Category Archives: Regulation

Alberta pipeline spills prompt questions

EDMONTON – Three pipeline spills in Alberta this spring have many people wondering whether there are better ways to move the petroleum products that are the lifeblood of Alberta’s economy.

The oil industry’s reliance on pipelines — which organizations such as the Canadian Association of Petroleum Producers and the Canadian Energy Pipelines Association say are the safest way to transport products— have companies like TransCanada and Enbridge proposing to expand their lines to carry Alberta bitumen to refineries in Texas and tankers at Kitimat, B.C., for shipment to Asia and its hungry economy.

“The industry really does move all of its oil and natural gas products through pipeline to get to market,” says Greg Stringham, vice-president of markets and oilsands CAPP. “Today in Canada, we are actually producing … almost three million barrels a day, and that’s across the country of course, from the field, to the upgraders, to refineries.”

To put that volume in perspective, CN Rail began in 2010 to test its ability to move heavy crude, light oil, and bitumen to markets in Eastern Canada and the United States.

The company moved three million barrels of oil last year, and expects to move 15 million barrels in 2012. That’s about five days worth of total production.

“Rail does play a part. But (pipelines) are the main transportation grid we use to move oil across the continent. It really has proven to be a very reliable, very safe, and a very efficient way to move this product,” Stringham says. “We are getting fairly constrained on the pipeline capacity given the growth that is happening.”

The use of tanker trucks to move oil is more difficult to measure. Alberta Transportation does not keep track of vehicles carrying petroleum on roads, but can say 430 of 602 “incidents” in 2011 involved petroleum products. The department defines “incidents” as anything that prevents a product from getting to its destination.

Expanding the reach Alberta’s pipelines is key in maintaining the province’s economic stake in the global oil market, provincial Energy Minister Ken Hughes says.

With that need comes a responsibility to maintain the pipeline system.

“The industry as well as the government need to ensure that we have ways to demonstrate the solid aspects of this way of transporting fuels across Canada,” Hughes says. “North America will continue to be heavy users of oil and of natural gas. Those products have to get to market somehow. What we need to do is ensure that they get there with as few incidents as possible.”

The Pembina Institute think-tank, which is among the environmental groups supporting a call for an independent investigation of Alberta’s pipelines, suggests there could be alternatives to building pipelines — particularly the proposed Enbridge Northern Gateway line to Kitimat, B.C., which has raised concerns from First Nations communities and municipalities along the proposed northern route to the West Coast.

Nathan Lemphers, a senior policy analyst in the Pembina Institute’s oilsands program, says the capacity of existing pipelines could be increased by increasing the number of pumping stations. Alternatively, companies could transport more product via rail.

“It’s not necessarily a clear-cut solution. There’s benefits and drawbacks to each method of transporting oil,” Lemphers says.

Pipelines leak. Trains derail, tanker trucks crash.

Since trains typically move less product than pipelines, spills are smaller. Derailments can be recognized far faster than pipeline spills.

A natural gas operator in Michigan was the first to notice oil spilling from Enbridge’s pipeline at the Kalamazoo River in 2010. The incident has since netted the company a multimillion-dollar fine in the United States and raised questions about the state of the control room in Edmonton, after testimony given during the investigation shed light on what was happening during the 17 hours it took to shut the line.

“When you have the government coming out and saying, well, simply trust us, we have adequate measures in place without actually coming forward and offering evidence for that position, it puts the government in a fairly precarious situation,” Lemphers says. “Having more information on the table will help ground further discussions” about pipeline expansion.

“Having pipelines in your backyard is nothing new for Albertans, but Albertans also have strong ties to the land and want to see the land conserved,” he says.

Doug Goss still remembers an oil spill that cut summer short at Wabamun Lake in 2005.

“It was a disaster, in every sense of the word,” Goss says. “When you get to the point where the front of the beach is covered in oil and there’s dead animals all over the place, and you’re told you can’t use the lake for the rest of the summer for any reason, it’s pretty devastating.”

