1. 1 Integrity Management: Lessons Learned, Challenges A Presentation by the Hazardous Liquids Pipeline Industry to the OPS Public Meeting on Integrity Management May 17-18, 2005

2. 2 Overview Marty Matheson American Petroleum Institute

3. 3 The National Network 160,000 miles national transmission network Crude oil to refineries Crude oil to refineries Refined products to end users Refined products to end users Volumes per year 1.6 trillion barrel miles crude oil 1.6 trillion barrel miles crude oil 1.7 trillion barrel miles refined products 1.7 trillion barrel miles refined products 0.4 trillion barrel miles HVLs 0.4 trillion barrel miles HVLs 1,600,000,000,000 barrel-miles crude oil 1,700,000,000,000 barrel-miles refined 400,000,000,000 barrel-miles HVL

4. 4 Benefits Energy Heating Heating Home heating oil Home heating oil Propane Propane Fuels Fuels Automotive Automotive Aviation Aviation Railroads Railroads Ships and barges Ships and barges Power plants Power plants Military bases Military bases Raw materials Pharmaceuticals Pharmaceuticals Plastics Plastics Cosmetics Cosmetics Fertilizers Fertilizers Construction materials Construction materials

5. 5 What do we do? We transport flammable, hazardous, useful products to customers under strict federal and state requirements through towns, cities, neighborhoods, and cross country where people live, work and play. We MUST do it safely and reliably.

6. 6 Energy Pipeline Oversight Pipeline Operators Federal Oversight State/Local Oversight Stakeholders/ Consumers PIPELINE OPERATORS AND THE PRIVILEGE TO OPERATE

7. 7 Our vision is an oil pipeline industry that -- conducts operations safely and with respect for the environment; conducts operations safely and with respect for the environment; respects the privilege to operate granted to it by the public; and respects the privilege to operate granted to it by the public; and provides reliable transportation of the crude oil and refined products upon which America and all Americans rely. provides reliable transportation of the crude oil and refined products upon which America and all Americans rely.

8. 8 Industry Goals No deaths No deaths No injuries No injuries No releases to the environment No releases to the environment No operating errors No operating errors Reliable service to our shippers, customers and communities Reliable service to our shippers, customers and communities Full compliance with requirements Full compliance with requirements

9. 9 Oil Pipeline Releases & Safety Incidents Reported to DOT Barrels (3-Year Moving Average) Number

10. 10 Oil Pipeline Fatalities & Injuries (Public, Employee, Contractor) Injuries Fatalities (3-Year Moving Average)

11. 11 Baseline Assessments – Voluntary Certification U.S. mileage – 160,000 U.S. mileage – 160,000 Companies/systems certifying – 73 Companies/systems certifying – 73 Certifying companies – Certifying companies – System miles – 130,113 (81% of US miles) System miles – 130,113 (81% of US miles) HCA “could affect” – 59,364 miles HCA “could affect” – 59,364 miles Baseline complete – 37,990 miles Baseline complete – 37,990 miles Additional miles assessed – 33,890 miles Additional miles assessed – 33,890 miles Total miles assessed – 71,880 miles Total miles assessed – 71,880 miles

12. 12 Baseline Assessments – Voluntary Certification 100% of companies have completed 50% 100% of companies have completed 50% 59% of companies have completed 65% 59% of companies have completed 65% 27% of companies have completed 75% 27% of companies have completed 75% 9% of companies have completed 80 - 100% 9% of companies have completed 80 - 100% of HCA “could affect” mileage At half way point (Sept 2004) of baseline assessment period (2001-2007) of baseline assessment period (2001-2007) Of certifying companies --

13. 13 Results from Assessments Source: PPTS 10,000 conditions addressed per year 10,000 conditions addressed per year Immediate repair conditions – 7% Immediate repair conditions – 7% Other rule-based conditions – 21% Other rule-based conditions – 21% Operator-defined conditions – 72% Operator-defined conditions – 72% All injurious conditions are addressed!

14. 14 System Location: Share of Releases by Spill Size Updated 08/04 Combo for All to OPS.xls Includes only incidents that are reportable to OPS under criteria established 2/2002. Location: Facilities piping & equip.: 52%; Onshore pipe: 40% Location: Facilities piping & equip.: 52%; Onshore pipe: 40% Percent, 1999-2003 Facility Piping/Equip. 59%44% 25% Onshore Pipe 32%50% 63% Location by size: Facilities piping & equip.: 25% of 50+ bbls; Onshore pipe: 63% of 50+ bbls Location by size: Facilities piping & equip.: 25% of 50+ bbls; Onshore pipe: 63% of 50+ bbls

15. 15 Onshore Pipe Incidents by Cause, 1999-2003 Incidents occurring on “Onshore Pipelines, including valve sites” reported to Pipeline Performance Tracking System. “Rest of Causes” is Natural Forces and “Other.”

