1 DIMSA A Distribution Integrity Management SME Approach August – 2009

DIMSA  A Distribution Integrity Management SME Approach  The Approach is predicated on  Program Performance Risk Management  Programs currently being implemented are utilized to demonstrate compliance / risk management  The Approach Includes  The Written Plan  Your Current Methodology for 49 CFR 192 Compliance  Three Distribution Integrity Procedures 1. Program Performance Evaluation 2. Threat Specific Risk Management 3. Results Driven Improvement  This is NOT Transmission,  so we will NOT treat it as such…

DIMSA Collaboration  SEMPRA Utilities  SoCal Gas / San Diego Gas & Electric  Largest LDC in the country  PI Confluence  Procedural Implementation Management (ICAM)  Manage  Schedule  Track  Document  Report

Your Operations  Would say your systems are safe and reliable?  Do you believe you are currently managing safety & reliability?  Are you in compliance with the requirements of 49 CFR 192?

Your Operations  Are you currently analyzing the results of your 49 CFR 192 compliance activities?  Can you correlate these results back to your incident / safety record?  Are you currently evaluating these analyses to determine the effectiveness of your programs?  Have you documented these analyses. Evaluations to support a defensible position that you are in fact managing safety & reliability?

 The Premise  In most cases the operators are doing the right things to manage integrity  In most cases the operators safety / reliability records and excellent  Implementing the requirements of 49 CFR 192 manages risk…  It is all about demonstrating performance Program Performance Risk Management

Programs Required by 49 CFR 192  Leak Survey and Leak Prioritization  Metallic Leak Repair  Plastic Leak Repair  Damage Prevention  Public Awareness  Pipeline Patrol  Corrosion Control  Land Movement Management  Plastic Pipe Management  Main and Service Replacement  Bridge and Span Inspections  Equipment Inspections  Internal Operations Audit  Operator Qualifications  Drug and Alcohol  Emergency Planning  EFV Program

 Program Performance Risk Management  Programs currently being implemented are utilized to demonstrate risk management  Performance may be measured through the use of Key Performance Indicators (KPI)  KPI take two forms, leading and lagging  Leading indicators refers to the measurement of the effort  Lagging indicators refers to the measurement of the results Program Performance Risk Management

Risk Evaluation / Prioritization Corrosion

Risk Evaluation / Prioritization Excavation

Risk Evaluation / Prioritization Other Damage

Risk Evaluation / Prioritization Natural Forces

Risk Evaluation / Prioritization Material / Weld Failure

Risk Evaluation / Prioritization Equipment Failure

Risk Evaluation / Prioritization Inappropriate Operations

Quote from Texas Railroad Commission  “Operators are sleep walking thru the rule”  They are performing the requirements of 192  They are capturing the required data  They are NOT looking at the data  They are not improving based on the results

Program Performance Risk Management  The Plan Objective  State the company positions  Formalize program descriptions  Analyze and Evaluate program performance  Correlate results to safety  Take credit where credit is due  Improve IF and WHERE necessary

Statistics  Over 91% of significant incidents are caused by other outside force damage, excavation damage and other causes.  PHMSA currently defines a significant pipeline incident as those reported by pipeline operators when any of the following conditions are met:  fatality or injury requiring in-patient hospitalization  $50,000 or more in total costs, measured in 1984 dollars  highly volatile liquid releases of 5 barrels or more or other liquid releases of 50 barrels or more  liquid releases resulting in an unintentional fire or explosion

Statistics PHMSA Significant Incident Data 2008 Damage of various types accounts for 65% of the significant incidents with all other causes adding another 26%.

Reality Check SO WHAT THREAT SHOULD WE BE FOCUSING OUR ATTENTION ON??? The Various Types of DAMAGE

Programs Required by 49 CFR 192  10 /17 Programs address Damage in one way or another  Leak Survey and Leak Prioritization  Metallic Leak Repair  Plastic Leak Repair  Damage Prevention  Public Awareness  Pipeline Patrol  Corrosion Control  Land Movement Management  Main and Service Replacement  Bridge and Span Inspections

Programs Required by 49 CFR 192  EACH of these 10 programs includes risk based aspects that support program performance risk management  More frequent patrols in populated areas  More frequent leak surveys in area with higher consequence  Repairs of leaks prioritized by consequence

Going Forward  How are you going to take what you are currently doing, formalize it, analyze it, evaluate it and then correlate it back to your safety record?  How are you going to demonstrate compliance and that your safety and reliability objectives are being met today?  How will these same objectives be met in the future? A Program Performance Risk Management Approach

Written Plan Analysis / Evaluate Programs Improve Program Performance Risk Management

 The Written Plan is new  Programs are already being implemented  Analysis, Evaluation and Improvement is new Program Performance Risk Management

