APGA Weekly Update March 10, 2016

03-10-2016 12:23

U.S. and Canada Announce Joint Plan to Reduce Methane Emissions from Existing Oil and Gas Wells

President Obama and Canadian Prime Minister Justin Trudeau announced a joint plan between the U.S.
and Canada to reduce methane emissions from existing oil and gas wells in advance of a meeting
between the two. Both leaders have prioritized fighting climate change and many in the environmental
community view reducing methane emissions as among the highest “bang for the buck” in terms of
emissions reductions.

The announcement will require the U.S. Environmental Protection Agency (EPA) and Environment
Canada to both independently begin rulemakings immediately to require existing oil and gas wells to
reduce methane emissions 45 percent below 2012 levels by 2025. In addition, next month, according to
a blogpost by EPA Administrator Gina McCarthy, the EPA “will begin with a formal process to require
companies operating existing oil and gas sources to provide information to assist in the development of
comprehensive regulations to reduce methane emissions. An Information Collection Request (ICR) will
allow us to gather information on existing sources of methane emissions, technologies to reduce those
emissions and the costs of those technologies in the production, gathering, processing, and transmission
and storage segments of the oil and gas sector.” The administrator did not list distribution systems, but
APGA will seek out more information to clarify if local distribution companies (LDC) are included.
It is highly unlikely that the EPA will be able to finish the methane reduction rulemaking process before
the end of President Obama’s term, meaning that whoever wins the presidency in November will be
able to continue the rulemaking or withdraw it. Republican candidates would likely withdraw the rule,
while Democratic candidates would likely keep it. In the interim, production companies and Republican
lawmakers will likely fight the implementation of this regulation, but legislatively, Congress would need
60 votes in the Senate to overturn the regulation, which would undoubtedly be vetoed by President
Obama. Post-veto, Congress would need 67 votes in the Senate to override the veto, which is highly
unlikely. Therefore, industry will have to push back on the rulemaking through the existing process or
turn to the courts if that is an option.

APGA will keep members informed of any developments with this rulemaking and will seek clarification
on the inclusion of LDCs. For questions on this article, please contact Scott Morrison of APGA staff by
phone at 202-464-2742 or by email at smorrison@apga.org.

Lower Alabama Gas District Closes 30-Year, $600 Million Natural Gas Prepay

On March 1, the Lower Alabama Gas District (LA Gas) successfully closed a 30-year gas prepayment
transaction with Goldman Sachs and its commodity arm, J. Aron & Company. LA Gas issued
$599,350,000 of tax-exempt gas revenue bonds to finance the prepayment and cover the costs of
issuing the bonds. The gas quantity averages 22,500 MMBtu per day over the 355-month life of the
transaction. The Clarke-Mobile Counties Gas District (CMC) will purchase all of the gas from LA Gas. CMC
will sell some of the gas to the South Alabama Gas District (SAGD) and a significant portion to the
Louisiana Municipal Gas Authority (LMGA), as well as retail customers on its system. The size of the
transaction entails a discount to market prices that will flow through to the gas bills of individual
customers, providing savings to communities throughout Alabama and Louisiana.

LA Gas was formed in 1999 as a joint action gas supply agency for the purpose of acquiring secure,
reliable, competitively priced long-term supplies of gas for delivery to residential, commercial,
institutional and industrial consumers in and around the areas served by CMC and SAGD. CMC serves
approximately 6,000 retail gas customers throughout eight counties in southwest Alabama.
SAGD serves the entire corporate limits of the Cities of Evergreen and Monroeville, Ala., in addition to
customers in the towns of Excel, Castleberry, Repton, Frisco City, Butler and Flomaton, and to rural
customers in Choctaw, Conecuh, Escambia and Monroe Counties. SAGD currently serves approximately
3,800 residential customers, approximately 330 commercial customers, seven small industrial
customers, eight industrial customers, and five municipal customers.

LMGA is a political subdivision created by the Louisiana State Legislature in 1987. LMGA aids over 100
Louisiana municipal utilities with natural gas acquisition, marketing and transportation.
A vast range of customers throughout the service areas of CMC, SAGD and LMGA will benefit from
discounted gas beginning in January 2017 and carrying on through the summer of 2046. Sheldon Day, a
CMC Board Member and the Mayor of Thomasville, Ala., is pleased to see that the people of not only his
town, but urban and rural areas throughout Alabama and Louisiana will enjoy long-term savings. “CMC,
and our partners at SAGD and LA Gas, have literally spent years putting together an all-star team to
make this prepay transaction a reality. Our gas districts, our communities, and our customers will be the
beneficiaries of this transaction for many years to come.” Cynthia Jackson, CMC Board member and
Mayor of Grove Hill, Ala., believes that the deal will be of significant benefit across the states of Alabama
and Louisiana. “This agreement signifies that municipalities can and must continue to work together in
order to make our counties continue to prosper. The hard work and dedication really paid off. I must say
this deal will be very beneficial for The Town of Grove Hill. I am proud to be a part of this team dynamic
team.”

