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

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.

The History: Improving Record, 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 Updated 3/27/02.

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 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 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 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

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

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

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 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 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 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 ILI Inspections – Inspection PeriodMiles inspected or to be inspected Cumulative mileage inspected 1996 – , – ,000 (HCA) 72, – ,000 (non HCA) 142,000

Projected ILI Demand – YearHCA milesNon-HCA miles or undifferentiated ILI per year 20027,5009,30016, ,70010,90018, ,90010,50017, ,60010,60016, ,90012,00017, ,9008,30012, ,4006,70011,100

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

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

The History: Improving Record, 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 Updated 3/27/02.