FW: PIPELINE NOTES, NO. 50

-----Original Message-----
From: Ben Cooper [mailto:bcfarm@starpower.net]
Sent: Sunday, December 23, 2001 3:38 PM
To: Michele F Joy
Subject: PIPELINE NOTES, NO. 50

PIPELINE NOTES FROM WASHINGTON
Vol. 4, No. 50
December 21, 2001

Association of Oil Pipe Lines
(202) 408-7970
(202) 408-7983 (fax)
bcooper@aopl.org

The opinions if any expressed in these notes are the author's only and do
not represent the views of the Association of Oil Pipe Lines (but they
should).

1. Joint Pipeline Associations Meet with Secretary Mineta

On Monday, December 17, along with the natural gas transmission and
distribution trade associations, we met with Secretary of Transportation
Norman Mineta to pledge the full support of the joint pipeline associations
for enactment of pipeline safety reauthorization legislation in the 107th
Congress. Joe Monroe of Unocal and Tom Miesner of Conoco represented the
liquid pipeline associations. The Secretary was very pleased and, we think,
relieved to see the pipeline industry united behind a common set of
proposals. He committed to working with us to facilitate passage of an
acceptable bill in the House, which is the next step. The proactive stance
of the combined industry associations on reauthorization legislation is
essentially CEO driven, and organizing it has been largely the work of Joe
Monroe, Captain for Gas-Liquid Relations Team of the AOPL/API Joint
Environmental and Safety Initiative.

We also urged the Secretary to expedite issuance of the four liquid rules
that AOPL and API wrote to him about on December 4. (See the letter on the
AOPL website at
http://www.aopl.org/news/2001/Mineta.4.rules.letter.12.3.012.pdf -- repair
criteria for integrity management; the Integrity rule of small lines; the
corrosion rule update; and the revised incident reporting rule). These four
complete an impressive series of new rules for liquid pipelines begun after
the Bellingham accident in June 1999. DOT hopes to have all four out by
yearend. This series of provides powerful evidence that OPS regulation of
pipeline safety is neither lax nor inadequate.

2. Pipeline Safety Legislation Introduced in the House

On Thursday, December 20, shortly before Congress recessed for the
Christmas-New Years break, key House members introduced H.R. 3609, the
"Pipeline Infrastructure Protection To Enhance Security and Safety Act".
The bill was introduced by Rep. Don Young (R-AK), Chairman of the House
Transportation and Infrastructure Committee and cosponsored by Rep. Billy
Tauzin (R-LA), Chairman of the House Energy and Commerce Committee, Thomas
Petri (R-WI), Joe Barton (R-TX), Gene Green (D-TX), Brad Carson (D-OK), Max
Sandlin (D-TX) and Ralph Hall (D-TX). Rep. Petri and Rep. Barton chair
subcommittees that will hold the hearings on the bill in these two
committees. It is highly significant that the sponsorship of this bill
includes both of the House committees that claim jurisdiction over pipeline
safety. It will be very helpful to have these committees cooperating rather
than fighting with each other. The bipartisan co-sponsorship of the bill is
also significant. Passage of a reasonable bill depends on cooperation
across party lines, and this is an excellent start.

If the House is to pass a pipeline safety bill in this Congress, H.R. 3609
will be the vehicle. The bill is a serious effort with new provisions not
seen before. The text of the bill will be posted on the Library of Congress
website: http://thomas.loc.gov. If you need a copy sooner, let us know and
we'll send one to you. This bill is the starting point for the pipeline
safety debate in the House. It is significantly different from the
bipartisan Senate- passed pipeline safety bill, S.235, authored by Sen. John
McCain (R-AZ) and others. H.R. 3609 incorporates post 9/11 security
considerations and doesn't attempt to write into law desired actions on
pipeline integrity management that have already taken or are in process by
the Office of Pipeline Safety. The task for the House, the Administration
and the industry now will be to review the provisions of the introduced
bill, improve on them where needed, build a consensus in support of the
basic bill and, if necessary to achieve a critical mass of support for
passage, add additional provisions. Look for hearings to begin in
February, probably leading off with a general oversight hearing on the
issues, followed by hearings on the bill itself. The Transportation and
Infrastructure Committee's press release on introduction is at
http://www.house.gov/transportation/

