natural gas gathering lines - attorneys at law | … in ohio aeps sb 315 left aeps structure...

Natural Gas Gathering Lines

John WilliamsDirector

Service Monitoring and Enforcement Department

Gas Pipeline Safety Staff• Program Manager• Office Support Staff• 12 Inspectors

The Federal/State Partnership• Pipeline and Hazardous Materials

Administration (PHMSA) develops, issues and enforces the Pipeline Safety Regulations

• PHMSA has delegated responsibility for pipeline safety to PUCO for regulated gas pipelines in Ohio

• PUCO also performs pipeline safety inspections on interstate pipelines within Ohio as part of a cooperative agreement

State Duties and Obligations as part of the partnership

• Operator Inspections• Compliance and Enforcement• Incident Investigations• Pipeline Construction Inspections• Record Maintenance and Reporting

Facilities Inspected• Local Distribution Companies (LDC)• Transmission Pipelines• Master Meter Operators• Municipal Gas Systems• Co-op Gas Systems• Propane Systems• Gathering Pipelines

Gas System Overview

Definition of Gathering Lines

As defined in CFR Part 192:

Gathering Line means “a pipeline that transports gas from a current production facility to a transmission line or main”

How do you determine if a pipeline is a gathering line?

• CFR Part 192.8 states “An operator must use API RP 80 (incorporated by reference, see 192.7) to determine if an onshore pipeline (or part of a connected series of pipelines) is an onshore gathering line.”

• American Petroleum Institute Recommended Practice 80 (API RP 80) defines onshore gathering lines and “production operations”.

Definition of Production OperationAPI RP 80 defines a Production Operation as:“Piping and equipment used for production and preparation for transportation or delivery of hydrocarbon gas and/or liquids and includes the following processes: extraction and recovery, lifting, stabilization, treatment, separation, production, processing, storage, and measurement of hydrocarbon gas and/or liquids; and associated production compression, gas lift, gas injection, or fuel gas supply.”

Definition of Onshore Gathering Line

• API RP 80 defines an Onshore Gathering Line as any pipeline or part of a connected series of pipelines used to transport gas from the furthermost downstream point in a production operation to certain endpoints.

• These endpoints are often the furthermost downstream gas processing plant, gas treatment facility, gas gathering compressor, point of commingling of gas from two or more fields, or point of connection of the gathering line to another pipeline.

Which Gathering lines are regulated?

• Must use both 192.8 and API RP 80 to determine the “beginning” and “endpoint” of Gathering

• Once a line is determined to be a definitional Gathering line, the Operator must use 192.8 to determine if it is a “regulated onshore gathering line”

CFR Part 192.9 What requirements apply to gathering lines?

• Regulated gathering lines are classified as either “Type A” or “Type B” gathering lines based on hoop stress if pipeline is metallic or MAOP if pipeline is non-metallic

• In general, requirements only apply to pipelines in Class 2, 3, and 4 areas

Regulated Gathering Lines

New Developments – Senate Bill 315:

• Intent is to extend safety regulations to high stress Gathering pipelines collecting gas produced from horizontal drilling / fracking that are currently exempt from regulation.

• Modifies Ohio Revised Code, Section 4905.90 and creates a new section 4905.911.

• New law takes effect on September 11, 2012.

Pre-Senate Bill 315

O.R.C. 4905.90 Additional Definitions"Gas gathering pipeline" means a gathering line that is not regulated under the Natural Gas Pipeline Safety Act and the rules adopted by the United States department of transportation pursuant to the Natural Gas Pipeline Safety Act, including 49 C.F.R. part 192, as amended. "Gas gathering pipeline" includes a pipeline used to collect and transport raw natural gas or transmission quality gas to the inlet of a gas processing plant, the inlet of a distribution system, or to a transmission line.

O.R.C. 4905.90 Additional Definitions (cont.)

"Processing plant gas stub pipeline" means a gas pipeline that transports transmission quality gas from the tailgate of a gas processing plant to the inlet of an interstate or intrastate transmission lineand that is considered an extension of the gas processing plant, is not for public use, and is not regulated under the Natural Gas Pipeline Safety Act and the rules adopted by the United States department of transportation pursuant to the Natural Gas Pipeline Safety Act, including 49 C.F.R. part 92, as amended.

