{"operation":"document","citation":"85 FR 8104","title":"Pipeline Safety: Safety of Underground Natural Gas Storage Facilities","source_type":"rulemaking","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2020-02-12","effective_on":"2020-03-13","summary":"The Pipeline and Hazardous Materials Safety Administration is publishing this final rule to amend its minimum safety standards for underground natural gas storage facilities (UNGSFs). On December 19, 2016, PHMSA issued an interim final rule (IFR) establishing regulations in response to the 2015 Aliso Canyon incident and the subsequent mandate in section 12 of the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016. The IFR incorporated by reference two American Petroleum Institute (API) Recommended Practices (RPs): API RP 1170, \"Design and Operation of Solution-mined Salt Caverns Used for Natural Gas Storage\" (First Edition, July 2015); and API RP 1171, \"Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs\" (First Edition, September 2015). The IFR required each provision in the API RPs to apply as mandatory (i.e., each \"should\" statement would apply as a \"shall\") unless an operator provides written justification for not implementing the practice, including an explanation for why it is impracticable and not necessary for safety. Based on the comments received to the IFR and a petition for reconsideration, PHMSA has determined that the RPs, as originally published, will provide PHMSA with a stronger basis upon which to base enforcement than the IFR. This final rule also addresses recommendations from commenters and a petition for reconsideration of the IFR by modifying compliance timelines, revising the definition of a UNGSF, clarifying the states' regulatory role, reducing recordkeeping and reporting requirements, formalizing integrity management practices, and adding risk management requirements for solution-mined salt caverns.","machine_formats":{"json":"https://regulus.evalyn.ai/document/federal-register-2020-00565.json","markdown":"https://regulus.evalyn.ai/document/federal-register-2020-00565.md"},"app_url":"https://regulus.evalyn.ai/document/federal-register-2020-00565","source_url":"https://www.federalregister.gov/documents/2020/02/12/2020-00565/pipeline-safety-safety-of-underground-natural-gas-storage-facilities","body":"Federal Register, Volume 85 Issue 29 (Wednesday, February 12, 2020) [Federal Register Volume 85, Number 29 (Wednesday, February 12, 2020)] [Rules and Regulations] [Pages 8104-8127] From the Federal Register Online via the Government Publishing Office [ www.gpo.gov ] [FR Doc No: 2020-00565] [[Page 8103]] Vol. 85 Wednesday, No. 29 February 12, 2020 Part II Department of Transportation ----------------------------------------------------------------------- Pipeline and Hazardous Materials Safety Administration ----------------------------------------------------------------------- 49 CFR Parts 191, 192, and 195 Pipeline Safety: Safety of Underground Natural Gas Storage Facilities; Final Rule Federal Register / Vol. 85, No. 29 / Wednesday, February 12, 2020 / Rules and Regulations [[Page 8104]] ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration 49 CFR Parts 191, 192, and 195 [Docket No. PHMSA-2016-0016; Amdt. Nos. 191-27; 192-126; 195-103] RIN 2137-AF22 Pipeline Safety: Safety of Underground Natural Gas Storage Facilities AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), Department of Transportation (DOT). ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: The Pipeline and Hazardous Materials Safety Administration is publishing this final rule to amend its minimum safety standards for underground natural gas storage facilities (UNGSFs). On December 19, 2016, PHMSA issued an interim final rule (IFR) establishing regulations in response to the 2015 Aliso Canyon incident and the subsequent mandate in section 12 of the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016. The IFR incorporated by reference two American Petroleum Institute (API) Recommended Practices (RPs): API RP 1170, ``Design and Operation of Solution-mined Salt Caverns Used for Natural Gas Storage'' (First Edition, July 2015); and API RP 1171, ``Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs'' (First Edition, September 2015). The IFR required each provision in the API RPs to apply as mandatory (i.e., each ``should'' statement would apply as a ``shall'') unless an operator provides written justification for not implementing the practice, including an explanation for why it is impracticable and not necessary for safety. Based on the comments received to the IFR and a petition for reconsideration, PHMSA has determined that the RPs, as originally published, will provide PHMSA with a stronger basis upon which to base enforcement than the IFR. This final rule also addresses recommendations from commenters and a petition for reconsideration of the IFR by modifying compliance timelines, revising the definition of a UNGSF, clarifying the states' regulatory role, reducing recordkeeping and reporting requirements, formalizing integrity management practices, and adding risk management requirements for solution-mined salt caverns. DATES: This final rule is effective on March 13, 2020. The