Energy conference settles pipeline safety, endorses Alaska gas line

Sept. 13, 2002
Lawmakers resolved disagreements over updated pipeline safety laws and endorsed a new Alaskan gas export pipeline to the Lower 48 during a House-Senate conference committee Thursday.

By OGJ editors

WASHINGTON, DC, Sept. 13 -- Lawmakers resolved disagreements over updated pipeline safety laws and endorsed a new Alaskan gas export pipeline to the Lower 48 during a House-Senate conference committee Thursday.

Senate Energy and Natural Resources Chairman Jeff Bingaman (D-NM) brokered an agreement that supporters said will ensure older natural gas pipelines and those that run through populated and recreation areas are inspected within 5 years. All other pipelines, including newer pipes, will be in inspected in the following 5 years.

After that initial inspection, all natural gas pipelines must be reinspected every 7 years, or more frequently if necessary.

"The tragedy that unfolded outside Carlsbad (NM) 2 years ago demonstrated just how important it is for us to have a strict pipeline inspection regimen. The pipeline safety plan we have developed will ensure that the pipelines that run across the country, often through our communities, will be assessed on a regular basis," Bingaman said.

The US Department of Transportation's Research and Special Programs Administration proposed a $2.52 million civil penalty—the largest ever called for in a federal pipeline safety program—against the El Paso Energy Pipeline Group for safety violations related to the August 2000 pipeline failure that resulted in the deaths of 12 people near Carlsbad, NM (OGJ Online, June 21, 2001).

Conferees also voted Thursday to streamline the permitting of a pipeline to carry Alaskan North Slope gas to the Lower-48 states along a southern route via the Alaska Highway. The US Federal Energy Regulatory Commission would have 18 months to approve a final environmental impact statement for the line's construction and then 2 months to approve a final certificate.

"The energy bill now addresses nearly all of the federal actions needed to encourage expedited construction of a trans-Alaska gas pipeline, said Sen. Frank Murkowski (R-Alas.) "It is a significant step in the approval process and brings the gas pipeline appreciably closer to reality."

Pipeline Safety
To improve inspection methods, the House and Senate conferees agreed to direct the Department of Energy, DOT, and the National Institute of Standards and Technology (NIST) to work with an advisory committee to develop a plan that addresses critical research and development needs to ensure pipeline safety. The plan also authorizes a total of $25 million to help the DOT, DOE and NIST develop improved inspection technology.

The pipeline proposal includes the following specifics:

-- Requires operators of natural gas transmission pipelines and of hazardous
liquid pipelines to submit to the secretary of transportation plans to
enhance the qualifications of pipeline personnel and to reduce the likelihood of
accidents and injuries.

-- Increases to $500,000 from $25,000 the civil penalty for each facility operator
failure to: (1) mark accurately the location of pipeline facilities in the
vicinity of a demolition, excavation, tunneling or construction; or (2) comply
with safety standards, prepare and carry out an inspection and maintenance plan,
allow access to records, or allow required entries or inspections. Increases the maximum civil penalty for a related series of violations to $1 million from $100,000.

-- Requires the transportation secretary, as part of the DOT research and
development program, to direct research attention to the development of new
technologies: (1) to expand the defect detection capabilities of internal
inspection devices; (2) to inspect pipelines that cannot accommodate internal
inspection devices available on the date of enactment; and (3) to develop
innovative techniques measuring the structural integrity of pipelines.

-- Requires each owner or operator of a gas or hazardous liquid pipeline facility
to carry out a continuing program to educate the public on the use of a one-call
notification system prior to excavation and other damage prevention activities,
the possible hazards associated with unintended releases from the pipeline
facility, the physical indications that such a release may have occurred, what
steps should be taken for public safety in the event of a pipeline release, and
how to report such an event.

Industry reaction
Oil and gas pipeline associations offered their own support for the deal.

"The industry supports this bipartisan measure that will give the government even greater oversight and addresses a number of areas where congressional action was needed. From providing the Office of Pipeline Safety with appropriate funding for its inspection, and enforcement responsibilities, to strengthening research, to improving communication with the public about pipeline safety without compromising security, Congress has acted responsibly," said the Association of Oil Pipe Lines.

"For the public, this promotes safer transportation of the fuel it needs to keep the nation's communities, airports and military on the move. Thanks to strong oversight and aggressive industry safety initiatives, pipelines remain the safest, cleanest and smartest way to deliver the fuel we all depend on."

Alaskan gas line
Key Senate provisions related to the Alaska gas line project are still pending. Senate language includes a $10 billion loan guarantee, along with a tax credit that is triggered when the Alberta natural gas hub price falls below $3.25/MMbtu.

The House bill does not offer any kind of tax incentive for the line but calls for the same southern route as the Senate bill, which parallels the oil pipeline from the North Slope to Fairbanks and then the Alaska Highway to British Columbia. Producers are also considering a northern route across the Beaufort Sea into Canada's Mackenzie Valley.
A final decision on the Senate language is expected later, when lawmakers tackle other thorny issues.

This latest round of discussions is part of a larger debate over comprehensive energy legislation that includes a myriad of issues covering energy efficiency, fuel standards, tax incentives, electricity reform, and expanded access to public lands. Conference manager Billy Tauzin (R-La.), chairman of the House Energy and Commerce Committee, told lawmakers he wants to present a final bill for the president's signature before Congress adjourns in mid-October.

Beyond pipeline safety, much remains to be resolved, although industry groups and lawmakers say there is still enough political momentum to pass some type of measure acceptable to the president.

Still on the table
The House and Senate bills both would add new tax incentives designed to encourage domestic production, although the $8 billion House provision is about twice as generous than the Senate version. The White House has indicated both of those provisions are too high, even if the tax relief is spread out over a 10-year period.

Whether the price tag will result in a veto remains uncertain. Clean fuel requirements, including possible liability relief for petrochemical producers that make the additive methyl tertiary butyl ether, are still under active discussion as well. There is strong White House and congressional support for a clean fuel plan that would phase out MTBE but require ethanol in a portion of the gasoline pool.

There is also the issue of access to public lands. The proposal to lease for exploration and development a portion of the Arctic National Wildlife Refuge is expected to be a hot topic, but like ethanol, it will probably not be settled until near the end of the session. That could happen in October, or possibly after the elections in November if Congress chooses to have a lame duck session.