Hot on the heels of recent pipeline safety incidents, regulators and state representatives are taking steps to quell public concern by increasing energy pipeline regulation.

Recently, U.S. Transportation Secretary Ray LaHood launched a national pipeline safety initiative to repair and replace aging pipelines to prevent potential incidents in the future. In Secretary LaHood's "Call to Action" plan, he states his intention to engage state partners, technical experts and pipeline operators in identifying risks, needed repairs, rehabilitation and replacement of the highest risk infrastructure. This spring-cleaning initiative will help ensure that operations and pipelines are following the best practices possible.

Also, Secretary LaHood is asking Congress to increase the maximum civil penalties for pipeline violations from $100,000 per day to $250,000 per day, and from $1 million to $2 million for a series of violations. He is asking Congress to strengthen risk-management requirements and improve data reporting to help identify potential pipeline safety risks early.

While most pipelines have a historically safe record, as compared to any other mode of transportation for hazardous materials, there are definite challenges that companies face, considering the age of a large percentage of U.S. pipeline infrastructure.

However, excavation damage remains one of the leading causes of distribution accidents. This is due, in part, to a general ignorance of the existence and placement of fuel lines and other pipelines. Other leading causes include corrosion, incorrect operation, material or equipment-weld failures and natural force damage.

Addressing excavation damage issues, the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA) is taking the initiative to launch a website listing pipeline locations, in the hopes of better informing the general public.

Other leading causes of accidents are factors within pipeline operators' control. These leading causes may be mitigated through innovative pipeline materials, leak-remediation practices and corrosion-prevention techniques.

DIMP

Under the new rules of the Distribution Integrity Management Programs (DIMP) Rule, which is effective as of August 1, 2011, operators of local gas distribution pipelines are required to evaluate the risks on their pipeline systems and develop appropriate risk-management strategies. For older systems, this involves major pipeline rehabilitation, repair and replacement programs in order to requalify all systems as being fit for service.

DIMP applies specifically to natural gas distribution pipelines from the city gate to the customer's fuel line. Interstate operators typically transfer gas to the local distribution operator at a city gate section. From the city gate station, natural gas moves into distribution lines, or "mains" that usually range from 2- to 24-inches in diameter. Gas then moves from main distribution lines into service lines to individual homes.

Distribution operators are typically responsible for the line up to the meter, before it enters the building, although some states require responsibility for maintenance up to the wall of the actual structure. Gas in these service lines typically flows at a pressure range of over 60 pounds per square inch (psi) to as low as .25 psi.

One such local distribution operator, Dominion East Ohio, is undertaking a Pipeline Infrastructure Replacement (PIR) program, in an effort to replace bare steel, wrought iron, cast iron, copper and ineffectively coated steel pipelines, and, in many cases, is doing so with a new type of bimodal polyethylene (PE) pipe. This pipeline is safer and far more economical than traditional steel lines.

Dominion recently sought approval from the Public Utility Commission of Ohio to increase its monthly PIR cost-recovery charge to its customers by up to $2 each year, starting in 2012. At present, the company's nearly one million residential customers in northeast Ohio pay an additional $1.58 a month for the pipeline recovery replacement costs, with larger customers paying higher amounts.

By expanding its existing program, Dominion East Ohio will be able to replace an estimated 1,454 miles of ineffectively coated steel pipelines, along with another 4,122 miles of older, vintage pipelines. Most of those buried lines are bare-steel lines, with 29% installed in 1929 or earlier and 61% installed in 1949 or earlier.

“Dominion East Ohio has more bare and ineffectively coated steel pipeline than any other natural gas utility in the entire country. So this problem isn’t going away, and the only solution to address this issue is to invest more, quickly.” Jeff Murphy, managing director of commercial operations, Dominion East Ohio.

The initiative that Dominion East Ohio and other local distribution companies (LDCs) are undertaking to replace old pipeline with new, more effective and less expensive pipeline is driven in part by public concern about aging infrastructure and pipeline safety.

According to Jeff Murphy, managing director of commercial operations at Dominion East Ohio, the overall goal of the program is to maintain a safe and reliable pipeline system.

"We are replacing our pipelines to achieve two objectives. First—to eliminate operations and maintenance repair. By expanding our program, we'll be able to proactively go out and replace pipeline that would otherwise need repair, and thus generate operations and maintenance cost savings, which we can pass on to our customers," he says.

"In addition, we still have a considerable amount of high-pressure distribution pipeline remaining. That pipeline does not have much of a leak history, but we view it as critical to our system reliability and safety."

But why now, when considering that these pipelines are so safe? "Frankly, we need to right now. Dominion East Ohio has more bare and ineffectively coated steel pipeline than any other natural gas utility in the entire country. So this problem isn't going away, and the only solution to address this issue to invest more, quickly."

Dominion has plans to do so. The company was already on track to spend over $2.7 billion over the next 25 years to replace nearly 20% of its aging infrastructure. If approved, the expansion would boost the company's pipeline replacement program by $100 million per year—from $100- to $125 million per year to more than $200 million per year. And there is a duel benefit to the program, because it will add jobs as well as safety.

"If you think about what's happening here, we're taking an investment of $100- to $125 million per year and nearly doubling it by another $100 million. That increased investment brings in a large number of jobs," he says.

These jobs will be welcomed, as unemployment numbers are still at alarmingly high levels. Murphy adds, "When we began the program in 2008, we had a study performed that concluded that we could expect to add, because of ancillary and direct benefits, over 3,000 jobs in the program at its peak. In addition to those jobs, we're also putting a significant amount of investment into our communities."

