Administration supports integrity idea for new Petroleum Systems Integrity Office

Regulatory gaps were evident after corrosion issues showed up in Prudhoe Bay transit lines last year and both the state and federal governments are working to fill those gaps.

“What is yet unaddressed is a comprehensive view of all of the facilities, not just pipelines, that are concerned with oil and gas activities within the state,” Jonne Slemons, acting coordinator of the Petroleum Systems Integrity Office told Senate Resources Feb. 19.

The Murkowski administration promised in August to address these issues, and in October the governor issued an administrative order establishing the Lease Monitoring and Engineering Integrity Coordinator’s Office, Slemons said, with a cabinet of nine agency heads involved in oil and gas in the state, a Joint Pipeline Office-type organization with representatives of agencies co-located, under Department of Natural Resources leadership.

The two primary goals were “first, to discover and fill the regulatory gaps regarding oil and gas, and second to ensure the integrity of oil and gas infrastructure within the state,” she said. While the Palin administration did not support a JPO-type organization, those two primary goals “were considered by the new incoming administration to be excellent goals,” and remain the primary goals of the Petroleum Systems Integrity Office, a leaner and less expensive organization with only four compositions, compared to 10 proposed by Murkowski.

Slemons said an administrative order establishing PSIO is under review by agencies with a role in oil and gas and is expected to be issued shortly. There will be no separate cabinet under the new plan, but the DNR commissioner will be the lead for state and federal coordination, and will designate a Petroleum Systems Integrity Office coordinator.

The coordinator’s responsibilities are to conduct a regulatory gap analysis in coordination with other agencies, and then to “fill those gaps in infrastructure oversight.” The office will also “review, approve and enforce operator quality assurance programs,” following the model used by the state pipeline coordinator’s office. In conjunction with the pipeline coordinator’s office, the integrity office will coordinate enforcement actions. And the integrity office “will periodically report both to the governor and to the Legislature on the health of our oil and gas infrastructure.”

Quality assurance program work will begin at Prudhoe Bay and then proceed to other units. Slemons said the original concept was to do all of the North Slope units first, but she believes that should be reconsidered, and priority based on age of infrastructure, production volumes and past maintenance and performance history.

“Cook Inlet frankly concerns me greatly because of the age of the infrastructure there,” Slemons said.

—Kristen Nelson