Gas Gathering Lines - Managing Risk

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1 Gas Gathering Lines - Managing Risk Gathering Lines are a Long-Term Capital Investment in Assets and Infrastructure Pipeline Safety Trust November 21, 2013

2 Shale Energy = National Opportunity And New Neighbors Shale Resources - Lower 48 States Current Shale Resources Prospective Shale Resources Basins Stacked Resources Shallowest/ Youngest Mid-Depth/ Mid-Age Deepest/Oldest Current and prospective resources and basins in the continental US Source: EIA based on data from various published studies updated May 9, 2011

3 Phases of Natural Gas Transportation EVERY STAGE IS REGULATED IN SOME ASPECT, NOT NECESSARILY BY DOT WELL SITE UPSTREAM EXPLORATION AND PRODUCTION MIDSTREAM GATHERING, PROCESSING, TREATING, COMPRESSING DOWNSTREAM TRANSMISSION & DISTRIBUTION

4 Who Oversees Safety of Gathering Lines? FEDERAL GOVERNMENT Under the U.S. DOT, PHMSA has jurisdiction over all gathering lines. However, some are exempted from the regulatory requirements found in 49 CFR STATES State regulations are tailored to geographic and regional needs. State requirements often cover topics including, but not limited to: construction reporting, corrosion control, damage prevention and public awareness programs. COMPANIES Prudent operators design, construct, test, and operate their gathering pipelines in a manner to safely transport the product and ensure the long-term integrity of the pipeline system. It s the smart thing to do.

5 State Regulatory Status Natural Gas Gathering Pipelines Federal Requirements State Regulations above Federal Requirements

6 Gathering Regulations Based on Risk Originally Regulated if Located in Cities, Towns, Villages, Populated Areas (Subdivisions, etc.) Changed in 2006 to Regulated in Class Locations 2, 3, or 4 Historically Smaller Diameters and Lower Pressures Than Transmission Pipelines

7 Class Locations Based on Population Density Class Location establishes Population Density around a sliding mile of pipeline. The denser the population, the more stringent the safety requirements. Class Location has been a risk-based concept in Part 192 since 1970

8 Higher Class Location Units = More Stringent Regulations Class 1 = 10 or fewer buildings intended for human occupancy. Class 2 = Greater that 10 but fewer than 46 buildings intended for human occupancy. 72% MAOP 60% MAOP Class 3 = 46 or more buildings intended for human occupancy; or locations within 100 yards of certain populated buildings or welldefined public areas 50% MAOP Class 4 = Where buildings with four or more stories aboveground are prevalent. 40% MAOP The class location is determined by the number of occupied buildings in the class location mile. Each separate dwelling unit in a multiple dwelling building is counted as a separate building intended for human occupancy.

9 Why the Current Focus? Advent and Expansion of Non-Conventional (Shale) Drilling & Production Public Perception Concerning Safety of Gathering Lines Structural Considerations Regarding Newer Gathering Lines (Diameters and Pressures)

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11 What about Pipeline Pressures? Design Pressure Formula for Steel Pipe ( ) P=(2 St/D) F E T P = Design pressure in pounds per square inch S = SMYS in pounds per square inch D = Nominal outside diameter of the pipe, inches t = Nominal wall thickness of the pipe in inches F = Design safety factor Class Location Design Factor: Class 1= 72% Class 2= 60% Class 3= 50% Class 4= 40% MAOP for new pipelines is established by pipe design pressure, pressure ratings of valves/fittings, and hydrostatic testing Very common for operating pressure to be much lower than MAOP

12 For Example P=(2 St/D) F E T For 16-inch diameter, inch wall thickness, S=SMYS=65,000 psi, pipe designed for a Class 3 Location (safety factor = 0.50), P = 1523 psi = 50% SMYS However (real world example Company X) Pipe used on upstream (suction) side of compression MAOP limited to 715 psi by components used (ANSI 300 series) = 23% SMYS Tested for 8 hours at 1075 psi (1.5 x MAOP) Typically operates at 200 psi or less = <10% SMYS

13 In Today s World Pipelines are designed & built using state-of-the-art materials, components and technologies. Pipelines are constructed to meet or exceed 192 requirements and industry standards for welding, depth of cover, hydro-testing, and quality assurance. Monitored for class location changes and perceived threats.

14 Looking Forward Operators are continuously taking steps to protect people, environment and integrity of pipeline systems. Focus future regulatory efforts on gathering lines using a risk-based approach. Recommend consistent application of gathering line safety regulations.

15 In Conclusion Pipelines are currently still the safest means of transporting hazardous liquids and natural gas - PHMSA Website