 The Written Plan will include sections that outline your position on each element of the rule  System Knowledge  Threat Identification  Risk Evaluation / Prioritization  Actions to Address Risk  Performance Measures  Plan Effectiveness / Improvement  Reporting Program Performance Risk Management

A Different View of the Elements  However, Program Performance Risk Management takes a slightly different approach  Performance Measures are detailed prior to Risk Evaluation and Prioritization  Performance of the programs will be utilized to document that risk is being managed  Actions to Address Risk will be combined with Improvement  These additional actions will be a means of improving the plan  Plan improvement includes program modifications to enhance performance  Plan Effectiveness is rolled up into performance.  Performance is the how we measure plan effectiveness through the demonstration of risk management  Performance against threats  Performance against their associated consequences

System Knowledge  The Program Performance Risk Management approach includes formalized program descriptions which detail the data collected by each program and how this data supports an understanding of the system  Additionally, the position on System Knowledge will describe the existence of other data sets, such as historical records, that also demonstrate the operators knowledge of their system

Threat Identification  The Program Performance Risk Management approach includes formalized program descriptions which detail how each program supports the identification of various threats to the system and where in the system they have a higher probability

Threat Identification DIM ProgramsCorrosionNatural Forces Excavation Damage Other Outside Force Damage Material or Weld Failure Equipment Malfunction Inappropriate Operation Leak Survey and Leak Prioritization (Grading) [ ]TI Pipeline Patrol [ ] TI Plastic Pipe Management [ and ] TI Bridge and Span Inspections [ ]TI Equipment Inspections [ ] TI Internal Operations Audit [ (f)] TI Operator Qualifications [Subpart N] TI Drug and Alcohol [Part 199] TI

Threat Identification DIM ProgramsCorrosionNatural Forces Excavation Damage Other Outside Force Damage Material or Weld Failure Equipment Malfunction Inappropriate Operation TI= Threat Identification The Program Performance Risk Management approach takes advantage of the fact that, at a minimum, there are programs utilized to identify each threat and the locations where they may have a higher probability.

Performance Measures  Performance may be measured through the use of Key Performance Indicators (KPI)  KPI take two forms, leading and lagging  Leading indicators refers to the measurement of the effort  Lagging indicators refers to the measurement of the results  The premise of a performance based approach is that if the efforts are defined so as to generate the optimal results, and these efforts are in fact implemented, then the desired results will be a byproduct

Performance Measures  The Quality Control Bill of Rights states that  The right person  Will do the right job  At the right time  In the right place  The right way  In order to achieve the Right Results

Performance Measures  Required by the Rule  Lagging  Measurement of Results  Optional to the Operator  Leading  Measurement of Efforts  Implementation  Data Management  Data Analysis  Follow Up Actions  Incident Mapping

Performance Measures  The basic implementation of EVERY program is the first and primary performance indicator.  If results indicate that performance of the program is not effective then the first analysis has to be … was the program properly implemented pursuant to its procedure  The programs must be properly implemented prior to the determination that any improvement might be required

Performance Measures  The Program Performance Risk Management approach requires that each program be defined in terms of its ability to provide leading and/or lagging performance indicators.  These indicators, when measured will be used to determine the effectiveness of each program in terms of its ability to manage threats and their associated consequences  Through the management of threats and their associated consequences, we will be successfully managing risk

Performance Measures  The programs required by or that may have been implemented in support of 49 CFR192 provide either leading or lagging indicators DIM ProgramsKPITriggers Metallic Leak Repair [ and ]Lagging Plastic Leak Repair [ and ]Lagging Damage Prevention [ ]Lagging Main and Service Replacement [ , and ]Lagging Internal Operations Audit [ (f)]Lagging Operator Qualifications [Subpart N]Lagging Drug and Alcohol [Part 199]Lagging Emergency Planning [ ]Lagging EFV Program [ ]Lagging Public Awareness [ ]LeadingEducation Pipeline Patrol [ ]Leading Inspection / Survey Land Movement Management [ ]Leading Inspection / Survey Corrosion Control [Subpart I]Leading Inspection / Survey Plastic Pipe Management [ and ]LeadingRepair Bridge and Span Inspections [ ]LeadingRepair Equipment Inspections [ ]LeadingRepair Leak Survey and Leak Prioritization (Grading) [ ]Leading / LaggingRepair

Performance Measures  Since leading indicator programs do not directly provide any measurable data that has value, their performance will be measured based on the actions they trigger. DIM ProgramsKPITriggers Leak Survey and Leak Prioritization (Grading) [ ]Leading / LaggingRepair Public Awareness [ ]LeadingEducation Pipeline Patrol [ ]Leading Inspection / Survey Land Movement Management [ ]Leading Inspection / Survey Corrosion Control [Subpart I]Leading Inspection / Survey Plastic Pipe Management [ and ]LeadingRepair Bridge and Span Inspections [ ]LeadingRepair Equipment Inspections [ ]LeadingRepair

