Developing a Cost Effective 15-year Plan to Comply with the Gas MEGA-Rule – Part 2

Article 2 of Series

Problems to Avoid When Implementing a Gas Mega Rule Mitigation Plan

This article is the second in a series to help operators create a successful and cost-efficient mitigation program to implement their 15-year plans in compliance with Part 1 of PHMSA’s Gas Mega Rule. These articles will help operators understand some of the pitfalls they may encounter when implementing their 15-year plans, and to understand some of industry’s best practices to speed the implementation of their mitigation plan while being as cost efficient as possible.

About GTS

GTS has been helping operators across the country with their gas transmission and distribution engineering for over 20 years. For the past ten years, California gas utilities have been implementing a California regulation mandate similar to the PHMSA Gas Mega Rule. GTS has been the leading gas engineering firm involved with their mitigation plans including the design of over 1400 miles of in-situ hydrotests, hundreds of miles of pipe replacement, ILI upgrades in both dense urban and rural locations, hundreds of valve automation upgrades, HDDs, distribution main replacement, regulator station replacements, program management, and more.  GTS is also one of the leading consultants nationwide for helping operators establish a compliant Records Management Systems (TVC Records) (§192.67, 205, 517), perform MAOP Reconfirmation (§192.624), and Material Verification (§192.607), and develop a 15-year mitigation plan to comply with the requirements of the Gas Mega Rule.

Regulation Mandate

On July 1, 2020, Part 1 of PHMSA’s Gas Mega Rule went into effect. Many of the changes in the “Mega-Rule” are intended to mitigate factors that can lead to damaging pipeline incidents in the future. The Mega Rule requires operators to:

• Establish an Integrity Management Plan and all required procedures documented by July 1, 2021;
• Verify 50% of pipeline mileage by July 3, 2028; and
• Verify 100% of pipeline mileage by July 2, 2035.

Operators will need to establish a compliant Records Management Systems (TVC Records) (§§§192.67, 205, 517), perform MAOP Reconfirmation (§192.624), and Material Verification (§192.607), and develop a 15-year mitigation plan to comply with the requirements of the Gas Mega Rule. Through best practice experiences and benchmarking, GTS believes the development of the processes, procedures, and documentation management are key components for operators to consider and perform to effectively implement these programs with long-lasting and excellent results.

Avoiding Problems

Once an operator has established a compliant records management system, completed their MAOP reconfirmation and material verification activities, and compiled a list of actions into a 15-year mitigation program, the operator is ready for implementation.  If the amount of work to bring an operator’s system into compliance with the Gas Mega Rule is extensive, there could be significant upward pressure on the rates customers will be charged in the future. This fact makes it imperative that operators carefully plan their mitigation activities and adopt as many best practices as possible that can help control costs. Controlling costs also helps an operator get more safety work done when dealing with limited budgets. Getting more safety work done as quickly and efficiently as possible should be the goal of every operator.

Now, let’s discuss some problems that contribute to making projects take longer or cost more. These are some common problems to avoid:

• Setting the priority. In many cases, the responsibility of who prioritizes the projects to be done and when to do them is not clear. This significantly disrupts the pre-planning, scoping, and engineering of projects when it is unclear what projects will be done in the future.
• Changing the priority. Frequent changes to risk models that set project priorities can cause significant engineering churn as projects with the highest priority in one risk ranking are swapped with other projects ranked higher in a new risk ranking. This constant change in priority wastes effort already spent on projects no longer being done in the current year, reduces the time to plan and engineer the actual projects to be constructed under the new priority, and disrupts construction and permit planning.
• Engineering and constructing projects in the same year. While it is tempting to start and complete projects in a single one-year budget cycle, this typically results in less time for the project team to manage specific project risks and challenges and can result in the project costing significantly more than if it were carefully planned and executed over a two or three-year horizon. Some of the biggest problems and lost opportunities with engineering and constructing projects in a single year are:
  • The compressed schedule needed to complete a project in the same year creates great uncertainty as to when the engineering will be completed, permits will be acquired, and the job is released to construction. Schedule delays can often cause the construction team to go into standby waiting for the release to construction and significantly increase the cost of the project. Schedule uncertainty also reduces an operator’s opportunity to use best practices such as bundling projects, which can significantly lower costs.
  • Projects engineered and constructed in the same year will likely have the construction phase pushed late into the year when gas system demand is significantly higher, weather is bad, and outage clearances are difficult to schedule. These late season challenges typically cause construction delays and increase costs.
  • A compressed project schedule reduces the opportunity for the project team to develop cost saving solutions to big challenges. For example, a project that faces significant ground water issues could reduce construction costs if the project had a permit to discharge the water to nearby surface waters or onto nearby fields.  If the project team’s schedule does not afford it the time to acquire long-lead permits for discharging the water, the alternative is to arrange expensive trucking to haul the water to an acceptable discharge location.
    Generally, the approach of splitting engineering and construction into different years creates opportunities for the project and overall program execution teams to optimize the coming year to a much greater extent.

In future articles, we will discuss best practices to help avoid these and other problems to speed the implementation of your mitigation plan while being as cost efficient as possible. GTS is ready to help provide any guidance or gas engineering services you need to help you comply with the Gas Mega Rule. Please contact Joe Medina (joemedina@gtsinc.us) for additional information.

In the next article in this series, we will cover creating Asset Owners to facilitate program and project decisions.