Integrity Management Continuous Improvement Fitness For Service and Management of Pre-Regulation Pipe Chad Zamarin Chief Operating Officer NiSource Midstream Services For: Gas Pipeline Advisory Committee December 13, 2012

What Is Fitness For Service (FFS)? The ability of a system or component to provide continued service, within established regulations and margins for safety Well-accepted approach to evaluate condition of a system or component to determine acceptability for continued operation Applied in petroleum refining, petrochemical, pulp and paper, nuclear, coal and gas-fired electric power industries One of the first acknowledged threat specific applications was in the pipeline industry  B31G, a method for calculating the remaining strength of pipelines in areas with metal loss, first published in 1984

Fitness For Service (FFS) for pipelines Disciplined approach to assessing the condition of a pipeline component or system to demonstrate safety and reliability Not a bypass for strong regulations – in fact, a basis for strong regulations Process focused Based on sound engineering Numerous examples within existing regulatory framework  Alternative MAOP (liquids and gas)  ERW Seam Integrity  Threat specific integrity assessment  Defect specific engineering critical assessment (ECA)

3 “Traceable, verifiable and complete” Significant Focus on Records and MAOP PHMSA Advisory Bulletins NTSB Recommendations California MAOP Order MAOP impacts numerous key functions Understanding MAOP and related properties are critical to operating a safe pipeline system Gas Control Facility PlanningFERCCompressor Measurement & Regulation Project Mgmt Pipeline & CorrosionOperations Integrity Mgmt Technical Data / Geographic Data Systems SCADA set points and alarms System operation Capacity & through-put to meet market demand Modeling analysis FERC certificated MAOP for pipeline Shutdown set points for compressor units Operation of compressor units Set points for over-pressure protection Type of over- pressure protection selected Pipeline design, construction & qualification testing requirements for new or replacement pipes Safety measures taken during maintenance, construction or anomaly investigations Jurisdictional gathering line determinations RSTRENG or other remaining strength calculations Load and other calculations May influence defect repair methods CIS frequency based on risk May impact areas considered active corrosion zones Pipeline operations, type & frequency of maintenance activities Recordkeeping associated with pipeline Safety measures regarding defects, excavation, public safety, etc. Emergency measures & planning Pipeline isolation and valve design Determining HCA areas based on PIR calculations May impact ability to pig pipeline Failure pressure calculations for anomaly indications Risk calculated for the pipeline Outcome of Class Locations determinations PIR calculations MAOP data in GIS

Recognized need to define and implement a “fitness for service” protocol for pipelines built prior to regulations Develop and apply guidance, including a process for systematically validating records and the MAOP. Process will address NTSB recommendations and PHMSA advisory to demonstrate traceable, verifiable and complete records Where records do not meet this standard, a process will include MAOP validation protocol to be applied within a defined period of time INGAA Commitments Fitness For Service for Pre-Regulation Pipe and MAOP Validation

Augmenting risk assessment and threat management to address material threats more aggressively for previously untested pipe. Where traceable, verifiable and complete records exist to establish MAOP, and there is a pressure test to 1.25xMAOP, continue to operate under 49 CFR 192. Where records are incomplete, or if the pressure test does not meet above criteria or there is no historical pressure test, apply FFS Process For Managing Pre- Regulation Pipe. Where records do not exist or are incomplete for a segment containing short sections of pipe in a replacement project or tie in of a line or appurtenance prior to the Federal regulations coming into effect, assign the segment as a high priority for hydrostatic pressure testing, direct examination and testing or replacement (San Bruno Provision – High Priority Slide 13). Evaluate use of historical pressure tests and piggability INGAA is working with AGA, API, AOPL and research community to develop ILI technology to evaluate material and construction threats in lieu of hydrostatic pressure testing.

Process for Traceable, Verifiable and Complete Records Locate Records Are There Gaps In Data? Are There Gaps In Data? Compile Data Verify Data Document Gaps Are Gaps Resolved? Are Gaps Resolved? Link To Data Base and Retain Apply MOC In Changing Records Define Means To Resolve Gaps Lack of Pressure Test Meeting 1.25xMAOP - Apply Process For Managing Pre-Regulation Pipe Yes NoYes No Valid Data Traceable, Verifiable and Complete Record Guidance

Process For Managing Pre-Regulation Pipe Legislation included an MAOP / records requirement, broad stakeholder need INGAA commissioned workgroup focused on records and MAOP Broad Industry Involvement Operators are already aggressively researching their systems Fitness For Service for Pre-Regulation Pipe and MAOP Validation

Process For Managing Pre-Regulation Pipe FFS Process based on prior precedent – hazardous liquids regulation Highest risk pipelines likely require pressure test if records are not available Medium risk pipelines will require test or equivalent measure on longer timeline Continue operating low risk pipelines under current regulations Fitness For Service for Pre-Regulation Pipe and MAOP Validation

Process For Managing Pre-Regulation Pipe Discussion Draft – Work In Progress Fitness For Service for Pre-Regulation Pipe and MAOP Validation

Risk Based Alternative Risk Based Alternative Draws From Approach Used for Hazardous Liquid Pipelines at 49 CFR LF-ERW is low frequency electric resistance welded; EFW is electric fusion or flash welded; and JF is joint factor as defined at 49 CFR Process For Managing Pre-Regulation Pipe Discussion Draft – Work In Progress Fitness For Service for Pre-Regulation Pipe and MAOP Validation

Technical Lead Mark Hereth Managing Director Blacksmith Group/P-PIC Executive Champion Chad Zamarin Chief Operating Officer NiSource Midstream Services FITNESS FOR SERVICE FOR PRE-REGULATION PIPE AND MAOP VALIDATION