Rules and Regulation for Cross country pipeline

Design, Laying and O&M in India

A blog by Anirudha

LEGISLATION & REGULATIONS

_ The Petroleum Act, 1934_ The Petroleum Rules, 2002_ Petroleum and Mineral Pipelines (Acquisition of Right of User in Land) Act,1962 & Amendment Act, 1977_ Indian Forest Act, 1927 And Indian Forest (Conservation) Act, 1980_ Guidelines for laying Petroleum Product Pipelines (Gazette Notification no. P-20012/5/99-PP dated 20.11.02)_ Supplementary guidelines for laying Petroleum Product Pipelines (GazetteNotification no. P-20012/5/99-PP/OR-II dated 26.10.04)

1) THE PETROLEUM ACT, 1934The Petroleum Act, 1934 consolidates and amends the law relating to import,transport, storage, production, refining and blending of Petroleum products.

2) THE PETROLEUM RULES, 2002The Petroleum Rules, 1976 were replaced by Petroleum Rules, 2002 with effectfrom 13th march, 2002. Part V of Petroleum Rules, 2002 deals in Transportationof Petroleum Products by Pipelines. The salient details of Part V of Petroleumrules are given below:

Right of Way to be acquired - No pipeline and installation connected with apipeline, shall be constructed without acquiring the necessary land, leasementsand right for the construction.

Approval of the design and route of the pipeline - No pipeline shall be laidwithout the prior written approval of the Chief Controller of the route of thepipeline, and of the design, construction and working thereof.

Design of pipeline and attachments - The pipeline shall be constructed of suitablesteel which is safe for the conditions under which it is to be used. The pipelineand its components shall be designed and constructed in accordance with a code

recognized by the Chief Controller or OISD Standard 141 and shall be capable ofwithstanding a pressure which shall not be less than the maximum workingpressure thereof plus an allowance for surge pressure, as anticipated. Provisionshall be made for thermal expansion or contraction of the pipeline.

The pipeline shall be protected by a casing of steel pipe or by increasing thethickness of its wall to prevent damage to the pipeline from usual externalconditions which may be encountered in railway crossings, road crossings, riveror water course crossings, bridges, long self supported spans, unstable ground,vibrations, weight of special attachments or thermal forces.

By-pass relief valves, pressure limiting stations or automatic shut downequipment of approved design shall be provided in the pipe line.

Isolation valves shall be installed at each of the following locations -_ On the suction end and the discharge end of the pump station._ On each line entering or leaving the installation._ On each main line at locations along the pipeline system that will minimizedamage from accidental product discharge, as appropriate for the terrain inopen country or for the location near cities or other populated areas._ On each lateral take off from a trunk line._ On each side of a water crossing that is more than 30m wide from high watermark to high-water mark._ On each side of a reservoir holding water for human consumption.Laying of Pipe Line - Pipeline shall be laid in the most favorable route, avoidingknown obstructions and areas in which unusual external conditions prevail.

Pipeline shall be laid below the ground level except where laying above theground level is desirable for topographical, economic or other special reasons.

Where an underground Pipeline has to cross any existing underground water orgas line, cable, drain or other services, the pipeline shall be laid at least thirtycentimeters below such services. The number of bends in the pipeline shall bekept to the minimum.

The route of underground sections of a pipeline shall be indicated by markers andnot less than two such markers shall be visible from any point along the route.

Protection against corrosion - The pipeline shall be protected against corrosion bysuitable coating strapping and where necessary by cathodic protection.

Hydrostatic testing of pipeline – Before transporting petroleum for the first time,each pipeline or completed sections thereof shall be filled with water and thepressure in the line or section, as the case may be raised to 1.1 times the design

internal pressure and maintained for a period of atleast 24 hours or as perprocedure laid down in the relevant pipelines design code recognized by ChiefController. A pipeline or a section thereof showing any significant drop ofpressure during the period of testing shall not be used for transporting petroleumuntil necessary repairs have been carried out and satisfactory retest done.

The test specified above shall be carried out atleast once in every 12 months ineach completed pipeline section which crosses an area where there is danger ofwater pollution by any leakage. However, the provision shall not apply to crosscountrypipelines, for which new technologies are available.

Shut down of pipeline - Except when shut down for maintenance work, a pipelinewhen not in operation shall be shut down under pressure and a careful recordmade of the pressure during the shut down period. Any significant drop inpressure shall be deemed to render the pipeline unfit for transport of petroleumuntil it is repaired and tested.

