Warren R. True
Pipeline/Gas Processing Editor
The effects of current and impending governmental regulations on U.S. pipeline operations occupied much of April's API Pipeline Conference in Houston.
Entire sessions were devoted to ramifications of the Oil Pollution Act of 1990 and governmentally mandated rules for reformulated gasoline.
Other papers discussed how the U.S. Federal Energy Regulatory Commission may regulate oil-pipeline rates in the future and what issues individual state legislatures may be examining.
If pipeline operators weren't hearing what governments planned, they were hearing what their own industry wanted them to do, mostly in the form of standards, such as API 2610 for terminal and tank facilities, or recommended practices, as for ensuring crude oil quality at terminal and tank sites.
OPA90 RULES
C. G. Broussard, Shell Pipe Line Corp., Houston, reviewed recent actions by federal agencies to implement the Oil Pollution Act of 1990, how in some instances the industry has reacted to those actions, and what they may mean if carried out.
From the pipeline operating industry's point of view she said, major elements of the act include the following:
- A comprehensive federal liability scheme
- A single, unified federal fund for response costs and claims
- Stronger federal oversight and control of oil spills
- Revision to response planning requirements
- Tougher criminal, civil, and administrative penalties
- No pre-emption of state laws addressing oil spills.
The various federal agencies that have become responsible for implementing the act are: Environmental Protection Agency (EPA), U.S. Coast Guard (USCG), Department of Interior's Minerals Management Service (MMS), National Oceanic and Atmospheric Administration (NOAA), and Department of Transportation's Research and Special Programs Administration (RSPA).
Following is a summary of her remarks concerning contingency plans, damage and facility plans, and the future.
CONTINGENCY PLANS
In October 1993, the EPA issued a proposed rule to revise the current National Oil and Hazardous Substances Pollution Contingency Plan.
Broussard said the American Petroleum Institute responded to the proposed rule by identifying many parts which are inconsistent, impractical, or confusing.
For pipeline operators, the most burdensome of the proposed rule's requirements will be procedures and techniques for identifying, containing, dispersing, and removing oil and hazardous substances.
Both the EPA and the USCG will develop area contingency plans in accordance with which owners and operators of pipelines and related facilities must act.
Further, land pipelines must certify to RSPA that they have reviewed applicable area contingency plans and have facility response plans (at, for example, a pipeline or pumping station) that are consistent with the area plans.
Although the USCG has drafted several area plans, the EPA has released relatively few.
MMS was delegated responsibility for issuing regulations concerning financial responsibility for offshore facilities including state submerged lands and pipelines, determination of acceptable methods of financial responsibility, and the specification of necessary or unacceptable terms, conditions, or defenses.
On Aug. 25, 1993, MMS issued an advanced notice of proposed rulemaking in it, MMS extended financial responsibility requirements to all facilities in, on, or under navigable waters of the U.S. or subject to the jurisdiction of the U.S. Land pipelines which cross navigable waters, therefore, would be required to have a $150 million certificate of financial responsibility to continue operating.
Broussard said that MMS' "strained definition of 'offshore facility' " and its interpretation of financial responsibility requirements "will have a far reaching impact on many pipeline companies as they try to obtain the necessary evidence of financial responsibility (insurance, guaranty, indemnity, surety bonds, letters of credit or self-insurance)."
DAMAGES; FACILITY PLANS
Another agency, NOAA, issued on Jan. 7, 1994, its notice of proposed rulemaking for natural-resource damage assessments and has been soliciting public comments in several workshops since.
The rule provides a lengthy process for determining "proper compensation" to the public for injury to natural resources. That process, said Broussard, may result in "enormous costs" to the pipeline industry.
Four federal agencies - USCG, RSPA, EPA, and MMS - were delegated the responsibility to draft rules outlining requirements for preparing and submitting facility response plans for agency review and, in some instances, approval.
The USCG has jurisdiction over marine transfer facilities (e.g., docks and piping); RSPA, over land pipelines; EPA, over nontransportation facilities (e.g., bulk terminal storage); and MMS, for offshore pipelines.
The USCG, RSPA, and MMS have issued interim final rules; EPA, only a proposed rule. She said all four are expected to be out with final rules this month.
In RSPA's interim rule, Section 194.103 requires an operator to identify which line sections in a response zone may cause significant harm to the environment.
The rule then states that a line section must meet the classification if it is larger than 6 in., longer than 10 miles, and meets any of five criteria that have do with the segment's spill history, its steel make up (electric-resistance welded), and its location relative to drinking water and environmentally sensitive areas.
If any line section in a given response zone meets the criteria, then the entire response zone is so classified. For pipeline operators to determine whether a segment qualifies means each foot in the zone must be evaluated on each of the five criteria. The consequent research and documentation requirements are extensive.
Pipeline operators have objected especially to the criterion that relates to environmentally sensitive areas, arguing that the definition is overly broad and vague. But while EPA works out the final rule, which may or may not resolve the problem of definition, operators must comply with requirements of the interim final rule.