But unlike the recent spills, the one at Wabamun Lake was from a 43-car train derailment.

That summer, 1.1 million litres (7,000 barrels) of Bunker C fuel oil spilled into the lake, creating a seven-kilometre slick. The cleanup took nearly a year and cost CN Rail an estimated $28 million.

“We haven’t had any issues since that spill many years ago. We cross our fingers all the time that that won’t happen again,” Goss says. “As a resident, we would be proponents of whatever system is proven to be the safest to transport substances like oil.”

The Wabamun incident sparked a provincial study and recommendations for a faster, more comprehensive response to environmental disasters.

Despite a growing volume of freight being moved along its tracks, CN’s derailments are down. In 2011, the company had 55 main track derailments, compared to 110 in 2005. To date, there have been 27 derailments along main tracks compared to 34 at this time last year.


Pipeline Integrity Management Meeting Set

The Pipeline and Hazardous Materials Safety Administration and the National Association of Pipeline Safety Representatives are jointly sponsoring the public meeting June 27 in Fort Worth, Texas.

A meeting to gauge gas distribution pipeline operators’ readiness for federal and state inspections of their integrity management programs has been set for June 27 in Fort Worth, Texas, by the Pipeline and Hazardous Materials Safety Administration and the National Association of Pipeline Safety Representatives. It is open to the public and will be webcast, according to PHMSA’s announcement.

PHMSA and NAPSR representatives will discuss observations from initial inspections of operators’ implemented integrity management programs.

PHMSA published a final rule in December 2009 setting requirements for ensuring the continued integrity of gas distribution pipelines; it gave operators until Aug. 2, 2011, to implement them. PHMSA and states have conducted some inspections and have many more inspections coming up, the notice says.

The meeting will be held from 8 a.m. to 5 p.m. CDT at the OMNI Hotel, 1300 Houston St., Fort Worth, TX 76102-6556; visit to register and for additional information.


Bill would earmark PG&E fines for better pipelines

Two Bay Area lawmakers want to use revenue raised from fines leveled against Pacific Gas & Electric Co. – in connection with 2010’s San Bruno gas line explosion – to pay for upgrades to the utility’s transmission system, saying the move will save ratepayers hundreds of millions of dollars.

Under current state law, any fine assessed by the California Public Utilities Commission goes to the state’s general spending account, which pays for schools, prisons and other state programs.

Assemblyman Jerry Hill, D-San Mateo, on Tuesday introduced legislation that would dedicate money raised from the explosion fines to pipeline upgrades. The measure is co-authored by San Francisco Democratic Sen. Mark Leno.

Hill said state regulators are expected to level at least $200 million – and probably far more – in penalties against the utility in connection with the deadly explosion. If that money is used for pipeline replacement instead of general state spending, he said, ratepayers would save at least $660 million.

“PG&E should not be allowed to profit from what has occurred,” Hill said. “The way it works now … PG&E will borrow the money for capital improvement costs and ratepayers will have to pay the principal back as well as interest.”

But the PUC also has authorized PG&E to grant its shareholders an 11.35 percent profit on its capital improvement projects – money that gets taxed. All these costs are to be paid for by ratepayers unless the bill passes.

Hill said that when you add up all of the additional costs, every dollar of penalty money spent on pipeline upgrades will save ratepayers $3 to $4.

“To me, those ratepayers within the PG&E service area are ones who have suffered the most … by living with an unsafe pipeline system,” he said. “I feel that those are the ratepayers who should benefit, or at least be made whole, from the penalties related to San Bruno.”

The PUC has not yet assessed fines against PG&E in connection with the San Bruno incident, which killed eight people and destroyed 38 homes. But the utility’s managers set aside $200 million last year, saying they expect penalties could top that amount when three separate state investigations are complete.

Hill said PG&E is expected to spend more than $5 billion, including interest, over the next 50 years upgrading its transmission system to comply with federal recommendations.

Brian Swanson, a PG&E spokesman, said the utility has not taken a position on the bill but supports the concept.



