trending Market Intelligence /marketintelligence/en/news-insights/trending/L6JLp42iyyIviugSi-w5wQ2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

In This List

Gas gathering regulation fuels debate as industry awaits new pipeline rules

Webinar Replay

Deep Dive on Oil & Gas for Financial Institutions

Essential Energy Insights - May 14, 2020

Credit Risk: Identifying Early Warning Signals In The Oil And Gas Industry

Stress Testing Energy Companies in the Current Environment


Gas gathering regulation fuels debate as industry awaits new pipeline rules

As federal regulators get closer to releasing rules for gas gathering lines, pipeline safety stakeholders still hold diverging opinions on how to treat this sprawling part of the nation's energy infrastructure, which is subject to little federal oversight.

The impending, long-awaited gathering rule expected in 2020 will likely govern a relatively small new portion of the vast and growing network of gathering lines — the pipes that deliver gas from production fields to processing facilities, transmission lines and distribution systems. But the U.S. Pipeline and Hazardous Materials Safety Administration, or PHMSA, also plans to collect data on all gathering lines, with an eye toward future regulation based on what the regulatory agency learns from that data.

At stake is how PHMSA treats an estimated 426,000 miles of unregulated gathering lines, as well as new infrastructure, in the coming years. The decision is a major concern to companies that will shoulder compliance costs and safety advocates who want expansive rules.

SNL Image

The U.S. shale revolution has driven a construction boom for gathering pipelines, but federal regulations have not kept pace with the shift to large, high-pressure gathering lines.
Source: AP Photo

"What we regulate — and that's the debate we're having, and it's a very good debate — and where we draw those lines is an important part of the conversation," John Gale, director of standards and rulemaking at PHMSA, said during a Nov. 8 panel at the Pipeline Safety Trust conference.

"But it's also important to note that it's only one step in the process, right?" Gale said. "That data that we're going to collect will help inform us of where we go next ... and how far we should go with those requirements."

Growing gas gathering network presents new risk

Gas gathering line construction has grown alongside the boom in U.S. gas production over the past decade and a half. The nation added about 28,000 miles of line between 2013 and 2017 and will lay another 73,000 miles through 2035, according to estimates from consulting firm ICF International.

Long viewed as a low-risk type of pipeline, gathering lines have largely fallen outside the purview of federal regulation. But the pivot toward unconventional shale drilling has also prompted the shift from smaller, low-pressure gathering lines to larger-diameter, high-pressure lines. These larger lines are typically seen as carrying greater risk than their smaller counterparts but remain just as unregulated at the federal level.

Incidents on these lines can be destructive. In Pennsylvania, Energy Transfer LP's Revolution gas gathering pipeline exploded in September 2018, destroying a house, a barn and several vehicles. The line was newly in operation at the time, and heavy rains contributed to the explosion.

Mary Friend, director of pipeline safety for the West Virginia Public Service Commission, said the state exemplifies this trend. West Virginia has 60 miles of 36-inch diameter gathering pipeline that operates at pressure up to 1,440 pounds per square inch, and only one mile is subject to regulation, Friend said. For perspective, the state's largest regulated transmission line is the same size and operates at 1,000 psi, according to Friend.

SNL Image

"The question becomes ... those people along that [gathering] line, shouldn't they be provided the same level of safety?" Friend said during the November panel.

Much of the West Virginia pipe is not regulated because it sits in a Class 1 location — a sparsely populated area where a failure is less likely to cause death, injury or property damage.

Based on an existing notice of proposed rulemaking, PHMSA's proposed rule would apply regulations to high-stress gathering lines of 8.625 inches or greater in Class 1 areas, where 97% of the infrastructure is located.

Industry, safety advocates spar over scope of rules

The American Petroleum Institute, an industry trade group representing multiple segments of the oil and gas sector, has proposed minimum safety requirements that would apply to rural gathering lines of 12.75 inches in diameter or greater.

"This is a baseline standard for what are the minimum requlations for perhaps an operator that has not operated in the regulatory realm before," said Aaron Martinez, who chairs the American Petroleum Institute committee developing the requirements. "Minimum standards are not how you get to zero, so this is not an endgame. This is the starting point."

Some safety advocates say that does not go far enough. Pipeline Safety Trust Board President Sara Gosman noted that 79% of the nation's gathering lines are smaller than 8 inches, while 11% are between 8 and 12 inches.

"If you think about it from the perspective of somebody who is living in those areas, I think the same question about why this particular threshold was chosen is going to be a concern," said Gosman, who also sits on PHMSA's gas pipeline advisory committee.

Friend said both a more broadly applied regulatory approach and a more nuanced set of standards have the potential to create headaches for operators and regulators alike. On one hand, the American Petroleum Institute's more detailed approach could prove a "nightmare" for those trying to parse, apply and oversee the standards, Friend said. On the other, the more expansive rules some pipeline safety advocates push for could carry heavy costs for operators already struggling amid low gas prices.

The rules "need to address the appropriate risk associated with the pipeline," Friend said." The compliance needs to be easy to understand and to implement. And there needs to be an appropriate balance between the safety — and of course safety is a priority — but safety and other issues."