Comparing Incident Responses - Leach XPress, Southern Star, SoCalGas

Pipeline safety has been in the limelight recently, with incidents involving Leach XPress, Southern Star, SoCalGas, and, most recently, facilities of El Paso Natural Gas in Midland County, Texas. While gas pipelines are the safest way to transport natural gas, incidents on pipelines occasionally do occur. These incidents can not only harm people and property, but can also disrupt the flows of gas around the country. The response taken by the pipeline and the regulator can help lessen such impacts when the flow of communication about the incident and its impacts is robust. A comparison of three recent examples shows how pipelines can manage -- with varying degrees of effectiveness -- such incidents. In all cases, if you are impacted by such an incident, LawIQ can assist in determining the impact of the incident on the company's ability to restore full service, as well as assess the possible impact to revenue from any force majeure that is declared.

PHMSA Record of Incidents

While FERC is responsible for the siting and operation of interstate natural gas lines, the regulation of the safety aspects of the construction and operation of pipelines is governed by a division of the United States Department of Transportation, the Pipeline and Hazardous Materials Safety Administration (PHMSA). PHMSA maintains records on all significant incidents that occur on gas transmission lines. PHMSA considers an incident to be significant if it involves the release of gas from a pipeline and includes either of the following consequences:

1. Fatality or injury requiring in-patient hospitalization; or
2. $50,000 or more in total costs, measured in 1984 dollars.

Gas Onshore Transmission Incidents from 1998 to 2017

Source: https://hip.phmsa.dot.gov/analyticsSOAP/saw.dll?Portalpages

Not all of these incidents result in the reduction of capacity on the affected pipeline, but in such cases, the need to communicate that impact to customers becomes critical.

Leach XPress

TransCanada's Leach XPress Pipeline project was placed in-service on January 1, 2018 with only restoration activities to occur through spring 2018. However, a section of the newly constructed pipe suffered a failure on June 7, 2018 in Marshall County, WV. Columbia indicated that the rupture of the pipeline was caused by a landslide and stopped service after $437,250 of natural gas was lost. There were no fatalities.

PHMSA began an investigation and issued a Notice of Proposed Safety Order on July 9, 2018. In the Notice, PHMSA indicated that the cause of the failure was unknown, but that the failure appeared to have resulted from land subsidence which had stressed a girth weld on the pipe. PHMSA's proposed order imposed a substantial set of remedial actions that Columbia Gas must undertake. Although the investigation will continue, Columbia has stated that it has addressed potential issues in six additional areas of concern noted by PHMSA, and has completed work at the failure location to prevent further land subsidence. Columbia was able to put the affected pipeline segment back into service on July 15, 2018 after restoration and repair activities were completed in accordance with PHMSA requirements.

Most importantly for its customers, Columbia Gas began communicating the status of the pipeline restoration work almost immediately and provided regular updates. The first notice was issued on the morning of the failure. Columbia ultimately provided 13 more updates on the status of the pipeline's return to service before it finally notified customers that the restrictions on the pipeline were lifted on July 15, 2018.

Southern Star

On June 15, 2018, Southern Star Central Gas Pipeline, Inc. had an incident in Harvey County, Kansas on its line segment 130. Like the Columbia Gas incident, this one did not result in any injuries or damage to structures. The cause of the incident was unknown as no excavation work had occurred in the area prior to the incident.

Similar to Columbia Gas, Southern Star began immediate communications with its customers and provided regular updates. The first notification went out the morning of the incident and Southern Star later provided five subsequent updates. Southern Star's most recent update provided its customers with detailed information about the need to perform an Inline Inspection (ILI) tool run, and noted that during the tool run, the segment's capacity would be reduced to 85,000 Dth/d and that once the ILI was completed, the pipeline's capacity would return to the voluntarily reduced capacity of 250,000 Dth/d.

SoCalGas Line Failure

While the communications by Columbia and Southern Star were robust, the information flow provided by Southern California Gas (SoCalGas) regarding an incident on its system is a textbook example of a failure to communicate. SoCalGas's Line 235-2 ruptured on October 1, 2017. Similar to the Columbia and Southern Star incidents, there was no loss of life in this incident, as it occurred in a remote area of San Bernardino County. However, the only notice that SoCalGas provided to its customers occurred on the day following the incident, and it simply stated:

SoCalGas Line 235-2 will be out of service for an undetermined amount of time while SoCalGas investigates and makes repairs resulting from a force majeure incident. As a result of the pipeline outage, the North Needles Sub Zone capacity will be zero.

Since that date, SoCalGas has not provided a single update. The California Public Utility Commission (CAPUC), which acts as the safety regulator for this pipeline, apparently has no better information about the status of the pipeline. This became clear when, on June 18, 2018, in an unrelated proceeding regarding the gas leaks that have occurred at SoCalGas's Aliso Canyon storage field, the CAPUC sent SoCalGas a letter asking that it provide the status of Line 235-2 by June 29, 2018. In its response, SoCalGas stated that the best case for Line 235-2 is that it will return to limited pressure service in April 2019.

The frustration induced by SoCalGas's lack of transparency is exemplified by a letter filed in response to CAPUC's request to SoCalGas by RWE Supply & Trading GmbH (RWE), a participant in the California power trading market. In this letter, RWE stated that SoCalGas's lack of transparency was in stark contrast to what RWE finds common in the industry. While acknowledging that no two pipeline incidents are alike, RWE cited Columbia Gas's frequent updates about the Leach XPress incident and its ability to provide a rough estimate of the expected resumption of service. RWE commended Columbia Gas for its strong effort to convey to market participants its dedication to returning the segment to service as quickly as possible. RWE asserted that SoCalGas's dearth of updates and its lack of transparency were not only troublesome, but have led to significant volatility in the forward markets.

LawIQ's Expert Services

One of the expert services we offer to our customers is assistance in tracking incidents such as these to understand the various regulatory hurdles to resuming service as well as the financial impacts to the pipeline from a declaration of force majeure.

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