... How to Succeed in a Challenging Regulatory Environment

How to Succeed in a Challenging Regulatory Environment

Achieving pipeline regulatory compliance continues to be a challenge that requires investment of valuable resources and accessibility to reliable insight, as well as the discipline to effectively prioritize the application of both.

On a daily basis, operators are faced with the challenges of data incompleteness, budgetary constraints and changing regulatory rules. These challenges feed a tendency for pipeline operators to rush to solutions to satisfy the requirements that define fitness-for-service in the pipeline industry, yet a hastily thrown together solution has a lot of pitfalls. Mostly, operators may find the solution is not extensible, creates data silos or doesn’t quite work with their workflow or existing software.

The solution? Invest wisely and cultivate an understanding of both the rulemaking procedures and the best practices for responding to those rules. Proceed slowly and follow a measured approach in establishing and executing a compliance program. However, this may be easier said than done.

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It is true that since the high consequence area (HCA) rules came into being in 2004 and after the 2011 expansion of integrity planning rules, pipeline companies have demonstrated continuous improvement in their own compliance programs. Unfortunately, the knowledge these companies have obtained all too often gets muddied by peripheral considerations, such as budget cuts, staff reductions and those pesky “day jobs,” which dilute focus and put these pipeline companies further behind.

These potential pitfalls are further magnified by a lack of clarity around what the ultimate regulatory landscape will look like. It also doesn’t help that there has been a continued stalling of recent regulations governing the safe operation of liquids pipelines and natural gas transmission and gathering pipelines in the United States. But it isn’t all doom and gloom. Companies like Novara are actively at the forefront in offering a solution to the problems these considerations create. Novara provides both solutions and consulting services tailored specifically to support a more robust asset management approach that can prepare operators for the adoption of new regulations.

Fortunately, the industry as a whole has not adopted a “wait and see” approach in how they will respond to the anticipated new regulations. Individuals have been actively discussing with the broader pipeline community the challenges their organizations face in developing their plan of attack in preparing operational data for the increased level of scrutiny these planned regulations promise. The overarching finding of these discussions is quite clear: Pipeline operators are looking for help to augment staff, implement more efficient programs and develop integrated technology-based solutions in developing a more accurate decision support and compliance reporting asset management environment.

Great Analytics Require Great Data

Regardless of when the new regulations for gas and liquids pipelines are formally introduced as final rules, it is clear that the most immediate impact will be an unprecedented transparency of data. A company’s “license to operate” will no longer simply be tied to their past performance and safety record.

Soon operators will be governed by predictive analysis and increased vetting of risk as it pertains to pipeline assets. To meet this new normal, pipeline companies will have no choice but to more rigorously audit their own data and data management procedures as they will need to ensure that decisions being made from that data are timely and, more importantly, accurate. Further, a higher volume of data — such as more complete information about the physical assets and more thorough information about recent inspections of those assets — will need to be made available in a way that will facilitate real-time or near-real-time analytical assessment as pipeline operators’ work to stay ahead of any potential issues with their assets.

For instance, Novara has assisted clients in this matter directly by creating a model where interviews were conducted directly in the field with the resources closest to the assets themselves. In one recent engagement, the company developed, implemented and executed structured data review processes that allowed for: validation of maximum allowable operating pressure (MAOP) attribution physical asset location; and key reference information about the assets. For example, operational cost center, operational status, and naming hierarchy. The result of this project gave the operator a much more accurate and complete picture of the assets the company owns and the location of these assets, which allows for improved reporting, more effective planning, and critical refinements in one-call response activities for pipeline safety.

Pipeline companies should be adopting a model based on a foundation of data validation. This model not only leverages the tactical document review and records validation but requires a higher level assessment that identifies new data sources, enhances data management procedures and establishes formal systems of record that can readily pass information between systems in a way that develops a comprehensive data understanding. As an example, Novara just partnered with a longtime client to implement Maximo and effectively integrate it with the Intrepid application and PODS database. Through this process, the company helped identify critical data ownership considerations and set up triggers that supported the synchronization of the disparate systems. Over time, this will ensure the data this organization uses to make decisions is not only effectively stored and accessible, but also is managed in a way that best supports accurate and timely asset management and reporting.

Another important component to a successful solution is that controls need to be put in place to govern the authoring of new data and to ensure that there is consistency. Operators face an array of choices in how data is referenced, be it through traditional linear referencing or through a more contemporary approach where spatial location serves as the integration point between disparate data sets.

A measured approach means to fully map every angle so the end solution is extensible and fully meets an operator’s requirements. Operators need to establish a foundational component to the asset management program that will easily support the full weight of an integrated systems environment by clarifying business processes, identifying gaps in the data management program, helping define and document data owners and systems of record, and asking probing questions that will help surface potential problems before they slow down or derail the program. Novara can help support these efforts by combining a deep knowledge of the regulatory rulemaking process with vast experience within the pipeline industry.

Should I Buy or Should I Build?

Beyond the practical considerations of tactics around data management and regulatory compliance reporting, there is an additional consideration that many operators face: Do I build a technology solution internally, or do I outsource the project? In assessing this build vs. buy decision, the most critical factor is gaining clear insight and understanding into the benefits and risks of each.

Common sense may lead one to assume that, as regulatory compliance is somewhat subjective in terms of how one interprets the regulations to impact one’s business, a custom “build” approach to technology makes the most sense. Such an approach would certainly allow for the inclusion of considerations unique to a given operating company. However, it also requires a much higher degree of direct support of those applications and can also create a situation where cost of upkeep of these applications becomes prohibitive, or at the very least uncontrollable over time.

On the flip side, a “buy” approach to technology will somewhat normalize costs and would certainly alleviate the internal application support burden. There is the risk that whomever is providing that solution could not effectively maintaining an awareness of potential changes facing the industry, therefore rendering that technology obsolete

The reality of the ever-changing regulatory landscape is that these evolutions are coming far quicker than they ever have before. Historically, U.S. Department of Transportation Class Areas were the most relevant consideration of population impact along a pipeline right of way. Recently, that model changed first by the establishment of the HCA, and now through moderate consequence area (MCA) consideration.

For decades, companies were asked to include a very limited amount of detail of their pipelines in their annual National Pipeline Mapping System (NPMS) submittal. Now, it appears that this same submittal will require a vastly increased depth of detail. External risk factors such as third-party damage susceptibility and weather-related threats were introduced, and the consideration of those factors is also being heightened through the pending regulations. You get the picture … more and more is being expected of pipeline operators in regards to the analysis that must be performed to validate an organization’s assets’ fitness-for-service. These changes all require enhancement of technologies used to perform those analytics, and the sheer volume of the changes will tax even the most well-established IT infrastructure as they look to refine their “built” technology solution. It is this very reason that many within the industry are shifting their approach from build to buy.

Matthew Thomas is senior industry manager for pipelines and in-house expert on the PHMSA and NPMS regulations for Novara GeoSolutions. He has more than 17 years in various GIS leadership roles, with the majority of this time working for pipeline operating companies. Contact him at mthomas@novarageo.com.


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