Agency Update: PHMSA 2009 Western Regional Gas Conference Tempe, AZ August 25, 2009

Great Conference Line-Up Regulatory Updates °DIMP, CRM, MAOP, Environmental Focus on Critically Important Issues °Emergency Response °Damage Prevention °Operator Qualification °New Technology Deployment °Research °Improved Land Use Planning Near Pipelines

Discussion Topics for Today A Bit on OPS & PHMSA °Who’s on First, What’s on Second Some Stage Setting Comments °Including Some Comments on Energy °A Perspective on Reauthorization A Macro View of Safety Data °Specific Comments on Role of Data and Particularly Incident Notification/Reporting Quick Survey of Regulatory and Non- Regulatory Initiatives °Emphasis on DIMP °Emphasis on Damage Prevention

Setting the Stage Introductions - PHMSA Leadership °Cynthia Quarterman – Administrator (nom.) °Vacant – Deputy Administrator °Vacant – Chief Counsel °Cindy Douglass – Chief Safety Officer °Jeff Wiese – Associate Administrator °Vacant – Deputy Associate Administrator(s) °Chris Hoidal – Western Region Director °4 Other Regional Directors: S, C, E, and SW

Setting the Stage PHMSA Directors °Zach Barrett – State Programs °Rod Dyck – Enforcement °Steve Fischer – Program Development °John Gale – Regulatory Program °Joy Kadnar – Performance and Evaluation °Blaine Keener – National Field Coordinator ­Stan Kastanas – Drug and Alcohol Prevention °Roger Little – Data and Information Technology °Alan Mayberry – Engineering & Emergency Support °Richard Sanders – Training and Qualification

Our Pipeline Safety Objectives Improve the Overall Integrity and Reliability of the Energy Pipeline System and Reduce System Risk °P = R/S + CO + BCA Engage, Lead, and Help Strengthen the Capabilities of Others Who Share in Achieving our Goals Anticipate Future Needs for Transporting Energy Products Earns the Respect of Our Stakeholders and the Public – as a Model Safety Agency

Setting the Stage PHMSA’s General Approach °Focus Heavily on Performance ­Not Solely on Compliance °Drive Performance Through Attention to ­Pipeline ­Process ­People °Advance “Risk-Focused and Data Driven” ­Risk Identification is KEY First Step ­Need Operator’s Help if All Are to Improve °Use an “Enterprise” Approach °Strive to be Engaged and Communicative °Create a Nucleus for Building Partnerships

Setting the Stage Current Events and Worries °Heavily Driven by Accidents ­Daily by excavation damage »Increasingly in shared ROW’s »Construction boom is worrisome ­Periodically, but notably, by corrosion failures »E.g., Alaska, Louisiana °Increasingly Driven by Supply Issues °Congressional Attention Keeps us Busy ­PIPES Act Mandates ­Hearings ­Audits and Recommendations

Pipeline Safety Reauthorization Quadrennial Check-Up Basic Ingredient Checklist °Execution of Last Mandates ­E.g., DIMP, CRM, Reporting, Damage Prevention, Community Assistance, Increases in State Funding °Responsiveness to Outside Auditors/Reviewers ­NTSB, DOT’s IG, GAO »E.g., DIMP, CRM, Reporting °Stakeholder Temperature Check ­AGA, AOPL, APGA, API, INGAA, NAPSR, NARUC °The Unexpected, High Profile Event °Concerns About Critical Infrastructure Vulnerabilities °Consensus Needs to Fill Gaps

The long term trendWhere we are now With 8 months of data so far, we are already at 95% of the target (36 year-to-date vs. 29 last year); there is also one incident reported for June so far. All three sectors (liquid, transmission, and distribution) are higher. Achieving our goal will be a major challenge. Over the past 20 years, gas distribution systems have accounted for 78% of pipeline incidents involving death or injury; gas transmission systems accounted for 13%, and hazardous liquid systems accounted for 9%.

