1. Current Inspection Process for Operators of Hazardous Liquids Pipelines Rod Seeley OPS SW Region Director May 18, 2005

2. 2 Goals of Future IMP Inspections Continuous improvement in OPS IMP inspection process Continuous improvement in OPS IMP inspection process Seamless inspection process to Operators Seamless inspection process to Operators

3. 3 OPS Liquid IMP Inspection Organizational Changes Management of IM inspection program has shifted from OPS Program Development to OPS Regions Management of IM inspection program has shifted from OPS Program Development to OPS Regions OPS Program Development will monitor the inspection process and identify significant trends OPS Program Development will monitor the inspection process and identify significant trends

4. 4 Seamless Transition in Inspection Process OPS SW Region to lead Liquid IMP inspections of many large Operators with jurisdictional assets in multiple Regions OPS SW Region to lead Liquid IMP inspections of many large Operators with jurisdictional assets in multiple Regions Change should be seamless to Operators Change should be seamless to Operators All OPS Regions participating in and/or directly supporting SW Region-lead inspections for large multi-region Operators All OPS Regions participating in and/or directly supporting SW Region-lead inspections for large multi-region Operators

5. 5 Inspection Process Inspection process is the same for all Operators and follows the format used in first round of IMP inspections Inspection process is the same for all Operators and follows the format used in first round of IMP inspections Pre-inspection meeting or teleconference Pre-inspection meeting or teleconference Inspection (approximately two weeks) Inspection (approximately two weeks) Exit interview at conclusion of inspection Exit interview at conclusion of inspection

6. 6 Continuous Improvement in OPS IMP Inspection Process Implemented systematic processes for the conduct of IMP inspections Implemented systematic processes for the conduct of IMP inspections Revised inspection protocols and Inspector guidance materials Revised inspection protocols and Inspector guidance materials Utilizing previous inspection results in preparation for IMP inspections Utilizing previous inspection results in preparation for IMP inspections

7. Current Inspection Process for Operators of Hazardous Liquids Pipelines Chris McLaren OPS SW Region May 18, 2005

8. 8 Talking Points Lessons learned Lessons learned IMP inspection format IMP inspection format Areas of improvement Areas of improvement Consensus standards Consensus standards Path forward Path forward

9. 9 Operators generally understand and are implementing the assessment provisions of the rule Operators generally understand and are implementing the assessment provisions of the rule Progress is needed in development and implementation of several IMP elements Progress is needed in development and implementation of several IMP elements  Preventive & mitigative  Leak detection and EFRD analyses  Periodic evaluations  Re-assessment interval determination  Program evaluation Lessons Learned from First Round IM Inspections

10. 10 Improved performance results from a commitment to continuous improvement Improved performance results from a commitment to continuous improvement Operator interactions have been generally cooperative with open communication Operator interactions have been generally cooperative with open communication Inspection approach continues to improve with the use of protocol driven inspections Inspection approach continues to improve with the use of protocol driven inspections Lessons Learned from First Round IM Inspections

11. 11 All OPS Regions participating in and supporting SW Region-lead inspections for large multi-region Operators All OPS Regions participating in and supporting SW Region-lead inspections for large multi-region Operators IMP related field activities and Region- specific issues identified during status update meetings and IM inspections for follow-up by individual Regions IMP related field activities and Region- specific issues identified during status update meetings and IM inspections for follow-up by individual Regions OPS Organizational Changes

12. 12 IMP status update meetings IMP status update meetings Scheduling of inspections Scheduling of inspections Performance of inspections using revised inspection protocols Performance of inspections using revised inspection protocols Documentation requirements Documentation requirements Reporting requirements Reporting requirements 2005 Inspection Format

13. 13 IMP Status Update Meetings conducted at SW Region with nine large liquid multi- region Operators being inspected by the SW Region in 2005 IMP Status Update Meetings conducted at SW Region with nine large liquid multi- region Operators being inspected by the SW Region in 2005 Operator IMP improvements since previous inspection discussed Operator IMP improvements since previous inspection discussed OPS expectations for next inspection discussed OPS expectations for next inspection discussed Performed pre-inspection activities Performed pre-inspection activities Status Update Meetings

14. 14 Provide opportunity for Operators to discuss specific concerns and areas of uncertainty with OPS Provide opportunity for Operators to discuss specific concerns and areas of uncertainty with OPS Ensure appropriate inspection resources are allocated Ensure appropriate inspection resources are allocated Operator IMP-related field activities identified on Regional basis to assist resource allocation (e.g., witness implementation tasks – integrity assessments, repair and rehabilitation, EFRD installation, etc.) Operator IMP-related field activities identified on Regional basis to assist resource allocation (e.g., witness implementation tasks – integrity assessments, repair and rehabilitation, EFRD installation, etc.) Status Update Meetings

15. 15 2005 Schedule Considerations 2005 Schedule Considerations  Date of previous inspection  OPS and operator personnel scheduling  Conclusion dates of any major assessment/remediation programs  Timing of significant mergers/acquisitions  Anticipated closing of any relevant open enforcement  Date of implementation of IMP-related projects (e.g. GIS, work order systems) Scheduling of Inspections

