Interpretation Response #PI-18-0015

Below is the interpretation response detail and a list of regulations sections applicable to this response.

Interpretation Response Details

Response Publish Date: 08/15/2019

Company Name: Pacific Energy and Mining Company

Individual Name: Mr. Dan Green

Location State: NV Country: US

View the Interpretation Document

Response text:

Mr. Dan Green
Consultant
Pacific Energy and Mining Company
3550 Barron Way #13A
P.O. Box 18148
Reno, Nevada 89511

Dear Mr. Green:

In a letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA) dated July 6, 2018, you requested an interpretation on the applicability of Title 49 Code of Federal Regulations (CFR) Part 192 to your Greentown Pipeline Gathering System (Gathering System). Specifically, you requested "clarification and interpretation of Title 49 CFR § 192.5 applicability to [the] Greentown Pipeline Gathering System," and if the Gathering System is exempt from 49 CFR Part 192 regulations pursuant to 49 CFR § 192.1(b)(4)(ii).

For background purposes, you stated that the Gathering System was built in 2008 by Delta Petroleum Corporation, and that it was not regulated until October 2013. You stated that the Utah Division of Public Utilities began to regulate the Gathering System in October 2013 after they conducted what you described as a "courtesy inspection." You stated that the Utah Division of Public Utilities Safety Engineer concluded his inspection of the line as follows:

"Review of the submitted documents on September 13, 2013 did not demonstrate using sound engineering principles that the endpoint of gathering extended beyond the processing plant. My field visit on September 19, 2013 also confirmed the fact that the endpoint of this gathering system is the outlet of the processing plant. Utah Pipeline Safely considers 22 miles of 16-inch steel pipeline from the processing plant to the Northwest Tie-in as Intrastate Transmission Pipeline."

You described the Gathering Systems as consisting of 26 miles of 6-inch diameter line operated at an MAOP of 750 psig, and 21.19 miles of 16-inch diameter line operated at a maximum pressure of 750 psig.¹

Furthermore, you stated gas is transported from production wells in the 6-inch diameter line to a plant where it is dehydrated and compressed. The gas is then transported in the 16-inch diameter line to a second facility upstream of the Northwest Pipeline interconnect, where the gas is routed to a filtration plant prior to being transferred to the Northwest Pipeline interstate transmission line.² You asked whether the entire Gathering System is an unregulated onshore gathering line (both the 6-inch diameter pipeline and the 16-inch diameter pipeline) due to the presence of a filtration plant downstream of where the gas is dehydrated and compressed and upstream of the connection to the Northwest Pipeline, a PHMSA-regulated interstate transmission line.

¹ Information provided by email from Mr. Tariq Ahmad to Asebe Tewabe (PHMSA), dated March 5, 2019 (stating operating pressures for both the 6-inch and 16-inch pipelines).

² On the March 5, 2019, email, Mr. Tariq Ahmad described the filtration plant removes liquid hydrocarbons and water. In the August 13, 2018, email, Mr. Ahmad described the hydrocarbons as heavier gaseous hydrocarbons (ethane, propane, butane, isobutane, pentanes and even higher molecular weight hydrocarbons) that are collectively referred to as Natural Gas Liquids.

In addition, on August 13, 2018, you provided additional information by email (see footnote #2). You assert that the Gathering System is an onshore rural gathering line exempt from PHMSA's regulations. Your assertion can be summarized as follows: (1) the entire Gathering System is located in a Class 1 location, as defined by 49 CFR § 192.5, and onshore gathering lines in Class 1 locations are unregulated gathering lines under 49 CFR § 192.8(b); (2) both the 6-inch diameter line and the 16-inch diameter line are gathering lines, as defined by 49 CFR § 192.3; and (3) the 6-inch diameter line and the 16-inch diameter line are gathering lines because there are three separate points along the Gathering System where the gas is treated before it reaches the end point of gathering and ready for consumer consumption. You describe the three treatment locations as follows: (i) the wellhead where the gas is separated to remove water and oil; (ii) a facility where the gas is compressed, dehydrated and refrigerated (Processing Plant); and (iii) a filtration plant where the gas is treated to remove impurities, and the quality of gas is measured and the 16-inch diameter line is connected to the Northwest Pipeline, PHMSA-regulated interstate transmission pipeline. Finally, you stated that only after the gas is treated and measured at the filtration facility it is fit for consumer consumption.