Patrolling of pipeline -_ The whole of every pipeline shall be efficiently patrolled by the companyowning the pipeline._ Telegraph or telephone or radio communication facilities shall be provided atfrequent intervals along the pipeline.Checking of gauges - Tank gauges or gauges at intermediate or booster pumpstations shall be checked atleast once a year.

Additions and alterations in the pipeline -No addition or alteration to a pipeline shall be carried out without the previousapproval of Chief Controller in writing. Every person desirous of carrying out anyadditions or alterations in any pipeline shall submit an application to the ChiefController. The Chief Controller shall, if he is satisfied, approve the proposedadditions or alterations subject to such conditions as he may deem fit.

Repair and maintenance of pipeline- No maintenance or repair involving cuttingor rewelding of any pipeline shall be carried out except under followingconditions, namely:

(i) An experienced engineer shall inspect the section requiring maintenance orrepair before the work is undertaken and issue a written permit specifyingtherein the precautions to be observed and the procedure to be followed forcarrying out the work. The permit so issued shall be preserved by the ownerof the pipeline for a period of six months.

(ii) All work involving cutting or welding shall be carried out by an experiencedperson.

(iii) The section of the pipeline shall be isolated and drained before startingrepairs or maintenance.

(iv) Only mechanical cutters shall be used for cutting the pipeline or anyconnection thereof unless the section of the pipeline and its connectionshave been purged with an inert gas.

(v) No hot work shall be carried out on any pipeline until the section thereofrequiring repair has been isolated drained and purged with inert gas or steamor kept filled with water or until such section has been prepared in a mannerapproved in writing by the experienced engineer.

(vi) The section of the pipeline in which repairs or maintenance work has beencarried out shall not be used for transporting petroleum until such sectionsare replaced with hydrostatically pre tested sections and the repaired weldjoints pass the radiography test.

(vii) No section of any pipeline, and no valve fitted to it shall be separated untilan efficient electrical bond has been established between the parts to be soseparated which shall not be broken until the separated parts have beenrejoined.

Relaying or repairs to a pipeline in public interest - Where the Chief Controller isof the opinion that it is in the interest of public safety to do so, he may, by a noticein writing given to the owner of the pipeline, require such owner, to relay, renewrepair such pipeline in accordance with such requirements as may be specified insuch notice.

Power of inspection and examination - The Chief Controller or Controller may atany time inspect and examine any pipeline.

Reports of fire or major leakage - The occurrence of any fire or major leakage in apipeline and connected facilities shall be reported immediately by the person forthe time being incharge of the pipeline to the nearest Magistrate or officer-incharge of the nearest police station and to the Chief Controller by telephone/fax

and also by telegram at his telegraphic address, namely “Explosives Nagpur”.

3) PETROLEUM AND MINERAL PIPELINES (ACQUISITION OF RIGHTOF USER IN LAND) ACT, 1962 & AMENDMENT ACT, 1977

The Petroleum and Mineral Pipelines (Acquisition of Right of User in Land) Act(P&MP Act), 1962 provides for the acquisition of Right of User in land for layingpetroleum pipelines. Given below are the salient details of this Act:

Competent Authority: Competent Authority is defined as any person or authorityauthorized by the Central Government, by notification in the Official Gazette, toperform the functions of the Competent Authority under the P&MP Act.

Publication of notifications for acquisition - Section 3(1): Whenever it appears tothe Central Government that it is necessary in the public interest that for thetransport of petroleum or any mineral from one locality to another localitypipelines may be laid by that Government or by any State Government or acorporation and that for the purpose of laying such pipelines it is necessary toacquire the right of user in any land under which such pipelines may be laid, itmay, by notification in the Official Gazette, declare its intention to acquire theright of user therein.

Power to enter, survey etc.(Section 4): On the issue of 3(1) notification, it shall belawful for any person authorized by the Central Government or by the StateGovernment or the corporation which proposes to lay pipelines for transportingpetroleum or any mineral, and his servants and workmen –

a) To enter upon and survey and take levels of any land specified in thenotification.

To dig or bore into the subsoil.

c) To setout the intended line of work.

d) To mark such levels, boundaries & line by placing marks and cuttingtrenches.

e) Where otherwise survey cannot be completed and levels taken and theboundaries and lines marked, to cut down and clear away any part ofstanding crop, fence or jungle; and

f) To do all other acts necessary to ascertain whether pipelines can belaid under the land.

Hearing of Objections - Section 5(1): Any person interested in land may, within21 days from the date of notification under sub-section (1) of section 3, object tothe lying of the pipelines under the land.

Objections shall be made to CA and order by CA shall be final.

