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Automation, Better Methods Enhance Regulatory Compliance in Pipeline Industry

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Over the years, regulatory compliance has evolved from a manageable challenge requiring proper attention to a major aspect of being able to operate profitably — or at all. The reality of this burden has become so negatively charged that just mentioning it often puts companies and their management in a reflexively defensive mode. For all the good that “regulatory compliance” has accomplished in the oil and gas industry, environmentally and in the workplace, the complexities and penalties have tended to create more of a combative atmosphere than a mutually comfortable working relationship.

Recently, however, technological developments have taken regulated companies in a better direction, making it possible for them to more expeditiously achieve and maintain compliance, thus avoiding penalties on a more positive note, in industries such as pipelines.

Technology and software make it easier for oil and gas pipeline and related companies to remain compliant with the latest governmental regulations.

Technology and software make it easier for oil and gas pipeline and related companies to remain compliant with the latest governmental regulations.

Technology Changed Everything

With the increasing intensity of environmental and health/safety regulations impacting the oil and gas industry, companies have become bogged down in a morass of documents telling them what is required to be in compliance and painful realities of what happens when they
are not.

Since the computer era had not arrived, compliance did not simply involve reading briefly through a few pages, checking some boxes, signing off and sending it to regulators, primarily the Occupational Safety & Health Administration (OSHA) and the Environmental Protection Agency (EPA) to stamp their acceptance. Quite the opposite, compliance involved — and unfortunately still does for a variety of companies — wading through an industrial version of the novel “War and Peace,” laboriously figuring out what the regulations require, then manually completing compliance paperwork.

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Fortunately for the energy industry, technology rewrote the book several years ago. Key software capabilities include automating countless compliance tasks and making updating as easy as clicking a computer mouse. While there are numerous requirements associated with the pipeline industry, the complexity of understanding, managing and keeping up with air permitting and operating requirements has been the most challenging.

From the broad perspective, when deciding to not handle compliance internally, pipeline-related companies can opt for electronic-driven Regulation Management or Managed Services.

In the former, regulations are simplified and systematized by identifying regulations affecting each individual company and formatting them to provide ready answers. The latter service functions similarly to Regulation Management but on a comprehensive site-specific basis, managing everything from permitting to handling identified tasks and at a fixed cost by the service provider.

Through many painful and costly failures, companies have learned that simply computerizing compliance does not provide the optimal solution, in part because regulatory requirements are concepts or processes, not simply tasks. A proper system will capture the task requirement from the In contrast, an innovative system electronically captures tasks and converts compliance into a more effective driver-based approach.

The Process

Taking a best practice approach, the process put in place for pipeline-related companies makes it simple to understand what the actual requirements are for a particular company (i.e., all requirements to which the company
is subject). Next, those requirements are “identified” through regulatory research and ideally either an innovative compliance certification management system (CCMS) or comparable  system is employed to capture and manage
the information.

The final step is to put a process into place to ensure the proper items are taken care of, that requirements are kept updated and that, as regulations change, those changes are updated in the system. Ensuring that what needs to be done is actually done, companies can use a service that:

• Is delivered as a complete, site-specific solution which is fully populated.
• Tracks requirements and updates the
system as requirements change.
• Sends notifications to users.
• Works directly with the regulated entity to answer any questions, make sure they understand the system and that they maintain information in an accurate manner, as opposed to only having a manual sitting on a shelf.

The real thrust of what is occurring with electronic-driven compliance is illustrated by a major oil company’s refinery, not that refineries and pipelines are mirror image operations, but from a system setup and execution perspective. In order to observe a realistic compliance demonstration, the company gave the service provider a collection of regulatory documents. Within less than one week, the provider had set up a complete regulatory compliance program for the company. In the words of a knowledgeable individual involved with the process, “This is going to change the whole regulatory compliance process.”

How? The provider or the company is taking the environmental/workplace regulations and making them a tool instead of a rule. The provider then provides the expertise to make the proper applicability decisions. The beauty of the process is that identifying what the site and the equipment are subject to builds the entire compliance system. It sends them reminders and requirements are tracked and kept updated in terms of date and frequency.

Using the CCMS system, checklists can be created from the extensive list of rules that are part of the system. For example, there may be a rule that has a task or one that does not have a defined task, such as a monthly, quarterly or semi-annual requirement associated with it, or may be associated only with a general duty clause. Any of these can be converted to a checklist item by the user simply indicating it should be in the checklist.

This system, which is transferrable to any industry, is well-suited to the pipeline industry. It includes Department of Transportation (DOT) requirements, safety requirements associated with specific pipelines and the environmental requirements for which compliance is necessary.

Air Compliance Management a Top Priority

With the increased scrutiny on air quality compliance and the increasingly stringent air standards, maintaining air compliance is generally more challenging than water and waste for the pipeline industry. Although not every aspect of regulatory compliance is directly tied to automation, electronics are still a tool, including with knowing requirements, tracking and signing off. For pipeline companies meeting air standards, successful compliance centers on executing proven strategies.

Air Quality Permitting

Various types of permits may be applicable to pipeline projects and operations, including New Source Review (NSR), Title V permits and Greenhouse Gas (GHG) permits. Demonstrating compliance with the National Ambient Air Quality Standards (NAAQS) is becoming more difficult and companies must have a well-planned strategy and know how to take the application from submittal to issuance of a permit. Failure to do so may still result in the operations being permitted but there is often a significant difference between the permit you have to live with that is done with expertise and the one that is not.

Air Dispersion Modeling

Because the NAAQS have become more stringent and air dispersion models more conservative, demonstrating compliance has become a time-consuming but critical part of the application process. The key,
typically from a service provider, is to recognize what is reasonable in the permitting process and how to negotiate the best permit conditions for your operations.

The objective should be not only to show compliance with NAAQS and PSD increments but also to show emission sources are compliant with all requirements. That entails staying current with any changes in regulations, standards and permitting.

Air Reporting

The reality of environmental compliance is that failure to document and report what was done to be in compliance was not in compliance. If companies assume that air reporting is more a formality than a compliance emphasis, that idea should be dismissed. One of the most common reasons for violation notices being issued by regulatory agencies is failure to report air emissions and requirement parameters as required by numerous regulations and permits.

The typical problem? Incomplete and improper emissions record-keeping. Ironically, this attracts the most regulator attention because agencies usually assume worst-case when better evidence is not being shown. Proactive compliance is less onerous than having to go back and bring all the records current. A service provider can review all applicable regulations and air permits, then systematically document each and every record-keeping and reporting requirement.

Staying in Compliance

In daily pipeline operations, most companies work diligently to comply with environmental and safe workplace regulations and, as a result, do not incur fines or penalties. Yet a major problem for all companies is not whether good intentions are practiced but the complexities and often exasperating job of proper and timely compliance.

For example, when environmental watchdog newsletters report record fines for a wide array of pipeline offenses, from air pollution to pipeline ruptures and loss of life, prior opportunities for compliance and accident prevention tend to fade into the background. Regulatory compliance software has made it possible to avoid that negative picture. With systematized information capture, turning tasks into checklists, tracking, reminders, updates and “certifiably A-OK” sign-offs when all criteria are met, automation has allowed for virtual removal of the non-compliance risk factor for any pipeline-related company.

Any pipeline company wanting to both be in regulatory compliance and stay on top of new rules should look no further than the nearest computer and an experienced compliance team. That combination will help ensure that regulators see a company as a good citizen, while a major burden is electronically lifted off a company’s back.

Greg Haunschild is CEO of Houston-based ACS Engineering.

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