1. Pipelines and Risk Management How Safe is Safe? Pipeline Safety Trust Conference Denise Hamsher Enbridge Energy Company November 2006

2. Over 14,000 miles of natural gas gathering, transmission and crude oil pipelines Over 14,000 miles of natural gas gathering, transmission and crude oil pipelines Operating since 1950 Operating since 1950 Expanding pipeline systems to meet market transport needs Expanding pipeline systems to meet market transport needs

3. How Safe is Safe? Can we eliminate risk? Can we eliminate risk? Or is question: “What is acceptable risk?” Or is question: “What is acceptable risk?” Scientific and technical answer?Scientific and technical answer? Government policy?Government policy? Regulatory decision?Regulatory decision? Community concern?Community concern? There may be no single answer to question of “How Safe is Safe?” There may be no single answer to question of “How Safe is Safe?” But there are approaches to improve understanding and communicate riskBut there are approaches to improve understanding and communicate risk

4. Technical Scientific Answer Risk = Probability X Consequence Risk = Probability X Consequence Probability: Probability: “… a revised USGS report concluded that a 33 percent probability now exists for one or more large earthquakes in the San Francisco Bay Area region between 1990 and 2000..”“… a revised USGS report concluded that a 33 percent probability now exists for one or more large earthquakes in the San Francisco Bay Area region between 1990 and 2000..” Based on fact-finding and dataBased on fact-finding and data  But whose facts? Consequence: Consequence: Safety of public and workersSafety of public and workers Environmental impactEnvironmental impact Upsets and reliability in serviceUpsets and reliability in service Costs and liabilityCosts and liability

5. Risk As seen by engineer & regulator: As seen by engineer & regulator: Risk = probability x consequence As seen by others: As seen by others: Risk = hazard* x concern** * Hazard may be actual or perceived ** Concern may be over safety, environment, fairness, property value, lack of information, lack of trust

6. Why we have different perceptions of risk Familiar versus Unknown Familiar versus Unknown Benefit versus Burden Benefit versus Burden Fair versus Unfair Fair versus Unfair Controlled versus Out of my control Controlled versus Out of my control Trusted source versus Suspicious source Trusted source versus Suspicious source

7. Government Regulatory Answer: Public Health and OSHA standards on acute or long-term exposure limits to certain chemicals Public Health and OSHA standards on acute or long-term exposure limits to certain chemicals Prescribed frequency of inspections or maintenance of pipelines Prescribed frequency of inspections or maintenance of pipelines Gas operations “class locations” and designation of liquid pipeline HCAs, each requiring special safety measures All true….all based on fact…but does policy make everyone feel “safe”?

8. Community Perspective Public definition of risk = Public definition of risk = Risk = Hazard X Concern Risk = Hazard X Concern We all expect “zero risk” for ourselves and loved ones We all expect “zero risk” for ourselves and loved ones Sometimes hazard is high and concern low … and sometimes concern is high and scientific facts indicate a low risk Sometimes hazard is high and concern low … and sometimes concern is high and scientific facts indicate a low risk

9. So how do we manage the interface among technical assessments, government policy and public concern?

10. Approaches that help Accept responsibility Accept responsibility Encourage fact finding and sharing Encourage fact finding and sharing Reduce and mitigate risks Reduce and mitigate risks Basis of regulatory and consensus standardsBasis of regulatory and consensus standards All parties act with respect and be trustworthy All parties act with respect and be trustworthy Principled leadershipPrincipled leadership Acknowledge risk issue-management is function of investment in communications and involvement Acknowledge risk issue-management is function of investment in communications and involvement

11. Example: Regulatory Policies for Pipeline Operations Public Involvement Public Involvement Fact finding and research rather than reactive to unusual, rare event Fact finding and research rather than reactive to unusual, rare event Flexibility to ensure effective practices Flexibility to ensure effective practices Education, awareness, dialogue Education, awareness, dialogue

12. Example: Planning a New Pipeline Early planning and dialogue with community County Farm Bureaus Landowners, etc. Fact finding Route alternative considerations Review route with landowner, adjusting as possible Trustworthy dialogue Knowledgeable, trained company representatives Commitment by all to reach solutions Two-way public consultation requires investment

13. Planning New Pipeline (cont’d) Mitigate Risks Mitigate Risks Design and routing carefully plannedDesign and routing carefully planned Special construction practicesSpecial construction practices o Protect farmlands with special soil handling techniques o Special river crossing techniques...etc. Additional safeguards near some areas may require consideration of:Additional safeguards near some areas may require consideration of: o Thicker wall pipe under rivers o Supplemental patrols or inspections o Warning tape to warn excavators o Route deviations

14. How Safe is Safe? A few observations….. Risk and safety is all in the eye of beholder Risk and safety is all in the eye of beholder We all know there is no such thing as zero risk, but we want assurances we are safeWe all know there is no such thing as zero risk, but we want assurances we are safe Risk communications must be interactive Risk communications must be interactive Each party should commit to: Each party should commit to: Increasing knowledge and understandingIncreasing knowledge and understanding Enhancing trust and credibilityEnhancing trust and credibility Resolving conflictResolving conflict