August 2015, Vol. 242, No. 8
Features
Pipeline Expert Peter Lidiak Ready for New Challenge
At the American Petroleum Institute’s spring pipeline conference in Savannah, GA one bit of news in particular grabbed attendees’ attention when it was announced that Pipeline Director Peter T. Lidiak was leaving his post after serving as API’s go-to pipeline executive since 2005.
Lidiak, who joined API in 2000, is one of the nation’s leading experts on crude oil pipelines, testifying before countless congressional and agency hearings in Washington, D.C. and having a hand in practically any issue involving pipelines.
A graduate of Colgate University in upstate New York, Lidiak said he plans to remain active in the energy industry.
P&GJ: What led you to decide on a career in the energy/pipeline industry?
Lidiak: I have worked in the energy industry for a little over 30 years, first as a federal regulator and then as an advocate and leader for the industry. What drew me to the industry was the pervasive impact it has on our society, economy and environment. Affordable and reliable supplies of energy produced and delivered safely and in an environmentally responsible manner have been a focus throughout my career.
P&GJ: What were your interests growing up, and did any of that factor into working in the energy industry?
Lidiak: I’m not sure I ever thought of energy as a career early in life. I was a teenager when the country was experiencing the oil embargoes of the early ’70s. With the price increases and rationing that accompanied them I, like many, came to appreciate the importance of affordable, abundant energy to our way of life.
P&GJ: What was the career path that brought you to API and when did you become so directly involved with pipelines? Is your involvement primarily with crude/products systems?
Lidiak: I’m trained in the physical sciences and my first career was as a secondary school science teacher. I left teaching to join government, working in environmental protection. I spent 15 years regulating fuels and vehicles, seeking workable solutions for reducing air emissions from mobile sources. I then joined API working on air quality standards, fuels, refining and finally pipelines.
My interest in pipelines grew while working on fuels issues and coming to understand their role in delivering crude to refineries and products to markets and most of my work has been with liquids pipelines (crude, NGL and products pipelines).
For the last 10 years I have worked closely with company CEOs, presidents, COOs and vice presidents to develop and implement industry programs to improve operations and safety and to advocate for smart, effective public policies, laws and regulations.
P&GJ: How have you seen the pipeline industry change during your tenure with API?
Lidiak: When I became the pipeline director at API, the industry was implementing the provisions of the pipeline integrity regulations. The industry was already moving forward progressively, focused equally on reliability of supply, profitability and safe operations. The industry leadership has continually focused on how to improve its safety performance and earn the social license to operate.
Equally important is the cadre of technical and operational leaders at all levels that assisted us day-by-day to identify the best solutions to issues we have faced. As an example, responding to PHMSA’s ANPRM (Advanced Notice for Public Rule Making) for Hazardous Liquids Pipeline Safety was a massive effort that I coordinated and we had several teams of technical experts who assisted in responding with suggestions for progressive changes the industry felt would make a difference.
P&GJ: What are the most important challenges looming ahead for the pipeline industry, perhaps from a legislative/regulatory perspective, communications/PR/social media/environmental and technology perspectives?
Lidiak: The industry is already on the road from “Quiet Steel” where operators felt it was enough to reliably move products from one point to another, to employing multiple communication channels to inform the public why pipelines are important to them and what information about pipeline safety they need to know. Effective communications is a challenge the industry is focused on.
People used to understand that life involved risk, but today there is zero tolerance for risk (or rather consequence), which means that every major service and manufacturing sector, including pipelines, must work at high levels of safety performance while keeping services regular and affordable. Regulations or laws that require significant additional controls must actually improve safety, as opposed to being paperwork exercises with little or no benefit, for instance, and should be flexible to allow for efficient implementation.
The challenge for operators, regulators, legislators and even the public is to recognize that resources should be focused on what’s most important and effective and not on controls that address rare or low impact threats. Performance-based requirements are generally most cost-effective and allow operators to address the greatest risks first.
Technology is ever-improving and the tools used to maintain pipeline safety are better today than they were even five years ago. Technology vendors and operators are coordinated in several research areas to improve technologies even more, including leak and crack detection. Industry leadership at the highest level is supporting R&D to assess and improve inline inspection technology.
P&GJ: What are your thoughts about the shale revolution and how the industry responded? Were you surprised by the speed in which it’s occurred or that it would be such a game-changer?
Lidiak: The shale revolution, as we have all seen, has changed the landscape of not only domestic, but global energy supply. Who would have thought even 10 years ago the U.S. would be the top global producer of natural gas and crude oil? I certainly didn’t.
The pipeline industry is operating at high rates of utilization where pipelines are able to service these new levels of production, but many of the shale production areas and the areas where that production can be processed and refined are underserved by existing pipelines.
When coupled with demands for tougher permitting reviews and longer timeframes for those reviews, it’s been difficult for pipeline operators to respond quickly to the growing demand. A result is the growing use of rail for crude movements and the commensurate increase in crude by rail accidents.
At the same time, new pipelines are being built using the newest steels and latest construction practices. This should give the public confidence in these newer pipelines. There is room for improvement in construction practices and API has formed a group to develop a pipeline construction quality management recommended practice.
