Editor’s Note: In Part 1 of a recent interview with Energy Viewpoints, Jim Hall, former chairman of the National Transportation and Safety Board, expresses his opinion on safety in the energy industry and serious infrastructure investment issues. Hall is managing partner of Hall & Associates LLC, a Washington, D.C.-based government relations consultancy.
EV: You served as chairman of the NTSB for seven years under President Clinton. What energy industry investigations were you involved in and what lessons were learned regarding the industry?
JH: During my time with the NTSB, I was involved in the investigation of multiple natural gas and hazardous liquid (petroleum) accidents. We found that there were inadequate testing and inspection programs in place to identify pipe defects and deficiencies before failure. We also found that insufficient action had been taken to mitigate the consequences of accidents after pipeline ruptures. For example, there was a general failure to install and use automatic shut off valves or remote control valves that could be operated by pipeline controllers to timely isolate failed sections of pipelines instead of waiting hours for personnel to respond to locations where they could close the valves manually.
EV: What infrastructure issues are energy companies facing and what will it take to address them?
JH: The pipeline infrastructure across our country is aging. Most pipelines were constructed decades ago when the energy demand was a fraction of what it is today; this is mostly due to the population doubling since 1950. That said, energy companies have to commit to inspecting, assessing, repairing, and upgrading pipelines when needed. But like other infrastructure, it’s difficult for energy companies to expand and upgrade their infrastructure without significant expenditures.
Furthermore, the risks of operating in the world today are even higher – operating costs, regulatory compliance, litigation and the reliance on federal or state approval for rate increases – it all adds up. These factors will make it more difficult to raise the massive amount of new capital required to finance the replacement and expansion of energy infrastructure.
Most importantly, the uncertain political climate is the greatest risk of all. Will the natural gas industry commit the capital to build systems to transport the growing supply of domestic natural gas? It’s hard to say if they cannot be certain the government will allow them to build and operate these systems. The U.S. currently has no effective national energy policy and without one, those who provide capital for new construction are taking a risk. It’s unfortunate because the safe transport of energy products is of the upmost importance to every citizen in this country.