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Quality of Supply – gas specification (current regulation 3)

62. Regulation 3 of the existing Gas Regulations states that natural gas must comply with NZS 5442, liquefied petroleum gas (LPG) with NZS 5435 and that all other gases supplied for use in installations, appliances or as automotive fuels must be safe for the intended use. The Standards, NZS 5442 and NZS 5435, define an envelope of characteristics and components for each gas type that enables gas equipment to function in a safe manner while using that particular gas type. The natural gas specification is also designed to minimise degradation of pipes and equipment within the transport system (i.e. transmission and distribution networks).

63. The natural gas specification in NZS 5442 reflects available gas compositions in New Zealand. To provide flexibility, the current natural gas specification is focused on limits for contaminants that may adversely affect the operation of gas equipment or lead to degradation of equipment or infrastructure (i.e. pipelines and appliances).

64. While the regulations refer to specific New Zealand Standards for the gas quality requirements, the regulations do not clearly set out their intent. As part of the regulations amendments it is the Ministry's objective to clarify the safety aspects associated with gas quality.

65. For the "quality of supply" regulation it is proposed that general safety principles be established. It is proposed these state the gas supplied to consumers is required to be of a quality that enables it to be used safely for the purpose/application for which it is supplied. To meet this requirement gas must be of the quality set out in the Standards, NZS 5442 and NZS 5435, under which the following elements are included:

• energy rating (per unit volume);
• relative density;
• temperature; and
• contaminants, including solids, liquids and gases.

66. A question that has arisen with respect to existing regulation 3 relates to the point(s) at which gas needs to comply with the relevant Standard and who should be responsible for compliance. The question within this is at what point in the distribution systems does gas need to meet the required safety standard?

67. In general terms of public safety, the composition of natural gas is most crucial when it is supplied to the consumer. On one hand it is becoming advantageous to provide scope to allow a range of gas sources and compositions to be fed into the transmission and distribution systems for a variety of supply scenarios, subject only to the agreement of the pipeline owners. On the other hand, the nature of distribution systems is that they tend to be interconnected and whilst one group of users may be able to deal with out-of-specification gas, domestic and small commercial users cannot, generally, use out-of-specification gas safely.

68. The following sections delve further into the question of where gas is required to be in-specification.

Specification of Gas in the Distribution System

69. The specification of gas within the distribution network is not as critical in terms of public health as there is less variability in the types or equipment it passes through. The specification of gas is important to the extent that impurities or contaminants may harm the pipeline or other infrastructure (e.g. through corrosion) or might affect the gas's ability to flow (e.g. liquids or particles).

70. These matters are likely, however, to be situation dependent in that a particular pipeline may be constructed of materials that make it more or less susceptible to corrosion. Given the potential for variation in infrastructural susceptibility it is considered that, in terms of general safety obligations within the gas distribution systems, this aspect of gas quality is best addressed through the proposed safety management system requirements. Accordingly, it is not proposed that gas quality needs to be regulated for this outcome.

Responsibility for the Specification of Gas Supplied to the Consumer

71. The quality of gas being supplied to the consumer is of primary importance. Consumers contract for supply of gas with their gas retailer. The gas retailer must therefore have the responsibility for the quality of the gas being supplied to the consumer.

72. The special exemption provisions set under regulation 30 are available to allow retailers to enter into arrangements to supply out of specification gas to particular consumers on an ongoing basis. This arrangement would need approval from the Secretary and may have conditions imposed upon it. For example, it is likely that the gas supply would need to be by means of a dedicated pipe so that out-of-specification gas was not accidentally supplied to other users.

Gas Specification During Emergencies

73. There are rare occasions when it may not be possible to keep gas within the required specifications, for example, a major failure in a processing facility that is expected to take a significant period of time to correct.

74. Current regulation 3 has the effect of requiring the gas supply to be stopped when the gas is out-of-specification. This could result in loss of essential services and economic losses to industries reliant on gas for operation. Allowing out-of-specification gas to be fed into the network could result in difficult and expensive purging of the distribution network.

75. In certain circumstances it could be argued that it is justifiable to maintain the gas supply even if out-of-specification. For example, supplying out-of-specification gas to keep essential services, such as hospitals, running may override the short term safety considerations. In some situations equipment can be "tuned" to run safely on gas outside the specification although this ability is often only associated with larger infrastructure, such as boilers and industrial equipment.

76. One possible option is to add provisions into regulation 3 to allow a broader gas specification in emergency situations. The difficulty with setting out regulations for emergency situations is that, by their nature, they become prescriptive. In emergency situations it may be better to provide for greater flexibility. In this regard, regulation 30 allows the Secretary to exempt any person from the requirements of regulation 3, the gas specification. Given the potential variation possible in supply and risk scenarios it may be better to use the provisions of regulation 30 (or widen them) so that consideration can be given to a particular scenario rather than giving an across the board emergency provision.

77. In addressing emergency situations the gas supplier would need to look at how the supply of out-of-specification gas could be stopped for normal consumers (i.e. domestic consumers that cannot adjust their equipment). Where the supply of out-of-specification gas cannot be stopped it would be the gas suppliers' responsibility to look at and assess the safety implications for those users. This assessment should then form part of the evidence for the regulation 30 exemption process.