Director of the Federal Register approved the incorporation by reference on January 18, 2017. FOR FURTHER INFORMATION CONTACT: Technical questions: Byron Coy, Senior Technical Advisor, by telephone at 609-771-7810 or by email at [email protected] . General information: Ashlin Bollacker, Technical Writer, by telephone at 202-366-4203 or by email at [email protected] . SUPPLEMENTARY INFORMATION: I. Executive Summary A. Purpose of This Final Rule B. Summary of the Major Provisions C. Costs and Benefits II. Background A. Overview of Underground Natural Gas Storage B. Underground Storage Incidents and Regulatory History C. Aliso Canyon Incident D. The PIPES Act of 2016 E. Interagency Task Force F. Interim Final Rule G. Petition for Reconsideration III. Comment Summaries and PHMSA's Responses A. Introduction B. Incorporation by Reference of API Recommended Practices 1170 and 1171 C. Compliance Timelines D. Placement of Underground Storage Regulations in a New Part for Title 49 of the 49 CFR E. Suitability of API RPs 1170 and 1171 as the Basis for Rulemaking F. Integrity Management Practices G. Notification Criteria Under 49 CFR Part 191 for Changes at a Facility H. The States' Role in Regulating UNGSFs I. Definitions and Terminology J. Requests for Additional or More Stringent Requirements IV. Regulatory Analyses and Notices I. Executive Summary A. Purpose of This Final Rule The Pipeline and Hazardous Materials Safety Administration (PHMSA) is amending the pipeline safety regulations applicable to underground natural gas storage facilities (UNGSFs). PHMSA is amending the UNGSF regulations in response to comments and recommendations received on its interim final rule (IFR) published on December 19, 2016 (81 FR 91860). The IFR implemented PHMSA's authority to regulate UNGSFs and the Congressional mandate in section 12 of the PIPES Act (Pub. L. 114-183) to establish minimum safety standards for depleted-hydrocarbon reservoirs, aquifer reservoirs, and solution-mined salt caverns used for the storage of natural gas.\\1\\ Congress issued the mandate to PHMSA following a large-scale natural gas leak at the Aliso Canyon UNGSF in Southern California on October 23, 2015. The mandate required PHMSA to establish minimum safety standards for UNGSFs within two years of the PIPES Act issuance on June 22, 2016. To meet the mandate's deadline-- and address the urgent need for safer storage of natural gas--PHMSA published the IFR with a 60-day comment period. The IFR went into effect on January 18, 2017. --------------------------------------------------------------------------- \\1\\ For a description of these storage types and other basic information about underground natural gas storage, see https://www.eia.gov/naturalgas/storage/basics/ . --------------------------------------------------------------------------- Since that time, PHMSA has considered public comments and a petition for reconsideration of the IFR and is modifying the minimum safety standards for UNGSFs in this final rule accordingly. PHMSA has also further reviewed the Final Report of the Interagency Task Force on Natural Gas Storage Safety \\2\\ to ensure any amendments in this final rule are consistent with the Task Force's recommendations to PHMSA.\\3\\ As detailed in this final rule, PHMSA believes these changes will reduce regulatory burdens and reduce costs for industry and gas consumers while sustaining safety and protecting the environment. --------------------------------------------------------------------------- \\2\\ ``Ensuring Safe and Reliable Underground Natural Gas Storage,'' Final Report of the Interagency Task force on Natural Gas Storage Safety; October 2016. See https://www.energy.gov/downloads/report-ensuring-safe-and-reliable-underground-natural-gas-storage . \\3\\ In addition to their comments on the IFR, on March 17, 2017, the State of Texas and the Texas Railroad Commission petitioned the U.S. Court of Appeals for the Fifth Circuit for review of the IFR under 49 U.S.C. 60119(a). See State of Texas v. PHMSA, No. 17-60189 (5th Cir. Mar. 17, 2017). On April 24, 2017, the court granted INGAA and AGA's motions to intervene in the litigation. On July 19, 2017, the court granted a joint motion to hold the petition for review in abeyance pending the issuance of this final rule. --------------------------------------------------------------------------- B. Summary of the Major Provisions Consistent with the IFR, this final rule maintains the incorporation by reference of American Petroleum Institute (API) Recommended Practices (RPs) 1170 and 1171 (the RPs) as the basis of the minimum safety standards in 49 CFR part 192. API RP 1170, ``Design and Operation of Solution-mined Salt Caverns Used for Natural Gas Storage'' \\4\\ has recommended practices for solution-mined salt cavern facilities used for natural gas storage and covers facility geomechanical assessments, cavern well design and drilling, solution mining techniques, [[Page 8105]] and operations, including monitoring and maintenance practices. API RP 1171, ``Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs'' \\5\\ has recommended practices for natural gas storage in depleted oil and gas reservoirs and aquifers, and focuses on storage