December 2020, Vol. 247, No. 12

Government

Industry Gets Half a Loaf from PHMSA on Class Location Changes

By Stephen Barlas, Contributing Editor

After nearly 10 years of trying, gas transmission pipelines have finally won a partial victory to convince the Pipeline and Hazardous Materials Safety Administration (PHMSA) to ease the class location system for pipe replacement.  

But the agency, in its proposed rule published in mid-October, doesn’t go as far as the industry has wanted, which included ditching the class location system entirely for new pipe, which the Interstate Natural Gas Association of America (INGAA) wanted to be subject to an alternative integrity management system based on the potential impact radius of a pipeline segment.  

Instead, the PHMSA proposal focuses exclusively on easing the class location system for existing pipe, specifically sections that are reclassified up to Class 3 from Class 1 as the result of increased residential and commercial population and buildings.   

Where “upscored” sections qualify – and not all will – their operators can choose an alternative integrity management program instead of having to replace pipe. The industry has argued the class location system requires too much unnecessary replacement of pipe. Classes are based on population and buildings within an area.   

PHMSA estimated that based on two different scenarios that over the next 20 years the number of pipeline miles going from class 1 to class 3 would be either 78 miles or 118 miles. Annual cost savings from not having to replace pipe would amount to about $55 million for Scenario 1, and $86 million for Scenario 2.   

One industry official in Washington said, “There are some things we like about the proposal and some things we don’t. We didn’t expect it to come out fully the way the industry wants. But it is largely what we expected.”   

Pipelines have pressed for the elimination of the class location system for nearly 10 years, and Congress included a provision in the 2011 Pipeline Safety Act that required that PHMSA evaluate whether applying IM principles to areas outside of high consequence areas (HCA) could possibly mitigate or eliminate the need for class location requirements.   

PHMSA published a report in 2016 that said the application of integrity management (IM) requirements to gas transmission pipelines outside of HCAs would not warrant the total elimination of class locations.   

However, PHMSA stated that it intended to consider whether adjustments were needed in the way that operators were required to implement certain requirements when class locations did change. On July 31, 2018, PHMSA published an advance notice of proposed rulemaking (ANPRM) that made good on that promise and asked for suggestions for changes in class location requirements.  

This proposed rule is the next step. It addresses the limited situation where an operator is faced with a change from a Class 1 location to a Class 3 location. In those situations, under the class locations system, the existing options of pressure testing or reducing operating pressure can be technically or operationally prohibitive for meeting contractual gas flow volume obligations.  

If an operator cannot pressure test or reduce operating pressure, the only options remaining per the existing regulations are to replace the pipe with higher-strength pipe by installing pipe with either greater wall thickness or higher steel grade or apply for a special permit.   

Pipelines that choose to take advantage of the new alternative for “allowable segments” – more on exclusions in a second – would follow IM requirements in Subpart O – that is the 2003 final rule – and additional requirements for applicable segments.   

These include required in-line inspections (ILI), external pipeline coating, cathodic protection, pipeline repair criteria to maintain MAOP with a Class 1 location 39% safety factor, and usage of remote-controlled or automatic shutoff valves and other additional preventive and mitigative (P&M) measures.   

PHMSA expects these measures to provide for an equivalent level of safety for the life of the pipeline when compared to pipe replacement.   

However, a pipeline segment can only be eligible for the IM alternative if the pipeline segment has a documented successful eight-hour pressure test to a minimum of 1.25 times MAOP. Even if that is the case, segments would not be eligible if they had such things as bare pipe, wrinkle bends, missing material properties records or some other listed shortcomings.  

A pipeline industry official said that some of these exclusions would be front and center in the industry’s efforts to modify the proposed rule.