3. Department of Energy Conference on Security of Energy Facilities

On December 11-12, the Department of Energy hosted a conference with
representatives of state governments, and the energy industry associations
to discuss energy security, assurance, reliability and energy emergency
preparedness. This conference sets the stage for future cooperative efforts
between the states, the industry and the DOE. Check out the presentations
on the website of the National Association of State Energy Officials:
http://www.naseo.org/committees/energydata/energyassurance/default.htm --
U.S. Department of Energy Energy Assurance Conference.

4. Energy Information Administration Releases Annual Energy Outlook 2002

This is the official federal government view on what is likely to happen in
energy markets in the near term. The report is interesting browsing even
for those who aren't energy nerds. Go to
ttp://www.eia.doe.gov/oiaf/aeo/ -- Annual Energy Outlook 2002 with
Projections to 2020 (DOE/EIA-0383 (2002), December 21, 2001).

5. FERC Issues Proposed Rule on Accounting for Derivatives

The Federal Energy Regulatory Commission this week issued a Notice of
Proposed Rulemaking entitled "Accounting and Reporting of Financial
Instruments, Comprehensive Income, Derivatives and Hedging Activities."
This rule proposes to revise FERC regulations to update the accounting and
reporting requirements under its Uniform Systems of Accounts for oil
pipelines, among others to establish uniform accounting requirements and
related accounts for the recognition of changes in the fair value of certain
security investments, items of other comprehensive income, derivative
instruments, and hedging activities. In particular, the Commission
proposes to add new balance sheet accounts to the Uniform Systems of
Accounts to record items of other comprehensive income and derivative
instruments. The Commission also intends to revise the Form 6 to include
this reporting.
Comments on the proposed rule will be due within 60 days of publication in
the Federal Register. We will let you know when that occurs. In the
interim, you can take a look at this proposed rule by going to
http://cips.ferc.gov/Q\CIPS\RULES\RM\RM02-3.000.TXT.
We also need to understand how much our member companies will be impacted by
this rulemaking. Please give us your thoughts.

6. Red Butte Depreciation Order Issued

The Commission approved a depreciation rate of 12.50% for Red Butte. Red
Butte had requested the change due to a crude oil reserve report indicating
exhaustion in eight years of the remaining reserves of Oregon Basin field,
which produces the majority of Red Butte's crude oil and more than fifty
percent of its revenues. The Commission's order may be found at
http://cips.ferc.gov/Q\CIPS\OIL\O_MS\DO02-1.000.TXT.

7. FERC Rejects of SFPP Compliance Filing

SFPP filed new tariffs in response to the Commission's Opinion No. 435-B
proposing a rate decrease for movements on its East Line (Texas to Arizona)
effective December 1, 2001 and December 20, 2001, depending upon the tariff.
The Commission rejected the tariffs, stating that revised tariffs must be
effective August 1, 2000. The orders may be found at
http://cips.ferc.gov/Q\CIPS\OIL\IS\IS02-46.000.TXT and
http://cips.ferc.gov/Q\CIPS\OIL\IS\IS02-82.000.TXT.

8. Exxon Mobil Files HOOPS Settlement

Exxon Mobil this week filed a settlement this week with the FERC reached on
the HOOPS offshore facility. A copy may be obtained at
http://rimsweb1.ferc.gov/rims.q?rp2~rimsdocinfo~2230884.

9. Commission Moves to Internal Paragraph Numbering

The FERC will be moving to a more uniform citation methodology for its
orders and opinions. Given the number of different forms in which these
orders and opinions are published, both electronically and in paper,
accurate citation to the body of Commission orders is difficult. To resolve
the issue, the Commission has decided to adopt internal paragraph numbering,
with the goal of creating uniform citation that will reference these
paragraphs. To learn more about this initiative, go to
http://cips.ferc.gov/Q\CIPS\MISC\CA\CA121901.00A.TXT.