well, reservoir, and fluid management for functional integrity in design, construction, operation, monitoring, maintenance, and documentation practices. Both RPs describe ways to maintain the functional integrity of design, construction, operation, monitoring, maintenance, and documentation practices for UNGSFs. The RPs contain numerous provisions that use the term ``shall'' to denote a minimum requirement necessary to comply with the RP. The RPs also use non-mandatory terms such as ``should,'' ``may,'' and ``can'' to denote a recommendation that is advised, but not required. --------------------------------------------------------------------------- \\4\\ API Recommended Practice 1170 ``Design and Operation of Solution-mined Salt Caverns used for Natural Gas Storage (First Edition, July 2015). \\5\\ API Recommended Practice 1170 ``Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs'' (First Edition, September 2015). --------------------------------------------------------------------------- This final rule amends the IFR in six primary ways. First, PHMSA adopts the RPs without modification to the non-mandatory terms. In the IFR, PHMSA adopted the RPs by modifying the non-mandatory provisions (i.e., statements containing ``should'' and other non-mandatory terms) as mandatory requirements (i.e., ``shall''). PHMSA provided that operators could deviate from the modified statements by providing a justification in their procedure manuals as to why the provision was ``not practicable and not necessary for safety'' at their specific facility. Accordingly, with this final rule, PHMSA also no longer requires operators to provide written justifications as to why they would not have performed a ``should'' provision. Second, this final rule is formalizing requirements and deadlines for operators to develop and implement their integrity management (IM) programs and to conduct their baseline risk assessments for UNGSFs. As noted by commenters and petitioners, the API RPs function as an IM system for UNGSFs, which requires more time to implement than the IFR allowed. After considering these comments and recommendations, PHMSA is relaxing the timeline for completing initial assessments of the reservoirs, caverns, and wells. PHMSA discusses these new requirements and deadlines in Section III-C, ``Compliance Timelines.'' Third, this final rule includes a requirement for solution-mined salt caverns to follow the same risk management practices as depleted- hydrocarbon reservoirs and aquifers that apply to the physical characteristics and operations of the facility (i.e., follow section 8 of API RP 1171). Since the publication of the IFR, PHMSA has observed that many operators of solution-mined salt caverns are voluntarily using section 8 of API RP 1171 to supplement the risk management practices in section 10 of API RP 1170. While most salt-cavern UNGSFs have a risk-management program in place, section 8 of API RP 1171 provides more prescriptive practices than API RP 1170 for how an operator must develop, implement, and document a program to manage risks that could affect the functional integrity of the storage operation. Extending the applicability of the recommended practices in section 8 of 1171 closes a potential critical safety gap for salt- cavern storage facilities and may prevent future failures at these facilities. PHMSA has codified this practice in the final rule to ensure consistency across all UNGSF facilities. Fourth, PHMSA is narrowing the scope of reportable events and changes at facilities. In addition to annual data reporting and National Registry information, the IFR required operators to notify PHMSA of certain changes and events and their facilities, such as incidents and safety-related conditions. Since the IFR, PHMSA received many notifications for routine maintenance activities, which was not the intent of the regulation. Operators are not required to notify PHMSA of regular maintenance. To make this clear, PHMSA is limiting notification of changes to a facility 60 days prior to the following events: (1) All plugging or abandonment activities (regardless of costs), and (2) construction or maintenance that requires a workover rig and costs $200,000 or more. PHMSA is also applying an emergency exemption to the 60-day notification requirements, which PHMSA overlooked in the IFR. Fifth, this final rule is revising the definition of an ``underground natural gas storage facility.'' The PIPES Act amended 49 U.S.C. 60101(a) to define an ``underground natural gas storage facility'' as ``a gas pipeline facility that stores natural gas in an underground facility, including--a depleted hydrocarbon reservoir, an aquifer reservoir; or a solution-mined salt cavern reservoir.'' The IFR incorporated a modified version of this definition in part 192. Part 192 covers the transportation of natural gas by pipeline. PHMSA discovered through the public comments on the IFR that the placement of the definition in part 192 created questions for operators as to where a gas pipeline facility ended, and regulations for a UNGSFs began. To remedy this confusion, PHMSA is revising the definition of an ``underground natural gas storage facility'' to exclude other components of a gas pipeline or