1. Ensuring Success in Integrity Management Marty Matheson American Petroleum Institute July 24, 2002

2. 2 Our vision is an oil pipeline industry that -- l conducts operations safely and with respect for the environment; l respects the privilege to operate granted to it by the public; and l provides reliable transportation of the crude oil and refined products upon which America and all Americans rely.

3. The History: Improving Record, 1968- 2001 First six years, Annl Avg: 359 spills; 368,000 barrels Last six years, Annl Avg: 160 spills; 145,000 barrels Source: Allegro Energy Group from RSPA 7000-1. Updated 3/27/02.

4. 4 Overview -- Measuring Effectiveness: l Understanding past performance l Creating new measures for future performance l Surveying operator plans for inspections l Identifying potential barriers to success and taking action

5. 5 Pipeline Performance Tracking System – A Voluntary Effort l Incidents down to 5 gallons l 20 cause categories based on ASME l Detail, detail, detail l Over 140,000 miles of pipe or more than 90% of regulated mileage l Infrastructure information u Miles by diameter u Miles by decade of construction, etc.

6. 6 New Infrastructure Data Elements l System Mileage By Commodity Transported u Crude oil u Refined products u HVLs u CO2 and other gases VALUE: Provides data for conducting analyses for separate aspects of the industry

7. 7 New Infrastructure Data Elements l System Mileage That “Could Affect” High Consequence Areas (line pipe) l Facilities That “Could Affect” High Consequence Areas (tanks, pumps, etc.) l VALUE: Trend analysis of incidents in HCAs versus incidents in non-HCAs

8. New Infrastructure Data Elements l Mileage inspected by ILI u Corrosion or metal loss tool | Dent or deformation tool Crack or long seam defect tool | Any other ILI tool l Actions taken based on ILI u # Anomalies excavated and inspected | # Conditions identified and repaired | # “immediate repair condition” | # “60-day condition” | # “180-day condition” l Mileage inspected by pressure testing l Actions taken based on pressure testing u # Ruptures | # Leaks | # Test failures repaired l Mileage inspected by other techniques, direct assessment l VALUE: Provides for evaluating the effect of the IMP rules and of company integrity management programs

9. New Infrastructure Data Elements l Total mileage assessed in calendar year l Total number of conditions repaired or otherwise mitigated l Total baseline assessments completed in calendar year u Risk assessment complete u Inspection complete (tools/hydro) u Information integrated u Repairs and mitigation complete VALUE: Provides means to evaluate progress toward specific IMP rulemaking goals

10. l Did this release reach any "high consequence areas“? l If yes, specify below the types of HCA's affected and whether they were identified or not identified in your Integrity Management Program. Û Com. navigable waterway___identified ___not identified Û High population area___identified ___not identified Û Other populated area___identified ___not identified Û Unusually Sensitive Area – Water___identified ___not identified Û Unusually Sensitive Area – Ecol.___identified ___not identified VALUE: Provides data for evaluating HCA definitions and their application New Incident Data Elements

11. 11 What Should You Be Doing to Measure Performance? l Collect information about your integrity performance l Participate in PPTS l Collect consistent information even if you don’t participate in PPTS

12. 12 Survey of Company Plans on ILI l Over the 7 year baseline period l 112,000 miles included in the survey l 70% of interstate oil pipeline mileage regulated by OPS

13. 13 Context Information l Between 85-90% of oil pipeline mileage is currently capable of being inspecting using ILI technology l Does not represent all forms of inspection, just IL l No hydrotest or direct assessment information

14. 14 ILI Inspections – 1996 - 2008 Inspection PeriodMiles inspected or to be inspected Cumulative mileage inspected 1996 – 2001 28,000 2002 – 2008 44,000 (HCA) 72,000 2002 – 2008 70,000 (non HCA) 142,000

15. Projected ILI Demand – 2002 - 2008 YearHCA milesNon-HCA miles or undifferentiated ILI per year 20027,5009,30016,800 20037,70010,90018,600 20046,90010,50017,500 20056,60010,60016,600 20065,90012,00017,900 20074,9008,30012,600 20084,4006,70011,100

16. 16 Potential Range of Annual ILI Demand Prior to 2002 8,000 – 11,000 Projected peak year 2003 19,000 – 27,000 Projected average 2002 – 2008 16,000 – 23,000

17. 17 Goals l More integrity assessments u In HCAs u Beyond HCAs l Improving integrity management within companies l Improving the government’s role in reviewing the adequacy of plans l Providing increased public assurance

18. The History: Improving Record, 1968- 2001 First six years, Annl Avg: 359 spills; 368,000 barrels Last six years, Annl Avg: 160 spills; 145,000 barrels Source: Allegro Energy Group from RSPA 7000-1. Updated 3/27/02.