16. 16 Onshore Pipe Incidents, '99-'03 TOTAL, ALL CAUSES CORROSION THIRD PARTY EQUIP./NON-PIPEOPERATOR/OPER'NMAT'L/SEAM/WELD

17. 17 Line Pipe Accidents by Cause Category (1999-2003) Corrosion accidents down Corrosion accidents down 3 rd party damage accidents down 3 rd party damage accidents down Equipment/non-pipe accidents down Equipment/non-pipe accidents down Pipe material/seam failures down Pipe material/seam failures down Operator/operational error down Operator/operational error down Focus on line pipe is a focus on where the public and public safety impacts are

18. 18 IMP is a Success Story Accelerated risk-based approach Accelerated risk-based approach Accelerated use of ILI tools Accelerated use of ILI tools Accelerated investments in GIS, information and data management tools Accelerated investments in GIS, information and data management tools Accelerated investments in pipeline assets Accelerated investments in pipeline assets Finding conditions and fixing them Finding conditions and fixing them Identifying emerging integrity issues Identifying emerging integrity issues

19. 19 Integrity Management: Not Just Inspection and Testing -- Public awareness and communication Public awareness and communication Security awareness and physical upgrades Security awareness and physical upgrades Third party damage efforts and Common Ground Alliance Third party damage efforts and Common Ground Alliance Operator focus on performance Operator focus on performance Stakeholder/public expectations Stakeholder/public expectations And much more … And much more … Public awareness and communication Public awareness and communication Security awareness and physical upgrades Security awareness and physical upgrades Third party damage efforts and Common Ground Alliance Third party damage efforts and Common Ground Alliance Operator focus on performance Operator focus on performance Stakeholder/public expectations Stakeholder/public expectations And much more … And much more …

20. 20 Onshore Pipe Incidents, '99-'03 TOTAL, ALL CAUSES CORROSION THIRD PARTY EQUIP./NON-PIPEOPERATOR/OPER'NMAT'L/SEAM/WELD

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22. 22 Lessons Learned API/AOPL Pipeline Industry Panel

23. 23 Where do the Lessons Come From? Operator’s own systems and experience Operator’s own systems and experience PPTS data collection and analysis PPTS data collection and analysis OPS (data, audits/inspections and enforcement actions) OPS (data, audits/inspections and enforcement actions) Meetings/conferences (OPS, API, AOPL, ASME, PRCI) Meetings/conferences (OPS, API, AOPL, ASME, PRCI) R&D (company, OPS, PRCI) R&D (company, OPS, PRCI) Standards work (1110, 1160, 1163, and more) Standards work (1110, 1160, 1163, and more) NTSB reports and accident investigations NTSB reports and accident investigations OPS/EPA/DOJ investigations/consent decrees OPS/EPA/DOJ investigations/consent decrees

24. 24 Step Changes Process Institutionalizing risk-based approaches Institutionalizing risk-based approaches Institutionalizing data integration Institutionalizing data integration Institutionalizing knowledge sharing Institutionalizing knowledge sharingOperational More (lots more) miles assessed More (lots more) miles assessed Standardization of dig criteria Standardization of dig criteria Application of data lessons Application of data lessons Information Sharing Operator cooperation and workshops Operator cooperation and workshops IMP data work (in progress) IMP data work (in progress) Risk-based Data Lessons Practice Sharing Data Integration Standardization Miles Assessed Knowledge Sharing

25. 25 Onshore Pipe Incidents by Cause, 1999-2003 Incidents occurring on “Onshore Pipelines, including valve sites” reported to Pipeline Performance Tracking System. “Rest of Causes” is Natural Forces and “Other.”

26. 26 Onshore Pipe Incidents, 1999-2003

27. 27 Onshore Pipe Incidents by Cause, 1999-2003 Incidents occurring on “Onshore Pipelines, including valve sites” reported to Pipeline Performance Tracking System. “Rest of Causes” is Natural Forces and “Other.”

28. 28 Lessons: Corrosion Observations Dropped by over 50% in 5 years Dropped by over 50% in 5 years Vast majority are small and getting smaller Vast majority are small and getting smaller Very little public safety impacts Very little public safety impactsLessons Tools find corrosion; mature tech. Tools find corrosion; mature tech. Manageable and predictable; risks from corrosion are being reduced Manageable and predictable; risks from corrosion are being reduced Returns on MFL technology will diminish related to detecting corrosion Returns on MFL technology will diminish related to detecting corrosion

29. 29 Onshore Pipe Incidents by Cause, 1999-2003 Incidents occurring on “Onshore Pipelines, including valve sites” reported to Pipeline Performance Tracking System. “Rest of Causes” is Natural Forces and “Other.”