gas pipeline facility covered elsewhere in part 192, and eliminate any potential overlap. PHMSA discusses the revised definition and the reason for keeping it in part 192 later in this document. Sixth, PHMSA is changing the name of the reporting portal to the ``National Registry of Operators'' (formerly the ``National Registry of Pipeline and LNG Operators''). Additionally, PHMSA is revising the name of the online portal's web address from `` http://opsweb.phmsa.dot.gov '' to `` https://portal.phmsa .dot.gov.'' These changes are throughout parts 191, 192, and 195. C. Costs and Benefits Consistent with Executive Order (E.O.) 12866, PHMSA has prepared a Regulatory Impact Analysis (RIA) that includes an assessment of the benefits and costs of this final rule, as well as reasonable alternatives. PHMSA published an RIA to accompany the IFR as well. This final RIA incorporates input from public comments on the IFR and the initial RIA. PHMSA has issued the final RIA concurrently with this final rule, and it is available in the docket (PHMSA-2016-0016). The annualized cost savings for this final rule, relative to the IFR, are estimated to be $11 million, applying a 7 percent discount rate. The benefits of this final rule come from making permanent the safety measures in the IFR and RPs 1170 and 1171, which API and other stakeholders developed to prevent leaks and blowouts before they occur. The safety measures adopted through the IFR and this final rule will prompt operators to undertake or hasten preventive and mitigative measures, as well as IM actions, such as mechanical integrity tests, that will reduce the probability of releases. The IFR reduced the likelihood and magnitude of catastrophic or operational natural gas releases by promoting safer practices through the incorporation of the recommended practices into the pipeline safety regulations. This final rule continues to require these same practices. For example, operators are required to assess the mechanical integrity of each storage well, evaluate the likelihood of failures at these wells, and determine the next steps to remedy conditions that could precede the [[Page 8106]] failures. Operators are also required to incorporate safety best practices when designing and constructing new wells, which could further prevent catastrophic failures. This final rule also adds a requirement for all solution-mined salt caverns to follow the risk management practices in section 8 of RP 1171. Per the IFR, PHMSA had only required operators of solution-mined salt caverns to follow the risk management practices in section 10 of RP 1170. The language in section 10, requires operators to take a ``holistic and comprehensive approach to monitoring cavern integrity,'' without providing specifics as to how to implement that approach. Post- IFR, during preliminary inspections, PHMSA observed operators of solution-mined salt caverns applying the framework of the risk management practices in section 8 of RP 1171. While RP 1171 applies to depleted hydrocarbon reservoirs and aquifer reservoirs, it offers a framework for risk management and monitoring that is translatable to other types of underground storage facilities. PHMSA expects that other operators of solution-mined salt caverns would benefit from a more specific framework for implementing the ``holistic and comprehensive approach to monitoring cavern integrity'' required in section 10 of 1170. Additionally, codifying the requirement for these operators to follow both section 8 of RP 1171 and section 10 of RP 1170 ensures consistent safety requirements across all UGS facilities. This change may cause those operators who were not already (voluntarily) applying API RP 1171 as a framework for monitoring cavern integrity to undertake stronger risk management practices, which could ultimately reduce the risk of an incident. However, PHMSA considers this action part of the baseline requirements to follow a ``holistic and comprehensive approach to monitoring cavern integrity'' already prescribed through the IFR. As a result, PHMSA does not expect an additional financial burden to operators beyond that already in place through the IFR. The IFR required operators to provide a written justification for each non-mandatory provision of the RPs that they did not perform. This final rule removes that recordkeeping burden on operators. Operators experience cost savings from the removal of requirements associated with deviations from the RPs, including technical reviews by subject matter experts and recordkeeping burdens, and reductions in the notifications burden. II. Background A. Overview of Underground Natural Gas Storage Underground storage of natural gas plays a critical role in the nation's energy independence and reliability. Notably, having a surplus of natural gas provides a buffer from the seasonal variations in supply and demand, creating price stability for customers. Over the past ten years, natural gas storage has increased 16 percent, prompted, in part, by significant growth in domestic shale-gas production. There are three principal types of underground natural gas storage fields, each with different geological characteristics and capabilities that govern their suitability for storage. The three types are depleted hydrocarbon reservoirs, aquifer reservoirs, and solution-mined salt caverns. Depleted hydrocarbon reservoirs are the most common type of storage, representing approximately 80 percent of the total working gas capacity in the United States. As the name implies, these facilities are repurposed from previous oil or gas production and converted to gas storage fields.