In response to the Aliso Canyon leak from an underground natural gas storage well that lasted nearly four months, federal agencies with oversight of over such facilities announced workshops to gather information and solicit input on forthcoming minimum safety regulations. There are an estimated 400 interstate and intrastate underground natural gas storage facilities that operate with more than 4 trillion cubic feet of natural gas capacity. Some interstate pipeline operators rely on underground storage to facilitate load balancing and system supply on their transmission lines, while a large portion of this capacity is leased to other industry participants. In addition to serving customers, intrastate pipeline companies use storage capacity and inventories for similar purposes. Underground natural gas storage provides for flexibility in supply to accommodate daily and seasonal demand fluctuations.
On June 22, 2016, the President signed the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (PIPES Act) into law to reauthorize the Pipeline Safety Act and PHMSA. Among the requirements of the PIPES Act, PHMSA must establish minimum safety standards for underground natural gas storage by June 21, 2018. In addition, the Department of Energy (DOE) must establish an Aliso Canyon natural gas leak task force by July 7, 2016, including PHMSA, EPA, FERC, Department of the Interior, and State and local government representatives, among others. This group must submit a final report to Congress by December 19, 2016 on the cause and contributing factors of the Aliso Canyon leak, impact of the leak, effectiveness of the measures taken to respond to the leak, agency responses, and recommendations for preventing future leaks.
In early April, the DOE and PHMSA already established an Interagency Task Force on Natural Gas Storage Safety. As part of these efforts, the DOE recently announced a workshop on July 12-13 in Broomfield, Colorado to discuss various issues, including well integrity risks, construction practices, monitoring and testing of subsurface storage integrity, accident response management, and research and development. At the same time, PHMSA also announced a separate public workshop the following day for July 14, 2016 in Broomfield, Colorado, which is open to the public and will be webcast. In issuing a public notice for the workshop, PHMSA described the current state of typical underground natural gas storage facilities. The Agency noted that most wells were not installed with consistent design or construction standards. Further, many wells are over 50 years old, some lack subsurface safety or isolation valves, were constructed with threaded couplings as opposed to girth welds, and some may not have corrosion resistant internal and external coatings. In the notice, PHMSA also emphasized its February 2016 Advisory Bulletin, which encouraged operates to comply with newly established industry standards API RP 1171 on functional integrity of natural gas storage hydrocarbon and aquifer reservoirs and API RP 1170 on design and operation of salt caverns.
Meanwhile, PHMSA is already drafting an interim final rule to establish minimum safety standards for underground storage facilities, including compliance with API RP 1171 and API 1170. Notably, the Agency is considering whether to require operators to comply with the non-mandatory provisions in those standards unless they can provide sufficient justification for why those provisions should not apply. Any new PHMSA regulations would apply to federally regulated storage facilities (i.e., those that serve interstate pipelines). Those federal regulations would also become the nationwide standard that states would have to meet or exceed in their regulation of those storage facilities that serve intrastate pipelines. Several states have also begun their own legislative efforts and representatives from California and Kansas will be attending the workshops noted above.