Christina Sames Vice-President, Operations & Engineering AGA’s 2013 Focus in O&E Christina Sames Vice-President, Operations & Engineering Gas Utility Best Practices Kickoff Los Angeles, CA

Update on O&E Activities Pipeline Safety Regulatory Update, including Cyber Security Raising the Bar on Safety Safety Information Resources Peer to Peer Evaluations pilot 2013 Discussion Groups Public Awareness, Contractor Management and Quality Odorization GIS/GPS and Work Management Damage Prevention Technical Training & Knowledge Transfer Key Committee initiatives In addition to the Commitment to Enhancing Safety, the AGA Board of Directors early last year adopted a Safety Culture Statement that lays out the expectation that all AGA members, as well as their contractors and suppliers, are expected to place the highest priority of safety. You can find the Safety Culture Statement on AGA’s website. We are also actively engaged with other stakeholders in an effort to improve safety Finally, we have a number of programs and efforts to improve information sharing. This includes Best Practices programs that allows companies to benchmark themselves against others and identify best practices to address specific issue. An Executive Leadership Safety Summit held by the AGA Board of Director’s Safety Committee to discuss lessons learned from incidents and innovative initiatives to improve safety A number of safety publications, including an annual employee and vehicular safety study A Safety Information Sharing Initiative with all of the pipeline trade associations in the US and Canada that is looking at ways other sectors are sharing information And an SOS program where companies can seek answers from other companies on issues they are trying to address. This is not an all inclusive list

Pipeline Safety Path Forward Success requires that stakeholders agree on the Path Forward Low gas prices provide opportunities to replace or enhance infrastructure without a significant negative impact on the customer

Roadmap for the Path Forward Pipeline Safety Act of 2011 NTSB Safety Recommendations Secretary LaHood Call to Action AGA’s Commitment to Enhancing Safety INGAA’s Integrity Management Continuous Improvement (IMCI) Five good documents. There are similarities, but they were developed for different purposes, are not aligned, present different messages and use different languages.

Pipeline Safety Act OF 2011 AGA views the Act as the definitive template for the pipeline safety path forward Key elements: MAOP verification Modification to grandfathering regs Automatic/Remotely Controlled Valves EFVs beyond single family homes Number of reports: Damage prevention, IM, leak detection, cast iron pipe

NTSB San Bruno Recommendations Delete grandfather clause. Require all pre- 1970 gas transmission lines be subjected to hydrostatic pressure test with spike test Manufacturing & construction defects can only be considered stable if line has been subjected to a post-construction hydrostatic pressure test of at least 1.25 times MAOP Require ASVs or RCVs in HCAs & class 3&4 Require all transmission lines be configured to accommodate ILI tools The NTSB accepts alternative regulatory actions that have consistent outcomes compared to their recommendations

Secretary LaHood’s Call to Action Focused on repair, rehabilitation and replacement of lines “no longer fit for service” Interested in replacement of cast iron, bare steel, older plastic Numerous meetings with industry CEOs, AGA’s Board, NARUC, others. Currently happy with AGA and it’s members because “You are doing what you said you would do.

The Path Forward Successfully moving forward reauthorization, NTSB recommendations and the Secretary’s Call to Action will require: Extensive stakeholder discussions Expedited rulemaking Compromise Billions of dollars in capital expenditures Transparency for the public Will we get this done? Yes, but it will be more difficult that anyone imagines and will take several years and possibly decades to accomplish.

Big Challenge for Membership Transmission MAOP Verification By June 15, 2013: Operators must confirm MAOP records of transmission pipelines and submit to DOT information on segments with insufficient records for established MAOP. The transmission operators annual report is the vehicle by which PHMSA will collect this information For pipelines with insufficient MAOP records, DOT must: Require operator to reconfirm a MAOP expeditiously Determine appropriate actions until MAOP confirmed NTSB recommendations are vastly different from the Act

Pipeline Safety Act OF 2011 MAOP Grandfathering Rulemaking DOT must issue regs for conducting tests to confirm material strength for untested gas lines in HCAs >30% SMYS by 7/13. DOT must consider safety testing methods, including pressure testing, ILI and methods determined equally effective. AGA members have an estimated 6,000 miles (14%) of pipe that will have to be hydro tested, have reduced pressure or be abandoned. DOT may not follow legislation. May include all transmission lines (NTSB Recommendation). Currently doesn’t consider ILI equally effective

