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Vol. 12, No. 20 Week of May 20, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

State, feds agree on pipeline oversight

Alaska’s Petroleum Systems Integrity Office, U.S. DOT agency to coordinate enhanced oversight; first of its kind for PHMSA in state

Kristen Nelson

Petroleum News

Enhanced regulation of Alaska oil and gas infrastructure following last August’s transit-line corrosion discovery at Prudhoe Bay took another step forward in mid-May when the State of Alaska and the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration signed a letter of intent to provide enhanced and coordinated oversight of oil and natural gas production and transportation facilities in the state.

In the letter, signed May 14, the Alaska Department of Natural Resources agreed to partner with PHMSA to enhance the protection of public safety, the environment and the reliability of energy supply through more effective coordination of oversight of oil and gas production and transportation.

PHMSA said this is the first agreement of its kind in Alaska. It is designed to close gaps in inspection coverage between Alaska production and transmission systems, improve risk assessment and oversight of unique and aging infrastructure, advance development of design and construction standards for future Arctic pipelines and increase timely data exchange about Arctic maintenance and corrosion management.

PHMSA has jurisdiction over oil and gas transmission pipelines in Alaska, including approximately 200 miles of pipelines on Alaska’s North Slope and the 800-mile trans-Alaska oil pipeline, which is jointly shared with DNR and the Alaska Department of Environmental Coordination. PHMSA said there are more than 4,600 miles of pipelines in Alaska.

PSIO will coordinate

Alaska Gov. Sarah Palin said in a statement that “the uninterrupted flow of oil and natural gas on state lands” is crucial for the state’s economic wellbeing, the protection of the environment and the safety of oil and gas workers. “I am pleased that Alaska, via the newly created Petroleum Systems Integrity Office, will be coordinating efforts and exchanging important systems integrity data with our federal partners to assure safe, continued operations,” she said.

DOT Acting Deputy Secretary and PHMSA Administrator Thomas Barrett said protecting transportation of energy from Alaska is essential for energy independence. “This partnership will help us to identify, assess and address potential risks to the oil and gas transportation infrastructure — allowing us to prevent system failures before they occur,” he said.

Recent significant events in Alaska, including pipeline failures on the North Slope, have highlighted the need for the state’s oversight agencies and PHMSA to implement a more comprehensive and effective “system of systems” approach, Barrett said.

The state said that as part of the agreement PSIO and PHMSA will delineate clear jurisdictional roles and develop a strategic plan for the oversight of oil and gas production and transportation, including risk assessment, standards and inspections.

“The Petroleum Systems Integrity Office is committed to maximizing the safe and stable flow of oil and gas resources to market by ensuring oversight and maintenance of oil and gas equipment, facilities and infrastructures,” said PSIO Acting Coordinator Jonne Slemons. “Working with our federal partners is one of the most effective ways to accomplish this job.

“Our integrated approach will identify, assess and address potential risks to the oil and gas transportation infrastructure, thereby allowing us to prevent system failures before they occur,” she said.

PSIO already coordinates state agencies

PSIO, which is in DNR’s Division of Oil and Gas, was created by the governor in April; it already coordinates among stage agencies.

When she signed the administrative order Palin said PSIO has “specific responsibilities and authorities for interagency coordination.” It doesn’t replace existing authorities, she said, but “provides enhanced and more flexible oversight with the goal of ensuring the integrity of oil and gas systems and infrastructure.”

“The goal here is to search for any gaps in laws or regulations and agency or industry practices that threaten systems integrity. If existing authorities can’t step up to the plate — won’t step up to the plate — we’ll exercise appropriate oversight using our authority” as landowner through our leases, the governor said.

Slemons told the Alaska Senate Resources Committee in February that in addition to identifying and filling gaps in regulations, PSIO 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, PSIO will also coordinate enforcement actions.

And PSIO “will periodically report both to the governor and to the Legislature on the health of our oil and gas infrastructure.”

Slemons said quality assurance program work will begin at Prudhoe Bay and proceed to other units. The original concept was to do all of the North Slope units first, but Slemons told the committee 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.

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