Pipeline Safety Issues Christina Sames Vice President Operations and Engineering AGA/EEI Beyond the Boardroom October 2013

Natural Gas Getting It to Homes, Businesses and to Work for America

Natural Gas Systems: Pipeline Infrastructure 2.4 million miles of natural gas pipeline infrastructure Gathering Lines: 20,000 miles Transmission: 300,000 miles Mostly steel, larger diameter, higher pressure Distribution: 2.1 million miles 1.2 million miles of main 900,000 miles service lines Multitude of materials (steel, cast iron, plastic) ½” – 12” diameter, pressures as low as 0.25 psi Make no mistake, safety is the number one priority of the natural gas industry. We want what customers want—safe and reliable access to and delivery of natural gas to the millions of customers who use it every day. We are consistently working to advance safety to help ensure this is possible. In 2012, Congress passed and the President signed the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 with full bipartisan support. AGA and its members were fully engaged to make sure that sound legislation was put in place to advance safety We continue to work with federal and state regulators to implement this important legislation.

Pipeline Safety Oversight Legislative Prescriptive Pipeline Safety Act Reauthorized every four years DOT National oversight Federal standards: Baseline National Transportation Safety Board Investigates significant accidents Issues recommendations to DOT, states, industry, others States Adopt federal standards Add other requirements; state regs on the rise Public Want information and to be involved Strong public/political reaction to PL incidents

Pipeline Safety Facts Safety form of transportation in the US (DOT, Bureau of Transportation Statistics) Leading cause of serious incidents: Excavation damage Decline in serious pipeline incidents: About 10% every 3 years for the last 20+ years Dramatic decline in pipeline leaks over last 20+ years Significant efforts underway by industry that go beyond regulation to improve the safety of the system Passed S. 275 on October 17, 2011 Transportation & Infrastructure Committee - Passed H.R. 2845 on September 8, 2011 Energy & Commerce Committee - Passed H.R. 2937 on September 21, 2011

Serious Pipeline Incidents Rare events So when they occur, they make headlines

2010 – 2011: Unprecedented Series of Serious Incidents BP Gulf of Mexico oil spill – 4/10 Kalamazoo River MI, liquid pipeline failure and oil spill – 7/10 San Bruno CA, NG transmission – 9/10 Philadelphia PA, NG distribution (CI) – 1/11 Allentown PA, NG distribution (CI) – 2/11 Yellowstone River, liquid pipeline – 7/11 Others

Repercussions of Incidents: Loss of public confidence in operators, DOT, and state oversight Pipeline safety questioned by Congress, NTSB, others Numerous Congressional hearings NTSB investigations, hearing, recommendations DOT actions Advisories, Safety Action Plan, Report to the Nation, Pipeline Safety Forum, push to states on enforcement and penalties, regulatory actions

Current Environment Growing public intolerance to risk – but highly rate sensitive Uninformed media (with drivers all their own) Internet-speed information exchange with no editorial control Polarized political atmosphere – advantage over policy DOT pushing states to issue more fines/penalties. Want to be seen as strong regulator & enforcer All resulting in an increasing number of new regulations under development Passed S. 275 on October 17, 2011 Transportation & Infrastructure Committee - Passed H.R. 2845 on September 8, 2011 Energy & Commerce Committee - Passed H.R. 2937 on September 21, 2011

Biggest Pipeline Safety Initiatives In Place Transmission Integrity Mgmt: Comprehensive program to assess/repair lines in high consequence areas; reassess every 7 years Distribution Integrity Mgmt: Requires operators know their system, ID risks to system, implement measures to mitigate risks and measure performance. Applies to all distribution lines Excavation Damage Prevention Excavation damage is the leading cause of serious pipeline accidents but progress is being made

What’s Currently on the Table? DOT is taking action on over 80 mandates from Congress and recommendations from NTSB, GAO, and the OIG Largest Initiatives Integrity Verification Process: Will apply to transmission pipelines. Expected cost for intrastate transmission operators: Nearly $20 billion IF the regulation follows legislation (DOT want to expand). Cost to interstate operators is unclear Initiatives that look at the safety culture of a company Metrics that indicate the safety of the infrastructure, including leading indicators

Other Actions: Distribution Manage existing infrastructure and finance “smart modernization” Accelerate rehabilitation, repair and replacement programs for high risk pipelines. Focus: on cast iron, bare steel, older plastic Enhanced leak detection and emergency response Refining distribution integrity management programs Excavation damage prevention

Other Actions: Transmission Pressure testing older lines that do not have a record of a post construction pressure test Record review Emergency response enhancements Adding automatic shutoff and remote control valves

QUESTIONS? Christina Sames Vice President, Operations and Engineering csames@aga.org