The gas pipeline industry has long been subject to federal regulations aimed at ensuring the safety of lives and property. These regulations traditionally focused on eliminating hazards and mitigating risks associated with pipeline leaks.
However, in recent years, there has been a significant shift toward environmental safety in the regulatory landscape, driven by growing concerns about sustainability and the role of methane emissions in contributing to greenhouse gases.
In 2023, the Pipeline and Hazardous Materials Safety Administration (PHSMA) proposed two major rulemakings that are rapidly shifting the way utilities handle leak-prone mains.
Protecting the Environment: A New Regulatory Priority
Historically, gas pipeline regulations prioritized safeguarding lives and property, often overlooking small leaks that posed no immediate threat to safety. These minor leaks might be found in remote locations or areas where they were deemed non-hazardous.
However, in May 2023, PHMSA introduced a set of proposed regulations aimed at addressing growing environmental concerns related to methane emissions from gas pipeline systems. These regulations mark a significant shift, treating environmental safety issues with the same level of urgency as other safety concerns in the industry.
PHMSA had previously identified specific pipe materials, including cast iron, bare steel, and vintage plastic pipe, as "leak prone." Under the proposed regulations, pipeline operators are now required to intensify their leak surveillance efforts, expedite repairs of these leak-prone pipes, and develop comprehensive plans for the removal of such pipes from their systems.
Notably, many operators already had plans in place to replace these pipes, but the proposed order has heightened the sense of urgency, primarily to prevent the escalation of maintenance costs associated with leak-prone mains.
Under the new rules, all leaks, regardless of severity, demand action. Even what were once considered nuisance leaks must be addressed within specified timeframes. The federal government has set a standard for leak detection equipment sensitivity, requiring that instruments must detect leaks at levels as low as 5 parts per million.
These changes are substantial and come with tight implementation deadlines, putting pressure on utilities to adapt swiftly.
Catastrophe Leads to New Regulations
In August 2023, PHMSA introduced another notable proposed rulemaking concerning the operation of vintage, leak-prone, low-pressure gas distribution systems, as well as the design and construction of their replacement systems. This ruling was prompted by a tragic incident that unfolded in Massachusetts in 2018, underscoring the critical need for enhanced safety measures in these aging systems.
As part of the proposed regulations, vintage distribution systems will necessitate the incorporation of additional safety systems, particularly at low-pressure district regulator stations. Moreover, the design and construction of replacement pipeline systems will see a substantial increase in oversight and inspection requirements, ensuring a heightened level of scrutiny to prevent future incidents and enhance overall safety standards.
These changes require enhanced scrutiny of construction, design, sensing lines, and pressure monitoring to prevent catastrophic incidents. The overarching goal is to replace leak-prone mains while ensuring safe operations and mitigating greenhouse gas emissions.
Anticipated Impacts on the Gas Pipeline Industry
These regulatory changes are expected to have far-reaching impacts on the gas pipeline industry. Firstly, the regulations reinforce the urgency for utilities to expedite the replacement of leak-prone mains.
While this comes with increased costs, it aligns with the industry's broader goals of enhancing safety, reducing emissions, and meeting net-zero emission targets.
The reduction in greenhouse gas emissions is a significant benefit for the industry, aligning with the increasing focus on environmental, social, and governance (ESG) factors. Furthermore, the regulations can lead to cost savings in operation and maintenance by reducing the need for ongoing surveillance and surveying of aging infrastructure.
The Cost of Progress
Utility companies are often caught between the imperative to replace aging infrastructure for safety and environmental reasons and the challenge of managing the associated costs. While upgrading infrastructure is always a priority, striking a balance is crucial as they must justify these costs to rate regulators to ensure they can recover capital cost while maintaining reasonable rates for customers.
Charting a Course Forward
The gas pipeline industry is undergoing significant regulatory changes, driven by a heightened focus on environmental safety and sustainability, and the need to prevent catastrophic incidents.
While these changes bring challenges and costs, they also present an opportunity for utilities to adapt swiftly to meet the new regulatory standards, ensuring the safety of lives, property, and the environment while striving to achieve net-zero emissions.
Balancing these objectives will be the key to success for utilities in this evolving landscape of gas pipeline regulation.
Managing Capital Programs
PFES is well situated to partner with utilities seeking comprehensive assistance in managing their capital programs. We leverage industry-leading project management expertise to guarantee precise project cost estimates while ensuring timely, budget-friendly, and safe project completion.
Our commitment to effective communication with communities affected by these projects underscores our dedication to responsible project execution. In addition to our project management proficiency, PFES possesses the specialized knowledge required to assist utilities in formulating rate case strategies to provide greater certainty of capital cost recovery for well executed capital projects.
Contact us today to find out how we can help.
by Ted Lenart, Vice President of Gas Services, PFES
