Federal interest in pipeline safety grows as industry evolves

Additional attention is focused on the energy sector as Congress considers reauthorization of the Pipeline Safety Act. Of particular interest appear to be questions of safety oversight keeping up with the ever changing landscape of infrastructure intended to be monitored for safety. Testimony in the Senate Subcommittee included a back and forth between Sen. Corey Booker, of New Jersey, whose questions focused on high density impacts, and Susan Fleming, the director of physical infrastructure in the Government Accountability Office, who emphasized the regulation of gathering lines. Other Senators commented at the hearing, pointing specifically to the changes in transportation as a need for “serious reform” to the Pipeline and Hazardous Materials Safety Administration (PHMSA).

This issue is becoming more significant as unconventional shale plays around the country are being developed. Historically, gathering lines tended to be smaller diameter, low pressure lines that posed a minimal safety risk. Because of the size of the wells producing gas in many of the unconventional shale plays (like the Marcellus and Utica shales), gathering systems have changed and now tend to operate at much higher pressures and in larger pipes to accommodate the massive amounts of gas generated from the well pads.

The policy issues raise fair questions, but highlight the challenges to dealing with this issue. The costs to construct and move gas are significant already and additional regulation will certainly drive up costs. Also, multiple federal and state agencies are involved and share the mutual obligation to ensure the safe operation of the ever growing infrastructure. Exploration and production companies continue to look for ways to move their product to market, and to do so at a time where price pressures are tremendous. And, environmental groups have shifted much of their attack to the pipeline system and siting issues to limit or prohibit further development of oil and gas resources, having been unsuccessful at stopping the drilling and well completion process. At a time of economic challenge for producers, if the costs to move the commodity to market are driven up or made more challenging by opposition, then drillers will simply not be able to develop resources in a cost-effective manner.

All of these issues are a continuation of discussions that have been happening for several years. The careful balance between appropriate safety regulations to ensure proper operation of the delivery system with the costs to operate it and the use of the rules by opponents to shut down the industry bear careful watching and active participation. Stay tuned for more as the reauthorization process continues.