1. Unregulated Low-Stress Hazardous Liquid Pipelines Mike Israni & John Gale Aug 5, 2009

2. Regulatory Requirements for Low- Stress Hazardous Liquid Pipelines Section 4 of the Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006 (PIPES Act) requires the Secretary to issue regulations subjecting low-stress hazardous liquid pipelines to the same standards and regulations as other hazardous liquid pipelines.

3. Regulatory Requirements for Low- Stress Hazardous Liquid Pipelines (continued) Exceptions to the PIPES Act requirements are: (1) low-stress pipelines regulated by the US Coast Guard; (2) A pipeline that serves refining, manufacturing, or truck, rail or vessel terminal facilities if the pipeline is less than one mile long (measured outside the facility grounds) and does not cross an offshore area or a waterway currently used for commercial navigation.

4. The June 3, 2008, Low-Stress Pipelines Final Rule- (Phase one) Covered Rural low-stress pipelines with a nominal diameter greater than 8⅝ inches and within ½ mile of unusually sensitive areas (USAs) Applies full set of regulations to these pipelines Adds annual, safety-related condition, and accident reporting for ALL rural low stress pipelines

5. Low-Stress Pipelines Upstream from Refining Storage Production 8⅝” coming from production – Gathering line 10” and Operating less than 20% SMYS USA Navigable Waterway Non-Rural Area Trucked In Oil Tankage Storage 6” and Operating less than 20% SMYS Subject to Part 195 Requirements Refining

6. Low-Stress Pipelines Upstream from Refining Storage Production 8⅝” coming from production – Gathering line 10” and Operating less than 20% SMYS USA Navigable Waterway Non-Rural Area Trunked In Oil Tankage Storage 6” and Operating less than 20% SMYS Subject to Part 195 Requirements After Phase 2 Refining

7. Airport Breakout Tankage Breakout Tankage 8 ⅝ ” operating at less than 20% USA 6”operating at less than 20% SMYS Refining Navigable Waterway Non-Rural Area Low-Stress Pipelines Downstream from Refining Subject to Part 195 Requirements Refining Less than 1 mile

8. Airport Breakout Tankage Breakout Tankage 8 ⅝ ” operating at less than 20% USA 6”operating at less than 20% SMYS Refining Navigable Waterway Non-Rural Area Low-Stress Pipelines Downstream from Refining Refining Less than 1 mile Subject to Part 195 Requirements After Phase 2

9. Cost-Benefit of Implementing Regulation for Unregulated Low-Stress Haz Liq. Pipelines 1. 1. Risk = Probability x Consequence (Unknown- No data on unregulated LS) 2. 2. Infrastructure size Total LS Miles = LS (pop+navig) + LS usa + LS rural 1. 1. Reasonable cost for this Infrastructure

10. Estimated Benefit for Low-Stress Pipelines Currently no incident data to review March 2009 we surveyed nine States to ascertain if they had incident data Currently evaluating the benefits associated with Low Stress II rulemaking

11. Supporting Data for Unregulated Low-Stress Hazardous Liquid Pipelines Rural Low-Stress Hazardous Liquid Pipelines Survey – October 2008 Low-Stress Pipeline Survey – Company Follow- up – March 30, 2009 Regulatory Evaluation for Low Stress I Final Rule- June 3, 2008

12. Supporting Data for Unregulated Low-Stress Hazardous Liquid Pipelines (continued) Total estimated Unregulated Low-Stress Hazardous Liquid Pipelines = 1575 miles Phase I picked up = 312 miles Phase II will pick = 1263 miles Of the total 1263 miles, 161 miles are estimated to be within USAs and with nominal diameter less than 8⅝ inches

13. Estimated Costs for Low-Stress Pipelines Cost Component Unit Cost per Mile Additional Costs (In thousands of dollars) Initial costs Recurring Costs Year 1 Years 2 through 5 Years 6 and on Part 195, Subpart A General $0 Part 195, Subpart B – Annual, Accident, and Safety-Related Condition Reporting Nominal $0 Part 195, Subpart C – Design Requirements, Subpart D – Construction, and Subpart E – Pressure Testing $0 Part 195, Subpart F – Operation and Maintenance Various*Various??? Part 195, Subpart G – Qualification of Pipeline Personnel Nominal $0 Part 195, Subpart H – Corrosion Control $15,022*???? Part 199 – Drug and Alcohol Testing $0Negligible$0 TOTAL

14. Estimated Costs for Low-Stress Pipelines Subpart F – Operation and Maintenance Maps and Records – nominal cost increase Damage Prevention Programs Costs under development, based on State mandated One call systems Line markers – Initial cost: $514 per mile Recurring cost: $134 per mile 90% of these lines are already marked

15. Estimated Costs for Low-Stress Pipelines Integrity Management Programs Impacts only those lines that are in a HCA 161 miles of small diameter pipe within a 1/2 mile of a USA Cost per mile is under development Subpart H Corrosion Control Initial cost: $15,022 per mile Recurring cost: $400 per mile 90% of the lines already comply with Subpart H.

16. Low-Stress Pipelines- (Phase Two) Will Cover Depending on supporting data either one, some, all, or none of the following will be regulated: All Part 195 to all low-stress pipelines not currently regulated All Part 195 to all low-stress pipelines less than 8⅝ inches diameter inside ½ mile of USAs All Part 195 to all low-stress pipelines 8⅝ inches diameter or more outside ½ mile of USAs All Part 195 to all low-stress pipelines less than 8⅝ inches diameter outside ½ mile of USAs Other option