Other Challenges Installing RCVs and ASVs on transmission lines Cast iron, bare steel replacement & management Vintage plastic pipe replacement & management IM on transmission lines outside of HCAs DIMP (to the satisfaction of state regulators), TIMP Enhancing emergency response Increased expectations from gov’t, Increased fines, penalties, public scrutiny

Cybersecurity Natural gas industry is a confirmed target 100% certainty that our control systems can be hacked. Time to detection – Over 400 days No serious damages or disruptions yet (but hackers may just be waiting) AGA has been actively involved in cybersecurity for over a decade and has increased its efforts Letter to all members identifying actions companies can take to reduce the threat of a cyber attack In October, AGA Board approves Cybersecurity Action Plan (see following slide) We are expecting an executive order to be issued by President Obama

Cybersecurity Action Plan Identify gaps in vulnerability assessment, current standards; fill gaps Workshop of operations technical experts to determine potential operational consequences of a successful cyber attack Sharing of best practices Educate Congress/others on our unique industry & steps we have taken to ID threats, reduce risk of cyber attack Create Cybersecurity Task Force to lead efforts Other actions: Operators have been encouraged to register for access to US-CERT, the Cybersecurity Evaluation Tool (CSET), review the TSA Pipeline Security Guidelines

AGA Actions to Raise Bar on Safety Commitment to Enhancing Safety Engagement: DOT, NTSB, NAPSR, NARUC NARUC – Emphasis on innovative rate mechanisms NAPSR – Pipeline safety coordination Information Sharing Best Practices programs Events, inc. Exec Leadership Safety Summit Publications Safety Information Sharing Study SOSs Safety Culture statement Peer-to-Peer review pilot In addition to the Commitment to Enhancing Safety, the AGA Board of Directors early last year adopted a Safety Culture Statement that lays out the expectation that all AGA members, as well as their contractors and suppliers, are expected to place the highest priority of safety. You can find the Safety Culture Statement on AGA’s website. We are also actively engaged with other stakeholders in an effort to improve safety Finally, we have a number of programs and efforts to improve information sharing. This includes Best Practices programs that allows companies to benchmark themselves against others and identify best practices to address specific issue. An Executive Leadership Safety Summit held by the AGA Board of Director’s Safety Committee to discuss lessons learned from incidents and innovative initiatives to improve safety A number of safety publications, including an annual employee and vehicular safety study A Safety Information Sharing Initiative with all of the pipeline trade associations in the US and Canada that is looking at ways other sectors are sharing information And an SOS program where companies can seek answers from other companies on issues they are trying to address. This is not an all inclusive list

Overview of Peer to Peer Evaluations In response to interest expressed by several of our executives on the Board of Directors Each company takes turns being evaluated by peer companies on a particular topic to determine opportunities for improvement Topic(s) and evaluation protocols and criteria used will all be determined by participating companies Is different from formal inspections/audits, but can be even more effective in value of information exchanged Meeting being held at AGA on Feb 7th to identify how this will all be structured The pilot will likely evolve into a more formal program in 2014, similar to what is being done in nuclear and electric 14 companies are expressing interest (see next slide) Refer to handout for additional details

Discussion Groups Damage Prevention (A. Lu) GIS/GPS and Work Management Systems (N. Assing) Contractor Mgt. and Quality (A. Lu) Odorization (Kate Miller) Public Awareness (Jake Rubin) Technical Training & Knowledge Transfer (Aaron Johnson) ----------------------------------------------------------- Quarterly sessions by webinar, usually with 1-2 presenters Easy way to exchange information with other members

Key Committee Projects in O&E Commitment to Enhancing Safety White Paper on Soft Tissue Injury Prevention and Management Guidance White Paper on Aldyl-A Mechanical coupling catalog Annual employee safety statistical report Vehicular Safety survey Various Measurement publications Study for Grandfathered Pipe See O&E 1-pager, listing various initiatives/projects

Major 2013 Events in O&E Best Practices Roundtables Transmission pipeline workshop – March 19-20 in Chicago Spring Committee meetings – May 20 – 21, Orlando Operations conference and Exhibit – week of May 20 in Orlando Executive Leadership Safety Summit – Nov 10-11, 2013 in Washington, DC Fall committee meetings – week of Sep 9 in LA Emergency Response forums, coordinated by AGA and conducted by Regional Gas Associations More to be announced

Find s Online Christina Sames csames@aga.org 202-824-7214