Declaration of Acquisition of Right of User - Section 6 (1): Where no objectionsunder subsection of section 5 have been made to the CA within the periodspecified therein or where the CA has disallowed the objections, CA shall submita report containing his recommendations and record of the proceedings to CentralGovernment and upon receipt of such report, the Central Government shalldeclare, by notification in the Official Gazette, that the right of user in the land forlaying the pipeline should be acquired.

On publication of 6(1) notification, the right of user shall vest in the CentralGovernment free from all encumbrances. Central Government may direct byorder in writing that the right of user instead of vesting in Central Government,vest in the State Government or the corporation proposing to lay the pipelines,free from all encumbrances.

Central Government or State Government or corporation to lay pipelines -Section 7: It is lawful for the Central Government or State Government orcorporation to lay pipelines provided that no pipeline shall be laid under –

a) any land which was used for residential purposes immediately before thedate of 3(1) notification.

any land on which a permanent structure is there.

c) any land which is appurtenant to a dwelling house.

d) any land at a depth which is less than one metre from the surface.

Power to enter land for maintaining, examining, repairing, alerting inspection etc.– Section 8

Compensation – Section 10: For any damage, loss or injury sustained by anyperson interested in the land under which the pipeline is proposed to be, or isbeing, or has been laid, by reason of

i) the removal of trees or standing crops

ii) the temporary severance of land under which the pipeline has been laid fromother lands belonging to or in occupation of such person

iii) any injury to any other property or the earnings of such personthe Central Government, State Government or the Corporation, as the case maybe, shall be liable to pay compensation to such person for such damage, loss orinjury, the amount of which shall be determined by the CA. In case the amount ofcompensation is not acceptable to either of the parties, the amount ofcompensation shall be determined by the District Judge.

No account shall be taken of any structure or other improvement made in the landafter the date of the notification under section 3(1) in determining thecompensation.

A compensation calculated by the CA at 10% of the market value of that land onthe date of 3(1) notification shall also be paid to the affected land owner.

Penalty – Section 15 (1): Whoever willfully obstructs any person in doing any ofthe act authorized by P&MP act or willfully fills up, destroys, damages ordisplaces any trench or mark shall be punishable with imprisonment which mayextend to six months or fine or with both.

(2) Whoever willfully removes, displaces, damages or destroys any pipeline laidunder section 7, shall be punishable with rigorous imprisonment for a term whichshall not be less than one year, but which may extend to 3 years and shall also beliable to fine.

4) INDIAN FOREST ACT, 1927 AND INDIAN FOREST (CONSERVATION)ACT, 1980

This act is applicable to the Pipeline ROU passing through reserved forest,protected forest or any area recorded as forest in the government records.

5) GUIDELINES FOR LAYING PETROLEUM PRODUCT PIPELINES(GAZETTE NOTIFICATION NO. P-20012/5/99-PP DATED 20.11.02)

Categorization of Pipelines

1. The petroleum product pipelines would be categorized as follows:

(i) Pipelines originating from refineries, whether coastal or inland unto adistance of around 300 kilometers from the refinery.

(ii) Pipelines dedicated for supplying product to particular consumer,

originating either from a refinery or from oil company's terminal and,

(iii) Pipelines originating from refineries exceeding 300 Km in length andpipelines originating from ports, other than those specified in (i) and (ii)above.

Ownership and access2. Right of User (RoU) in land for laying pipelines under the PetroleumPipelines (Acquisition of right of User in Land) Act, 1962 for the pipelinesfalling under category specified in sub-clauses (i) and (ii) of Clause 1, will begranted in favor of applicant company treating such pipelines as captivepipelines for exclusive use by the proposer company.

3. For grant of ROU in land for laying pipelines under the Petroleum Pipelines(Acquisition of right of User in Land) Act 1962 for the pipelines falling underthe category specified in sub-clause (iii) of clause 1, the following procedurewill be followed:

3.1 A proposal for laying common usage product pipeline could originate fromany single interested party or a joint-venture (herein after referred to asproposer).

3.2 The Ministry of Petroleum and Natural Gas shall publicize in such manner asthe Ministry may decide, the proposal inviting expression of interest, within aperiod of three months from anyone interested in the proposal. In case anycompany is interested in taking any capacity in the pipeline, it could expressits interest and enter into “take of pay” or any other mutually agreeablecontract with the proposer. The pipeline size and design would be finalized bythe proposer after taking into consideration all such requests.

3.3 In case, no expression of interest is received from any industry player within aperiod of three months of publicizing the proposal, the proposer would be atliberty to go ahead with the project.

