Agency Update: PHMSA 2008 Western Regional Gas Conference Tempe, AZ August 26, 2008

Suggested Topics PHMSA – Who’s on 1st, What’s on 2nd How business is to be done °PHMSA, NAPSR, NARUC, industry Energy Picture °Natural Gas – bridge to cleaner options °Construction boom & problems °Speculation in gas markets? Regulatory update °DIMP ­Comments Received ­PPDC Federal Incident Notifications Terrorist Threat Intergovernmental Initiatives w/NTSB, DHS, DOE

Discussion Topics for Today A Fair Bit on OPS & PHMSA °Who’s on First, What’s on Second °Goals and Objectives Some Stage Setting Comments °Including Some Comments on Energy A Macro View of Safety Data °Specific Comments on Role of Data and Particularly Incident Notification/Reporting Quick Survey of Regulatory and Non- Regulatory Initiatives °Emphasis on DIMP

Setting the Stage Introductions - PHMSA Leadership °Carl Johnson - Administrator °Krista Edwards – Deputy Administrator °Stacey Gerard – Chief Safety Officer °Jeff Wiese – Associate Administrator °Bill Gute – Deputy Associate Administrator °Chris Hoidal – Western Region Director °4 Other Regional Directors: S, C, E, and SW

Setting the Stage Introductions - PHMSA Directors °Richard Sanders – Training and Qualification °Roger Little – Data and Information Technology °Zach Barrett – State Programs °Alan Mayberry – Engineering & Emergency Support °Steve Fischer – Program Development °Joy Kadnar – Performance and Evaluation °Rod Dyck – Enforcement °John Gale – Regulatory Program °Stan Kastanas – Drug and Alcohol Prevention

PHMSA’s Strategic Goals Safety (focused on preventing high consequence events) °Protecting People and their Communities by Reducing Risk from Hazardous Materials Transportation – Including Through Pipelines Environmental Stewardship °Protecting the Natural Environment by Reducing the Risk of Harm to the Environment Due to Transportation of Hazardous Materials Reliability °Maintain and Improve the Reliability of Systems that Deliver Energy Products and Other Hazardous Materials Global Connectivity °Facilitating a Global Transportation System that Promotes Economic Growth and Development Preparedness and Response °Reduce Consequences of Accidents We Can’t Prevent

Our Pipeline Safety Objectives Improve the Overall Integrity and Reliability of the Energy Pipeline System and Reduce System Risk Engage, Lead, and Help Strengthen the Capabilities of Others Who Share in Achieving our Goals Anticipate Future Needs for Transporting Energy Products Earns the Respect of Our Stakeholders and the Public – as a Model Safety Agency

Setting the Stage PHMSA’s General Approach °Focus Heavily on Performance ­Not Solely on Compliance °Drive Performance Through Attention to ­Pipeline ­Process ­People °Advance “Risk-Focused and Data Driven” ­Risk Identification is KEY First Step ­Need Operator’s Help if All Are to Improve °Use an “Enterprise” Approach °Strive to be Engaged and Communicative °Create a Nucleus for Building Partnerships

Setting the Stage Current Events and Worries °Heavily Driven by Accidents ­Daily by excavation damage »Increasingly in shared ROW’s »Construction boom is worrisome ­Periodically, but notably, by corrosion failures »E.g., Alaska, Louisiana °Increasingly Driven by Supply Issues °Congressional Attention Keeps us Busy ­PIPES Act Mandates ­Hearings ­Audits and Recommendations °Need for Aggressive Workforce Planning and Recruitment °Safety Culture is Eroding Due to Inattention

Big Picture

Current Initiatives Optional and Required Studies °Corrosion synthesis report °Mechanical Damage synthesis report °Cross Border study Regulatory – Recent and Forthcoming °80% SMYS / MAOP °DIMP (**) °Control Room Management °Gas IM 7-year reassessment interval (?) Non-Regulatory Emphasis °Excavation Damage Prevention (**)

