By Rich Heidorn Jr.

SCOTTSDALE, Ariz. — The natural gas industry found itself on the defensive at the National Association of Regulatory Utility Commissioners’ Summer Policy Summit last week as panelists debated pipelines’ resilience and ability to withstand cyberattacks.

During a panel ominously titled “Handling and Preparing for Attacks on the Natural Gas Network from Rising Cyberthreats,” Rebecca Massello, of the Interstate Natural Gas Association of America (INGAA), noted there were no gas outages during last winter’s “bomb cyclone” for generators with firm service.

“What history shows is that pipeline outages are very rare, and when they do occur they’re localized in nature. And I want to tell you, that’s not by accident,” said Massello, director of security, reliability and resilience for the group, which represents interstate pipelines. “It’s actually inherent in the way the system is designed and the way it has continued to evolve over time. Today we have more supply diversity than ever before, with natural gas regions all over the country. We also have more looping lines and multiple pathways to reroute gas in the event there is an incident.”

“Interconnects and multiple pipeline feeds support system resilience, help with contingency planning and keep disruptions localized,” said Kimberly Denbow of the American Gas Association, which represents local distribution companies. “Because of the way natural gas utilities must operate, blackouts … and rolling brownouts are not operationally feasible. We build resilience on the front end.”

Paul Stockton, managing director of security and risk management firm Sonecon, said he’s less concerned about weather than Chinese and Russian hackers.

Stockton, former assistant secretary of defense for homeland defense and Americas’ security affairs, quoted Director of National Intelligence Dan Coats, who told a think tank earlier this month that the Department of Homeland Security and FBI “have detected Russian government actors targeting government and businesses in the energy, nuclear, water, aviation and critical manufacturing sectors.”

“The warning lights are blinking red again” the way they were before the Sept. 11 attacks, Coats said.

Gas Industry Cybersecurity

Denbow pushed back on suggestions that the gas industry is vulnerable because it lacks the mandatory cybersecurity rules of the electric sector.

“The argument that natural gas systems lack resilience because they lack cybersecurity regulations is unfounded,” she said, calling gas industrial control systems “our crown jewels.”

She said the industry’s cybersecurity procedures are informed by standards, including the Transportation Security Administration’s pipeline security guidelines, the National Institute of Standards and Technology cybersecurity framework, American Petroleum Institute standards and the Department of Energy’s cybersecurity capability maturity model. AGA in 2014 helped create a downstream natural gas information sharing and analysis center (ISAC), which is now located on the floor of the electricity ISAC in D.C.

Communications Disruptions

Stockton cited retired boxer Mike Tyson’s often repeated adage that “‘Everybody has a plan until they get punched in the mouth.’

“I think that’s true for information sharing,” Stockton said. “In a blue-sky day like today — no event going forward — everybody’s sharing better and better. … If there is an attack by a major state on the energy sector represented here, you bet we should assume that adversaries will go against Internet-based communications, public switched telephones — none of that stuff is gonna work. Power companies and natural gas companies have pretty good [communications] inside their own company — push-to-talk radios, things like that. But between sectors: nada, nothing” will work.

Stockton said regulators should identify single points of failure such as multiple utilities using the industrial control systems of the same vendor. “That’s why I’m a big fan of fuel diversity for electric generation,” he said. With nuclear and coal in addition to renewables and gas, he said, “it’s much harder for the adversary to take everything down simultaneously.”

Solutions

Stockton, a consultant for Exelon, which is seeking subsidies for its struggling nuclear plants, says state regulators should help define attributes of fuel resilience and create a “design basis threat” for the electric and gas sectors, like that issued by the Nuclear Regulatory Commission.

“You can fly a 747 into [a nuclear plant] and the containment vessel can survive,” Stockton said. “That’s no accident: There’s a design basis threat that they have to meet.”

(Stockton overstated the NRC’s requirements. In 2009, the commission required all new nuclear plants to ensure their reactor containments could withstand a crash by a large commercial aircraft. But it rejected proposals that existing reactors be retrofitted with similar protections. “Deliberate attacks by large airliners loaded with fuel, such as those that crashed into the World Trade Center and Pentagon, were not analyzed when design requirements for today’s reactors were determined,” the Congressional Research Service wrote in a 2014 report.)

Stockton said industry should prepare for threats like Timothy McVeigh’s 1995 truck bomb attack in Oklahoma City and the coordinated hijackings by al-Qaeda terrorists on Sept. 11, 2001.

“Folks, Russia is not going to attack a single gas pipeline and expose themselves to retaliation. They’re going to try and take down the energy sector. It will be a comprehensive attack.”

Gas industry representatives urged against overreacting to what Massello called the “fear and uncertainty and doubt [of scenarios that haven’t] happened before.”

“Rather than try to fix portions of the system that are not broken, let’s hone in on those areas where concentrated problem-solving will yield measurable results,” said Denbow, who noted that the leading cause of pipeline disruptions is third-party excavation damage.

“For as long as gas utilities must contend with third-party excavators who hit our lines and disrupt our systems, gas control operators will continue exercising their training with respect to rerouting gas supplies and with respect to workarounds, resort[ing] to manual operations when necessary and minimizing the impact to firm service and residential customers,” she said. “This is what they do on a daily basis. This is not new to us.”

In a second panel (“What Does the Future Hold for Gas-Electric Interdependencies and Where Does Resilience Fit In?”), Todd Snitchler, director of market development for the American Petroleum Institute, had a similar message.

“We can’t underestimate the importance of getting this right, but I think we have to keep in balance … to be realistic in our assessment,” he said. “There is a long track record of successful performance.”

In the same panel, Kathleen Barron, Exelon’s senior vice president of federal regulatory affairs and wholesale market policy, said it was too soon to discuss concerns over the potential cost of resilience efforts.

“Our perspective is all this conversation about what’s the remedy, who gets paid, is your interest aligned with mine … is really premature. The question we need to answer is … based on a reasonable set of assumptions, what we should be planning for.”

Referring to PJM’s current fuel security study, she said, “Once that evaluation is done, and we figure out what our vulnerabilities are, then we can figure out how we should … adjust the market rules to accommodate them.” (See Stakeholders Debate PJM Fuel Security Scope.)

Moderator Angela O’Connor, chair of the Massachusetts Department of Public Utilities, disagreed. “I don’t think that any part of that conversation is premature,” she said.

Departure from Markets?

Amanda Frazier, vice president of regulatory policy for Vistra Energy, said it is “disheartening … that the conversation has switched and there’s so much discussion around moving away from markets in the name of resilience.”

“I would dispute the narrative that there’s any particular fuel source that is at risk of extinction,” she said, noting that half of the active nuclear plants receive regulated rates of return. “If all of the subsidized and unsubsidized but at-risk merchant nuclear plants closed tomorrow, we would still have 80% of our civilian nuclear plants up and operating,” she said.

While Vistra’s 10-K securities filing mentions catastrophic events as a material risk, “we mention regulatory intervention in about six different ways … because those are what really keep us up at night: Are the regulators [and] politicians going to continue to support competitive markets, which have delivered resilient and reliable electric generation across this country?”

Pennsylvania Public Utility Commissioner John Coleman said regulators’ decisions have become more complex “as we’ve added in all the other fuel source attributes into this dialog.”

“I hope that we have the intellectual horsepower in this room and within the NARUC community to be able to solve this. … The drama around all of these discussions need[s] to go down a level. … I am confident that we have the ability to figure that out without having external forces trying to dictate how this is going to work.”