For questions on this article, please contact Dave Schryver of APGA staff by phone at 202-464-2742 or
by email at dschryver@apga.org.

Senate Passes Pipeline Safety Legislation

On March 3, the Senate passed legislation titled Securing America’s Future Energy: Protecting our
Infrastructure of Pipelines and Enhancing Safety Act (Safe PIPES Act), which reauthorizes the Pipeline
Safety Act. The Pipeline Safety Act is up for reauthorization every five years. Key provisions of the bill
include:
 Reauthorizes the Pipeline and Hazardous Materials Safety Administration (PHMSA) from fiscal
year 2016 through fiscal year 2019 and authorizes appropriations to the Department of
Transportation (DOT);
 Requires DOT to submit a report to the Senate Commerce Committee every 90 days regarding
the status of implementation of regulations required under the Pipeline Safety Regulatory
Certainty and Job Creation Act of 2011;
 Requires that PHMSA dedicate resources to finalize regulations required under the Pipeline
Safety Regulatory Certainty and Job Creation Act of 2011 before beginning any new rulemaking
unless the DOT Secretary certifies to Congress that there is significant need to move forward
with a new rulemaking;
 Requires that within 18 months of a final rule, the Comptroller General submit a report to
Congress addressing, among other things, the extent to which Natural Gas Integrity
Management Program has improved the safety of our nation’s transmission lines and making
recommendations to the program intended to prevent inadvertent pipeline releases and would
expand integrity management beyond high consequence areas;
 Requires DOT to conduct a one-year study, in consultation with stakeholders, on improving
damage prevention through technology improvements in location and communications
practices to prevent accidental excavation damage;
 PHMSA must submit a report to Congress addressing the hiring challenges they are facing and
making recommendations to address hiring challenges, training needs, and any other identified
staff resource challenges;
 Requires PHMSA to convene a working group to look at the development of a voluntary, nofault,
information sharing system to encourage collaborative efforts to improve inspection
information feedback and information sharing in an effort to improve natural gas transmission
and hazardous liquid pipeline integrity risk analysis;
 Within 18 months of passage of the bill, DOE must submit a report to Congress on the feasibility
of a national integrated pipeline safety regulatory inspection database to improve
communication and collaboration between PMHSA and State pipeline regulators;
 Within two years of passage, DOT, in coordination with other federal agencies, must issue
minimum uniform safety standards for the operation, environmental protection, and integrity
management of underground natural gas storage facilities;
 No later than 30 days after a pipeline safety inspection, PHMSA or the state authority must
conduct a post-inspection briefing outlining concerns and to the extent practicable providing
written findings of the inspection or issue a final report;
 The Comptroller of the U.S. must complete a report within 180 days of passage on the feasibility
of odorizing all combustible gas in transportation; and,
 Within one year, PHMSA must submit a report to Congress on the metrics provided to PHMSA
for lost and unaccounted natural gas from local distribution companies, which must include: an
analysis of whether separate or alternative reporting could better measure the amounts and
identify the location of lost and unaccounted for natural gas; a description of potential safety
issues associated with lost and unaccounted for natural gas from local distribution companies
(LDC); and, an assessment of whether better reporting methods could resolve potential safety
issues.
 The Comptroller must conduct a state-by-state review of policies that encourage the repair and
replacement of leaking LDC pipeline systems and policies that serve as barriers to the repair and
replacement;
 A report to Congress, including recommended best practices for the federal or state
government, is required within one year of the bill’s enactment; and,
 PHMSA must provide a report to Congress on the feasibility of any recommendations made in
the report.

The bill did not contain any language addressing the current manner in which user fees are
collected. APGA has been communicating in meetings with staff our strong opposition to any potential
changes in user feel collection. With Senate passage, the debate now moves to the House where both
the House Transportation and Infrastructure Committee and Energy and Commerce Committee have
released their versions of a Pipeline Safety Act reauthorization bill. For questions on this article, please
contact Dave Schryver of APGA staff by phone at 202-464-2742 or by email at dschryver@apga.org.

