The natural gas industry is at another crossroads—leaving natural gas utilities and pipeline operators with plenty to consider. The industry last went through such a time when forecasts of severe shortages and high prices ended with hydrofracking, abundant supplies, low prices, and creation of a robust market for exports. The industry’s new challenge is one of its very survival.
This crossroads stems in part from global decarbonization efforts and use of existing gas pipeline infrastructure to move renewable gas (RNG) and hydrogen blends. As a result, natural gas utilities and pipeline operators are being challenged to work collaboratively to introduce any new standards necessary to ensure ongoing pipeline safety. Beyond current and applicable federal, state, and local regulations, new standards and regulations for RNG and hydrogen will likely put additional burden and costs on natural gas utilities and pipeline operators. For existing pipeline infrastructure to transport RNG and hydrogen, compression and controls must accommodate blended fuels’ chemical composition and varying characteristics.
Natural gas utilities and pipeline operators should need to continually demonstrate to customers and regulators that operations are safe and in compliance with all applicable regulations. Only then can they successfully plan for operations to handle RNG and hydrogen. New regulations would require a more rigorous inspection program while companies adapt to maintaining and operating a considerably different pipeline network.
Natural gas utility and pipeline executives have myriad complex issues to navigate. Decarbonization might be overwhelming, but natural gas utilities and pipeline operators can prepare now with resources available to them to examine their organizational structure, operations, and infrastructure—and begin to address the issues at the very heart of their survival.
Staying involved with industry trade associations—such as the American Gas Association (AGA) and the National Association of Regulatory Utility Commissioners (NARUC)—will give natural gas utilities and pipeline operators the knowledge and network to work collaboratively with the industry, customers, and policy makers. This will ensure that the low-carbon solutions that natural gas utilities and pipeline operators might adopt will account for the components necessary for sustainable, safe, and reliable operating.
State regulators expect utilities and pipeline operators to engage with federal regulators such as the Pipeline Hazardous Materials and Safety Administration (PHMSA), associations like AGA, and research and development agencies like the Gas Technology Institute (GTI). Many of these entities have come together in the form of the Low Carbon Resources Initiative (LCRI), a five-year research initiative led by leading industry research organizations, the Electric Power Research Institute (EPRI), and GTI. Such initiatives allow natural gas utilities and pipeline operators to fund and direct research while participating in pilot projects that might reap significant benefits to drive standard development for a hydrogen future.
The consortiums and collaborative efforts between industry and regulators around the world will generate valuable information and insights. Participation and monitoring of these initiatives will benefit utilities and pipeline operators as they plan to transition, upgrade, or enhance pipeline networks.
A recent study from The Center on Global Energy Policy at Columbia University’s School of International and Public Affairs posits that continued investment in existing natural gas pipeline infrastructure can “help the U.S. achieve net-zero emissions goals more quickly and cheaply.” Natural gas usage data is expected to remain steady for the next 30 years, even as the U.S. reaches net-zero emission targets. There is no quick replacement for natural gas, and full electrification is not the answer if electricity is not derived from carbon-free energy sources. Additional carbon-free or carbon-neutral fuel sources will be needed, such as RNG, hydrogen, or gas from biomass. The study suggests these fuels can play a significant role in supporting reliability and making the energy transition more affordable.
Natural gas utilities and pipeline operators should take hert that these fuels will continue to require pipeline infrastructure for efficient delivery to customers—and maintenance of the existing pipeline infrastructure to ensure continued safe delivery of gas and to reduce methane leaks from older pipes requires continued investment, which will need to be recovered through rates.
Hydrogen’s future must be considered in asset and capital planning for natural gas utilities and pipeline operators. The U.S. Department of Energy's (DOE) updated Hydrogen Program Plan—a commitment to facilitating hydrogen’s growth as an energy source that provides a strategic framework for the DOE’s hydrogen research, development, and demonstration (RD&D) efforts—presents natural gas utilities and pipeline operators the opportunity to prepare existing infrastructure for the future. One of DOE’s efforts funds a two-year, $15 million consortium with Southern Company GTI and six of the DOE’s national laboratories to examine how blending hydrogen with natural gas will impact existing natural gas infrastructure.
This research will shine light on current maintenance practices and how they might need to change. Understanding the risk of transporting hydrogen, PHMSA promulgated regulations on its shipment as a compressed gas. PHMSA is also researching hydrogen’s effects on steel pipe and is working with DOE’s Office of Energy Efficiency and Renewable Energy (EERE) to lower the cost and energy use of the hydrogen delivery infrastructure.
For a variety of reasons, about three times as much hydrogen needs to be delivered to provide as much heat as natural gas, and existing natural gas infrastructure cannot readily support a transition to 100% hydrogen. Additional capacity is needed to transport hydrogen, but investments in the current pipeline network should continue and be planned carefully to account for the transport of future fuels and blends of fuel.
The complex processes involved in natural gas utility and pipeline operations generate considerable data, which utilities can use to gain insights and support decision making that can optimize their performance while still maintaining compliance with regulations.
Many natural gas utilities and pipeline operators have maturing Geospatial Information Systems (GIS) platforms and systems of record that are traceable, verifiable, and complete. The next challenge is developing and maintaining digital twins of the pipeline networks and facilities. Digital twins marry static and real-time data from sensors, Internet of Things (IoT) devices and Supervisory, Control and Data Acquisition (SCADA) systems. Digital twins can virtually predict what will happen in the physical world, driving efficiency and reducing down time. This can also facilitate the modeling of where pipeline networks need to be upgraded or enhanced to support hydrogen delivery.
