PHMSA has issued an interim final rule (IFR) to establish – for the first time ever – minimum federal standards for underground natural gas storage facilities. The IFR imposes significant new requirements in a short timeframe for “downhole facilities,” including wells, wellbore tubing and casings at underground natural gas storage facilities. The IFR addresses construction, maintenance, risk management and integrity management procedures for these facilities and incorporates the requirements of recent API industry Recommended Practices (RPs) 1170 for salt caverns storing natural gas and 1171 for storage in depleted hydrocarbon reservoirs and aquifer reservoirs. In addition, the IFR requires underground gas storage operators to prepare and file annual reports, incident reports, safety-related condition repairs and register their facilities in the PHMSA operator registry.
The Interagency Task force on Natural Gas Storage Safety formed last April in response to the massive prolonged Aliso Canyon gas leak, recently issued its report on the safety and reliability of underground natural gas storage. The report responds to a Congressional mandate in the recent reauthorization of the Pipeline Safety Act. It includes numerous (44) recommendations to industry to reduce the likelihood of leaks at underground natural gas storage facilities and minimize the impacts of leaks when they occur. These recommendations are not binding, but PHMSA is required to consider them in issuing final rules pursuant to 2016 Pipeline Safety Act amendments. The report recommendations primarily address well integrity, risk management, and data gathering and recordkeeping, which are likely to be incorporated in PHMSA’s forthcoming interim final rule to establish minimum federal standards. The Agency plans to issue an interim final rule before the end of this year. As this will be a new area of regulation for the Agency, industry should be mindful of the various legal issues regarding jurisdiction, state regulation and preemption, and dual jurisdiction, among others.
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.
The ongoing leak of methane from Southern California Natural Gas Company’s Aliso Canyon/Porter Ranch underground storage field near Los Angeles has drawn national attention to underground natural gas storage, triggering regulatory and legislative efforts to regulate these facilities at federal and state levels. On the regulatory front, President Obama recently committed to direct PHMSA to promulgate new storage regulations. Just this week, PHMSA announced a new Advisory Bulletin on managing the integrity of underground natural gas storage facilities.