The long term trendWhere we are now We beat our target by a large margin last year (145 vs. 204), and are on track to meet a much more ambitious target in FY 2009, with 103 incidents year-to-date (vs. 108 at the same time last year). Corrosion and excavation incidents have declined generally in all three pipeline sectors – both corrosion and excavation-related incidents reached a seven-year low in 2008.

Current Initiatives Optional and Required Studies °Corrosion synthesis report °Mechanical Damage synthesis report °Cross Border study Regulatory – Recent and Forthcoming °80% SMYS / MAOP °DIMP (**) °Control Room Management °Gas IM 7-year reassessment interval (?) Non-Regulatory Emphasis °Excavation Damage Prevention (**)

Regulatory Update Distribution Integrity Management °Status and Outreach ­Public Website ­Web-casts of Key Rule Elements – next slide ­Support for State Seminars ­Supplement by Attending Other Stakeholders’ Meetings as Necessary ­Workshops to follow final rule °Special Topic: EFV’s °Paving the Way ­NAPSR, GPTC Guidance and other supporting standards, Operator/Industry Efforts, data improvement efforts, etc.

DIMP Webcast Webcast Outline (4.3 hours) 1.Introduction 2.Baseline and Goals 3.Executive Summary 4.System Description (Paul Preketes) 5.AGF and DIGIT, Earlier Risk Data Analysis, PHMSA Report to Congress on DIMP, Phase 1 – Organization (Sue Fleck) & Findings, Developing Rules Guide 6.Rule Content (majority of minutes) 7.PHMSA and State Perspective 8.GPTC Guidance and Relation to NPRM 9.Small Operators 10.Improvements Panel (Sue Fleck) 11.Q&A Panel 12.Next Steps

What Principles Underlie DIMP? DIMP requires operators to better understand and mitigate system risks °Know your systems °Identify the threats °Rank risks °Mitigate the risks NPRM does not stipulate specific assessment or mitigation actions, In combination with the GPTC Guidance – NPRM provides direction to operators and allows the regulator to investigate internal operator risk management practices

Required Elements Element“Commercial” Operators Master Meter / LPG Written ProgramRequiredSimple (checklist) Know systemRelevant factorsLocation/material Identify threatsThorough analysisChecklist approach Analyze riskRequiredNot required Mitigate riskRequired Performance Measures7 plus threat-specificLeaks by cause Review/revise as needed Required Report Perf Measures4 measuresNot required

Guidance Needed for a high-level performance rule GPTC has developed draft guidance °Several GPTC members and Chair here today APGA is developing more-specific guidance for small operators

Additional Issues Allowing alternate time intervals for certain requirements currently in Part 192 Plastic Pipe failure reporting Consideration of compression coupling failures in the threat analysis Prevention Through People (PTP) component

Damage Prevention Managing the Risks of Excavation Damage °State Damage Prevention Assistance Program ­Gap Analysis Guidance Document ­State Damage Prevention Program Grant ­Getting Started °Position on Federal Enforcement °Common Ground Alliance & Regional Partners °Technology Improvements to One-Call Process °One-Call Center Board Leadership °Pipelines and Informed Planning Alliance °Mechanical Damage Study °EDP Technology Development / Deployment

Keeping Me Up At Night Loss Of Lifecycle Quality Control °Pipe, Process, and People Malignant Effects of Economic Downturn °Hesitancy to Investigate, Improve, and Act Inadequate Workforce Planning The Unexpected °Can Defend If All Responsible Actions Taken

Upcoming Events – Last Slide! Casings Workshop Distribution Construction Workshop Data Summit DIMP Implementation Workshop(s) Public Awareness Program Workshop Reauthorization of the Pipeline Safety Program: Hearings, Audits, Posturing

The End For more information on PHMSAFor more information on PHMSA ° For more information on Pipeline SafetyFor more information on Pipeline Safety ° Thanks for your time & enjoy the weather!Thanks for your time & enjoy the weather!