1. Allegro Energy Consulting Allegro Energy Consulting P.O. Box 230592  New York, NY 10023 Phone: (212) 787-6923  Fax: (212) 721-9028 ctrench@rcn.com November 20, 2008 New Orleans, LA © Cheryl J. Trench, 2008 The Oil Pipeline Industry Had an Idea... Learning from PPTS 1999-2007 Cheryl J. Trench President Allegro Energy Consulting A Presentation to Pipeline Safety – What More Needs To Be Done? A conference sponsored by The Pipeline Safety Trust Understanding Hazards Consequences 0 Deaths Improving Performance 0 Spills 0 Injuries Error-Free Operations

2. Allegro Energy Consulting What is the Pipeline Performance Tracking System? Z“PPTS”: voluntary; open to all liquids pipeline operators ZNo membership req’d, no fee imposed ZIndustry-run and maintained ZCollecting info since 1999 ZRecords spills of 5 gallons or more on land, all spills to water (compare old OPS @ 50 barrels) ZIn 2007, PPTS participants operated about 85% of OPS miles and total barrel-miles 1. Measure 2. Learn 3. Manage 4. Improve

3. Allegro Energy Consulting Data Mining Highlights ZTeam Composed of Diverse Subject Matter Experts ZOperator Advisories (www.api.org/ppts) ÛCauses/locations with a large share ÛConsequences ÛNew perspective via PPTS ÛGuidelines for reporting ÛFAQs for consistency ZReports and Fact Sheets ZAlso, Performance Excellence Team The data doesn’t go in and not come out!

4. Allegro Energy Consulting PPTS Participants Use PPTS ZTo measure operator/Industry performance ZTo allocate $ 4Maintenance 4IMP 4R&D ZTo direct regulatory/advocacy effort ZTo find new approaches to keeping people and communities safe

5. Allegro Energy Consulting Key Elements in PPTS Success ZCommitment ÛPipeline Leadership ÛAPI/AOPL ZCare and Feeding (API’s Commitment) ÛQC: Transparency, credibility ÛProgram Software/Mechanics ÛData Mining Team ZLearning ÛData Mining Team ÛLectures ÛWebsite

6. Allegro Energy Consulting Source: Pipeline Performance Tracking System, a voluntary spill reporting system involving 85% of the U.S. liquids pipeline mileage. Percentage decline from 1999-2001 average to 2005-2007 average. Dramatic Improvement: Liquids Pipeline Industry Onshore Pipe Spill Record Number of Spills per 1,000 MilesBarrels Released per 1,000 Miles 3-Year Averages Ending in Year Shown -60% -52%

7. Allegro Energy Consulting Releases along the right-of-way have fallen by almost 60% All other locations: tanks, caverns, offshore pipe Source: Pipeline Performance Tracking System, 1999-2007. Number of Releases Facilities Piping Onshore Pipe All Other Locations 3-Year Averages Ending in Year Shown -30% -59% -19%

8. Allegro Energy Consulting System location and risk Facilities piping: more of them, but small Onshore pipe: fewer of them, but larger Includes releases due to hurricanes Ivan, Katrina and Rita. Source: Pipeline Performance Tracking System

9. Allegro Energy Consulting Where Are People Getting Hurt or Killed? Deaths and Injuries by System Part

10. Allegro Energy Consulting Assessing Consequences: Deaths and Injuries by Cause

11. Allegro Energy Consulting Reduction in releases along the right-of-way reflects diverse strategies 3-year average ending: 132 Source: Pipeline Performance Tracking System, a voluntary spill reporting system involving 85% of the U.S. liquids pipeline mileage Number of Releases -71%-64%-53%-20%-60%-49%233%

12. Allegro Energy Consulting Focus on Corrosion ZLargest cause of ROW spills (46%) ZReduced by 71% between 1999 and 2007 Z56% are less than 5 barrels ZMore important in crude oil systems than in refined product systems ZBillions $ of investment have reduced ÛInspection and repair in high consequence areas ÛFirst 5-year cycle is completed ÛRe-inspection for 2 nd cycle now begun

13. Allegro Energy Consulting Focus on Third Party Damage Z"Third party" is someone other than the operator (first party) or its contractor (second party) ZExcavation or other mechanical damage ZNot the greatest number, but the highest consequence ÛAlmost 90% occur along ROW ÛDeaths, injuries 410 of 17 fatalities on ROW due to third party damage 417 of 43 injuries on ROW due to third party damage ÛLarge spills 415% of ROW number, but 38% of ROW volume RIGHT-OF-WAY Source: PPTS, 1999-2007

14. Allegro Energy Consulting Who are these "third parties"? ZLandowners (farmers, homeowners, tenants) ZRoad construction crews ZResid./comm'l development, etc. Z"One-call Partners" (pipelines and other underground utilities that pay for "call before you dig" systems) ZCan't forget first and second parties, though – the pipeline operator and its contractors RIGHT-OF-WAY

15. Allegro Energy Consulting Landowner/ Tenant, 29% Oper./Contractor Excav., 17% One-Call Partners, 22% All Other*, 22% Road Work, 10% Onshore pipeline spills where: release occurred at the time of damage, and involving 5 barrels or more, or death, injury, fire or explosion. Source: Pipeline Performance Tracking System, 1999-2007 1 st & 2 nd Party 3 rd Party Who does the damage? Not just excavators Who does the damage? Not just excavators

16. Allegro Energy Consulting 3 rd Pty: At the Time 3 rd Pty: Prior Damage 76% 59% 22% * Includes onshore pipeline incidents >=5 barrels or death, injury, fire or explosion 3-yr average ending in year shown 17% 7% Operator/Contractor 19% 70% Decline in Third Party Hits Causing Immediate Failure

17. Allegro Energy Consulting Example of Declines 1999-2007 Number of IncidentsThousands of Barrels Released Farming Homeowners 3-Yr. Averages ending in year shown Incidents Caused by Landowner/Tenant Activity, 1999-2007 6.7 1.7 2.0 0.7 6.3 0.6 6.3 0.2

18. Allegro Energy Consulting Recent Learnings: More detailed choices aid reporting ZOperator Error: more Other Human Error ÛSurvey: more root cause analysis? Better understanding? ÛYes. Old categories don’t provide a good reporting path ÛRevise PPTS to increase -- and improve – categories 4Reporters don’t have to puzzle over category -- faster 4Better consistency from incident to incident and operator to operator

19. Allegro Energy Consulting Recent Learnings: More detailed choices aid reporting (Facilities) ZFacilities incidents require details: “granularity” ÛDifferent pieces of equipment, different failure mechanisms ÛDiverse industry groups to advise ÛMore surveys ÛImproved categories, plus sub-categories ÛPRCI report

20. Allegro Energy Consulting Data Mining Team ZBukky Adefemi (API) ZHazem Arafa (API) ZMolly Atkins (Longhorn) ZAdrianne Cook (AOPL) ZTom Kelly (Colonial) ZFrank Gonzales – Lead (Buckeye) ZDave Knoelke (BP) Z Peter Lidiak (API) Z Matt Roberts (Chevron) Z Guy Peltier (ExxonMobil) Z Debbie Price (Shell) Z Terry Riesen (Marathon) Z Cheryl Trench (Allegro Energy Consulting) Z Todd Tullio (ConocoPhillips)