1. Insights From Year One PSMS Implementation
Zac Lowe
Manager, Compliance & System Integrity
Virginia Natural Gas

2. Outline of Presentation
Background of SCG and VNG
Initial Pre-Implementation Thoughts and Ideas
Implementation and Lessons Learned
Results
Challenges Ahead
Path Forward

3. Southern Company Overview
Background of SGC and VNG
Southern Company Overview
Figure 1. Southern Company operational overview.

4. Virginia Natural Gas Background
Background of SGC and VNG
Virginia Natural Gas Background
Virginia Natural Gas (VNG) is an LDC in Central and Southeast Virginia.
Operates as an LDC within the Southern Company Gas footprint.
Approximately 325,000 services and 5,400 miles of main.
190.4 miles of intra-state transmission pipelines.
VNG operates locally-run departments and shared-service departments.
Figure 2 Virginia Natural Gas service territory.

5. Southern Company Gas Values
Background of SGC and VNG
Southern Company Gas Values

6. Why Southern Company Gas Decided to Implement PSMS
Initial Pre-Implementation Thoughts and Ideas
Why Southern Company Gas Decided to Implement PSMS
Southern Company Gas executive leadership and VNG executive leadership pushed for the early and voluntary adoption of API RP 1173.
Leadership recognized the importance of API RP 1173 and how it could positively impact VNG and SCG.
VNG was selected to be the “pilot” program for SCG due to:
- Regulatory priorities in Virginia;
- Relatively small size of VNG allowed for progress without crippling effect;
- Idea to expand the program across SCG footprint after lessons learned from VNG;
- Virginia Commission Order of Settlement.

7. VNG’s Pilot Program: Initial Thoughts on PSMS
Initial Pre-Implementation Thoughts and Ideas
VNG’s Pilot Program: Initial Thoughts on PSMS
Contains 10 Essential Elements Categorized into the PDCA Cycle
Figure 3. Essential Elements of API RP 1173 organized in PDCA cycle.
American Petroleum Institute Pipeline Safety Management Systems. First Edition.

8. SCG’s View: What is Safety Management Systems?
Initial Pre-Implementation Thoughts and Ideas
SCG’s View: What is Safety Management Systems?
Pipeline Safety Management Systems (PSMS) is an organizational-wide approach to business operations through the consideration of risk-management in all operating decisions.
Pipeline Safety Management Systems provides an in-depth analysis of an organization’s culture as it pertains to pipeline safety and how that culture affects decisions made/actions taken.
Safety Management Systems Programs are already required in:
- Nuclear Industry;
- Chemical Industry;
- Aviation Industry.
Figure 4. Southern Company Vogtle 3 & 4 Construction

9. VNG’s Pilot Program: Implementation Plan & Strategy
Initial Pre-Implementation Thoughts and Ideas
VNG’s Pilot Program: Implementation Plan & Strategy
VNG started with a blank canvas and multiple ideas on where and how to start.
Personnel attended 2016 AGA PSMS Roundtable and Workshop in Dallas, TX;
Approved a full-time position for a Manager of the PSMS Program;
Planned to conduct a Gap Analysis and Safety Culture Assessment;
Decide which “Element” to start with.
One Issue: Linear approach to SMS,
as opposed to a “macro-view.”

10. VNG’s Pilot Program: Implementation Steps
Initial Pre-Implementation Thoughts and Ideas
VNG’s Pilot Program: Implementation Steps
VNG hired a Manager of the PSMS Program who began to dissect the elements and requirements of API RP 1173.
VNG began to build the framework of processes utilized in order to complete the Gap Analysis so that the overall PSMS Plan could be developed.
VNG decided to implement PSMS in a multi-phased approach:
Phase I – Identification of Stakeholders
Phase II – Document Gap Analysis
Phase III – Gap Analysis and Safety Culture Assessment

11. Methodology of Conducting Gap Analysis and Safety Culture Assessment
Document Review
API RP 1173 Requirements
ISO Framework
Prior Experience
Industry Leading Practices
High Level Maturity Assessment +
API 1173 Maturity
Survey +
Interviews
High Level Recommendations and Roadmap
13 functional group interviews;
>45 PSMS Stakeholders +
Safety Culture Assessment.
Figure 5. Overall Process of VNG PSMS Gap Analysis

12. VNG’s Implementation Process
Implementation and Lessons Learned
VNG’s Implementation Process
PSMS personnel engaged with VNG and SCG leadership about proposed path forward:
- Communication with internal and outside counsel;
- Start with the identification of key internal stakeholders;
- Assign responsibilities of key stakeholders within RACI matrix;
- Conduct a Gap Analysis relative to API 1173 documentation requirements;
- Employ a consultant to conduct face-to-face interviews and develop questionnaires;
- Conduct interviews and administer questionnaires for Gap Analysis and Safety Culture Assessment;
- Document processes along the way to develop the PSMS plan.
Figure 6. Five roles of respondents identified based on job function.