\\6\\ Aquifer reservoirs are natural water-bearing formations, also converted to gas storage, and represent roughly 9 percent of the total working gas capacity in the United States. Solution-mined salt caverns (salt domes) are geological formations that leached out of salt deposits. These facilities represent only about 10 percent of the total working-gas capacity but provide high withdrawal and injection rates relative to their working gas capacity.\\7\\ --------------------------------------------------------------------------- \\6\\ Energy Information Administration (EIA). 2015. ``The Basics of Underground Natural Gas Storage.'' November 16, 2015. Retrieved from http://www.eia.gov/naturalgas/storage/basics/ (Accessed March 2019). \\7\\ Total working gas capacity percentages do not sum to 100 percent due to rounding. --------------------------------------------------------------------------- Of the 403 active UNGSFs in the United States, approximately 60 percent of the facilities are interstate, and 40 percent of the facilities are intrastate.\\8\\ The total storage capacity at these fields was 9,236 billion cubic feet (Bcf), and the total working gas capacity was 4,815 Bcf. Facilities identified as interstate represented 63 percent of total storage capacity and 65 percent of working gas capacity. --------------------------------------------------------------------------- \\8\\ PHMSA's 2018 annual report data show 403 active underground natural gas storage fields in the United States as of 2017, distributed across 31 states. --------------------------------------------------------------------------- Interstate UNGSFs serve interstate facilities, such as providing storage for interstate gas transmission pipelines.\\9\\ These types of storage facilities commonly receive surplus gas from interstate pipelines during warmer months and then send it back into the product stream during colder winter months. Since these UNGSFs serve interstate facilities and PHMSA has exclusive pipeline safety jurisdiction over the design, construction, operation, and maintenance of interstate gas pipeline facilities, the standards in this final rule will affect all interstate UNGSFs. --------------------------------------------------------------------------- \\9\\ Under 49 U.S.C. 60101(a)(6), an ``interstate gas pipeline facility'' (including an interstate UNGSF) is defined as ``a gas pipeline facility--(A) used to transport gas; and (B) subject to the jurisdiction of the [FERC] under the Natural Gas Act (15 U.S.C. 717 et seq.).'' The term ``transporting gas'' is defined in Sec. 60101(a)(21) as ``the gathering, transmission, or distribution of gas by pipeline, or the storage of gas, in interstate or foreign commerce . . .'' --------------------------------------------------------------------------- Intrastate UNGSFs, on the other hand, are facilities that provide gas storage for intrastate pipelines, most notably local gas distribution companies (LDCs). These storage facilities serve intrastate pipelines that are contained entirely within a particular State and that do not fall within the jurisdiction of the Federal Energy Regulatory Commission (FERC). As discussed more fully below, these intrastate ``gas pipeline facilities'' are generally subject to the IFR and this final rule. Intrastate UNGSFs may continue to also be subject to State regulations provided that: (a) The otherwise applicable State regulation does not conflict with the Federal minimum safety standards established in the final rule, and (b) the applicable State authority has filed a certification with PHMSA to participate as a full State partner under the new Federal program and to receive Federal funding through PHMSA. B. Underground Storage Incidents and Regulatory History While rare, serious incidents at underground storage facilities have occurred. For instance, on April 7, 1992, an uncontrolled release of highly volatile liquids from a salt-dome storage cavern near Brenham, Texas, formed a heavier-than-air gas cloud that exploded. Three people died in the accident, with an additional 21 people treated for injuries at area hospitals. Property damage from the accident exceeded $9 million. Following its accident investigation, the National Transportation Safety Board (NTSB) published pipeline safety recommendation No. P-93-9 regarding underground storage. Recommendation P-93-9 asked PHMSA's predecessor agency, the Research and Special Programs Administration (RSPA), to develop safety requirements for storage of highly volatile liquids and natural gas [[Page 8107]] in underground facilities, including a requirement that all pipeline operators perform safety analyses of new and existing underground geologic storage systems to identify potential failures, determine the likelihood that each failure will occur, and assess the feasibility of reducing the risk.