30. 30 Lessons: Third Party Damage Observations Incidents >50 bbls have dropped by ~50% in 5 years Incidents >50 bbls have dropped by ~50% in 5 years Public safety impacts are greatest Public safety impacts are greatest ILI tools do not address prevention ILI tools do not address preventionLessons Assessing line condition is only part of the answer Assessing line condition is only part of the answer Understanding where to look for threats is important Understanding where to look for threats is important Greatest potentials for improvement … Greatest potentials for improvement … (Current and past damage)

31. 31 Example: Frequency of ROW Patrol Prevention strategy: Increased frequency of ROW ground patrol (1997) Prevention strategy: Increased frequency of ROW ground patrol (1997) Result: ILI indications of top side deformations fell from 22 in 1997 to 4 in 2004 Result: ILI indications of top side deformations fell from 22 in 1997 to 4 in 2004 Top Side Deformations

32. 32 Example: Centralized “One Call” System Assists Operator in processing of: Assists Operator in processing of: One call Notices One call Notices Direct call-ins Direct call-ins Aerial reports Aerial reports Benefits: Benefits: Positive response conformance Positive response conformance Standardize one call practices Standardize one call practices Centralized one call ticket archival Centralized one call ticket archival Optimization in one call processing Optimization in one call processing

33. 33 Centralized “One Call” System

34. 34 Onshore Pipe Incidents by Cause, 1999-2003 Incidents occurring on “Onshore Pipelines, including valve sites” reported to Pipeline Performance Tracking System. “Rest of Causes” is Natural Forces and “Other.”

35. 35 Lessons: Equipment/Non-Pipe Observations ILI does not address this type of failure (valves, valve seats, traps) ILI does not address this type of failure (valves, valve seats, traps) Data and industry focus on small spills has paid off Data and industry focus on small spills has paid offLessons Incident investigation in addition to data and analysis Incident investigation in addition to data and analysis

36. 36 Onshore Pipe Incidents by Cause, 1999-2003 Incidents occurring on “Onshore Pipelines, including valve sites” reported to Pipeline Performance Tracking System. “Rest of Causes” is Natural Forces and “Other.”

37. 37 Lessons: Material/Seam/Weld Observations ERW seam failure has been successfully addressed ERW seam failure has been successfully addressed Types and availability of crack tools expanding Types and availability of crack tools expandingLessons Crack tools are still in “proof of concept” phase Crack tools are still in “proof of concept” phase Pipe body, seams, welds can be managed effectively Pipe body, seams, welds can be managed effectively

38. 38 Example 8.625” x 0.203” 5LX X52 seamless 8.625” x 0.203” 5LX X52 seamless Deformation & Hi Res MFL indicated no defect Deformation & Hi Res MFL indicated no defect Hydro to test seams in adjacent ERW Hydro to test seams in adjacent ERW Seamless pipe failed at 1830 PSI Seamless pipe failed at 1830 PSI Investigation indicated re- rounded construction-era dent w/ stress concentrator Investigation indicated re- rounded construction-era dent w/ stress concentrator Dent & metal loss dimensions were below threshold for ILI tools Dent & metal loss dimensions were below threshold for ILI tools Lesson: There may be times when hydro is more appropriate to the risk than ILI.

39. 39 Onshore Pipe Incidents of 5 Barrels or More, by Cause, 1999-2003 Incidents involving a release of 5 barrels or more (or a death, injury, fire or explosion) that occurred on “Onshore Pipelines, including valve sites” reported to Pipeline Performance Tracking System. Stress Corrosion Cracking detail is not available for smaller releases.

40. 40 Lesson: SCC Observations SCC industry-wide knowledge has now been aggregated and shared SCC industry-wide knowledge has now been aggregated and shared SCC awareness has been raised SCC awareness has been raised R&D now a priority R&D now a priorityLessons Don’t over-react to “emerging” integrity issues Don’t over-react to “emerging” integrity issues Don’t under-react to “emerging” integrity issues Don’t under-react to “emerging” integrity issues

41. 41 Onshore Pipe Incidents by Cause, 1999-2003 Incidents occurring on “Onshore Pipelines, including valve sites” reported to Pipeline Performance Tracking System. “Rest of Causes” is Natural Forces and “Other.”