RSPA's interim final rule also requires each facility's response plan to be consistent with the national contingency plan and each applicable area contingency plan.
But operators who operate systems in several states, she said, may be required to analyze facility response plans against several different area plans that, being site or region specific, may have varying planning and response requirements.
Broussard also objected to the RSPA interim rule's requirement that each operator identify and ensure, by contract or other approved means, the resources necessary to remove a worst-case discharge and to mitigate or prevent a substantial threat of a worst-case discharge.
But oil pipelines often extend over hundreds of miles. This requirement, therefore, becomes extremely onerous and, for remote facilities, impossible to achieve in the time frames outlined.
Pipeline operators depend on a myriad of contractors, response organizations, cooperatives, and others to remove and mitigate a spill. Identification of these resources that are available within specific time frames is unrealistic, she said.
MORE TO COME
Major regulatory issues that will affect the pipeline industry in the future, include:
- Storage tank liner requirements and secondary containment
- Natural resource damage assessment implementation
- Environmentally sensitive area delineation and protection
- Utilization of geographic information systems.
Broussard noted that, as federal agencies complete their rules and conclude numerous studies and area contingency plans mandated by the Oil Pollution Act of 1990, the industry can look for increasing cost and regulatory burdens.
PIPELINES AND RFG
The additional liabilities and documentation associated with reformulated gasoline (RFG) will make RFG more difficult to handle than such other grades handled in the past, according to Ralph L. Thompson of Colonial Pipeline Co., Atlanta.
Many in the industry, however, are still trying to interpret the RFG regulations, he said.
FUNGIBILITY AND SPECS
To a common carrier, probably the most important part of the RFG regulations deals with fungibility because addition of RFG to current pipeline movements will strain existing tankage.
Moreover, building more tankage in congested distribution areas is difficult, at best, if not impossible.
Segregation of gasolines requires pipelines to use large tanks for small volumes. That causes, said Thompson, a loss of tankage capacity which could result in less throughput and reduced shipper service. Fungibility of products enables pipelines to use large tanks for large volumes.
Simple-model RFG during 1995-1997 is fungible. Simple-model gasoline from one refinery can be commingled with simple-model gasoline from another refinery.
At the same time, gasoline produced by a refiner to meet the per-gallon specifications can be commingled with gasoline produced by another refiner to meet the average specifications.
Phase I complex-model gasoline during 1995-1997, however, must be segregated from the refinery to the retail outlet. This requires segregation of each batch of 1995-1997 complex model gasoline through the distribution system.
Complex-model gasoline produced for January 1998 and later will be fungible. Simple-model gasoline will drop out at the end of 1997.
Reformulated base for oxygenate blending (RBOB) is fungible, if the type and amount of oxygenate to be blended are the same. RBOB is the blendstock for reformulated gasoline, before ether (or alcohol) is added; in other words, RFG without oxygenate.
RBOB produced for blending with ethers from different refiners is fungible, as well. RBOB produced for blending with ethanol from different refiners is fungible, but RBOB for ethers is not fungible with RBOB for ethanol.
RBOB produced for blending with a refiner's designated oxygenate is segregated and cannot be commingled with any other RBOBs.
It's unclear at this time, said Thompson, how much RBOB will have to be moved through common-carrier pipelines.
The pending decision on the renewable oxygenate standard will affect pipeline movements of RBOB. For the present, he said, RBOB on Colonial will be segregated.
RFG specifications for the simple and complex model are on a per-gallon or an average basis; the refiner can elect to use the per gallon or average specification parameters.
Pipeline specifications for simple model RFG will be written with average specifications. The controlling parameters for the simple model are volatility, oxygen content, and benzene.
Colonial will handle complex-model RFG as a segregated batch until 1998, even though two batches of complex-model RFG can be commingled until then unless the two refiners' baselines are identical, a condition Colonial believes unlikely.
After 1998, as stated earlier, the complex model becomes fungible and replaces the simple model. At that time pipeline specifications for the complex model will be written with average specifications.
As for fungible specifications for RBOB, Thompson knew of no pipeline or refiner who had tackled that yet. Colonial had not, he said; at present, any RBOB movement on Colonial will be segregated.
RFG rules for handling conventional gasoline address increases in emissions. The requirements will not affect current pipeline specifications for conventional gasoline.
Thompson said EPA earlier proposed use of phenolphthalein as the required marker for conventional gasoline.
Field tests using phenolphthalein as a gasoline marker, however, suggest that it does not mix with conventional gasoline. Instead of remaining in the test batch of gasoline, the phenolphthalein was later found in water, on pipeline surfaces, and in other products.
In the final rule, EPA elected not to designate a gasoline marker until alternative markers had been tested. EPA has indicated that a final decision may not be published until after the beginning of the RFG program in December.
PRODUCT CODES
Thompson explained that representing the characteristics of each product grade with a two or three-character code is accomplished with pipeline product codes. Each new product grade will require a new product code.
The most significant change for pipeline operators, he said, will be the number of new product grades required to handle RFG and RBOB, and he cited Colonial as an example.
