Friday, March 19, 2010

PUC sets hearing on Marcellus shale pipelines

Thursday, March 18, 2010

The Pennsylvania Public Utility Commission is holding a special hearing as part of efforts to clarify and possibly expand its role in regulating burgeoning Marcellus shale gas well and gas pipeline development.

The hearing by the commission on April 22 in Harrisburg is expected to examine a host of safety issues, including whether the PUC has jurisdiction over the pipelines that will transport gas pulled from the 5,000- to 8,000-foot-deep shale layer beneath three-quarters of the state.

Tyrone Christy, PUC vice chairman, said development of the state's shale gas field or "play," thought to hold as much as 363 trillion cubic feet of natural gas, raised numerous issues about the commission's core regulatory functions and scope.

"We believe that these issues need to be examined and these questions answered sooner rather than later so that we can fully protect the public while not stifling economic growth," Mr. Christy said in a hearing notice last week.

Jennifer Kocher, PUC spokeswoman, said the PUC has regulatory jurisdiction over "public utility pipelines," defined as pipelines transporting gas or oil within the state for compensation.

"But if a drilling company uses its own pipelines to transport the gas it produces, then there's a question about our jurisdiction," Ms. Kocher said. "We're looking at that issue, at our safety jurisdiction, safety issues and the role of the PUC."


State Department of Environmental Protection regulators say 5,000 new Marcellus shale wells could be permitted this year in Pennsylvania, double the number permitted in the state over the last two years.

"There's an enormous amount of development going on and a big increase in the amount of pipelines," Ms. Kocher said. "Our concern is the safety of those lines and who will oversee it. That's unclear right now."

State legislation would be needed to authorize any expansion of the PUC's regulatory role.

On a related Marcellus shale regulatory matter, the PUC increased its transportation enforcement activities in five northeastern counties last month after receiving complaints that well drilling and tanker trucks were operating without PUC certification.

"We've increased enforcement all over the state," said Ms. Kocher.

Roadside truck inspections, in partnership with the State Police, have occurred in Bradford, Sullivan, Susquehanna, Tioga and Wyoming counties. Trucking companies must have PUC certificates and proof of insurance if transporting commodities such as sand, water or stone related to the well-drilling operations.

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The Pennsylvania legislature has empowered the Public Utility Commission to direct and enforce safety standards for pipeline facilities and to regulate safety practices of certificated utilities engaged in the transportation of natural gas and other gas by pipeline.

The Commission is authorized to enforce federal safety standards as an agent for the U.S. Department of Transportation's Office of Pipeline Safety. The safety standards apply to the design, installation, operation, inspection, testing, construction, extension, replacement and maintenance of pipeline facilities. The PUC may prescribe additional pipeline safety standards over and above federal standards, provided they are not in conflict.

Whenever the Commission uncovers pipeline safety violations, it is empowered to direct the utility to take necessary steps to correct the violation.

The PUC investigates all methods or practices of pipeline companies, including reports, records and other information. PUC investigators inspect the property, buildings, plants and offices of the pipeline companies and inspect books, records, paper, email and documents relevant to the enforcement of the rules and regulations.

If an inspector finds evidence of a possible violation, a violation report is written. The Gas Safety Division will notify the gas utility of the results of the onsite evaluation, specifically citing the gas pipeline safety regulation the gas utility is apparently violating. The gas utility must answer with a written response to the PUC within 30 days of notification.

The gas utility and the Gas Safety Division will work together to reach an agreement on how to correct the violation. If an agreement can not be reached, the Gas Safety Division can refer the problem to the PUC for formal resolution by issuing a complaint, setting a penalty, or seeking enforcement through the court system.


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