42. 42 Lessons: Operator/Operation Observations People AND procedures People AND proceduresLessons Don't assume improper training Don't assume improper training Incident investigation in addition to data and analysis Incident investigation in addition to data and analysis

43. 43 Step Changes Process Institutionalizing risk-based approaches Institutionalizing risk-based approaches Institutionalizing data integration Institutionalizing data integration Institutionalizing knowledge sharing Institutionalizing knowledge sharingOperational More (lots more) miles assessed More (lots more) miles assessed Standardization of dig criteria Standardization of dig criteria Application of data lessons Application of data lessons Information Sharing Operator cooperation and workshops Operator cooperation and workshops IMP data work (in progress) IMP data work (in progress) Risk-based Data Lessons Practice sharing Data integration Standardization Miles assessed Knowledge sharing

44. 44 Data Integration – A Giant Step Identifying conditions that cannot be identified from a single data set. Identifying conditions that cannot be identified from a single data set. This concept is now engrained in pipeline integrity management This concept is now engrained in pipeline integrity management ILI Data Analysis ILI Data Analysis Risk Assessment Risk Assessment Direct Assessment (ECDA, ICDA, SCC) Direct Assessment (ECDA, ICDA, SCC) Driving integrity-related IT advancements Driving integrity-related IT advancements

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48. 48 Organizational Changes to Support IMP – Before: Operating division resources responsible for pipeline integrity (NACE-certified Corrosion Specialist, reliability engineers, corrosion technicians, inspectors, etc.) Operating division resources responsible for pipeline integrity (NACE-certified Corrosion Specialist, reliability engineers, corrosion technicians, inspectors, etc.) Efforts led by Division IM Leader reporting to Division Operations VP. Efforts led by Division IM Leader reporting to Division Operations VP. For the most part, division resources operated independently. For the most part, division resources operated independently. Corporate support resources from parent company provided integrity-related capacity and some coordination efforts. Corporate support resources from parent company provided integrity-related capacity and some coordination efforts.

49. 49 Organizational Changes to Support IMP – Today: Division support organization (IM expertise & superior local knowledge). Fosters asset-specific knowledge sharing & accountability. Division support organization (IM expertise & superior local knowledge). Fosters asset-specific knowledge sharing & accountability. Corporate support team reassigned to pipeline operations group. Corporate support team reassigned to pipeline operations group. Coordinated by corporate IM Capability Leader reporting to VP of Pipeline Support. Coordinated by corporate IM Capability Leader reporting to VP of Pipeline Support. Technical teams – subject matter development, improvement, assessment and results. Representatives from each division and corporate. Technical teams – subject matter development, improvement, assessment and results. Representatives from each division and corporate.

50. 50 Work Flow Diagram ILI Vendor Legal Senior Eng. Integrity Eng. Integ. Assess. Team Const. Supervisor GIS Program Admin. Pipeline Inspection Corrosion Risk Dir., Corr. & Maint. Mgr., Proj. Eng. ILI Vendor Integrity Eng.

51. 51 Corrosion Pipeline Data Risk Mapping SME’s, Data Owners Management, Engineering, Operations View, Analyze, Configure View GIS Integrity Mgmt RDBMS ILI DataRepairs Integrity Data Integration

52. 52 Tapping Organizational Knowledge: Never Learn It TWICE Shared electronic tracking and documentation Shared electronic tracking and documentation Photo documentation Photo documentation Cross-functional Steering Team Cross-functional Steering Team Internal Conferences Internal Conferences Repair Conference Repair Conference Safety Summit Safety Summit External Conferences External Conferences

53. 53 TOTAL, ALL CAUSES CORROSION THIRD PARTY EQUIP./NON-PIPEOPERATOR/OPER'NMAT'L/SEAM/WELD Onshore Pipe Incidents, '99-'03

54. 54 Line Pipe Accidents by Cause Category (1999-2003) Corrosion accidents down Corrosion accidents down 3 rd party damage accidents down 3 rd party damage accidents down Equipment/non-pipe accidents down Equipment/non-pipe accidents down Pipe material/seam failures down Pipe material/seam failures down Operator/operational error down Operator/operational error down Focus on line pipe is a focus on where the public and public safety impacts are

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56. 56 Challenges API/AOPL Pipeline Industry Panel

57. 57 IMP Will Continue to be a Success Story Operators are committed to risk-based approach Operators are committed to risk-based approach Operators are committed to zero incidents and to continuing improvement Operators are committed to zero incidents and to continuing improvement Technology will continue to evolve and there will continue to be limitations Technology will continue to evolve and there will continue to be limitations Technology and IMP rules must be applied in the real world Technology and IMP rules must be applied in the real world Greatest additional improvements may still lie in integrating and understanding information Greatest additional improvements may still lie in integrating and understanding information