Performance Measures  For example – a line patrol may determine the there was recent excavation in an area. This discovery would lead to further inspection of the area or possibly a new leak survey to determine if the pipeline was damaged  The performance measure is how many times were these types of conditions discovered and how many times were they acted on  If it can be show that in100% of the cases, if conditions were discovered that indicated potential damage to the system, action was taken to mitigate, then the program is being proper implemented and the leading indicators favorable reflect performance

Performance Measures  Lagging indicator programs provide measurable data that has value and their performance will be measured based on these results.  For example – leak surveys allow us to determine the number of leaks, which is a lagging indicator because they already exist. One measure of the effectiveness of the integrity plan is whether this number is improving  The leak survey program also provides a leading indicator in that we are able to determine how many leaks found (grade 1 or 2) triggered the action of repair  If 100% of the grade 1 leaks are repaired immediately and 100% of the grade 2 leaks are addressed according to policy, then the leading performance indicator would suggest that the program was effective AND if the number of leaks by grade was trending downward, then the lagging performance indicator would suggest that the program was effective

Performance Measures  In ALL cases, these performance measures may be utilized to manage threats or their associated consequences.  For example – by providing the leak grade information the leak surveys allow us to manage the consequences since by definition the grade is a function of the nature of the release  Regardless of the threat that may have contributed to the leak, the grading system allows us to trigger repairs.  These repairs allow us to determine and manage the root cause threat

Performance Measures  Program Performance Risk Management begins with the evaluation of each program in terms of its effectiveness in managing specific threat and/or their associated consequences.  For each program the leading and lagging indicators will be defined and measured  The measurements will weighted in relation to the program and threat where applicable  On a program by program basis, the performance measures will be utilized to rank the program effectiveness in addressing each threat  The following table shows each program and the threats and/or consequences it manages

Performance Measures DIM ProgramsCorrosion Natural Forces Excavation Damage Other Outside Force Damage Material or Weld Failure Equipment Malfunction Inappropriate Operation Public Awareness [ ] CMTM / CM CM Pipeline Patrol [ ]TM Land Movement Management [ ] TM / CM Plastic Pipe Management [ and ] TM Bridge and Span Inspections [ ]TM Equipment Inspections [ ] TM Corrosion Control [Subpart I]TM Leak Survey and Leak Prioritization (Grading) [ ]CM Metallic Leak Repair [ and ]TM Plastic Leak Repair [ and ] TM Damage Prevention [ ] TM Main and Service Replacement [ , and ]TM Internal Operations Audit [ (f)] TM Operator Qualifications [Subpart N] TM Drug and Alcohol [Part 199] TM Emergency Planning [ ] CM EFV Program [ ] CM

Risk Evaluation / Prioritization  The Program Performance Risk Management approach includes formalized program descriptions which detail how each program is being utilized to manage specific threats and the consequences associated with a failure whose root cause was that threat.  The management of threats and their consequences, supports the management of risk, with the objective being to demonstrate the safety and reliability of the system.

Risk Evaluation / Prioritization  Risk is managed, on a threat by threat basis relative to the specific areas where the program data substantiates that the probabilities are higher and/or the consequences are greater If You Manage Threats & If You Manage Consequences…. You are Managing Risk

Risk Evaluation / Prioritization DIM ProgramsCorrosionNatural ForcesExcavation Damage Other Outside Force Damage Material or Weld FailureEquipment Malfunction Inappropriate Operation Public Awareness [ ] CMTM / CM CM Pipeline Patrol [ ]TM Land Movement Management [ ] TM / CM Plastic Pipe Management [ and ] TM Bridge and Span Inspections [ ]TM Equipment Inspections [ ] TM Corrosion Control [Subpart I]TM Leak Survey and Leak Prioritization (Grading) [ ]CM Metallic Leak Repair [ and ]TM Plastic Leak Repair [ and ] TM Damage Prevention [ ] TM Main and Service Replacement [ , and ]TM Internal Operations Audit [ (f)] TM Operator Qualifications [Subpart N] TM Drug and Alcohol [Part 199] TM Emergency Planning [ ] CM EFV Program [ ] CM

Risk Evaluation / Prioritization DIM ProgramsCorrosionNatural Forces Excavation Damage Other Outside Force Damage Material or Weld Failure Equipment Malfunction Inappropriate Operation TM= Threat Management CM= Consequence Management The Program Performance Risk Management approach is predicated on the fact that there are, at a minimum programs utilized to manage each threat and 1-4 programs utilized to manage the associated consequences of these threats.

