Upstream independents protest PHMSA’s proposal for gathering lines

Independent oil and gas producers are asking the US Pipeline & Hazardous Materials Safety Administration to not begin regulating gathering and production lines as part of the US Department of Transportation agency’s latest proposed pipeline safety rules. PHMSA failed to comply with a congressional mandate before proposing new regulations for gathering lines, the Independent Petroleum Association of America and 11 state associations said in July 7 comments.

The producers particularly protested PHMSA’s proposing to define “onshore production facilities” as “terminat[ing] at the furthermost downstream point where: Measurement for the purpose of calculating minerals severance occurs; or there is commingling of the flow stream of two or more wells.”

The definition not only ignores PHMSA’s jurisdictional constraints by ignoring the line’s actual function, but it completely dismisses the traditional understanding of production operations reflected in RP-80, said Gregory D. Russell, a co-chairman of IPAA’s Pipeline Safety Task Force (PSTF) and a partner at Vorys, Sater, Seymour & Pease LLP in Columbus, Ohio.

It also dismisses the reality of multiwell horizontal development from a single well pad where under the proposed definition, regulated gathering could begin on the well pad, at or near the wellhead, Russell said.

“We are independent producers of America’s reliable energy resources, a high responsibility,” said Tom Stewart of Oilfield Policy Advisors LLC (OPA) and the PSTF’s other co-chairman. “In our comments we ask only that the agencies obey the law, regulate as necessary, yet respect the authorization provided them by Congress,” he said.

Tom Stewart of OPA and another PSTF co-chairman, said, “We all have mutual goals of protecting the public interest. But we will fight unwarranted and intrusive regulators who think they have the right to rise above the rule of law, even as we will operate our investments in America’s energy infrastructure to the highest standards possible.”

Shut-ins would be likely

Susan W. Ginsberg, IPAA’s senior vice-president of regulatory affairs, said producers want to operate safely and reliably. “What PHMSA has proposed would not further that goal, and would likely result in smaller producers having to shut in production, particularly from marginal wells,” she warned.

Joining IPAA in the comments were the American Exploration & Production Council, the Colorado Oil & Gas Association, the Independent Oil & Gas Association of West Virginia, the Kansas Independent Oil & Gas Association, the Kentucky Oil & Gas Association, the Michigan Oil & Gas Association, the Ohio Oil & Gas Association, the Pennsylvania Independent Oil & Gas Association, the Texas Alliance of Energy Producers, the Virginia Oil & Gas Association, and the West Virginia Oil & Natural Gas Association.

The Interstate Natural Gas Association of America and American Gas Association also recommended changes to PHMSA’s proposed rule in their separate July 7 comments.

NGAA identified three key provisions that PHMSA should remove or modify in its comments. It suggested that the agency:

• Allow the use of alternative methods for validating maximum allowable operating pressure in order to ensure the ongoing development and implementation of technologies and practices that improve pipeline safety.

• Withdraw the proposal for spike hydrostatic pressure testing.

• Remove overly prescriptive material verification criteria from the proposed rulemaking.

AGA, like INGAA and IPAA, expressed strong support in its July 7 comments for working with PHMSA and stakeholders to improve safety. It also said the agency’s proposal represents a shift away from performance-based regulations, which recognize the unique characteristics of each pipeline system, to prescriptive regulations, which define how an activity is to take place regardless of the circumstances or the characteristics of the system.

Contact Nick Snow at nicks@pennwell.com.

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