\\10\\ --------------------------------------------------------------------------- \\10\\ National Transportation Safety Board, Pipeline Accident Report PAR-93/01 (Nov. 4, 1993). --------------------------------------------------------------------------- In response to the NTSB's safety recommendation, RSPA held a public meeting \\11\\ to determine what actions it should take, if any, regarding the regulation of underground storage of natural gas and hazardous liquids. The participants expressed mixed views on whether RSPA should begin to regulate ``downhole'' pipe and underground storage. Most participants spoke favorably of industry safety practices and State regulation but saw no immediate need for Federal regulatory action. --------------------------------------------------------------------------- \\11\\ (Docket PS-137, 59 FR 30567, June 14, 1994). --------------------------------------------------------------------------- On July 1, 1997, RPSA issued an advisory bulletin (ADB-97-04) to inform UNGSF owners and operators of the availability of guidelines for the design and operation of underground storage facilities. Specifically, the advisory bulletin pointed to the safety standards guide from the Interstate Oil and Gas Compact Commission (IOGCC) \\12\\ and API as appropriate for use by pipeline operators and State regulatory agencies. The IOGCC guide provided safety standards for the design, construction, and operation of gas storage caverns. API had published guidelines for the underground storage of liquid hydrocarbons. RP 1114, ``Design of Solution-Mined Underground Storage Facilities,'' June 1994, provided basic guidance on the design and development of new solution-mined underground storage facilities. RP 1115, ``Operation of Solution-Mined Underground Storage Facilities,'' September 1994, provided guidance on the operation of solution-mined underground hydrocarbon liquid or liquefied petroleum gas storage facilities. --------------------------------------------------------------------------- \\12\\ Interstate Oil and Gas Compact Commission, ``Natural Gas Storage in Salt Caverns: A Guide for State Regulators.'' (IOGCC Guide), 1995. --------------------------------------------------------------------------- Another catastrophic natural gas leak happened in January 2001 after a wellbore failed at the Yaggy storage field near Hutchinson, Kansas. The natural gas migrated nine miles underground, where it eventually surfaced through abandoned wells. Once at the surface, the natural gas exploded, killing two people and destroying two businesses.\\13\\ After a month, the flares burned off, with the ultimate loss of 143 million cubic feet (MCF) of natural gas from the storage field. --------------------------------------------------------------------------- \\13\\ Allison, M. Lee, 2001, The Hutchinson Gas Explosions: Unraveling a Geologic Mystery, Kansas Bar Association, 26th Annual KBA/KIOGA Oil and Gas Law Conference, v1, p3-1 to 3-29. --------------------------------------------------------------------------- These incidents at UNGSFs alerted operators and regulators to consider assessing the safety of these facilities. By 2012, API had begun developing additional guidance for the safety of UNGSFs. API developed RP 1170 and 1171 over several years, based on input from many industry stakeholders, including regulators such as PHMSA, FERC, and five State regulatory agencies, as well as the API Midstream Group. In July 2015, API issued RP 1170, ``Design and Operation of Solution-mined Salt Caverns Used for Natural Gas Storage.'' API RP 1170 provides recommendations and requirements for geo-mechanical assessments, cavern well design and drilling, solution mining techniques, operations and maintenance procedures, and practices for salt caverns. In September 2015, API issued RP 1171, ``Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs,'' which focuses on storage well, reservoir, and fluid management for functional integrity in design, construction, operations and maintenance procedures, monitoring, and documentation practices. The RPs appropriately recognize the variety and diversity of UNGSFs used throughout the United States and are not limited to addressing facilities in a single State, basin, geological setting, or well type. C. Aliso Canyon Incident Shortly after the publication of the industry safety standards RP 1170 and RP 1171, another major UNGSF incident occurred. On October 23, 2015, Southern California Gas Company (SoCalGas) discovered a leak that manifested into the largest methane leak from a natural gas storage facility in U.S. history. Well SS-25 in the Aliso Canyon storage field, located in Los Angeles County, California, leaked for nearly four months until it was permanently sealed on February 17, 2016. While SoCalGas attempted to plug the leak, residents in nearby neighborhoods experienced health symptoms consistent with exposure to the odorants (mercaptans) added to natural gas and residual components from previous oil production in the field. The incident temporarily displaced more than 5,000 households from their homes, according to the Aliso Canyon Incident Command briefing report issued on February 1, 2016, although some sources place the number of related households at approximately 8,000.