PG&E Names New Executive to Gas Pipeline Team

PG&E added another executive to its gas operations team to help rebuild the company following the 2010 pipeline explosion in San Bruno.

Jesus Soto Jr., who is currently the vice president of operation services for El Paso Corp.’s pipeline group, will now become PG&E’s senior vice president of gas transmission, operations, engineering and pipeline integrity.

In his new role, Soto Jr. will be responsible for four areas for the company:

  • public safety and integrity management;
  • project engineering, design and management;
  • gas transmission; and
  • gas system operations.

“PG&E and our customers are fortunate to have someone with such a strong background working to make our system the best in the country,” said Nick Stavropoulos, PG&E’s executive vice president of gas operations, who was recently hired himself to help chart a new path for the utility following the San Bruno disaster. “We have already made excellent progress in turning our operations around, and there is still more to do. I have every confidence Jesus will play a major role in meeting this challenge.”

PG&E has been steadily making strides to revamp its pipeline operations by bringing in Stavropoulos and new CEO Anthony Earley and following through on the pipeline safety recommendations the National Transportation Safety Board issued following the explosion.

The utility also is trying to get a $2.2 billion plan approved by the California Public Utilities Commission to modernize its pipeline system throughout the state.

Meanwhile, PG&E has still been beset with problems stemming from its pipeline operations.

The CPUC recently fined PG&E $3 million for failing to comply with the commission’s orders to provide records for its gas transmission pipelines following the explosion. The company has set aside another $200 million for pending fines that are expected for the explosion.

More than 250 people have filed lawsuits against PG&E for the explosion, and the jury trial starts in July. The lawsuits are expected to be costly.

PG&E also just reached a settlement with the city for $70 million as restitution for the fire.

Soto said he hopes to help turn the company’s operations around.

“I look forward to quickly integrating myself into the PG&E Gas Operations organization and reinforcing a team and a culture that are driven to operational excellence anchored in public, employee and contractor safety, facility integrity, regulatory compliance and system reliability,” he said in a statement.


State Hearing to Focus on Increasing Funding for CA Public Utilities Commission

The California Public Utilities Commission is seeking to add seven new positions to its gas safety division 

A state assemblyman will be leading a hearing today to talk about possibly beefing up state regulators’ ability to oversee pipeline safety in the wake of the 2010 San Bruno pipeline explosion.

Assemblyman Rich Gordon, D-Menlo Park, who chairs the Assembly Budget Subcommittee on Resources and Transportation, will be conducting the hearing from 9 a.m. to noon in the state capitol. The legislators will be reviewing the increased funding the California Public Utilities Commission has received to strengthen its safety oversight and enforcement over gas, electric, communications and rail public utilities throughout the state.

In particular, Gov. Jerry Brown’s budget proposes a budget of $5.896 million for the commission and increasing its staff to 41 people, which would include seven new positions in its gas safety division and an additional $300,000 to build a gas safety database.

Investigators and critics blasted the CPUC after the PG&E pipeline explosion in the Crestmoor neighborhood because it only had nine inspectors, who were each responsible for overseeing the safety of an average of 11,000 miles of pipeline.

The CPUC has since added nine more safety inspectors—a move that reflects a change in the culture of the commission, according to a staff report that explained the increased funding.

The “CPUC admits that policy objectives took priority over safety prior to the San Bruno explosion,” the staff report said. The “CPUC’s reactive safety strategy, premised on the assumption that utilities recognized public safety as their top priority, was inherently misguided.”


PHMSA Proposes New Rule to Increase Enforcement of Pipeline Excavation Programs

The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) has proposed new procedures geared to strengthen excavation damage prevention programs and increase penalties for violators.

Excavation damage continues to be a leading cause of all U.S. pipeline failures and is the single greatest threat to the safety, reliability, and integrity of the natural gas distribution system. Excavation activities accounted for more than 25 percent of fatalities resulting from pipeline failures in the U.S. between 2002 and 2011.

“Safety is our top priority,” said U.S. Transportation Secretary Ray LaHood. “It is important for states to have strong and effective enforcement programs as we work together to crack down on violators of these important laws.”