Currently, Colonial ships 41 different grades of gasoline. It plans to revise all gasoline product codes so that a code is assigned for each grade and volatility class.
A new code for each grade of RBOB, conventional, simple model, and complex RFG means a total 147 codes. The total number of possible gasoline codes if fungible batches are moved on a segregated basis is 269.
TRANSFER DOCUMENTATION
On each occasion when custody or title to any reformulated gasoline or RBOB is transferred, other than when gasoline is sold or dispensed for use in motor vehicles at a retail outlet or wholesale purchaser-consumer facility, the transferor will provide to the transferee documents which include the following information:
- Name and address of the transferor
- Name and address of the transferee
- Volume of the gasoline at the time of the transfer
- Location of the gasoline at the time of the transfer
- Date of the transfer.
Thompson said that these are only the first five lines of documentation and consist of information typically on pipeline tickets today.
In addition, the gasoline must be identified as the following:
- Conventional or reformulated
- Volatile organic compounds (VOC) or non-VOC controlled
- Region 1 or Region 2
- Oxygenated or non-oxygenated
- Simple or complex
- Minimum or maximum standards for benzene, oxygen, and Rvp
- VOC and NOx emissions
- Identification as RBOB
- Refiner registration number
- Designation of oxygenate and amount for blending with RBOB
- Statements about combining RBOB with RBOB.
In the case of conventional gasoline, a statement is required concerning the mixing of conventional and RFG.
In the past, pipelines have used the product code on the ticket as certification that the product delivered to a shipper met all the specifications of the pipeline product specification sheet for that particular code.
To meet the EPA transfer documentation requirements for RFG, RBOB, and conventional gasoline, each product-specification sheet will include the required documentation. Colonial hopes, said Thompson, that EPA will allow the pipeline product code to represent the additional information required on the transfer document.
OPERATIONS
A certificate of analysis is required from the refinery before RFG is released into a pipeline.
In the future, Colonial will be working toward use of electronic data-transfer capabilities to speed the process of passing information from the refiner to the pipeline.
By receiving batch certification information in a timely manner, the pipeline will be able to accept the refiner's batch for shipment.
Pipelines will begin lifting RFG and RBOB from refiners 30 to 70 days before Dec. 1, the period length depending on the pipeline transit time from the refinery to the retail outlet.
Shippers will go through a transition period to convert both terminal and retail tanks from conventional to RFG.
RFG will have to be sequenced in blocks through the pipeline to avoid additional interfaces with conventional or distillate products. The different grades of RFG in a pipeline movement will be sequenced together.
As Colonial understands the regulations, said Thompson, RFG will have to be cut clean at delivery locations. This means a cut from conventional to RFG will be on 100% RFG gravity, a cut from RFG to conventional will be on first indication of gravity change.
This type of batch cutting will increase the loss of RFG to conventional gasoline. By reducing the number of interfaces at which RFG is next to nonconforming products, the amount of downgrading of RFG into conventional gasoline or transmix will be reduced.
OVERSIGHT PROGRAMS
A quality-control oversight program is voluntary but essential, Thompson said. The regulations recommend a carrier have a quality-control oversight program in place to test Rvp, oxygen, and benzene on RFG and RBOB.
Pipelines already have established oversight programs. The testing on RFG and RBOB recommended by EPA will be included in current testing procedures.
The regulations specify the test methods to use for testing RFG. The EPA methods are in most cases elaborate laboratory procedures impractical in the field, said Thompson.
For an oversight program, pipelines will have to use alternate field test methods and correlate the test results with the approved test method.
EPA-recommended test methods and typical pipeline test methods will only differ on certain tests.
EPA and the pipelines will both use ASTM D5191 for Rvp. The EPA will use D3606 for benzene while the pipelines will use D3606, D4815, D4420, and portable IR analyzers.
The EPA will use the GC-OFID method to test oxygen and allow D4815 until 1998; the pipelines will use D4815 or portable IR analyzers.
EPA will enforce rules for Rvp, oxygen, and benzene content. The agency will not take enforcement action, however, if a sample tests over the standard but within the tolerance downstream of the refinery.
Record keeping requirements for pipelines are the following:
- Product transfer documentation for all RFG, RBOB, or conventional gasoline.
- Data retained for any sampling and testing of RFG or RBOB include location, date, time, tank or truck identification for each sample; identification of who sampled and who conducted the test; results of tests; and for noncompliance, actions taken to stop sale and measure to prevent future noncompliance.
All records must be kept for 5 years.
UNANSWERED QUESTIONS
Thompson said some unanswered questions remain:
- Will the EPA allow the blending of RFG-fuel oil mix, that is at their interface, into RFG in geographic areas where there is no conventional gasoline?
- Will the EPA allow blending RFG-conventional mix into conventional gasoline?
- Will pipeline product codes be sufficient transfer documentation to identify product characteristics, minimum and maximum specifications, and required statements?
- Will the EPA clarify the use of alternate test methods for oversight programs as a defense?
- Will the EPA clarify its position on product documentation during changeover transition periods?
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