\\14\\ --------------------------------------------------------------------------- \\14\\ For example, see KPCC news report on August 4, 2016, ``Cost estimate of Aliso Canyon gas leak hits $717 million''. http://www.scpr.org/news/2016/08/04/63268/cost-estimate-of-aliso-canyon-gas-leak-hits-717-mi/ . --------------------------------------------------------------------------- The leak at Aliso Canyon ultimately released approximately 5.7 Bcf of natural gas into the atmosphere, translating to 109,000 metric tons \\15\\ of methane, a potent greenhouse gas, as well as numerous other pollutants.\\16\\ Additional reports identified other potential health effects that lasted even after the well was sealed. A report by the Los Angeles County of Public Health suggests that the continued health symptoms may be due to contaminants in indoor air and dust.\\17\\ As of December 31, 2016, SoCalGas and its parent company, Sempra Energy, recorded estimated costs of $913 million to control the release, monitor air emissions, relocate residents, and cover legal and other expenses.\\18\\ The singular well that failed in the Aliso Canyon accident (SS-25) had originally been drilled in 1953 and was re- purposed for natural gas storage in 1972. The age of this well is not unusual. Per data from the American Gas Association (AGA), approximately 60 percent of active storage wells are located in fields that were activated before 1960. --------------------------------------------------------------------------- \\15\\ CARB estimates that the incident resulted in a total emission of 99,650 9,300 metric tons of methane (CARB, 2016a) and seeks mitigation of 109,000 metric tons. \\16\\ California Air Resources Board (CARB), 2016; County of Los Angeles Public Health. \\17\\ Ibid. CARB. \\18\\ Of the $913 million of costs, approximately 60 percent is for the temporary relocation program (including cleaning costs and certain labor costs). Other estimated costs include amounts for efforts to control the well, stop the Leak, stop or reduce the emissions, and the estimated cost of the root cause analysis being conducted by an independent third party to investigate the cause of the Leak. The remaining portion of the $913 million includes legal costs incurred to defend litigation, the value of lost gas, the costs to mitigate the actual natural gas released, the estimated costs to settle certain actions and other costs. The value of lost gas reflects the replacement cost of volumes purchased through December 2017 and estimates for purchases in 2018. As of mid-January 2018, SoCalGas has replaced all lost gas. SoCalGas adjusts its estimated total liability associated with the Leak as additional information becomes available.'' (SoCalGas/Sempra, 2018). --------------------------------------------------------------------------- The Aliso Canyon incident created serious energy-supply challenges for the region and prompted public concerns about the safety of UNGSFs, including the extent and effectiveness of Federal and State oversight. On February 5, 2016, PHMSA issued an advisory bulletin (ABD-2016-02), identifying specific minimum actions that operators of UNGSFs should take, in addition to the recommendations of ADB-97-04, [[Page 8108]] API RP 1170, API RP 1171, and the IOGCC Guide. The 2016 advisory bulletin recommended that operators begin reviewing their operating, maintenance, and emergency response activities and apply the new RPs accordingly. On July 14, 2016, PHMSA held a public meeting to discuss potentially extending its regulations to include transportation-related UNGSFs. PHMSA heard from a diverse group of stakeholders, including State regulators, emergency responders, and residents, including those impacted by the Aliso Canyon incident. PHMSA concluded that it should take action to incorporate by reference API RP 1170 and API RP 1171 into part 192. The RPs describe a range of measures that UNGSF operators should undertake to ensure the safe operations of their facilities. The RPs also include construction, maintenance, IM, security, and emergency response procedures. D. The PIPES Act of 2016 The Aliso Canyon incident prompted broader public concerns as to how to prevent similar UNGSF accidents in the future. Congress addressed these concerns in two sections of the PIPES Act, enacted on June 22, 2016 (Pub. L. 114-183). Section 12 of the PIPES Act required PHMSA to issue minimum safety standards for all UNGSFs within two years of enactment. The statute defines an ``underground natural gas storage facility'' as a ``gas pipeline facility that stores natural gas in an underground facility.'' Because title 49 United States Code (U.S.C.) 60101(a) already defines ``gas pipeline facility'' as ``a pipeline, a right of way, a facility, a building, or equipment used in transporting gas or treating gas during its transportation,'' PHMSA interprets the PIPES Act as directing it to regulate only those UNGSFs that store natural gas incidental to transportation. The PIPES Act requires that in issuing minimum safety standards for UNGSFs, PHMSA must: (1) Consider consensus standards for the operation, environmental protection, and