The proposed rule will encourage states to strengthen their excavation damage prevention enforcement programs, provide more protection for underground pipelines, and allow for federal enforcement against violators in cases where state enforcement may not occur. Specifically, it would revise and strengthen the federal Pipeline Safety Regulations by establishing:

  • Criteria and an administrative process to determine the adequacy of a state’s excavation damage prevention law enforcement program;
  • Federal requirements that PHMSA will enforce against excavators in states determined to have inadequate damage prevention enforcement programs; and
  • An enforcement process to impose federal fines and penalties for violations.

These new procedures would also address a congressional directive requiring PHMSA to establish procedures to evaluate state damage prevention enforcement programs. By law, PHMSA must establish these criteria prior to any attempt to conduct federal enforcement proceedings in a state where an excavator damages a pipeline.

“Those who violate damage prevention laws must be held accountable,” said PHMSA Administrator Cynthia Quarterman. “We will continue to work to strengthen damage prevention laws, partner with states to strengthen their enforcement programs, and impose stiffer fines and penalties for these types of pipeline failures.”

For more details about the proposed rule, including comments received from the agency’s Advance Notice of Proposed Rulemaking, visit PHMSA’a website at


Pipeline regulators propose broader public access

The California Public Utilities Commission on Monday proposed opening up public access to most records under the agency’s purview, a dramatic shift that would allow Californians to view documents detailing the safety records of natural-gas pipelines running under their neighborhoods.

The move comes 18 months after the explosion of a Pacific Gas and Electric Co. pipeline in San Bruno that killed eight people, and four months after a Chronicle investigation revealed that the vast majority of documents at the commission are barred from public access, including investigation reports on natural-gas pipeline accidents and safety audits of utilities such as PG&E.

The practice of shielding documents from public view spawned criticism by victims of the explosion and others, and prompted Sen. Leland Yee, D-San Francisco, to write a bill requiring such disclosure.

On Monday, Yee called the utilities commission’s proposal a “good first step.”

Terrie Prosper, a spokeswoman for the commission, said the proposed change would improve public access to records. “The public should have the widest possible access to information we possess,” she said.

In a written statement, the commission added that its public access regulations are “outdated and cumbersome, and often delay rather than facilitate access to records requested.”

A 60-page draft resolution, which the five members of the utilities commission will vote on in May, would change the agency’s rules to make documents publicly available unless a utility can show why the records should be hidden from view.

Currently, regulations require a vote of the commission before any unreleased paperwork may be made public – a vote that comes after the panel consults with utilities.

The proposal calls for automatically disclosing the outcomes of safety-related investigations and creating an online index of the commission’s available records and an online “safety portal” that houses all safety-related records.

California law now exempts the utilities commission from the state’s public records law, a contrast to other states, where such documents are routinely available.

Yee said the commission’s announcement is a good starting place but that his proposal, SB1000, should still move forward.

That legislation would repeal a 1951 state law exempting the agency from the state’s Public Records Act unless the commissioners vote to allow public access to specific documents.

“The fact that CPUC is willing to do much more than they are doing right now to be open and transparent – I think that’s a good thing,” Yee said. “But the best step is to support my bill and to pass it.”

To view the proposed regulations, go to: 


U.S. Sen. Bob Casey visits Allentown to call for greater transparency on pipeline safety information

Visiting the site of last year’s massive gas explosion in Allentown, U.S. Sen.Bob Casey, D-Pa., announced he was pushing for Pennsylvania to improve public transparency regarding pipeline safety information.

In a letter he sent today to the chairman of the Pennsylvania Public Utility Commission, Casey said improving that transparency will help reduce the amount gas pipeline incidents and help protect state residents.

“The Public Utility Commission should be providing more information to the people of Allentown, the people of the Lehigh Valley, and the people of this Commonwealth,” Casey said.

He made the statement at the gravel lot at 13th and Allen streets, which was the site of several homes before the Feb. 9, 2011, explosion.