Meanwhile, the project generates additional property taxes for local communities. "As a matter of fact, we pay about 2% of our investment in property taxes, so if we're spending another $100 million more each year, that times 2% is $2 million, and so on."

Another market consideration that provides incentive for Dominion to accelerate this project is the fact that customer bills are quite a bit lower right now than when the program was first approved, and gas prices will likely continue to remain relatively depressed.

"In fact, largely because of declining gas costs, that bill has now decreased by $40 per month, down to $75 from $115. We think that now is a good time to move on this issue because the impact on customers will be mitigated by low gas prices," Murphy explains.

Out with the old

Today, about 95% of LDCs' pipe installations are built with PE, like the type Dominion is using. Over the years, steady improvements to PE materials, like PE 4710 and bimodal resins, require that industry standards be updated to reflect their superior performance over early vintage PE materials. PE pipeline is less subject to corrosion, is easier to install, and is more economical.

Though PE pipelines have been used in the past, newer and safer types are being field tested, and the results are extremely positive, according to Michael Reed, director of design and construction for Dominion East Ohio.

"In 2008, we were standardized for what's known as a bimodal product—a bimodal PE pipeline product. We are actually one of the few gas LDCs in the industry standardized on this right now. Frankly, other companies are interested in our experience and our results to date."

The primary difference with the bimodal product, versus what is referred to as a unimodal product, or a one-phase product, both of which have a good safety history, is that bimodal PE pipe is more resistant to rapid-crack propagation and slow-crack growth, which are key properties in determining plastic pipe materials.

“Our plans call for us to leverage the use of PE pipe for the majority of our infrastructure replacement projects.” Mike Reed, director of design and construction, Dominion East Ohio.

"It's certainly the industry's material of choice," says Reed. "Given our focus on modernizing our infrastructure through these replacement projects, that's what we've continued to use. It is flexible, very durable, and it's very good from a construction standpoint. The material has a projected life exceeding 100 years, is more cost competitive than steel and provides us with outstanding performance."

The new bimodal PE pipe can operate at very low pressure and at higher pressures. Reed points out, "We typically operate our systems below 60 psi throughout, and we use steel for everything greater than that. We've used this, to my knowledge, going back to the late 1970s, and early 1980s, standardizing on the bimodal product in 2008. Our plans call for us to leverage the use of PE pipe for the majority of our infrastructure replacement projects."

Plastic generally has a long life span, a fact long touted by environmentalists to be specifically damaging to the environment. However, with proper application, this can be especially useful. Such pipelines are safer and have a longer life span, which is a highly desirable integrity characteristic.

"We certainly have minimized the risk of slow-crack growth and rapid-crack propagation. Also, it's lightweight and it doesn't require welders," Reed says.

In fact, the benefits list doesn't stop there. According to Reed, "Plastic pipelines don't require cathodic protection, they are bendable to a degree, and have greater cost advantages over steel in terms of material costs and labor. Probably another benefit is that if you do damage it during construction, you'll know about it quickly after a pressure test, and it can be replaced very quickly. It's less of a risk from all sides, for us."

In with the new

It is interesting to note that, in light of the over-production of ethane in the Marcellus shale play, upstream producers and midstream operators alike are trying to find ways to transport ethane, and sometimes carbon dioxide, to local petrochemical plants, or use it as fuel during field operations.

Yet, ethane and carbon dioxide are corrosive and pose take-away problems due to concerns about leaks or ruptures. This inherent corrosion issue will provide a market for products not normally associated with petroleum pipelines, such as protective coatings, large-diameter plastic and resin pipelines, compressors and pumps designed for use with corrosives, as well as leak detection technologies.

In fact, in a recent study by SBI Energy, a division of Market Research Group LLC based in Rockville, Maryland, the firm estimated that the specialty pipeline market will expand 30% per year, to reach $3 billion worldwide by 2015. This includes carbon dioxide pipelines, used for enhanced oil recovery in oilfields.

Going forward, the theme for midstream pipeline operators will become one of innovation, as operators work to solve these issues. For now, the best solution will be to replace pipelines before leaks become a major issue.

Meanwhile, Dominion East isn't the only LDC that is taking steps to switch out old pipelines.

Unitil Corp., the largest natural gas provider in Maine, is replacing more than 100 miles of pipeline in Portland and neighboring Westbrook as part of a 14-year, $60 million project to modernize its infrastructure. The project, which began in April, involves replacing cast-iron pipes (some of which are more than 100 years old) with state-of-the-art plastic pipe.

Also, Vectren Corp. of Evansville, Indiana, began replacing about 11 miles of steel LDC mains with plastic in March 2011.

In New Jersey, utility company New Jersey Natural Gas (NJNG) has identified nine projects in Monmouth, Ocean and Morris counties for inclusion in the state's second accelerated infrastructure program, which was formed in support of Governor Chris Christie's goal to rebuild the state's economy and improve the state's climate for growth. These improvement projects include main replacements, system reinforcements and expansions that are expected to improve the safety and reliability of NJNG's distribution system.

According to Rutgers University's Bloustein School of Planning and Public Policy, the NJNG program could create 490 direct and indirect jobs, and generate some $29 million in wages, salaries and proprietors' income and about $38 million in gross state product.

This spate of new construction projects is paving the way toward a safer network of pipelines. With the help of innovative material, pipeline safety will remain an industry focus as operators work to combat corrosion and ensure that future incidents do not occur.

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