16. 16 Flexibility from participants was needed in the inspection scheduling process Flexibility from participants was needed in the inspection scheduling process Future scheduling of IMP team inspections to be done prior to status update meetings to alleviate scheduling issues Future scheduling of IMP team inspections to be done prior to status update meetings to alleviate scheduling issues Scheduling of Inspections

17. 17 IMP needs to have matured from framework status into detailed process descriptions IMP needs to have matured from framework status into detailed process descriptions All protocols will be used during inspections All protocols will be used during inspections Results of the previous inspection will be utilized as applicable Results of the previous inspection will be utilized as applicable Anticipated to take two weeks Anticipated to take two weeks IMP Inspection

18. 18 Use of revised protocols dated December 31, 2004 on OPS website Use of revised protocols dated December 31, 2004 on OPS website Spreadsheets for operator performance data acquisition revised Spreadsheets for operator performance data acquisition revised  Liquid operator program information form now includes leak detection systems data (Protocol 6.05 removed and incorporated here) IMP Inspection

19. 19

20. 20

21. 21 Exit interview used for communication to Operator of strengths and weaknesses of IMP identified during inspection Exit interview used for communication to Operator of strengths and weaknesses of IMP identified during inspection Communication to OPS Regions of possible field verification activities identified during the inspection Communication to OPS Regions of possible field verification activities identified during the inspection Documentation of IMP inspection Documentation of IMP inspection Post Inspection Activities

22. 22 Summary Report (reviewed by Operator for factual content prior to finalization) Summary Report (reviewed by Operator for factual content prior to finalization) Electronic format of IMP is extremely helpful in completing OPS documentation requirements Electronic format of IMP is extremely helpful in completing OPS documentation requirements All documents not included in reports and/or enforcement returned or disposed of at conclusion of inspection process All documents not included in reports and/or enforcement returned or disposed of at conclusion of inspection process Inspection Documentation

23. 23 Evaluation of leak detection capabilities Evaluation of leak detection capabilities Implementation of preventive and mitigative measures Implementation of preventive and mitigative measures EFRD need determination EFRD need determination Re-assessment interval determination Re-assessment interval determination Program performance evaluation Program performance evaluation Areas of Improvement

24. 24 Evaluation of corrosion control programs and their input into risk analysis and integration with integrity assessment results Evaluation of corrosion control programs and their input into risk analysis and integration with integrity assessment results QA/QC processes QA/QC processes  Verification of data in risk analysis and use of data obtained from OM&I tasks  Review of integrity assessment results and other vendor supplied data Areas of Improvement

25. 25 StandardStatusCommentsSchedule ASME B31.8S – 2001 Integrity Management Revisions in process Modify ECDA section and add CDA. May have to wait on new RP0502 ASME B31Q Qual. of Personnel Drafting Standard Work started in August - 2003 Est. completion Q4 2005 NACE RP0502-2002 Pipeline ECDA Published 2002 Revisions to be considered at NACE Spring Meeting Revisions in 2005 NACE RP0102-2002 In-Line Inspection of Pipelines Updating/Revisions Modify to compliment API 1163, TG 212 Reestablished Revisions in 2005 NACE – TG315 ICDA for Liquid Petroleum Pipelines Development in process ICDA especially for crude oil systems Draft not completed. Completion date undetermined Industry Consensus Standards

26. 26 Industry Consensus Standards StandardStatusCommentsSchedule NACE – RP-0204 - Pipeline SSCDA Development in process Addresses high pH and near- neutral pH Complete in 2004 API 1110 – Pressure Testing of Pipelines Completed Standard on pressure testing new and existing pipelines Completed API 1163 - ILI Systems Qualifications Development in process Balloting/Public Comment Publish – Q2 2005 ASNT ILI PQ – 2003 ILI Personnel Qual. & Cert. Completed In Balloting/ Public Comment Publish – Q2 2005 API 1162 Public Communications Approved / In Publication NPRM issued Q2 for inclusion in regulations Approved – Q3 2003

27. 27 Integrity management is a continuous improvement regulation Integrity management is a continuous improvement regulation OPS is committed to developing and implementing improved tools and techniques as inspection process evolves OPS is committed to developing and implementing improved tools and techniques as inspection process evolves Operator feedback / perspective of which methods are effective and which methods are not effective is important to OPS Operator feedback / perspective of which methods are effective and which methods are not effective is important to OPS Path Forward

28. 28 Continue to improve inspection process and standardization of documentation and communication channels Continue to improve inspection process and standardization of documentation and communication channels Ensure inspections are consistently performed and IM Rule is consistently applied during inspection process Ensure inspections are consistently performed and IM Rule is consistently applied during inspection process Field verification of IMP activities Field verification of IMP activities Complete “second round” of IMP inspections by 2007 Complete “second round” of IMP inspections by 2007 Path Forward

29. The End