P&GJ: Although I ask this while the oil spill in California is being cleaned up, how has the industry responded to safety and environmental challenges? What approaches would you like to see companies take to improve the safety of their systems?
Lidiak: First, while many question its efficacy, pipeline integrity management has been a huge success in improving pipeline safety. The industry and PHMSA worked together, and with others, to structure and implement IMP. According to industry statistics, from 1999-2014 there was a 50% reduction in releases of all types and sizes along the pipeline right-of-way.
In my work with the industry, we have always focused on the right-of-way because that is where pipelines are in contact with communities and the environment. Operators don’t ignore facilities, but there has been a greater focus on what is outside the fence line.
The rate of reduction in releases was significant in the early 2000s but has slowed considerably in recent years. Industry executives at the highest levels are engaged and supportive of efforts to move the needle even further on pipeline safety.
That’s why the focus on safety management systems is so important for future success. API will release Recommended Practice 1173 in the near future, which I believe will prove to be the most important pipeline safety improvement document in more than a decade – really since integrity management came out. The pipeline industry is committed to applying this RP to its operations to ensure continuous safety improvement.
P&GJ: What can the industry do to improve the public’s perception, in particular that companies try to operate in an environmentally sensitive manner?
Lidiak: The industry has already implemented some of the pieces needed to better inform the public about pipelines. API is getting ready to start work on the third edition of RP 1162 on Public Awareness. The first edition served as the basis for the public awareness regulations and defined the target audiences and messages operators need to address.
AOPL (Association of Oil Pipelines) and API started issuing an annual safety performance report and pipeline safety strategic plan two years ago to improve industry transparency on the record and what industry plans to do to improve. These pieces get a lot of high-level (C-suite) attention from the operating companies. But, as I mentioned, industry must do more and part of that will be to use new means of communication and provide information and data that is transparent and accessible to the public.
P&GJ: Do you think the industry is over-regulated by the federal government? Where would you prefer to see less regulation, and are there cases where there should be greater regulation?
Lidiak: Our state and federal regulators and the regulations they operate under are “about right.” PHMSA has shown record levels of civil penalties in the last several years, showing that the federal regulator is on the job and is tough. We have also seen an increase in inspections and the number of federal inspectors in recent years. And PHMSA has leveraged its use of advisories to make it clear to industry how they intend to interpret and apply the regulations.
My opinion is that improvement will come through efforts being pursued via non-regulatory avenues, especially the implementation of safety management systems. Regulations set a necessary standard for performance but if regulations become the be-all for safety improvement, they will fall short.
P&GJ: You were very involved with developing API Recommended Practice 1173 Pipeline Safety Management Systems (SMS). What is the significance of this?
Lidiak: As stated, I expect 1173 to offer the next-step change in pipeline safety. We put together a team that spans the oil and gas pipeline industry and includes non-industry pipeline and process safety experts, operating company representatives, federal and state regulators and trade association staff.
This team met once a month for most of the last two years to develop 1173, examining all relevant existing safety management guidelines we could find and writing the elements of the RP. The first draft that was balloted garnered about 1,000 comments following an open public comment period.
The document makes planning for safety improvement and assessing results regular and intentional. It takes a step that most other management system documents have not by discussing how safety culture supports and is supported by an SMS. Industry leadership is committed to active implementation of the RP leading to significantly improved safety.
PGJ: What do you feel were your most important accomplishments with API, and what, in retrospect, might you have done differently?
Lidiak: I hold RP 1173 up as my most important accomplishment – this document ties safety management and culture together in a way not attempted previously, and I feel confident it will result in significant safety improvement. I’m also proud of the Pipeline Information eXchange forum, which API has hosted since 2008 for operators to share significant learnings from incidents and near misses.
While not well-known outside the operator community, as it is closed to others to encourage open sharing, the program has allowed the industry to learn from others’ actual or near misfortunes as opposed to repeating mistakes experienced and solved by others.
I would not change anything I chose to do as pipeline director. I led our industry actively and ably to accomplish many positive outcomes in industry safety programs and state and federal legislative and regulatory advocacy.
P&GJ: Do you think the Keystone Pipeline will be approved and built? Why has the industry made this its leading priority? Do you think an ultimate rejection would lead opponents to oppose future infrastructure projects?
Lidiak: I believe the project will be approved. It should have been some time ago. This became a leading priority to the energy industry, and indeed the business community as a whole, because it set a new standard for the arbitrary review of a border crossing permit.
Despite repeated findings by the DOS (Department of State) staff that the project would have minimal environmental impacts, would actually be better than the no-build alternative and numerous additional conditions agreed to by TransCanada, the administration has declined to make a decision. It sets a dangerous precedent for other privately funded, shovel-ready infrastructure projects.
P&GJ: What are your professional and personal plans?
Lidiak: I expect to be back to work soon and am considering several opportunities. I am available to help operators, especially those interested in implementing safety management systems that are compliant with RP 1173.
Right now, I am able to spend more time with my wife and three sons as we get ready to send our oldest off to college. It’s been my pleasure to be a leader in the Cub Scouts and Boy Scouts and to coach some sports teams for my boys, which I hope to continue.
Peter Lidiak can be reached at ptl@lidiaks.us.
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