Regulators Look to Plug Holes in Pipeline Rules
Wednesday, August 16, 2006
Even as BP PLC works to patch up its image and its leaky Alaska pipelines, environmentalists, the oil industry, Congress and federal officials are trying to figure out how to plug the holes in petroleum pipeline regulations.
BP's 22 miles of transit pipelines carried 8 percent of the nation's crude oil, but they were not subject to the same Transportation Department requirements as other pipelines, experts say. Those requirements exempt pipelines that operate at low pressure in rural areas and far from commercially navigable waters.
Although BP has admitted that it let as much as 14 years lapse without using cleaning and diagnostic devices known as "pigs" in key transit pipelines, it is not clear that the company violated any federal regulations.
That has not mollified Thomas Barrett, head of the Transportation Department's Pipeline and Hazardous Materials Safety Administration. In an interview yesterday, he said that the maintenance of the BP pipelines was "well below the standard of care I would expect from a company like BP -- regulations or not." He said his agency would soon propose new rules to cover low-pressure lines like these near sensitive areas.
State regulators failed to fill the oversight gap that's existed until now. Kurt Fredriksson, commissioner of Alaska's Department of Environmental Conservation, said that his agency knew that BP had not used the pigs on its 30- to 34-inch transit lines since 1992 in one case and 1998 in another, but that it accepted the company's reasoning about why that was not necessary and why the company could rely on more narrow ultrasound examinations.
"BP missed something, and we need to become more vigilant about those lines, and that's our intent," Fredriksson said last week. Regarding the use of the pig devices, he said "we didn't have any reason to think it was necessary."
The number of spills from pipelines in the United States has declined by half since 1999, according to an industry survey that included data through 2004. But large low-pressure lines like the ones where BP discovered severe corrosion problems last week account for about 50 percent of the total volume of oil spilled from pipelines nationwide, said Peter T. Lidiak, director of the pipeline segment of the American Petroleum Institute.
"Pipeline safety is typically a very obscure issue," said Lois N. Epstein, senior engineer and pipeline expert with the Cook Inletkeeper, an environmental group in Alaska. "But the dollar implications for consumers are huge." BP has said it would spend nearly $200 million fixing its Prudhoe Bay pipelines.
Federal and state regulations focus on public safety, not economics, and thus target oil pipelines that operate at higher pressure and in densely populated areas. Federal regulations require high-pressure oil pipelines to use diagnostic pigs at least once every five years. These lines can operate at pressures of 800 pounds per square inch or so. BP's transit lines in Prudhoe Bay operate at about one-tenth that pressure level. Low-pressure, low-stress lines operate at less than 20 percent of their maximum pressure capacity.
Epstein said that even though BP's transit lines were not high pressure, they should have fallen under federal regulations that govern pipelines in "high-consequence areas." That usually means densely populated areas, but Epstein said it could also apply to environmentally sensitive ones. "If the pipelines were low-pressure or low-stress, it was thought you don't have as much of a safety issue, but it is certainly still an environmental issue," she said.
Barrett said the new rules would govern 966 miles of low-stress lines and 625 of lines that begin at the wells, or 22 percent of the currently unregulated low-stress pipelines, all in rural areas.
Epstein said that federal regulation is needed because states often have conflicts of interest in dealing with big oil companies. Alaska, for instance, relies on oil royalties for nearly 90 percent of state government revenue, and it is in the middle of negotiations with BP and other big oil companies over whether to build a natural gas pipeline that could cost more than $20 billion. The oil companies are seeking concessions from the state and guarantees that certain taxes and royalties would remain frozen for long periods of time.