Casey cited an independent report by the Pipeline Safety Trust that gave Pennsylvania a score of 0.75 out of 3 in pipeline information transparency, and ranked it 25th among states in that area.

Jennifer Kocher, spokeswoman for the Pennsylvania Public Utility Commission, said the report was conducted in November and is “flawed” because it was based in part on areas where the commission has no jurisdiction.

“In general, Pennsylvania is in line with all of the other states when it comes to access to its information on pipeline safety,” Kocher said. “We are continuing to pursue gas safety improvements including the manner in which records are made to the public.”

But Casey said the report found the commission only provides agency staff contact information and information on pipeline regulations.

That means it provides no information on incident data, inspection records, enforcement records or excavation damage data, he said.

Casey sent a letter to Commission Chairman Robert Powelson requesting immediate steps to share more data.

Kocher said some of the information not available on their website can be found on the U.S.Transportation Department’s Pipeline and Hazardous Materials Safety Administration website. She also said the commission has ongoing efforts to increase pipeline safety.

“Among other things, we are seeking the placement of a training facility for pipeline safety inspectors here in Pennsylvania to help with the current two-year backlog in training for inspectors,” she said.

Allentown Mayor Ed Pawlowski joined Casey this morning in urging more transparency.

UGI replaced seven miles of Allentown gas main in 2011 and plans to replace 7.5 miles in 2012, which will leave about 64.5 miles of cast-iron pipe in the city.

UGI spokesman Joe Swope previously said UGI also installed a system in October allowing Allentown and the company to communicate and coordinate more efficiently on infrastructure projects through map-based solutions online.

An investigation into the exact cause of last year’s gas explosion is still ongoing.

Kocher said some information like maps and specific locations of gas pipelines are withheld for homeland security reasons. Casey said he believes a middle ground can be reached where the state is more transparent without creating safety problems.

Pawlowski said that, if certain information could not be provided due to homeland security issues, it could at least be given to city officials and not the public at large.

“Information about water pipelines are public, and if there was a terroristic threat, I’d think it would come from poisoning our water supply rather than the gas pipelines,” he said.


$67 million requested for pipeline safety

Federal pipeline safety programs would get an extra $67 million and nearly 120 new employees under a proposal President Obama announced Monday that brought cheers from safety advocates pushing to address accidents and growing safety concerns.

The request, part of the president’s $3.8 trillion plan, would almost double the number of enforcement agents nationwide, according to the Pipeline and Hazardous Materials Safety Administration. The increase also would cover improvements from research to accident investigation to information databases, according to an agency news release.

Pennsylvania safety officials and advocates and the national safety group Pipeline Safety Trust all urged Congress to approve the funding, though Republican leaders have said the president’s budget will be dead on arrival there.

Obama’s plan doesn’t provide a comprehensive solution to several key issues as the state’s pipeline system expands to handle the rush of shale gas, several officials said.

“It is helpful, but there are still huge gaps in pipeline safety,” said Myron Arnowitt, Pennsylvania director of Clean Water Action.

The Obama administration has been pushing for safety system upgrades for more than a year in light of deadly explosions in Allentown, Philadelphia and suburban San Francisco.

Pennsylvania has a growing expanse of pipeline from shale gas development and one of the country’s oldest home heating gas transport and distribution systems. Utility and pipeline companies were spending about $800 million annually going into 2011 to beef up the system, in part to meet increasing federal safety demands.

State lawmakers in December passed rules that will allow them to receive federal funding and hire 12 to 15 inspectors. The Public Utility Commission still wants Congress to pass the increase as part of a general need to improve safety, spokeswoman Jennifer Kocher said.

The state has 60,000 miles of pipe, and drillers could add 25,000 miles, according to federal figures and a report from the Nature Conservancy, an Arlington, Va.-based advocacy group. Nationwide, there were 10 pipeline incidents causing six deaths, seven injuries and more than $4.2 million in damage last year, according to the Pipeline and Hazardous Materials Safety Administration’s online database.