Post-Senate Bill 315

O.R.C. 4905.911(A)(1) The public utilities commission shall require an operator of either of the following types of pipelines that was completely constructed on or after the effective date of this section and that transports gas produced by a horizontal well to comply with the applicable pipe design requirements of 49 C.F.R. 192 subpart C:

• (a) A gas gathering pipeline; • (b) A processing plant gas stub pipeline.

O.R.C. 4905.911 (continued)(A)(2) The commission shall also require the operator to do all of the following regarding that pipeline:

• (a) Design, install, construct, initially inspect, and initially test the pipeline in accordance with the requirements of 49 C.F.R. 192 if the pipeline is new, replaced, relocated, or otherwise changed;

O.R.C. 4905.911 (continued)• (b) Control corrosion according to requirements of 49

C.F.R. 192 subpart I if the pipeline is metallic;

• (c) Establish and carry out a damage prevention program under 49 C.F.R. 192.614;

• (d) Establish and carry out a public education program under 49 C.F.R. 192.616;

• (e) Establish the MAOP of the pipeline under 49 C.F.R. 192.619;

O.R.C. 4905.911 (continued)• (f) Install and maintain pipeline markers according to

the requirements for transmission lines under 49 C.F.R. 192.707;

• (g) Perform leakage surveys according to requirements in 49 C.F.R. 192.706;

• (h) Retain a record of each required leakage survey conducted under division (A)(2)(g) of this section and 49 C.F.R. 192.706 for five years or until the next leakage survey is completed, whichever time period is longer.

O.R.C. 4905.911 (continued)(B)(1) Any person who plans to construct a pipeline subject to division (A) of this section after the effective date of this section shall file with the public utilities commission division of pipeline safety a form approved by the division that includes all of the following information: • (a) The route of the proposed pipeline; • (b) The MAOP of the pipeline; • (c) The outside diameter of the pipeline; • (d) The wall thickness of the pipeline; • (e) The material that the pipeline will be made of; • (f) The yield strength of the pipeline. • The form shall be filed with the division not later than twenty-one days

prior to the commencement of construction of the pipeline.

O.R.C. 4905.911 (continued)(B)(2) Not later than sixty days after the completion of construction of a pipeline subject to division (B)(1) of this section, the operator of the pipeline shall file with the public utilities commission division of pipeline safety an explanation of the constructed pipeline's route and operating information.

Questions?

© 2012 Bricker & Eckler LLP

Presentation byTerrence O’Donnell

Bricker & Eckler LLP

Cogeneration / An Ohio Update


Areas of Focus

Cogeneration– Waste Energy Recovery– Combined Heat and Power

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Cogeneration in Ohio AEPS

SB 315 left AEPS structure generally intact.But promotes waste energy recovery (WER) and combined heat and power (CHP) by qualifying them to meet certain portfolio requirements.

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Cogen

‘Pure,” use-it-or-lose it WER systems now qualify as either renewable energy or energy efficiency resources. Eligible for RECs along with traditional renewables. Some precedent in other states. Fuel-fired CHP projects qualify to meet Ohio’s energy efficiency requirements but not the renewable targets.

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WERWaste energy recovery system: a facility that generates electricity through the conversion of energy from either:– (i) exhaust heat from engines or manufacturing, industrial

commercial, or institutional sites, except for exhaust heat from a facility whose primary purpose is the generation of electricity; or,

– (ii) reduction of pressure in gas pipelines before gas is distributed through the pipeline, provided that the conversion of energy to electricity is achieved without using additional fossil fuels.” R.C. 4928.01(36).

WER systems capture waste energy from an industrial or commercial process, but do not introduce additional fossil fuel sources.

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CHP

Combined Heat and Power: coproduction of electricity and useful thermal energy from the same fuel source designed to achieve thermal-efficiency levels of at least sixty percent (60%) with at least twenty percent (20%) of the system’s total useful energy in the form of thermal energy. CHP systems often introduce additional fossil fuel energy sources (e.g., natural gas, oil, or coal).