3.4 The designed pipeline capacity would be atleast 25% more than the capacityrequirement of the proposer and of those who take capacity under clause 3.2as may be decided by the Ministry of Petroleum and Natural Gas.

3.5 The ownership of the pipeline would be that of the proposer or as may bedecided by the proposer, irrespective of whether the other industry player(s)take pipeline capacity or not.

3.6 The excess capacity, as mentioned in clause 3.4, would be available for use byanyone other than the owner and those taking capacity under clause 3.2 at theapproved tariff as per the provisions under clause 4, on “common carrier”

basis i.e. capacity would be made available to anyone interested and offeringto pay the tariff. In case, such demand exceeds this excess capacity, theallocation of the excess capacity would be prorated amongst the interestedusers other than the owner and those taking capacity under clause 3.2.

Tariff

4. Tariff for the pipelines commissioned after the date of publication of thisnotification in the Official Gazette and falling in the category specified in subclause(iii) of clause 1, will be subject to the control orders or the regulationsthat may be issued by the Government or the statutory authority in this behalfunder any law for the time being in force.

Conditions under ROU acquisition

5. The ROU acquisition under the Petroleum Pipelines (Acquisition of Right ofUser in Land) Act, 1962 will be subject to such conditions as may be deemedfit by the Government in public interest. Such conditions may inter aliainclude the following:

5.1 Sharing of portions of acquired ROU falling in forest areas, wild life/marinesanctuaries/parks, prohibited/restricted areas etc with the other interestedparties.

5.2 In case the route alignment of the Pipeline crosses another pipelineroute/alignment, the points of crossing would be decided by mutual agreementbetween the parties failing which the matter will be referred to the Ministry ofPetroleum and Natural Gas whose decision will be final.

6) SUPPLEMENTARY GUIDELINES FOR LAYING PETROLEUMPRODUCT PIPELINES (GAZETTE NOTIFICATION NO. P-20012/5/99-PP/OR-II DATED 26.10.04)

The Supplementary guidelines are applicable for pipelines falling under category– 1(iii) of Guidelines for laying Petroleum Product Pipelines.Common Carrier Capacity

1. The “Common carrier” capacity to be built under para 3.4 of the Guidelinesfor Laying Petroleum Product Pipelines notification F.No.P-20012/5/99-PPdated 20.11.2002 provides the right of first use to any party other than theowner / proposer, throughout the life of the pipeline.

2. In the event that capacity is available out of the common carrier capacity, theowner / proposer may utilize the same with the stipulation that should any

other party seek transportation through common carrier capacity, the owner /proposer would vacate and make available common carrier capacity up to thedesignated level immediately.

Time Frame for Completion of Pipeline

3. Pipeline project will be required to be commissioned with in the time periodprovided in the sanction / approval letter, which shall have an outer limit of 36months from the date of sanction / approval.

Bank Guarantee

4. The owner / proposer will be required to furnish an irrevocable bankguarantee of an amount equivalent to 2% of the project outlay or Rs. 2 lakhsper kilometer of pipeline proposed, whichever is higher, as a guarantee forcommissioning the pipeline project as per the approved time schedule. Theirrevocable bank guarantee shall be encashable any time after 36 months fromthe date of the sanction / approval and will be dischargeable only on advice ofthe Government. If the completion of the project is delayed beyond 36 monthsfrom the date of sanction / approval of the project, then the bank guaranteemay be invoked.

5. The ROU acquisition would be commenced after execution of BankGuarantee and its deposit with the Government.

6. The Bank Guarantee may be deposited within 30 days of issue of sanctionletter failing which sanction letter would stand withdrawn.

7. The Bank Guarantee will be discharged on commissioning of the pipelinewithin the time period specified and satisfactory compliance of conditionsimposed through the sanction / approval letter.

Competent Authority for Acquiring ROU

8. Only serving Government Officers will be considered for working asCompetent Authority under the Petroleum and Minerals Pipelines(Acquisition of Right of User in Land) Act, 1962.

Transfer of Ownership

9. Where a pipeline implementing company is a subsidiary company and hasbeen granted sanction / approval letter on the basis of its holding / parentcompany’s balance sheet, permission of Ministry of Petroleum and NaturalGas will be required to be obtained prior to any change in managementmajority holding in such pipeline implementing subsidiary.