78. To enable the rapid use of the Secretary's exemptions in emergencies, one option would be for gas distributors and retailers to have discussions with the regulator to establish scenarios for the emergency situation that would enable an exemption to be granted quickly. It is noted that emergencies in this sense are not necessarily matters that would be covered by a civil defence emergency.

Pressure (Current Regulation 4)

79. In its present form, existing regulation 4 does not specify the minimum gas pressures, or where in the system these pressures apply. Instead the regulation sets out the performance requirements that the gas supply pressure must be able to meet. The performance requirements are that gas pressure should be sufficient to ensure gas can be used safely in properly functioning installations and appliances, and not allow flashback, flame failure or the creation of hazardous levels of carbon monoxide.

80. It is proposed that the regulations continue to include these general supply pressure safety requirements and that they also specify the acceptable supply pressure, or range thereof, to domestic and light industrial. This style would dovetail with the obligation in Part 1 of NZS 5261 (which is cited through existing regulation 12) that the pressure be verified to ensure it is suitable and safe for the appliances and fittings to be installed.

81. It is proposed that, because the consumer has a contractual arrangement for the supply with the retailer, the retailer should carry the responsibility for ensuring that the gas is supplied to them at the correct pressure.

82. For clarity it is proposed that the gas pressure must be within the specified range at the "point of supply" to the end consumer. The "point of supply" has been chosen as it is a clearly defined point for which there should be little confusion.

83. It is noted that in certain circumstances, larger gas consumers (industry, hospitals) may require gas to be supplied at greater pressures than those specified for domestic or small industrial applications. While the regulation 30 provisions would allow for exemptions to be granted this process is likely to become unwieldy because of the number of exemptions that may be sought. To address this it is proposed that the regulations also include provision for gas supply pressures to be set via contractual arrangement between the retailer and the consumer. It is proposed the contracted gas supply pressure provisions could only be used where the consumer is aware of their supply requirements and is not intended to be used for domestic applications.

Gas Detection

84. Current regulation 5 requires gas suppliers to ensure that the gas they supply has a distinctive and unpleasant odour so that its presence is readily detectable at a concentration equivalent to one fifth of the lower flammability limit of the gas.

85. The underlying objective of this regulation is to enable the detection of gas in the atmosphere before it accumulates to flammable concentrations. Neither natural gas nor LPG have a natural odour of their own that enables individuals to detect gas leaks or the accumulations of gas. Adding an artificial odour is a well established method of making it detectable.

86. Odorisation is not, however, the only way of making gas detectable. Electronic detectors are, for example, an alternative although they are expensive and therefore of limited availability. In some circumstances, such as certain industrial processes, it is preferred that gas is not odorised.

87. It is proposed that the regulation require reticulated natural gas to be odorised when it is in distribution systems and when supplied to consumers. The rationale is that consumers and the general public play an important role in detecting dangerous gas releases and it is considered important, for this reason, that the recognised method of odorisation be maintained unless a very good case is presented otherwise.

88. In providing for industrial applications where odorisation of gas is likely to cause problems (for example, methanol production), an exemption may be sought under regulation 30. Exemptions for odorisation are only likely to be granted in situations where the gas is supplied via a separate/dedicated pipeline and that the pipeline does not run through residential areas. This is because of the safety aspects associated with the detectability of gas.

89. A Standard, NZS 5263:2003 – Gas detection and odorisation has been developed to provide industry with guidance. It is proposed that this Standard should now be cited in the regulations and that the current reference to GCP 3 be removed.

90. A further question is where responsibility should lie for the detectability of reticulated natural gas that is supplied to the consumer. Odorisation normally occurs within the gas production facilities; with the possibility of top-ups occurring within distribution systems to address any fading of the odorant (odorant fading typically occurs through absorption into new pipeline walls and cylinder surfaces and general odorant breakdown). Although retailers play no role in the technical aspects of odorising gas, they are the ones contracted to supply suitable gas to consumers. It is therefore considered that the retailer should hold responsibility for ensuring the gas supplied to consumers is correctly odorised. For the retailer, this means that they will need to enter into contractual arrangements with the distributor to ensure that the gas they sell to consumers is correctly odorised.

91. The next question is whether the distributor should also hold specific responsibility for odorisation. Given that gas is typically distributed through public areas (streets etc) it is proposed that the gas distributor should also carry a responsibility for the odorisation of natural gas in order that gas leaking in public areas can be identified.

92. With respect to LPG, it is proposed that current regulations should continue. In other words, LPG should be odorised before being supplied to refillers and ultimately consumers. It is proposed that wholesalers of LPG should carry the responsibility for the gas to be odorised.

93. The responsibility for the odorisation of gas in canisters is considered to best lie with the party filling the canisters, if filling occurs in New Zealand, or with the importer of pre-filled gas canisters. This is because the party filling or importing the canisters has the ability to control the specification and odorisation of the gas in the canister.