Improve federal pipeline permitting process, UTA white paper urges

Federal oil and gas pipeline permitting processes need to be accelerated and improved if they are to keep pace with rapidly expanding production, a new white paper produced for United Transportation Advisors LLC argued.

Regulatory delays are forcing producers to use less efficient shipping modes such as rail, which could increase otherwise avoidable accidents, according to the white paper, “Assessing America’s Pipeline Infrastructure: Delivering on Energy Opportunities.” Forecasts anticipate rail’s share of total North Dakota crude oil production will climb from 60% in 2013 to as much as 90% in 2014, it indicated.

“In short, by failing to act, regulators are effectively mandating inefficiencies into the system, which disrupt the market and stifle investment and development,” it noted in its executive summary.

The authors—Jack Rafuse, who was a White House energy advisor during the Nixon administration, and Vern Grimshaw, who directed Unocal Corp.’s pipeline operations for years before his retirement—offered three specific recommendations:

• Federal regulators—particularly the US Pipeline and Hazardous Materials Safety Administration—should review and revise federal codes 49 CFR Parts 192 and 195 to improve pipeline transportation and enforcement as well as facilitate regulatory decision-making so that pipeline operators and owners can plan long-term investments.

• Renew the focus and funding support for pipeline technology research and development efforts to ensure that the domestic energy transportation system remains the safest for decades to come.

• Review and modernize industry best practices and specifications surrounding emerging technology such as improvements in composite pipe materials and leak detection technologies.

“Typically, a pipeline is considered a good utility investment over a long period, much like the interstate highway system,” said UTA Founder and Principal Brigham A. McCown, who was PHMSA’s acting administrator during George W. Bush’s presidency, in a Feb. 6 teleconference with reporters. “In that case, you had the luxury to put the system together over years. With tight gas, the resource can be depleted quickly and decisions have to be made faster.”

Rafuse, who also participated along with Grimshaw, said, “If pipeline permits are slow in coming, what producers have shown the past 4-5 years is they can buy trains, get them moving, and fill them up. It may not be the perfect solution, but it’s happening at a tremendous rate. It’s astounding how quickly North Dakota production has switched over to trains in the last 3-4 years.”

Grimshaw said, “We want to make sure regulators and the pipeline industry continue to work together. My experience is that regulators have done a good job so far. PHMSA and the Office of Pipeline Safety, through their workshops, have helped pipeline operators identify and correct problems.” The permitting process for use of composites needs to become less arduous, he added.

“I was initially intrigued by composite pipe because this type of material can be put down more quickly, often at a much reduced cost, yet exceed pipeline safety regulations,” said McCown. “It’s one thing that can help speed up the traditional infrastructure lag time. It can be used in ever-increasing diameter pipes’ repair and remediation, which can take a long time.”

Even when a pipeline operator or regulator has identified an infrastructure problem, it can take up to 2 years to get a permit to fix it, he continued. “That process needs to move faster,” McCown said. “We’re no longer in a 1960s typewriter-driven era.”

Contact Nick Snow at nicks@pennwell.com.

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