With new technology and sensors comes even more data, for which utilities and pipeline operators will need automated digital systems and processes to review, validate, and manage. These new platforms will be supported by artificial intelligence and machine learning systems that can manage streaming data which can feed risk algorithms. Data analytics will be vital for prioritization of service an infrastructure needs across assets.
To also manage expected rapid changes in new standards and regulations, natural gas utilities and pipeline operators will leverage mobile platforms to facilitate digital “as-built” data collection as well as maintenance and compliance activity tracking. Integrating work management systems with GIS and field technology to provide “office-to-field-to-office” processes will drive compliance and operational excellence.
Natural gas utilities and pipeline operators will continue self-evaluate their current and future capabilities for new technology and compliance with current and upcoming regulations even as these changes occur. They must be able to accurately assess their compliance and capabilities with proven and repeatable assessment frameworks. Organizational business unit leaders know what’s needed for compliance, safety, and reliability. What is often lacking is integrating various business functions into a comprehensive framework and organizational structure that supports individual components and their interconnectedness.
In response to a National Transportation Safety Board (NTSB) recommendation, the pipeline industry, federal and state regulators, and interested stakeholders developed the industry-standard API (American Petroleum Institute) Recommended Practice (RP) 1173, “Pipeline Safety Management Systems” (PSMS) in June 2015.
Regulators have begun to urge the adoption, and in some specific cases even mandated, that natural gas utilities and pipeline operators implement API RP 1173 to better manage the necessary components for a safe, reliable, and compliant operation. API 1173 provides a framework to manage and reduce risk and promote continuous improvement in pipeline safety performance. Users will better understand how to systematically manage pipeline safety, and continuously measure progress to improve overall pipeline safety and performance. Such a framework can be tailored to the size and scope of the gas utility and pipeline operator’s pipeline system and grow and mature over time. The PSMS provides the ability to compile and study data collected from all pipeline safety processes and procedures, including information required to prove compliance with safety regulations.
Industry leaders should consider assessing their organizations in the context of a formal framework possibly starting by assessing their existing and planned compliance structures. Compliance requirements are embedded in many, if not all, parts of a natural gas utility and pipeline operator’s business. Examining the organization in terms of a compliance assessment framework as shown in Figure 1 offers insight into the interconnectedness of the various maintenance, operations, and compliance efforts and highlights potential gaps.
Utilities and pipeline operators have slightly different operating models based primarily on their place in the industry value chain and level of maturity on how compliance is executed. Accountability for compliance outcomes can be driven through either ‘end-to-end’ processes or through compliance category owners responsible for oversight and reporting across functional areas, shown in Figure 2.
The operating model design helps drive a safety compliance culture in which employees and contractors have positive attitudes toward compliance. There is also an increasing trend to use corrective and preventive action frameworks, with compliance assurance provided through in-depth process and program audits based on a multi-year workplan that covers all processes, controls, and operating effectiveness.
Threats to pipeline infrastructure from outside sources, either physical or cyber, remain a concern. The Transportation Security Administration (TSA) is responsible for securing the pipeline systems in the U.S. Since 2002, the TSA has worked with industry and government entities to develop and update pipeline security guidance for operational natural gas and hazardous liquid transmission pipeline systems, natural gas distribution pipeline systems, and liquefied natural gas facility operators. TSA’s Pipeline Security Guidelines cover physical and cybersecurity and provide a framework for assessing corporate security plans and applying risk management strategies to determine the criticality of the pipeline’s assets facilities.
Currently, this guidance is simply that. But things are changing amid incidents like the Colonial Pipeline ransomware attack. The TSA recently issued a security directive requiring certain pipeline operators to report cybersecurity incidents to the Department of Homeland Security (DHS) within 12 hours, with fines starting at approximately $7,000 per day for failing to comply with security guidelines. This is a major shift, and DHS has indicated its actions are part of a broader strategic plan that will include additional security requirements meant to protect the nation’s vital pipeline industry.
Social justice is emerging as an important consideration when siting new pipeline or infrastructure projects. Smart siting requires robust infrastructure planning coordinating among federal, state and local governments, private and public companies, and members of communities hosting projects. Developing new energy assets must be steered first toward sites with no negative conservation or ecosystem impacts or unacceptable tradeoffs. Other site considerations, such as repurposing existing sites where some infrastructure is in place and no new net harm is done or existing negative impacts are reduced, or where consensus among parties exists for development, are also important. Compliance with social justice and smart siting considerations provide additional benefits to developers by demonstrating care and concern safety overall.
Some pipeline operators, including natural gas utilities, will soon face tough decisions if they don’t have now-required traceable, verifiable, and complete records. As governments and the scientific community work to get new carbon-free or carbon-neutral fuels to market, pipeline operators will face designing and building new pipeline systems—or robustly testing current systems—to deliver some sort of energy in the future.
Natural gas utilities and pipeline operators should begin considering where and how new and replaced pipeline networks are constructed and whom those activities impact. By incorporating these concerns in planning for updating and retrofitting existing pipelines, siting new pipeline systems, and any new facilities needed to support those systems gas utilities and pipeline operators will be prepared to handle questions and concerns raised by opponents of their capital projects.
Natural gas utilities and the pipeline industry will continue to be an essential component in meeting the energy needs for some time. There is an opportunity to examine the industry’s compliance operating models, pipeline operations, and continued infrastructure needs to meet current and growing demands.
While a significant task in its own right, this can be done while also preparing for the future. Natural gas leaders should remember one big-picture takeaway: Against the backdrop of decarbonization, now is the time to get ahead of the curve to ensure that their industry goes into the future smarter, safer, and more prepared for the unexpected than ever.