10. Commission Revises Gas Pipeline Outreach Requirements

The FERC has been struggling with how to improve communications with
landowners about prospective gas pipeline projects. It has been come up
with a number of proposals including significant pre-filing communications
requirements. Now, the Commission staff has developed a report entitled:
Ideas For Better Stakeholder Involvement In The Interstate Natural Gas
Pipeline Planning Pre-Filing Process. The report can be downloaded from the
FERC web-site at www.ferc.gov or requested by e-mail at: gas
outreach-feedback@ferc.fed.us.
This FERC initiative does not apply to oil pipelines but does indicate what
the FERC expects of gas pipeline sponsors. The Staff is also planning a
series of workshops in the new year to bring interstate natural gas
companies and Federal, state and local agency representatives, and
landowners together to discuss implementation of stakeholder involvement
programs. For more on this initiative, go to
http://cips.ferc.gov/Q\CIPS\MISC\M_MS\MS121801.000.TXT.

11. Platte Filing Makes Shippers Unhappy

Platte made a cost-of-service filing several months ago, seeking to raise
the ceiling level on its tariffs. That filing was not protested. Platte
then filed to increase its rates to a level under the ceiling level
established. That filing has been protested by Big West, Chevron Products,
Frontier Oil and Refining, Tesoro West Coast, Phillips 66, and Conoco Inc.
The docket number IS02-65. Copies of the filings may be found under
http://rimsweb1.ferc.gov/rims.

12. Express Filing Protested

Express too made a tariff filing that was not acceptable to all. It was
protested by Big West, Chevron Products, Sinclair, and Tesoro West Coast.
Express then withdrew the tariff. To take a look at the pleadings, go to
http://rimsweb1.ferc.gov/rims, look under the docket number IS02-81.

13. OPS Forms Available on Line

The new Evaluation Report of a Liquid Pipeline Carrier is available on the
OPS website at
http://ops.dot.gov/forms/Eval_Liquid_Transmission07_13_2001.pdf. Also
available is the Operator Qualification review form for liquid pipelines at
http://ops.dot.gov/forms/OQl040401.pdf. OPS also warns that it will soon
begin electronic incident reporting for gas transmission lines. Liquid line
reporting will no doubt follow thereafter. See
http://ops.dot.gov/electronic_reporting.htm.

14. Northwestern U. Offers Course in Houston

The Northwestern University Transportation Center is taking the mountain to
Mohammed this March. Rather than offering its pipeline program "Quest for
Operational Excellence in the Pipeline Industry" at the main campus outside
Chicago, it will present the program in the Houston area. The course will
be offered March 12-14, 2002. For more program information, go to the
Transportation Center's web site at www.nutc.nrthwestern.edu/public.

15. Confrontation in Austin

Federal preemption of interstate pipeline regulation will be tested as the
City of Austin makes its latest move to stop the Longhorn pipeline project:
http://www.austin360.com/aas/metro/121901/19longhorn.html -- Austin
challenges pipeline's progress; City seeks to suspend Longhorn's replacement
of pipe if development rules aren't followed;
http://www.austin360.com/aas/metro/122001/20longhorn.html -- City, pipeline
company scuttle mediation.

16. Ammonia Pipeline Spill in Iowa

http://www.dmregister.com/news/stories/c5903220/16805398.html -- Fish kill
is Iowa's worst;
http://desmoinesregister.com/news/stories/c5903220/environment-front.html --
Environment :Seven-day index of headlines

17. We Should Get PEMEX to Join AOPL

http://www.ohio.com/home/docs_business/002484.htm -- Mexico in a sticky
mess.

18. Register for the January AOPL Winter Meeting

Those registering for the AOPL Annual Winter Meeting being held in
Washington, DC on January 22-23, 2002 should be sure to get their
registrations in to Gail Sumter as soon as possible. If you need a
registration form, contact Gail at gsumter@aopl.org. Please note that AOPL
meetings are open to members only.

- PIPELINE NOTES12.21.01.rtf