Ken Silverstein EnergyBiz Insider Editor-in-Chief

The Pipeline Safety Improvement Act, signed into law by President Bush in 2002, requires "meaningful" pipeline inspections at least once in the next 10 years and every seven years after that, although some infrastructure near big cities would receive more frequent attention. Because the U.S. Department of Transportation has a "poor" history of compliance with Congressional directives, the language provides a "fail-safe" mechanism that places the obligation to inspect pipelines on pipeline operators if the department passes over its duties.

The pipeline industry has dealt with some high profile accidents including a 1999 explosion that killed three people in Bellingham, Wash., and a rupture in New Mexico that killed 12 people. Altogether, there are 2.4 million miles of interstate oil and gas pipelines in the United States as well as 1.8 million miles of distribution lines.

The progress: Through December 2005, operators reported that they have reviewed 6,700 miles of pipeline and completed 338 repairs. Most of the problems are with the high-pressure long distance transmission lines and not with the lower-pressure distribution lines. For their part, pipeline operators are on guard but caution that the process is too paper-work intensive, adding that inspections every seven years are overkill because most lines don't show wear and tear until 20 years out.

Specifically, the Office of Pipeline Safety oversees the integrity of the system. Early on, the program had been attacked by critics as too lenient and too close to the industry. But, in the years since the 2002 law passed, the office has been determined and implemented a number of processes that include increasing the average size of civil penalties from $18,000 to $29,000, as well as increasing the number of annual penalties from 14 to 22. While the size of the penalties may not be large, the pipeline operators say that the public attention works to keep them on their toes. Still, critics complain the fines are too small to be effective.

"Under a more aggressive enforcement strategy (termed 'tough but fair') that the Office of Pipeline Safety initiated in 2000, the agency is using the full range of its enforcement tools, rather than relying primarily, as it did before, on more lenient administration actions, such as warning letters," the General Accountability Office (GAO) said in recent congressional testimony. However, the GAO adds that regulators have not established goals that specify the intended results or put measures in place to demonstrate just how effective the strategy has been.

Frequent Inspections

The GAO's analysis shows that the number of serious accidents on interstate natural gas transmission lines was stable at 88 per year from 1994 through 2003. At the same time, hazardous liquid pipeline accidents dropped by almost a third for the same time period and went from 245 to 126. But, those accidents that involved death and property damage of $50,000 or more have remained constant.

The American Gas Foundation defends the industry. It says that between 1990 and 2002 the number of serious injuries or fatalities occurring on the nation's distribution lines accounted for 40 percent of the 1,570 incidences. In a formal report it has issued, the foundation says that 47 percent of those "serious" accidents were caused by outside factors such as excavation by third parties.

In testimony before Congress, trade groups said that legislation encouraging stronger state damage prevention programs would go a ways to cut accidents. The American Gas Association explains that data collected over the last five years shows that states with strong enforcement programs have better safety records than those without such programs. It points to Virginia and Minnesota, which have reported reduced problems because they have implemented those laws.

"Congressional attention to more effective state excavation damage programs can, and will, result in measurable decreases in the number of incidents occurring on natural gas distribution lines each year," says Frank Bender, chair of the gas association's integrity management committee and gas distribution manager for Baltimore Gas & Electric.

According to U.S. Department of Transportation statistics, the single largest cause of all distribution pipeline incidents reported to federal pipeline safety authorities between 2001 and 2005 resulted from excavation damage.

The fix is not easy, particularly when it comes to issues surrounding excavation. Right now, state pipeline safety programs are responsible for overseeing 222,000 miles of natural gas and liquid transmission and gathering lines. They are also charged with watching over 1 million miles of natural gas distribution lines and 764,000 miles of service lines.

All told, that's about 2 million miles of pipe -- a nice chunk of the overall infrastructure in this country. However, in fiscal year 2005, the states only received 28 percent of the total dollars that Congress allocated for pipeline safety, says the National Association of Regulatory Utility Commissioners.

Enhancements in current law would go a long way. Still, operators stand by their record and say pipelines are consistently the safest form of energy transportation. While they do not want intrusive government, they are making strident efforts to improve their operating and maintenance policies. Before the 2002 law, they argued for self-regulation. But high profile disasters changed that. Now, a more frequent and dutiful inspection process is uniformly endorsed, giving everyone a little more piece of mind.

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