PG&E Lauded for Gas Operations Improvements
Leading the Way
Four years and almost $2.7 billion worth of work later, the Pacific Gas and Electric Co. (PG&E) natural gas transmission and distribution system is a far cry from what it was.
Sept. 9, 2010: Defective welds in a series of short connections of a 30-in. diameter pipe led to a transmission line rupture and explosion in San Bruno, California, that resulted in eight deaths and the destruction of 38 homes. Following the incident, PG&E set out to regain the public’s trust and rebuild its tarnished image and become a leader in safety in the industry.
Because of the accident, PG&E committed $70 million to the City of San Bruno to support the city’s and community’s recovery efforts, established a $50 million trust fund for the city and settled claims of almost $500 million with victims and their families. It also fully agreed to the National Transportation Safety Board’s 12 safety recommendations and as of February 2014, nine were complete.
On the legal front, April 1, the U.S. Attorney’s Office for the Northern District of California handed down an indictment alleging that PG&E violated the Natural Gas Pipeline Safety Act of 1968. Then on July 30, the office handed down a superseding indictment.
Response from the company to both indictments is that San Bruno was a tragic accident, the company has taken accountability for the accident and its work since 2010 show that the utility is committed to regaining the public’s trust. The utility also believes that no PG&E employee intentionally violated the Pipeline Safety Act. The company also created the pgeresponds.com website to keep the public informed of the ongoing legal matter.
Renewed Focus
The utility put processes in place as early as October 2010 – with the Pipeline 2020 program, a five pronged program to guide the utility’s efforts through 2020 – but it was not until June 2011, when Nick Stavropoulos came onboard as the executive vice president of gas operations that the reshaping of the company really kicked into high gear.
It is Stavropoulos’s main remit to make PG&E Gas Operations the safest and most reliable natural gas system in the country and the Pipeline 2020 initiatives were rolled into his plans. Stavropoulos came to PG&E from the East Coast where he served as executive vice president and COO for National Grid’s gas distribution business.
May 27, 2014: Stavropoulos and his PG&E coworkers had their hard work affirmed when then Gas Operations segment received a pair of safety focused asset management certifications from Lloyd’s Register Energy.
“I am proud of the determination of our gas operations team for this accomplishment and the progress it represents,” says PG&E President Chris Johns, in a statement about the recognition. “The men and women of PG&E have worked tirelessly to transform the safety and reliability of our gas system and earn back the trust of our customers.”
The recognition comes after Lloyd’s Register spent the first quarter of 2014 traveling throughout PG&E’s 70,000-square-mile service area assessing safety practices, information and risk management policies, employee qualifications, emergency response protocols and more than 20 critical areas of asset management. The audit also involved a series of independent audits and interviews of more than 150 PG&E management, field employees and contractors. In a two-week span, Lloyd’s Register employees traveled 1,700 miles throughout the system performing field validation.
“In my opinion, based on my experience of many other utility companies around the world, PG&E gas ops made the most progress in the shortest time,” says Peter Glaholm, utilities regional manager for Lloyd’s Register Energy. “I say that based on their starting point, that is San Bruno, other companies we work with have gained certification more quickly but probably had a firmer platform to start from.”
“This kind of progress can only be initiated from the top and Nick has been a driving force in giving his full backing to the initiatives required to move the PG&E aset management system to a state of compliance with the two standards.”
The outcome garnered PG&E the International Organization for Standardizations (ISO) 55001:2014 and Publicly Available Specification (PAS) 55-1: 2008 certification. It also places PG&E at the top among utility companies in North America and it is the first to achieve dual recognition.
“I think it’s one important affirmation around the work that we have been doing here,” Stavropoulos says.
Since his arrival, PG&E has completed almost 600 miles of pipeline strength testing. The company has validated the maximum allowable operating pressure (MAOP) of all of its nearly 7,000 miles of pipeline in the transmission network and added 157 remotely controlled or automatic shutoff valves. The National Transportation Safety Board (NTSB) cited the lack of the latter as one of the probable causes of the severity of the incident.
Paving the Way
“In addition to executing on the work, we’ve really focused on changing and improving the culture within the organization to have a world class safety culture and to make sure we have the processes in place that world class companies are able to demonstrate,” he says.
“That’s really what the certifications were all about. It was to look at how we go about executing our work. We were just thrilled that Lloyd’s confirmed that all of the improvements that we made over the last couple of years have led to having in place processes that are really world class in terms of being able to manage such an asset-intensive business.”
By the time Stavropoulos arrived at PG&E from the East Coast, nine months after the incident, the NTSB, the California Public Utilities Commission (CPUC) and the California Legislature had delivered, or were on the way to delivering, reports that outlined specific improvements PG&E had to make.
When talking about the improvements to the PG&E systems, Stavropoulos frequently refers to the culture change within the organization.
To accomplish this, one of the first things he did was head straight to the International Brotherhood of Electrical Workers (IBEW) 1245 union hall in Vacaville, California. He met with the union leadership to find out what PG&E needed to do to make it the safest most reliable gas company in the country.
With suggestions from the IBEW, the aforementioned reports, an internal review by PG&E and an separate review conducted by Stavropoulos himself, a punch list of specific goals formed. In three months, he had a turnaround plan in place and the 5,000 gas operations employees and 2,000 contractors were on their way to shifting the culture at PG&E.
