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Pipe safety rule projected to cost 56 times federal estimate; judge went easy on PG&E, CPUC unit says

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Essential Energy Insights - February 2021

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021


Pipe safety rule projected to cost 56 times federal estimate; judge went easy on PG&E, CPUC unit says

Thefederal pipeline safety regulator's majorgas transmission rule would cost significantly more and yield farless benefit than official projections suggest, the American PetroleumInstitute said.

Thesweeping rule proposalcould cost the industry $33.4 billion, with benefits ranging between $306million and $568 million, according to an ICF International study conducted forthe American Petroleum Institute. The cost estimate is about 56 times the U.S.Pipeline and Hazardous Materials Safety Administration's regulatory impact analysisestimates of roughly $597 million in costs. PHMSA also estimated $3.2 billionto $3.7 billion in benefits.

CallingPacific Gas and Electric Co.'sgas distribution record-keeping system "far from safe," theCalifornia utility regulator's safety division charged that a judge wastoo lenient on theutility for its shortcomings.

Thejudge's proposed decisionin the California Public Utilities Commission's investigation said a "systemthat works over 99% of the time is not a system in need of improvement."The CPUC's Safety and Enforcement Division, however, said in a July 1 appeal ofthe ruling that the judge overlooked a great deal of important factors indrawing this conclusion.

TheU.S. Department of the Interior has issued its final rule for drilling in theArctic Circle, throwing down new regulations that are stiffer than those foroffshore drilling in other areas.

AfterRoyal Dutch Shell plc'sdecision to abandonits exploration plans in the Chukchi Sea earlier this year, there has been nodrilling activity in the Arctic. The DOI moved ahead with the final ruleregardless, meaning that any future drillers in the Chukchi or Beaufort seaswill face stricter regulations.

Californiaregulators proposed underground gas storage regulations that would haveoperators do daily leak inspections permanently and conduct more frequenttesting.

"Thispreliminary draft of regulations updates construction and operating standardsof gas storage wells, introduces new data and monitoring requirements forstorage facilities, and ensures adequate risk management and emergency responseplans at each storage facility," Ken Harris, the California Department ofConservation's oil and gas supervisor, said in a July 8 statement. "Ouremphasis is to ensure public safety and environmental protection during theoperation of these facilities."

TheInterstate Natural Gas Association of America criticized proposed transmissionpipeline safety rulesas "overly complicatedand rigid," echoing the objections of other industry representatives.

Incomments submitted July 7 to the U.S. Pipeline and Hazardous Materials SafetyAdministration, INGAA said the sweeping set of rules would force operators toredirect their resources to focus on activities that "do little, ifanything, to increase the margin of safety."

TheEPA's rules on methane emissions are part of a greater "war against fossilfuels" and will have a devastating effect on Texas' industry, the state'stop oil and gas regulator said during testimony before Congress.

TexasRailroad Commission Chairman David Porter ripped the Obama administration andthe EPA in particular for overstepping their boundaries in what he described asa quest to ruin hydrocarbon producers.

TheOntario Energy Board approved UnionGas Ltd.'s C$12.3 million Leamington expansion project to extendservice in the Leamington, Kingsville, Mersea Township and Gosfield South areasof the province.