Risk Evaluation / Prioritization  Risk Management is demonstrated by through the aggregated evaluation of each program performance metric as it applies to any given threat.  Total threat score is determined  Performance is measured on the threat score range for the specific threat  Improvement is driven by the results  No review / improvement required  Consider review / improvement  Review / improvement required  Implement Improvement Procedure

Address Risk  Leak Survey and Leak Prioritization  Metallic Leak Repair  Plastic Leak Repair  Damage Prevention  Public Awareness  Pipeline Patrol  Corrosion Control  Land Movement Management  Plastic Pipe Management  Main and Service Replacement  Bridge and Span Inspections  Equipment Inspections  Internal Operations Audit  Operator Qualifications  Drug and Alcohol  Emergency Planning  EFV Program Considering the fact that the Program Performance Risk Management is program centric, the contention is that the programs themselves are currently managing risk

Address Risk  The program performance evaluation results will serve as the drivers for both Additional Actions as well as Improvement  These additional actions / improvement may include  Plan Improvement  Program Improvement  Physical Improvement  Regulatory Improvement

Plan Improvement  The Plan will be reviewed for effectiveness  Modify Positions  Update approach  Update policy  Update requirements by states or feds  Modify Programs  Data Gathering Requirements  Frequency  Procedure  Modify Procedures  Program Performance Evaluation  Risk Management  Improvement

Program Improvement  Program Improvement – as required existing programs may be modified. These modifications may be made to any of the aspects of the formal description detailed in the next section. However, the expected modifications if any will be primarily in terms of the frequency and the data collected. A secondary change might be the means by which the data is managed so that for example, we can further delineate the drivers for what has been categorized as “Other Damage” in the past.  New Program Creation – in the event it is determined that new programs are required to support the Utilities ability to manage risk, these programs will be designed, approved by management, documented and added to the Plan with change manage records documented.

Physical Improvement  System Change – Performance on the results of the analysis of the resultant data from the Programs currently being implemented, the best resolution to the management of specific threats may require system changes. Such changes are currently being evaluated and proposed through the Main and Service Replacement Program. In the event other system changes are required, a change management process will be followed to ensure the implications were considered, the appropriate approvals were granted, that the change was documented and finally, that the Plan was updated accordingly.  One Off Mitigation – in the event the annual analysis of the data provided through the various programs currently being implemented suggests that any area fall outside the norm in terms of risk, the Utilities will address each of these on an as needed basis. This may include mitigation of a specific threat though one time enhancement to the programs that manage this threat and/or its consequences, or it may include taking actions that heretofore have not been part of any program in place. If these one off mitigations are required and they are not part of any existing program, consideration will be made as to whether the creation of a new program is in order.

Regulatory Involvement  Regulatory Involvement – the commitment to be involved in all regulatory events. This includes active participation in industry forums such as SGA, AGA and GPTC. Additionally, all State and/or Federal public forums will be attended. It is the your position that as an LDC with an exemplary safety record, you can set examples for industry and serve a thought leaders in terms of their ability to safely manage their distribution integrity systems.

Reporting  External  DOT Annual  Revised DOT  Internal  Performance  Improvement  Change Management

Program Descriptions  The Program Performance Risk Management approach includes formalized program descriptions for each of the programs being implemented. These descriptions, at a minimum will include:  Roles & Responsibilities  Personnel Qualifications  Procedures  System Knowledge Support  Threat Identification  Threat Management  Consequence Management  Effectiveness Measures

Program Performance Risk Management  A Distribution Integrity Management SME Approach  The Approach is predicated on  Program Performance Risk Management  Programs currently being implemented are utilized to demonstrate compliance  The Approach Includes  The Written Plan  Your Current Methodology for 49 CFR 192 Compliance  Three Distribution Integrity Procedures 1. Program Performance Evaluation 2. Threat Specific Risk Management 3. Results Driven Improvement

Plan Implementation  Program Performance Evaluation  Program specific analysis for threat / consequence management  Each program is analyzed to determine its effectiveness in managing the various threats and associated consequences  Prioritized Risk Management  Threat specific program management  Each threat is analyzed to determine the effectiveness of the various programs that manage it in some fashion  Results Driven Improvement  Program objectives being met  Risk being managed

 ICAM is a web based application that supports the management, scheduling, tracking, documenting and reporting of your distribution integrity procedures.  ICAM does not deal with numerical data; rather, it captures who, what, when, where and why.  ICAM provides decision based routing, notifications, management visibility and performance measures against program objectives.  From a business perspective ICAM ensures program sustainability, protects against workforce attrition and supports knowledge continuity.

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