City of San Francisco sues to force feds to improve pipeline safety

The city of San Francisco took the unusual step Tuesday of asking a judge to force federal natural-gas safety regulators to step up efforts in California, saying the government “abjectly failed” to enforce pipeline laws before and after the 2010 explosion that devastated a San Bruno neighborhood.

At issue in City Attorney Dennis Herrera’s lawsuit, filed in U.S. District Court in San Francisco, is the performance of the little-known U.S. Pipeline and Hazardous Materials Safety Administration. Although it is charged with enforcing federal safety law, the agency relies on states to do much of its oversight.

Herrera’s suit says federal officials never set standards and let California’s enforcement dwindle in the years leading up to the September 2010 explosion of a PG&E pipeline in San Bruno.

‘Blind trust in operators’

In its investigative report on the blast, which killed eight people and destroyed 38 homes, the National Transportation Safety Board recommended that the pipeline agency tighten regulations on operators. The board’s chairwoman, Deborah Hersman, said PG&E had “exploited weaknesses in a lax system of oversight, and regulatory agencies that placed a blind trust in operators to the detriment of public safety.”

Herrera’s lawsuit echoes those findings, saying the pipeline agency stood by for more than a decade while the California Public Utilities Commission failed to detect PG&E’s safety problems, questionable pipeline-management practices and shoddy record keeping.

The state agency allowed utilities to police and report their own safety violations in lieu of being fined. The agency has changed its approach since the San Bruno disaster and recently proposed a $16.8 million penalty against PG&E for failing to conduct leak inspections on several miles of gas distribution pipelines in the East Bay.

“In the absence of any meaningful oversight by PHMSA, the CPUC has, for decades, forsaken its duty to enforce federal pipeline safety standards,” the city said in its suit. Under those circumstances, the suit said, “it is not a question of if another pipeline will explode, but a question of when.”

The pipeline safety agency issued a statement Tuesday declining to comment on the lawsuit but stressing its “core” commitment to safety.

“That’s why we devoted hundreds of hours of staff support and technical expertise to the NTSB and the California Public Utilities Commission to understand the San Bruno tragedy,” the agency said.

Failure to monitor

The suit said the federal government’s failures were putting San Franciscans at risk. It is the first time a local government has sought stricter regulation from the pipeline safety agency, said Rick Kessler, a lobbyist for the Pipeline Safety Trust, a nonprofit that focuses on safety improvements.

“If this brings better oversight and enforcement,” he said, “I applaud it.”

The suit seeks a court order to compel federal pipeline safety officials to set performance standards for state regulators who oversee gas transmission lines.

According to the complaint, the U.S. pipeline agency gave California $1.3 million in 2010 to oversee pipeline safety, yet “never meaningfully evaluated” how the money was spent or measured the effectiveness of the state’s program.

Federal officials knew California’s enforcement efforts had been understaffed since 1998, the suit said, resulting in a small proportion of federal funding being allocated to the state. Inspections became so infrequent by 2006 that the pipeline agency warned the Public Utilities Commission that California was jeopardizing public safety.

The explosion of a gas distribution pipeline in Cupertino in August, in which a condominium was destroyed, is evidence that the federal government hasn’t done enough to strengthen its regulatory efforts since the San Bruno disaster, the suit said.

That explosion happened because of a leak in a notoriously brittle type of 1970s-era plastic pipe, which the government recommended in 1998 that pipeline operators replace. Regulators have never ordered companies to do so, though.

Giving up authority

The federal agency, “for all practical purposes, has allowed gas pipeline operators like PG&E to regulate themselves and, in doing so, has improperly delegated its authority to enforce federal pipeline safety standards to those operators,” the suit said.

Although Herrera earlier threatened to sue the Public Utilities Commission as well, he said Tuesday that the state agency has improved its oversight of PG&E since 2010.

“We are participating in the administrative process to make sure the CPUC follows through on its pledge,” Herrera said in an interview.

PG&E had no comment on the suit except to emphasize actions it has taken since the San Bruno explosion to try to make its gas system safer.