integrity management of underground natural gas storage facilities; (2) consider the economic impacts of the regulations on individual gas customers; (3) ensure that the regulations do not have a significant economic impact on end users; and (4) consider the recommendations of the Aliso Canyon natural gas leak task force established under section 31 of the PIPES Act of 2016. The Secretary of Transportation (the Secretary) delegated this responsibility under chapter 601 of title 49 U.S.C. to the PHMSA Administrator (49 CFR 1.97). PHMSA fulfilled this mandate by publishing the IFR on December 19, 2016. The PIPES Act provides that states may adopt additional or more stringent safety standards for intrastate UNGSFs if such standards are compatible with these Federal regulations. E. Interagency Task Force In addition to section 12 of the PIPES Act, Congress included a second mandate, section 31, directing the Department of Energy (DOE) to establish an Interagency Task Force on Natural Gas Storage Safety to perform an analysis of the Aliso Canyon events and make recommendations to reduce the occurrence of similar events in the future. PHMSA and DOE co-led the effort. The Task Force established several working groups, comprised of premier scientists, engineers, and technical experts from the Executive Office of the President and various Federal agencies. The working groups examined three key areas: The integrity of natural gas wells at storage facilities; The public health and environmental effects from natural gas leaks; and The nation's vulnerability to reduced energy reliability in the event of future leaks. In October 2016, the Task Force issued its final report on natural gas storage safety and made 44 recommendations to operators and regulators. The main recommendation to PHMSA was to incorporate existing industry consensus standards, API RP 1170 and 1171, into part 192 of the regulations in an enforceable manner, and consider supplementing the regulations with recordkeeping and reporting requirements as necessary. The Task Force recommended that operators develop comprehensive risk-management plans that addressed risks based on their potential severity and probability of occurrence. These plans should document an operator's risk-management strategy, identify risks, define responsibilities among stakeholders, assess risks, and take appropriate action to reduce risks to well integrity. The Task Force's report also highlighted growing concerns regarding the age of the nation's natural gas storage infrastructure. For example, wells reflect material, technology, and design factors that may have been appropriate at the time they were constructed, but may not meet design criteria for wells drilled today. Over time, corrosion, other environmental processes, and mechanical stresses from the injection and withdrawal of natural gas can impact well integrity. Wells in depleted oil fields may have been designed for lower operating pressures than what they may be subject to now. Many of these wells were designed without redundant barriers to reduce the risk of gas migration. One of the lessons from the Aliso Canyon incident is that wells without redundant barriers present higher risks because they have a single point of possible failure that may be extremely difficult to shut off or kill. F. Interim Final Rule On December 19, 2016, PHMSA issued the IFR that satisfied section 12 of the PIPES Act, exercising the agency's statutory authority to regulate underground natural gas storage facilities. The IFR amended the pipeline safety regulations found at 49 CFR parts 191 and 192, to address critical safety issues related to ``downhole'' UNGSF facilities, including wells, wellbore tubing, casing, and wellheads (81 FR 91860). Additionally, the IFR added a definition of ``underground natural gas storage facility'' to Sec. Sec. 191.3 and 192.12 and applied reporting requirements to operators of UNGSFs similar to those applicable to operators of other gas pipeline facilities, including annual reports, incident reports, reports of major construction and organizational changes, and registration with the National Operator Registry. Effective January 18, 2017, all UNGSFs, both intrastate and interstate, now had to meet the minimum standards outlined in RPs 1170 and 1171 and were subject to inspection by PHMSA or a PHMSA-certified State entity. The IFR made each provision in the RPs 1170 and 1171 mandatory unless the operator documented a technical justification why compliance with a provision was not practicable and not necessary for safety. Operators were required to incorporate the RPs into their written operations, maintenance, and emergency response program manuals following Sec. 192.605. PHMSA, or a certified State partner, would review any of the operators' justifications and its procedure manuals during compliance inspections. After publishing the IFR, PHMSA took significant steps to educate the regulated community on the new requirements, to promote a better understanding of issues concerning integrity assessments of UNGSFs and the implementation of the RPs. The first action was to publish frequently asked [[Page 8109]] questions ","truncated":true,"body_characters":176952}