Pursuant to 49 U.S.C. 60101 et seq., PHMSA prescribes and enforces standards and regulations that apply to the gathering, transmission, and distribution of gas by pipeline. A gathering line is defined in Part 192 as "a pipeline that transports gas from a current production facility to a transmission line or main" per 49 CFR § 192.3. That same section defines a transmission line as "a pipeline, other than a gathering line that: (1) Transports gas from a gathering line or storage facility to a distribution center, storage facility, or large volume customer that is not downstream from a distribution center; (2) operates at a hoop stress of 20 percent or more of SMYS; or (3) transports gas within a storage field."

On March 15, 2006, PHMSA issued a Final Rule that defined a "regulated gathering line" and set forth the requirements that apply to regulated gathering lines (71 FR 13289). The rule adopted API RP 80 with certain limitations. Section 192.8 now provides as follows:

§ 192.8 How are onshore gathering lines and regulated onshore gathering lines determined?

(a) 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. The determination is subject to the limitations listed below. After making this determination, an operator must determine if the onshore gathering line is a regulated onshore gathering line under paragraph (b) of this section.

(1) The beginning of gathering, under section 2.2(a)(1) of API RP 80, may not extend beyond the furthermost downstream point in a production operation as defined in section 2.3 of API RP 80. This furthermost downstream point does not include equipment that can be used in either production or transportation, such as separators or dehydrators, unless that equipment is involved in the processes of "production and preparation for transportation or delivery of hydrocarbon gas" within the meaning of "production operation."

(2) The endpoint of gathering, under section 2.2(a)(1)(A) of API RP 80, may not extend beyond the first downstream natural gas processing plant, unless the operator can demonstrate, using sound engineering principles, that gathering extends to a further downstream plant.

(3) If the endpoint of gathering, under section 2.2(a)(1)(C) of API RP 80, is determined by the commingling of gas from separate production fields, the fields may not be more than 50 miles from each other, unless the Administrator finds a longer separation distance is justified in a particular case (see 49 CFR § 190.9).

(4) The endpoint of gathering, under section 2.2(a)(1)(D) of API RP 80, may not extend beyond the furthermost downstream compressor used to increase gathering line pressure for delivery to another pipeline.

Based on the information provided, the 26-miles of 6-inch diameter pipeline meets the definition of a gathering line because it transports gas from a production facility (the wellhead), and is upstream from the Processing Plant, where the 16-inch pipeline originates. Further, the 6-inch diameter gathering line is located within a Class 1 location, and is therefore an unregulated rural onshore gas gathering line exempt from Part 192.

However, pursuant to 49 CFR § 192.8(a)(2), the endpoint of onshore gas gathering for the Gathering System is the outlet flange of the Processing Plant where the 21.19-miles of 16-inch diameter pipeline connects. As you described the treatment processes, the gas is processed at the wellhead and the Processing Plant. The treatment conducted at the filtration plant removes water and separates heavier hydrocarbons. There are no sound engineering principles that require the filtration plant to be located 21.19 miles downstream of the Processing Plant, and you have provided no justification to the contrary. In addition, the product that is transported in the 16-inch diameter pipeline could be injected into the Northwest Pipeline without first going through the filtration plant. Unless the gas is transported to an LNG facility, almost all natural gas is transported with some heavier hydrocarbons.

PHMSA agrees with the September 13, 2013, conclusion of the Utah Division of Public Utilities that treatment for transportation of gas by pipeline is completed at the Processing Plant. Therefore, the 16-inch diameter pipeline is regulated as an intrastate transmission line under 49 CFR Part 192.

If we can be of further assistance, please contact Tewabe Asebe at 202-366-5523.

Sincerely,

John A. Gale
Director, Office of Standards

Regulation Sections