SUPPLEMENTARY INFORMATION: ( printed page 38951)

Background

GTFS, a wholly owned subsidiary of GulfTerra Energy Partners L.P., has entered into a gas gathering agreement with Kerr McGee Oil & Gas Corporation and the Devon Louisiana Corporation to design, build, own, and operate the Phoenix Gas Gathering System (Phoenix). GTFS will transport production fuel from the Red Hawk Spar, a deepwater fuel production facility in the Gulf of Mexico, to the Pioneer Platform, an existing pipeline facility located approximately 76 miles downstream.

GTFS requested a waiver of compliance with the requirements at 49 CFR 192.619(a)(2)(ii), 192.503, and 192.505 based on its contention that it is unnecessary to hydrostatically test this pipeline. GTFS asserts that a hydrostatic test will not demonstrate the strength and integrity of the pipeline because the pipeline is designed of heavy wall pipe and it will not experience the wall stress intended to be produced by a hydrotest. The heavy wall pipe is being used to prevent the collapse of the pipeline in the face of the huge external pressures exerted on it at a water depth of 5,300 feet. GTFS proposes to perform alternative risk control activities instead of the pressure test regulations.

After reviewing the waiver request, RSPA/OPS published a notice inviting interested persons to comment on whether a waiver should be granted (Notice 1) (69 FR 16338; March 29, 2004). RSPA/OPS stated that it was considering if a hydrotest of this pipeline was necessary and if the alternative risk control activities proposed by GTFS will yield an equivalent or greater degree of safety.

Comments on Proposed Waiver

Comments were received from Carl Langer (a private citizen) and the U.S. Department of the Interior, Minerals Management Service (MMS). Each substantive comment is addressed below:

1. Both commenters noted that a hydrotest is a means of ensuring that the finished pipeline meets all quality requirements.

RSPA/OPS agrees that a hydrotest is one of several quality control checks that are generally used to ensure quality construction of a pipeline. For the Phoenix pipeline, however, GTFS has demonstrated that a hydrotest, as required by 49 CFR part 195, will not produce stresses in the pipe wall sufficient to demonstrate the integrity of the pipe because the Phoenix pipeline uses heavy wall pipe. Furthermore, RSPA/OPS sees no added value in performing a hydrotest on this pipeline. GulfTerra has committed to perform several additional quality control measures on this pipeline throughout its construction to ensure its integrity. These additional risk control measures are listed at the end of this document.

2. Mr. Langer thought it prudent to require a hydrotest as a means of applying pressure on pipeline project managers to eliminate as many human errors as possible.

Although no one can disagree that humans make mistakes, the purpose of a hydrotest has never been to apply additional pressure on pipeline project managers. To the contrary, the purpose of a hydrotest is to impose wall stresses that are sufficient to expose defects in the pipeline.

3. Both commenters mentioned that a hydrotest can be useful in detecting small pipeline leaks due to minor defects and not necessarily major pipeline failures.

The intent of the hydrotest regulation is to produce stresses in the pipe wall that are sufficient to expose defects in the pipe prior its operation. Because this pipeline is built using heavier wall pipe and is under huge compressive stresses from more than a mile of water, a hydrotest as required by the gas pipeline safety regulations will not produce wall stresses high enough to detect leaks.

4. Mr. Langer commented on the consequences of a leaking hydrocarbon pipeline and how negative public opinion could result in a suspension of operations for an offshore oil producing facility in the event of a major crude oil pipeline break. He stated that it is better to verify that the pipeline is free of leaks during construction—before hydrocarbons are introduced into the pipeline. He also suggested that a sizing pig be used in addition to a hydrotest.