Regulatory Update Distribution Integrity Management °Status and Upcoming Outreach ­Public Website ­Web-casts of Key Rule Elements – includes AGA** ­Support for State Seminars ­Supplement by Attending Other Stakeholders’ Meetings as Necessary °Comment Coordination °Special Topic: EFV’s °Paving the Way ­NAPSR, GPTC Guidance and other supporting standards, Operator/Industry Efforts, data improvement efforts, etc. °Three Issues: inspection intervals, PTP, data

What Principles Underlie DIMP? DIMP requires operators to better understand and mitigate system risks °Know your systems °Identify the threats °Rank risks °Mitigate the risks NPRM does not stipulate specific assessment or mitigation actions, In combination with the GPTC Guidance – NPRM provides direction to operators and allows the regulator to investigate internal operator risk management practices

NPRM Structure Requires risk-based written IM program including the seven elements Requires appropriate mitigation measures, including leak management and enhanced damage prevention Requires installation of EFVs Requirements are high-level, performance- based - Guidance needed for implementation details

Master Meter and LPG Operators Smallest operators; truly different Already treated differently in 192, particularly for documentation/reporting Systems cover compact geographic areas and are relatively less complex Excavation damage is often under the operator’s direct control Not required to evaluate risk or report results “Checklist” IM program described in Appendix F

Required Elements Element“Commercial” Operators Master Meter / LPG Written ProgramRequiredSimple (checklist) Know systemRelevant factorsLocation/material Identify threatsThorough analysisChecklist approach Analyze riskRequiredNot required Mitigate riskRequired Performance Measures7 plus threat-specificLeaks by cause Review/revise as needed Required Report Perf Measures4 measuresNot required

Guidance Needed for a high-level performance rule GPTC has developed draft guidance °Several GPTC members here today APGA is developing more-specific guidance for small operators

Additional Issues Allowing alternate time intervals for certain requirements currently in Part 192 Plastic Pipe failure reporting Consideration of compression coupling failures in the threat analysis DIMP programs to include a Prevention Through People (PTP) component

Alternate Time Intervals Part 192 includes requirements for some actions at set intervals Better risk understanding may tell us that some things should be done less often; some more Operators will be able to use their risk analyses to seek regulator approval of alternate intervals for current requirements

Plastic Pipe Failure Reporting Each operator must report information on each material failure of plastic pipe (including fittings, couplings, valves and joints) no later than 90 days after failure. This information must include, location of the failure, nominal pipe size, material type, nature of failure including any contribution of local pipeline environment, pipe manufacturer, lot number and date of manufacture, and other information that can be found in markings on the failed pipe

Reporting Plastic Pipe Failures Operators must report plastic pipe failures in 90 days Intended to develop information available to all operators PHMSA will be discussing needs with industry groups including PPDC – this week in D.C. Need to extend to other materials?

Integrity Management Program Haz. Liquid IMP Gas Transmission IMP Prevention Through People “P T P” Operator Qualification Control Room Management Damage Prevention Public Awareness Human Factor NTSB Issues Drug & Alcohol Processes ( QA/QC) How? Pipeline System Gas Distribution IMP What is affected? Prevention (Performance) Through People

DIMP Webcast Webcast Outline (4.3 hours) 1.Introduction 2.Baseline and Goals 3.Executive Summary 4.System Description (Paul Preketes) 5.AGF and DIGIT, Earlier Risk Data Analysis, PHMSA Report to Congress on DIMP, Phase 1 – Organization (Sue Fleck) & Findings, Developing Rules Guide 6.Rule Content (majority of minutes) 7.PHMSA and State Perspective 8.GPTC Guidance and Relation to NPRM 9.Small Operators 10.Improvements Panel (Sue Fleck) 11.Q&A Panel 12.Next Steps

Damage Prevention Managing the Risks of Excavation Damage °State Damage Prevention Assistance Program ­Gap Analysis Guidance Document ­State Damage Prevention Program Grant ­Getting Started °Position on Federal Enforcement °Common Ground Alliance & Regional Partners °Technology Improvements to One-Call Process °One-Call Center Board Leadership °Pipelines and Informed Planning Alliance °Mechanical Damage Study °EDP Technology Development / Deployment

The End For more information on PHMSAFor more information on PHMSA ° For more information on Pipeline SafetyFor more information on Pipeline Safety ° Thanks for your time & enjoy the week!Thanks for your time & enjoy the week!