, publication of the final rule is only one step or is the start of the final rule, but there will be effective dates and compliance dates folded into the rule itself that will give operators additional time to come into compliance.
Even if we got a rule in 2021, there would be provisions where you’d probably have another year to come into compliance or two years depending on how they stagger those compliance deadlines. Is 2021 a possibility? It’s a possibility. 2022.
Russel: If I were a betting man, I would say this gets done before the mid-term election cycle.
Keith: That’s probably a safe bet.
Russel: That’s the outside.
Keith: Although all my bets on the timing of this rule have been horribly, horribly wrong. Let me say this. I don’t know if I’m going to get this rule as a stocking stuffer for Christmas. It’s possible. It’s possible, or whether I’ll get it from the Easter Bunny next year. We’ve only got a little way to go.
Russel: Again, if it were me, I’d be betting the Easter Bunny. It’s not me. The only reason I say that is the change in administration just injects more time into getting things done.
Keith: The new administration — those new folks are going to come in — they’re going to pick up a rulemaking package that has gone through a lot of review and consideration by previous administrations. They’re going to need to take a look at it and make some policy judgments about whether the rule as it was left from their predecessors reflects the priorities of the current administration.
We talked about this on a previous podcast. There were significant differences in regulatory philosophy between the Trump Administration and the current administration. I would expect those differences in philosophy are going to manifest themselves in this final rule.
One way I expect that to probably happen is the diameter that gets picked up in this rule for the Class 1 lines. I would expect it more likely that PHMSA will regulate some of the smaller diameter lines than maybe you would have seen in the Trump Administration.
I would also expect perhaps to see some more additional regulations for the lines that do get picked up in terms of the substantive requirements.
One of the things that PHMSA was looking at in the rulemaking process was whether to consider the potential impact radius (PIR) of a gathering line as one of the criteria that would warrant additional or more stringent requirements for a subset of gathering lines. That might be something that gets more scrutiny from the current administration.
I do think that the current administration will need to take a look at the cost-benefit analysis that was done on the proposed rule back in 2016. Industry identified some very significant concerns and problems with that original cost-benefit analysis. I think the new administration will take another look at that, probably clean that up or revise it.
They would consider things in a different way like methane emissions, societal benefit from reduction in greenhouse gases. They’ll probably quantify the cost-benefit analysis in a different way than the previous administration would have.
Russel: Here’s my takeaway from this conversation, Keith. Number one, the rule is not done, but it’s going to get done. Number two, probably what’s going to be asked of the operators does not include any of the IM requirements. It’s more about other things. Lastly, the real question that remains is how big of line are they going to regulate, down to what diameter.
Keith: That’s right. The diameter that they pick in terms of whether it’s 8”, greater than 8 inches, 12”, greater than 12 inches, because of the nature and order of magnitude has changed, if you start to pick up lines at smaller diameters, there are going to be more 8” lines than there are 12” lines in the gathering space.
Russel: The other thing to say about that is not only is there more, it’s more by a lot.
Keith: Yeah. Traditionally, as we said in the beginning of the podcast, these tended to be smaller diameter systems. You’re going to find more 6”, more 8” in some of these older, legacy gathering systems.
To the extent that portions of those systems get picked up, we’re more likely going to have some conventional operators that get affected, not just the ones that are operating in the unconventional shale plays with horizontal drilling and hydraulic fracturing.
You may be dealing with smaller operators, smaller producers, and gatherers, much older wells, much older pipeline systems. Some of those older pipeline systems will have different challenges in terms of compliance than some of the newer systems will.
If you built a line in 2015, 2016, you were probably following very modern design construction practices. You probably had some records that you were already keeping. You were doing testing to current standards. If you have a gathering line that was put in in the ’40s or ’50s, it was just a very different set of practices that applied at the time.
Russel: If you built something in the last five years, you probably have good records. Those records are probably digitized. You probably did everything according to the current standards.
Keith: Particularly on the larger lines, newer, larger.
Keith: It’ll be less of a compliance burden on you given the age of the line, the practices that were used in its installation and construction. For the older, smaller lines, yeah.
Russel: If I’m running even a 20-year-old gathering system that’s 8” line, and that gets gobbled up, that’s going to be a much different problem.
Keith: Other challenges that come up on gathering, mapping of gathering systems, being able to know exactly what the characteristics of your system are, basic things, pipe diameter, some of that stuff can be pretty challenging.
Russel: Knowing what I have and knowing where it is can be a challenge for some of these guys with these older systems, knowing it well enough would be the way to say that.
Keith: One of the things that was stressed during the rulemaking process and during the GPAC review was recognizing that there’s going to be a lot of unknown data for some of these older systems. That needs to be accommodated when you’re talking about reporting requirements for these systems, making sure that there are appropriate assumptions that can be made for things like MAOP or diameter.
If we get into a situation where we’re requiring exactitude and all of these things right away for these gathering lines when they become regulated, they’re going to be spending all kinds of time just trying to figure out pipe diameter, materials, all that stuff.
Is there a safety value in that, at least in this first wave of regulation, or should we focus resources on the basics, getting basic O&M requirements in place, construction requirements for new lines, like that?
Russel: Yeah. Listen, this is informative as always. I really appreciate you continuing to come back and to share all the information you share.
I want to make a couple of shoutouts to you, Keith, and to your company, Babst Calland. We put out a newsletter on the podcast every month that’s a synopsis of the episodes. It also includes Regulatory Updates and Alerts that are provided to us by Babst Calland, and that’s included on the website in the Resources section. A good way to stay up on what’s going on. Just subscribe to the newsletter on the Pipeliners Podcast website, and you’ll get all that valuable stuff.
Keith: This is a shoutout time for you. I think I’ve said this before. This is a great resource for having a place to come have conversations. It’s good to be able to have the content to listen to talking about current issues related to pipelines and pipeline safety. This is a unique platform. You’re not going to find a lot of this material easily in other places. I think you’re providing a set of content that’s really valuable for the industry. I appreciate it.
Russel: I appreciate that, Keith. I’m coming up on 200 episodes here pretty quickly. When I started all this, when I first started, I just thought, “Well, I’ll do this for a year, and we’ll see what it looks like.”
Russel: About 50 episodes a year, so that gives you an idea of how long we’ve been doing this. What I will say is you would think after 200 episodes, I’ve talked about everything you can talk about in pipelining, but what I’m discovering is we’re just getting the crust off the biscuit, man, and that by the time we cover everything that can be covered, we’ll need to cover it all again because it’ll all have changed.
Keith: It’s a humbling experience to realize how little you know sometimes, how quickly things change.
Russel: Oh, my gosh.
Keith: Keep doing the good work.
Russel: Thank you very much, Keith. I appreciate you. I’ll look forward to when we have you back and talk about some of the more fun regulatory stuff we have in our future.
Keith: Sounds good, Russel. Thanks again.
Russel: I hope you enjoyed this week’s episode of the Pipeliners Podcast and our conversation with Keith. Just a reminder before you go, you should register to win our customized Pipeliners Podcast YETI tumbler. Simply visit pipelinepodcastnetwork.com/win to enter yourself in the drawing.
Russel: If you have ideas, questions, or topics you’d be interested in, please let me know on the Contact Us page at pipelinepodcastnetwork.com or reach out to me on LinkedIn. Thanks for listening. I’ll talk to you next week.
Transcription by CastingWords