“We really have massively accelerated the modernization plan that was already under way,” he says.
Since the 2010 San Bruno, California
accident PG&E’s employees and contractor partners have worked to regain the public’s trust in the natural gas utility.
Culture Shift
“I go back to Vacaville with several members of my leadership team three or four times a year to have those continuing discussions on what we can do better,” Stavropoulos says.
This improved communication, he says, is something that was missing on the gas operations side before his arrival. It also helped lead to the implementation of a Corrective Action Program (CAP), modeled after the nuclear industry, specifically a program in place at PG&E’s Diablo Canyon nuclear facility.
The CAP allows workers, including contractors, an anonymous and non-punitive avenue to report issues and concerns about every facet of the gas operations system.
These comments can range from improper pedestrian markings in an operating yard to equipment maintenance issues and beyond.
For example, an employee observed a number of copper distribution service lines that were not included in PG&E’s Copper Service Replacement program. The employee reported her observations via CAP to create a record of the issue. After an assigned team looked into the issue, it was determined that the service lines were copper and the lines received the appropriate classification and were added to the replacement schedule before the program concluded.
Since implementing CAP nine months ago, Stavropoulos estimates the system received 2,000 reports and counting.
Glaholm cites the CAP as one of the many highlights of the improved PG&E system.
“The refreshing of the CAP process has reaped huge benefits in PG&E being able to understand what is happening on the assets and that field staff have a quick and easy way of raising concerns and opportunities for improvement,” he says.
Glaholm also praised the development of the eight asset families: transmission pipeline, distribution mains, distribution services, customer-connected equipment, compression and processing, gas storage, measurement and control and compressed natural gas (refueling stations)/liquefied natural gas (portable supply). Also lauded by Lloyd’s Register were the strategic plans associated with those families as well as the maturation of the risk assessment process and how it factors into the company’s decision process.
Response time to the San Bruno incent was one area where the NTSB criticized the utility and noted that it likely led to the severity of the incident. At that time, the average PG&E response was 33 minutes, which Stavropoulos says put the company in the bottom third compared to other U.S. companies.
“Now we are in the 19-minute range, which puts us in the top decile of U.S. companies,” Stavropoulos says. “Our ability to respond quicker has dramatically improved. In addition to that, just about a year ago, we opened up what I think is the state of the art gas control center in the United States.”
The $38 million center in San Ramon, California, which opened in December 2013, is the nerve center of PG&E’s natural gas transmission and distribution network. There, the utility can monitor and understand what is happening along the gas network and more effectively and quickly respond to emergencies as they arise.
Peter Glaholm, of Lloyd’s Register Energy; Chris Johns, PG&E president; and Nick Stavropoulos, PG&E’s executive vice president, gas operations at the May 27 ceremony celebrating PG&E’s (ISO) 55001:2014 and Publicly Available Specification (PAS) 55-1: 2008 certifications.
Room for Improvement
With the certifications in hand, it might be easy for some to put their system on autopilot, but that is not an option for PG&E. There is constant need for improvement and there are four areas in particular that Lloyd’s Register will look at in November during the six-month surveillance visit.
• Common to many utilities, especially one that has assets that are more than 100 years old, records keeping varies. As a result, the company is aggressively working to improve its records and the record keeping program.
• Lloyd’s Register will look at how PG&E is managing the changes it has implemented since embarking on its gas operations transformation
• Asset system documentation looks at the documentation PG&E has regarding its policies, procedures and work methods. The company has to make sure the documentation is up to date and in compliance and more importantly that its employees and contractors are properly trained and informed with said policies, procedures and work methods
• Lloyd’s Register will look at PG&E’s information management system. Specifically, how effectively the company can take the data it has and make proper decisions about managing its assets.
None of these factored against PG&E receiving the certifications, and Glaholm says they are not out of the ordinary for a utility company.
“The system, is in some parts, still maturing and may take some time to reach full maturity. This though is similar to most utility companies,” Glaholm says. “We have some companies that have been certified since 2005, and obviously their asset management systems are far more mature as you would expect.”
He added that the work undertaken by PG&E gives the company an excellent foundation moving into the future.
“The work put in by Nick (Stavropoulos), Javid Kahn (senior director- strategy and process excellence), the senior management team and everyone else involved is now moving PG&E forward and huge efforts are being made around records and information management,” he says. “There are some areas now where PG&E gas ops are comparable with some of the more mature systems seen in other companies and I think this demonstrates the commitment and hard work of the teams involved.”
In order to maintain the certifications, Lloyd’s register will return to PG&E in November to make sure PG&E is improving in the suggested areas as well as continuing to build upon all of the processes and procedure in place at the time of the certification. From there, another surveillance visit in a year will cap the initial certification process and PG&E enters the three-year certification cycle.
“I think what it says is that we are able to have an independent view of the processes that we follow within our company and that independent view gave us comfort that we are able to operate in a classification of companies that have been able to demonstrate that they can follow this world class standard,” Stavropoulos says. “We’re trying to lead the way here for our industry to step up to the plate and show that very healthy to have independent review of your operations. It’s been just a great way for us to identify areas for us to improve and embark on those improvements.”
Mike Kezdi is assistant editor at Benjamin Media Inc. and a contributing staff editor of North American Oil & Gas Pipelines. Contact him at mkezdi@benjaminmedia.com.