APGA Speaks at ANGA Spring Seminar

On March 8, APGA’s Executive Vice President, Dave Schryver, spoke to over 200 members of the
Alabama Natural Gas Association at their Spring Seminar in Birmingham, Ala. In his presentation, Dave
discussed the benefits that the direct-use of natural gas provides citing its high efficiency and the role it
can play in reducing greenhouse gas emissions. He also discussed the activities of APGA’s Direct-Use
Task Group, which has been focused on identifying and responding to threats to natural gas direct-use
at the regulatory, legislative, and codes and standards level.

Dave provided an update on APGA’s effort to respond to the Department of Energy’s Notice of Proposed
Rulemaking that would establish a nationwide standard of 92 percent Annual Fuel Utilization Efficiency
(AFUE) for natural gas furnaces. He communicated APGA’s concerns with the proposed nationwide
mandate and the impact it would have on natural gas consumers, particularly those living in low and
fixed-incomes. He also discussed definitions of net-zero and the role of the direct-use of natural gas in a
net-zero building. Lastly, he provided an update on several other issues that APGA has been engaged in
including reauthorization of the Pipeline Safety Act and requiring that investment grade municipal
securities be included in the definition of High Quality Liquid Assets.

For questions on this article, please contact Dave Schryver of APGA staff by phone at 202-464-2742 or
by email at dschryver@apga.org.

Nominations Open for 2016 APGA Awards!

Each year, APGA presents awards to recognize individuals within our organization who have gone above
and beyond to represent the interests of APGA and public natural gas. These awards will be presented at
the Annual Conference in Newport, R.I., in July.

Please take a few minutes to recommend likely candidates for each of the following awards and return
the attached nomination form to the APGA office by April 15. You can nominate a candidate online at
https://www.surveymonkey.com/r/2016APGAaward or send this PDF back to APGA by email, mail, or
fax.

Nominations are open for the:
• Distinguished Service Award - Recipient has made substantial contributions to the public
natural gas industry, maintains an unusual devotion to duty, exemplifies the highest ideals
and finest traditions in the management of publicly owned natural gas systems, and has
made contributions to the betterment of the community. Nominee holds a management
position with an APGA public natural gas system member and has been active in APGA for at
least five years.
• Public Gas System Achievement Award - Recipient is an APGA public natural gas system
member whose performance is widely recognized in the public natural gas industry, has
made substantial contributions to the community, other utilities and the goals of APGA. The
system has expressed a willingness to exchange ideas and technology with others to ensure
the gas industry will be the safest and most knowledgeable of all utilities. The system has
been an active member of APGA for at least five years.
• Personal Achievement Award - Recipient has made substantial contributions toward the
goals of APGA and the natural gas industry. Nominee is an employee of an APGA public
natural gas system member.
• Harry M. Cooke Personal Service Award - Recipient has made substantial contributions
toward the goals of APGA and the natural gas industry. Nominee is not an employee of an
APGA public natural gas system member.
• J. Hardie Johnston Service Award - Individuals who are retiring after serving 25 years in the
gas service business and have participated as an APGA member system representative or a
retiring APGA Charter Member.
• APGA Safety Award - This contest is based on the number of employee hours worked and
the number of hours lost to accident or injury during the 2015 calendar year. Please enter to
win this award through a separate application at
https://www.surveymonkey.com/r/2016safetycontest.

For questions or if you would like to email your nominations and/or supporting documentation, please
contact Sheila Deringis at sderingis@apga.org.

Enter the 2016 APGA Safety Contest

Your gas system is invited to participate in the Annual APGA Safety Contest. All APGA members are
eligible to enter this contest. This contest is based on the number of employee hours worked and the
number of hours lost to accident or injury during the 2015 calendar year. The winners of each group will
be selected based on a statistical calculation. Systems that qualify for this safety award will receive a
certificate and may also be eligible to receive a safety plaque based on the number of consecutive years
they have won. The Safety Contest rules and entry form can be downloaded here for your completion by
May 15, 2016. You can also complete the survey online at
https://www.surveymonkey.com/r/2016safetycontest.

The winners will be announced at the APGA Annual Conference in Newport, R.I., this summer. For
questions regarding the contest, please contact the APGA office at 202-464-2742.

EIA Reports Storage Decrease of 57 Bcf to Put Working Gas Storage at 2,479 Bcf

Here is the weekly EIA Summary Report issued on Thursday, March 10, 2016, which reports the week’s
storage report highlights for Friday, March 4, 2016. A 57 Bcf decrease has been reported.
Working gas in storage was 2,479 Bcf as of Friday, March 4, 2016, according to EIA estimates. This
represents a net decline of 57 Bcf from the previous week. Stocks were 911 Bcf higher than last year at
this time and 727 Bcf above the five-year average of 1,752 Bcf. At 2,479 Bcf, total working gas is above
the five-year historical range.

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