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On 10/15 we hosted an Expert Call with Richard Kuprewicz of pipeline safety consulting firm Accufacts, Inc to discuss transmission pipeline maintenance, safety, and regulation.

Below we list the key takeaways and quotes from the call, and you can listen to the replay HERE.

1.  PHMSA is the main federal pipeline safety regulator; regulation is “minimal.”  Maintenance activity and level of spend are not mandated / regulated.
2.  “Lion’s share” of regulation is “reactive as opposed to proactive.”
3.  Historically, PHMSA’s safety / incident reporting data “has not been very reliable.”  The data “wouldn’t pass an audit test.  You have to be careful not to over-use the PHMSA database, or over-rely on it.”  Pipeline operators enter information into the PHMSA database on their own, “and if [the data] wrong, PHMSA can’t change it.”
4.  Increase in pipeline failures in late 90’s was due to “serious break downs in the management process,” which could have been the result of an “over-focus on cost reduction” and /or “mergers and acquisitions that added chaos to the normal way that the pipelines were historically managed.”
5.  “You think it’s just a pipeline and it’s fairly easy to operate.  But the philosophy of how your operate the pipeline, the importance of safety culture, the importance of the management culture can be a wide spectrum.”  

6.  Some companies have embraced concept of “integrity management,” some have not.  Wide discrepancy in how different companies maintain their systems (no specific companies referenced).

7.  Cost reduction “is more common than I’d like to know about.”  “It’s easy for management to send the signal that we want to cut costs at all expense.  And meanwhile, the risk factors are going up exponentially, and you bet the company.  I don’t say that lightly.”
8.  A lot of effort behind eliminating “grandfathered” maximum allowable operating pressures (MAOP) on natural gas lines.  PHMSA is heading in this direction.

9.  Management of main lines is most important (not the “moving parts”), as that’s where the greatest risk is.

10. Some companies, with an over-focus on cost reduction, “have ordered very important records to be destroyed.”

11. With respect to pipeline age / maintenance, “New isn’t necessarily better than old …  Just because it’s old doesn’t necessarily mean that it would be more expensive to maintain.” 

12. The industry is going through a cycle where it’s losing a lot of its experience (retirees); M&A exacerbates this trend.

13. “Gold-plating” typically occurs after an expensive tragedy …  Just “throw money at it” to make it seem that you’ve solved the problem.  It is “an illusion of safety.”  Gold-plating is not common today.

14. Properly maintained or reconditioned pipe can last, essentially, indefinitely.

15. Data management and understanding is crucial to pipeline integrity management and safety.

Kevin Kaiser

Senior Analyst