Eligibility of Players Seeking Capacity in a Pipeline Project

10. Any party may approach the proposer to seek capacity in a pipeline project forwhich an EOI has been issued under Guidelines for Laying Petroleum ProductPipelines Notification F.No.P-20012/5/99-PP dated 20.11.2002. Eligibility ofparties seeking capacity will not be limited on the grounds that the party,seeking capacity is neither a refinery nor possessing any marketing rights.

LIST OF STATUTORY APPROVALS REQUIRED FOR A PIPELINE PROJECT

a) Environmental Clearance –

i) State Pollution Control Board’s (SPCB) Consent for Establishment

ii) Ministry Of Environment and Forest clearance (including CRZ & nonCRZ areas)

iii) State Forest Clearance for Reserve / Protected / State forest crossingROUs (upto 5 hectares in a state). Clearance from State Forest Departmentin case of Social forest crossings specifically in case of such notified areasalong High way/ Local road networks

iv) Clearance from Regional Conservator of Forests for Reserve / Protected /State forest crossing ROUs (From 5 to 20 hectares of forest areas in astate). For more than 20 hectares, approval of Central Forest department isrequired under MOEF

v) SPCB consent for operation before commissioning of the project

ROU approvals –

i) State Government’s deputation of in service Government officer (preferablyrevenue officers) for notification as Competent Authority under Petroleum& Mineral Pipeline (Right of Use Acquisition) Act., 1962

ii) MOP&NG’s notification of Competent Authority under PMP Act 1962

iii) MOP&NG’s notification of ROU under 3(1), 6(1) sections of PMPAct,1962, CA’s conduction of Objection hearing under 5(1) section after3(1) notification

iv) Approval of Zonal railways for railway crossings

v) Approval of State Panchayat, State R&Bs (PWD), NH authorities for

various road crossings

vi) Approval of Rivers/canals/Streams/Nalahs/Drains/ water body crossingsfrom respective State Irrigation Authorities

vii) Approval / Consent from other Utility owners like Telecom, Water/Petroleum pipelines etc.

viii) Approval of District Magistrate for crossing of ROU in Government, lands

ix) Approval from Port Trust and other Govt. bodies where ever applicable forrestricted ROUs in their lands

c) Approvals from Central Departments -

i) CCOE Construction approvals for Pipeline alignment, Station / Terminallayouts & approval for commissioning after project completion

ii) Approval for Fire Advisor, Ministry of Home

iii) Approval of Ministry of Finance for concessional Custom Duty

iv) Notification of entry ports for concessional duty imports

v) Approval from Ministry of Communication for HF/ VHF wireless frequency

vi) Approval of Central Electricity Authority for energizing HV/EHV electricalinstallations

d) Approvals from State Departments -

i) Certificate of Registration from Regional Labor commissioner

ii) Construction approval from Director of Factories

iii) NOC from respective District Magistrates for all Stations/ Terminals

iv) Approval of plans from respective Municipal authorities

v) Approval of HT/LT Electrical Loads, DG set installation

vi) State Fire Service Dept.’s approval of plans and Fire officer’s approvalbefore commissioning

PIPELINE DESIGN CODESOISD (Oil Industry Safety Directorate) Standards

1) OISD 138 Inspection of Onshore Pipelines

2) OISD 140 Inspection of Jetty Pipelines

3) OISD 141 Design & Construction of Hydrocarbon Pipelines

International Codes, Standards & Practice

1) DNV Rules for Submarine Pipeline Systems

2) ASME B 31.8 Gas Transportation and Distribution Piping Systems

3) ASME B 31.4 Pipeline transportation Systems for Liquid Hydrocarbonsand other liquids

4) API RP 1102 Recommended Practice for Rail And Highway Crossings

5) API 1104 Standard for Welding Pipeline and Related Facilities

6) API RP 1110 Recommended Practice for Pressure Testing of LiquidPetroleum Pipelines

7) API RP 1111 Recommended Practice for Design, Construction,Operation and Maintenance of Offshore HydrocarbonPipelines

8) NACE MR 0175 Material Requirements- Sulphide Stress Cracking ResistantMaterials for Oil Field Equipment

9) IP 6 Pipeline Safety Code

10) OTHER

REFERENCES

Applicable Standards / Specifications Of ANSI / ASME,API, NACE, MSS, BS and DIN

OISD : Oil Industry Safety DirectorateAPI : American Petroleum InstituteASME : The American Society of Mechanical EngineersANSI : American National Standards InstituteNACE : The National Association of Corrosion EngineersBS : British StandardDNV : Det Norske VeritasMSS : Manufacturers Standardization Society of Valve and Fittings IndustryAWS : American Welding SocietyDIN : Deutsches Institute fur Normung[/font]