America’s Natural Gas Utilities’ Distribution Pipelines November 2, 2006 The Connection To the Customer

Topics Covered  Fast Facts  Gas Utility Pipeline Safety Regulatory Oversight  Excavation Damage Impacts  Safety Priorities  Managing Distribution Integrity  We Are In This Together

Natural Gas Utilities  Deliver 23% of energy used in the United States  Distribute to 63 million homes and 5 million businesses through 1.9 million miles of pipeline to meet customer needs  Work closely with emergency responders, firefighters and communities to ensure safety

Designed for operational excellence in the safe, secure, environmentally-friendly and cost-effective delivery of natural gas Natural Gas Pipeline System

Pipeline Safety Legislation Congress Investigates Major Accidents Makes Recommendations Sets Minimum Regulation Pipeline and Hazardous Materials Safety Administration Office of Pipeline Safety State Agencies Direct Oversight May Be More Stringent Gas Utility Pipeline Safety Regulatory Oversight

Excavation Damage Causes Most Incidents

Number of Incidents Excavation by 3 rd party, earth movement, flooding, vandalism Excavation by utility operator, corrosion, materials, welds 11

Natural Gas Utilities Safety Priorities  Increased Focus on Excavation Damage Prevention  Distribution Integrity Management Enhancements  Transmission Integrity Management in Populated Areas  Operator Qualification  Public Awareness of Pipelines and Safety  Deliverability Continuity (Hurricane Preparedness, Pandemic Flu, Infrastructure Security)

Managing Distribution Integrity DOT Stakeholder teams formed in 2005 State and federal regulators Utility operators Firefighter and public representation Multiple meetings held throughout 2005 American Gas Foundation used as study starting point DOT study completed January, 2006 Proposed rule anticipated by year end

What We Have Learned Distribution pipeline systems operations are SAFE, but we can do more Overall Approach Excavation damage nation-wide education program and federal legislation to prevent excavation damage High-level regulation Implementation guidance Continue research and development Operator written integrity management plan requirements Address leaks responsibly Perform a risk assessment to determine if excess flow valves should be installed (if not already installing devices) Collect meaningful performance measures

We Are In This Together Natural Gas Utilities, Regulators, Legislators and the Public Should Support A Common Sense, Risk-Based, And Technically Sound Approach To: Maintain or rebuild infrastructure Manage Increased excavation activity Continue to deliver natural gas safely, reliably, and efficiently, by not placing undue burden on consumer Meet the energy needs today and in the future

Questions? Lori S. Traweek Senior Vice President, Operations & Engineering Natural Gas Operations: Always In Focus