13. VNG’s Implementation Process
Implementation and Lessons Learned
VNG’s Implementation Process
VNG utilized online surveys to conduct its Gap Analysis and Safety Culture Assessment. A sample question/response string is below:
VNG’s consultant and PSMS Personnel incorporated their notes, as well as respondent comments to assess maturity in addition to survey results.
Figure 7.Sample survey question from respondents and PwC
Figure 8.Sample survey notes from respondents and PwC

14. Lessons Learned From Gap Analysis
Implementation and Lessons Learned
Lessons Learned From Gap Analysis
Due to time constraints, there was a lack of communication to VNG personnel about PSMS, its importance, and how it will impact them.
Survey Participation:
- 100% of groups and departments were represented;
- 63% of employees participated in online Gap Analysis;
- 56% of employees participated in online Safety Culture Assessment.
VNG was initially disappointed with these results. It was evident that employees were not aware of the PSMS and viewed this survey as another annual safety survey.
No formal communication had occurred from the Manager, PSMS Program prior to surveys being released.
Little planning had occurred for VNG “FSR’s,” who need scheduled time during the day to complete non-field tasks.

15. Lessons Learned From Gap Analysis (cont.)
Implementation and Lessons Learned
Lessons Learned From Gap Analysis (cont.)
The Gap Analysis survey was administered first, and took about 30 minutes to complete. The language was specific to PSMS, but likely confused field personnel.
- Word spread quickly that the survey was “hard” and “long,” likely discouraging participation.
- The Safety Culture Survey was much shorter and “easier” to understand, but it was administered after the Gap Analysis survey.
Takeaways:
- Front-end communication is essential!
- Plan time for employees to participate – Union..
- Ensure employees understand what PSMS
is prior to implementation.
VNG discovered that it should not approach
element by element at this stage.

16. Virginia Natural Gas Overview Results
VNG utilized a consultant to conduct the baseline Gap Analysis and Safety Culture Assessment
Developing
Level 3
Prioritize resourced plans are in placed to close gaps in the PSMS
Processes and procedures exist but are not fully documented or uniformly implemented
Some decision making is made incorporating risk
Continuous improvement is incorporated in some but not all tasks
Innocent
Level 1
No awareness of missing capabilities
Aware
Level 2
Management is aware of the need to improve and has begun to develop an improvement plan
Inconsistent processes, informal processes with limited data and resources
Optimizing
Level 4
PSMS program fully aligned with strategic plan for organization
Processes and procedures are fully documented and have been implemented
Risk management and part of daily routine
All major decisions incorporate risk
Continuous improvement is a formal process that is incorporated in most but not all areas
Excellent
Level 5
Consistent processes exist across organization
Data available and used for metrics and operating decisions
Resources, training, procedures, and guidance is readily available
All decisions incorporate risk
Risk management and continuous improvement integrated into routine for all areas of organization
VNG
VNG is currently at a Level 3 maturity
Maturity Stage
Figure 9. Current VNG maturity level determined by PwC.

17. Virginia Natural Gas Baseline Gap Analysis Results5 4 3 2 1
Figure 13. PwC Baseline Gap Analysis Maturity Assessment

18. Three Major Themes Emerged From Analysis
Results
Three Major Themes Emerged From Analysis
There is a need to improve process standardization and to formalize leading practices that are informally implemented.
There is a need to establish a formal communication plan and a feedback loop.
The PSMS needs to be developed and managed as a holistic program outside of processes and procedures.
Many of the requirements are cross-cutting that “choosing an element” could require re-work when another element was chosen.
A foundation needs to be built prior to looking at individual gaps. Holistic processes need to be developed to better understand what the issues truly are on a detailed level.

19. Figure 14. Proposed next steps laid out on an Impact vs. Effort scale.
Challenges Ahead
VNG’s Path Forward
Figure 14. Proposed next steps laid out on an Impact vs. Effort scale.

20. Challenges Ahead Current Challenges
Based on the results, VNG needed to determine where to start in remediating “gaps” identified:
Virginia-specific gaps involving VNG;
Company-wide gaps involving shared service departments;
Risk vs. Reward strategy;
Balancing “Quick-Wins” and longer-term risks.
Making changes in one department may have an immediate effect on another department.
Where can we find more time for key stakeholders to complete their PSMS tasks?
Figure 15. Sample initiatives recommended as a result of the Gap Analysis.

21. Current Challenges (cont.)
Challenges Ahead
Current Challenges (cont.)
If VNG is the “pilot” program, how can we continue to advance VNG’s PSMS and also begin implementation across SCG’s footprint?
Which SCG LDC should be next on the implementation schedule?
In order to address these issues, SCG is developing a “steering committee” involving key PSMS personnel, executive leadership, and counsel to determine appropriate next steps at VNG and SCG.
VNG has also begun the recruitment process for a full-time PSMS Analyst to assist the PSMS Manager.
Figure 16. Sample initiatives across business capability elements.

22. Figure 14. Proposed next steps laid out on an Impact vs. Effort scale.
Path Forward
VNG’s Path Forward
Figure 14. Proposed next steps laid out on an Impact vs. Effort scale.

23. PSMS Path Forward and Quick Win Opportunities
Establish foundational elements of PSMS program.
- Define program mission, objectives and program governance structure;
- Identify metrics, accountabilities, and opportunities to align resource and performance management practice with PSMS objectives.
Formalize PSMS program communication and awareness plan
- Institute program-wide communications plan, identifying key stakeholders and communication channels;
- Establish formal and periodic leadership communications with the organization;
- Develop PSMS program education materials, including program overview, mission, goals.
Provide employees feedback from PSMS and Safety Culture Assessments.
Brand the PSMS program.
Figure 17. Recommendation with a proposed timeframe for completion.