The Phoenix system is a natural gas pipeline, not a hazardous liquid pipeline. Because of the different characteristics of gas and hazardous liquids, the impact of gas pipeline incidents on an offshore pipeline facility is expected to be significantly less than a similar accident involving a hazardous liquid pipeline. Moreover, because this is an offshore natural gas pipeline facility, there would be no immediate safety hazard to the general public. RSPA/OPS expects—and the federal pipeline safety regulations require—GTFS to take actions that are necessary to ensure the safe operation of its system. In addition, RSPA/OPS has the enforcement authority to impose restrictions or discontinue the use of the Phoenix pipeline in the event the facility becomes a danger to persons or the environment. Finally, the suggestion that a sizing pig be used in addition to a hydrotest is beyond the scope of this waiver.

5. Mr. Langer commented that the elimination of the hydrotest would introduce the possibility of shoddy materials and shoddy workmanship.

The Federal pipeline safety regulations set forth minimum standards for materials and constructions. In addition, GTFS has committed to perform several other quality control checks on this pipeline throughout its construction to ensure the integrity of the pipeline. GTFS is expected to comply with the federal pipeline safety regulations and the conditions of this waiver.

A waiver of the hydrotest requirement for the Phoenix system does not relieve GTFS of its responsibility to ensure that quality control procedures are adhered to during the construction of this pipeline.

6. Mr. Langer commented that there may come a time when it is cost prohibitive to dewater gas transmission pipelines after a hydrotest has been performed. However, he does not believe this to be the case with the Phoenix pipeline because this line is at a depth of only 5,300 feet.

In evaluating this waiver request, RSPA/OPS evaluated whether the proposed waiver would provide an equal or greater level of safety to that currently provided by the regulations. RSPA/OPS believes that because the Phoenix system is constructed of heavy wall pipe and located offshore at a depth of 5,300 feet, a hydrotest of this pipeline does not provide any meaningful information because the stresses produced from the tests are not sufficient to demonstrate the integrity of the pipe.

7. MMS commented that research should be performed by industry experts to determine what viable hydrotest alternatives exist and how can they be implemented.

GTFS relied on the research and expertise of Det Norske Veritas (DNV), a respected international and independent foundation involved in safeguarding life, property, and the environment at sea, and designed this pipeline to meet DNV's Offshore Standard for Submarine Pipeline Systems (DNV-OS-F101, Jan. 2003). DNV publishes Offshore Service Specifications, Offshore Standards, and Recommended Practices for ships, offshore units and installations. It also provides classification, certification, and other verification and consulting services for general use by the offshore industry. For additional information on ( printed page 38952) DNV's research and expertise dealing with offshore pipeline facilities, they are located on the Web and can be reached at http://exchange.dnv.com.

Grant of Waiver

For the reasons explained above and in Notice 1, and in light of the equivalent level of safety provided by the alternative risk control activities, RSPA/OPS finds that the request for waiver is consistent with pipeline safety. Therefore, GTFS's request for waiver of compliance with 49 CFR 192.619(a)(2)(ii), 192.503, and 192.505 is granted subject to GTFS compliance with the following conditions:

1. Utilize thick wall, high strength, and high quality DSAW pipe;

2. Perform a pipe mill hydrotest on each pipe joint equivalent to 95% specified minimum yield strength (SMYS) to detect defects in the seam weld and prevent the deployment of defective pipe joints;

3. Perform extensive inspection and quality control during the line pipe manufacture, transport, fabrication, and installation to prevent pipe damage;

4. Utilize Automated Ultrasonic Inspection (AUT) for inspection of offshore welds to improve defect detection in the girth weld and to improve the weld quality during the pipeline and steel catenary riser fabrication;

5. Subject all buckle arrestors to complete radiographic and magnetic particle inspection, including radiographic inspection of all buckle arrestor to line pipe welds;

6. Perform complete radiographic inspection and hydrotesting of all welds connecting subsea valves and assemblies to the pipeline;

7. Perform a leak test of the pipeline's subsea tie-in flange that connects to the VR 397 riser flange; and

8. Perform factory acceptance hydrotests of all subsea “wye”, tee, ball valve, and check valve assemblies.