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New Systems Only*To qualify for the renewable or efficiency standard, systems must be placed in service or retrofitted after September 10, 2012. (Effective date of bill).*Two fuel-fired CHP systems “sited at a state institution of higher education, and placed in service between January 1, 2002 and December 31, 2004,” also qualify as energy efficiency or renewable resources. Old provision allows University of Cincinnati and Kent State to sell RECs from their fossil fuel fired CHP systems.Only such systems in the country that can sell RECs as far as we can tell.

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SB 289, AK Steel / Air Products

SB 289 allows AK Steel to deploy a cogen technology and sell large amount of RECs.Air Products received $30M federal stimulus grant to support project.Project terminated 6/27/12. “Not economically justified.”Statute was limited to one county so now appears obsolete.

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What’s Next?

These market-based policy drivers can only work if the investment community believes they are stable and reliable.SB 315 initially created some uneasiness among renewable energy project developers as the rules of the game were undergoing changes.Market looking for signals from policymakers that the State is committed to the RE/EE benchmarks without ongoing modification.

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Questions

Terrence O’DonnellBricker & Eckler, LLP100 S. Third Street

Columbus, Ohio [email protected]

614.227.2345

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Presentation byPrice Finley


Financing Alternative Energy Generation and Energy-Saving

Retrofits for Commercial Buildings Using “PACE”


PACE Financing

PACE = “Property Assessed Clean Energy”


Ohio’s PACE Law

ORC Ch. 1710 provisions allow municipalities and townships to work with property owners to provide up-front, assessment-based financing for property owners that want to install their own alternative energy improvements.Ohio’s law modeled after the success of Berkeley, California’s FIRST (“Financing Initiative for Renewable and Solar Technology”) program.26 States/Territories have authorized PACE laws.


Ohio’s PACE LawEnergy SID: special type of financing district created under ORC Ch. 1710 for the purpose of financing:

– solar photovoltaic (i.e., roof-top and ground-mounted solar arrays)

– solar thermal systems (i.e., solar water heating systems)

– geothermal– wind– biomass– gasification– energy efficiency improvements


PACE Financing


PACE Financing:Forming an Energy SID

Energy SIDs are available for residential, commercial, industrial, non-profit and government property.Petition(s) by property owner(s).Legislative approval by local government. Noncontiguous “districts” are permitted.A property owner cannot be compelled to join an Energy SID.


PACE Financing DistrictsPACE can be authorized for an entire municipality or township, and property owners seeking financing can “opt in.”PACE can be multijurisdictional or regional if authority is granted by local governments across municipal/township boundary lines.Examples: – The Toledo Ohio Advanced Energy Improvement Corporation (Toledo-

Lucas County Port Authority + City of Toledo)– Northwest Ohio Advanced Energy Improvement Corporation (Toledo-

Lucas County Port Authority + City of Toledo + City of Oregon) – Northeast Ohio Advanced Energy District (City of Cleveland + First

Suburbs)– Pending PACE for mall in northeast Ohio


PACE Financing

PACE can be a tool added to other tools used in a project financing.PACE can be utilized on a single parcel or a single campus; PACE need not be city-wide or district-wide.PACE could be a project financing tool for any large user of power with deferred maintenance such as:- Manufacturers- Colleges and universities- Hospitals- Municipal, county, or township properties


PACE Financing:Fannie/Freddie ComplicationsIn 2010, Fannie and Freddie took issue with PACE Financing for residentialproperties, citing lien priority and credit concerns.Federal District Court made recent pro-PACE ruling.Federal legislation pending.


Thanks!

Price FinleyBricker & Eckler [email protected]

614.227.8897


Presentation byChris Montgomery


Pipeline Location Issues


Pipeline Rights of Way

Decide early whether you want a pipeline on your property



Location, Location, Location– Importance of seeing a map– Think about the future– Ask early if location can be moved



Terms and Conditions– 1 pipeline vs. multiple pipelines– Size of pipeline– Size of easement (temporary vs. permanent)– Duration – Landowner approval of locations– Use of surface– Insurance– Indemnification



$$$$– How to value the right of way

• $/foot• $/acre• Diminution in value• Surface damage



Threat of eminent domain


Chris MontgomeryBricker & Eckler LLP

[email protected]

Questions?

natural gas gathering lines - attorneys at law | … in ohio aeps sb 315 left aeps structure...

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