58. 58 Step Changes Process Institutionalizing risk-based approaches Institutionalizing risk-based approaches Institutionalizing data integration Institutionalizing data integration Institutionalizing knowledge sharing Institutionalizing knowledge sharingOperational More (lots more) miles assessed More (lots more) miles assessed Standardization of dig criteria Standardization of dig criteria Application of data lessons Application of data lessons Information Sharing Operator cooperation and workshops Operator cooperation and workshops IMP data work (in progress) IMP data work (in progress) Risk-based Data Lessons Practice sharing Data integration Standardization Miles assessed Knowledge sharing

59. 59 Challenge: Enforcement and Compliance Observations: Process Performance rule migrating toward prescriptive; impact of protocols Performance rule migrating toward prescriptive; impact of protocols Over-emphasis on inspection and testing Over-emphasis on inspection and testing Over-emphasis on HCA identification; reinvention of oil spill planning detail Over-emphasis on HCA identification; reinvention of oil spill planning detail Need: Dialog

60. 60 Challenge: Enforcement and Compliance Observations: Operational Lack of inspection focus on “critical path” Lack of inspection focus on “critical path” Corrosion based understanding is not sufficient Corrosion based understanding is not sufficient Company overall performance not part of enforcement view Company overall performance not part of enforcement view Need: Dialog

61. 61 Challenge: Enforcement and Compliance Observations: Information Sharing Lack of opportunities for honest and open discussions about what works and what doesn’t Lack of opportunities for honest and open discussions about what works and what doesn’t Second round of comprehensives feels like starting over Second round of comprehensives feels like starting over Most knowledgeable inspectors seem to be moving to enforcement of natural gas rule Most knowledgeable inspectors seem to be moving to enforcement of natural gas rule Need: Dialog

62. 62 Request: The hazardous liquid industry would like to sit down with OPS headquarters, OPS regions, and OPS contractor for open exchange of concerns and suggestions related to inspection and enforcement. We need to listen to each other!!

63. 63 Challenge: Plain Dents Observations Current rule repair criteria are unsupported technically Current rule repair criteria are unsupported technically Remediating some dents may do more harm than good depending on service, metallurgy, D/t ratios Remediating some dents may do more harm than good depending on service, metallurgy, D/t ratiosNeeds Better methods for evaluating deformations and separating injurious from stable/non-injurious Better methods for evaluating deformations and separating injurious from stable/non-injurious Flexibility from OPS in application of the rule to some dent situations Flexibility from OPS in application of the rule to some dent situations

64. 64 Example: What is a Dent? “Sharp” “Flat” Ovality

65. 65 Example: What is a Dent? No industry method on calculating when a deformation is injurious (i.e., RSTRENG) No industry method on calculating when a deformation is injurious (i.e., RSTRENG) Little correlation between depth of a dent and the damage to the pipe Little correlation between depth of a dent and the damage to the pipe Deformation may reround when excavated and residual dent depth is affected by the line pressure at the time of measurement Deformation may reround when excavated and residual dent depth is affected by the line pressure at the time of measurement

66. 66 Example: Determining Injuriousness of Dents Field Bends Identified as Dents Field Bends Identified as Dents Multiple dent-like indications later determined to be field bends Multiple dent-like indications later determined to be field bends Smooth dents in low stress pipelines Smooth dents in low stress pipelines No technical basis for repair No technical basis for repair

67. 67 Example: Determining Injuriousness of Dents Examples of dent indication that turned out to be a field bend!

68. 68 Example: Determining Injuriousness of Dents Hydrotest immediately followed by caliper Hydrotest immediately followed by caliper ‘Actionable’ dents identified which survived Subpart E hydrotest ‘Actionable’ dents identified which survived Subpart E hydrotest Repair and/or pressure reduction versus operating pressure hard to justify - dent survived higher test pressure Repair and/or pressure reduction versus operating pressure hard to justify - dent survived higher test pressure

69. 69 Example: Determining Injuriousness of Dents Examples of dents that survived Subpart E Hydrotest

70. 70 Challenge: Analysis of ILI Data Observations Equivalency of data and analysis vendor to vendor is not good enough (many formats, different integration requirements) Equivalency of data and analysis vendor to vendor is not good enough (many formats, different integration requirements)Needs More standards setting for quality of ILI data and analytical methods More standards setting for quality of ILI data and analytical methods Better understanding of what tools can and cannot accomplish (inspectors and operators) Better understanding of what tools can and cannot accomplish (inspectors and operators)

71. 71 Operator #1 ran early generation Hi-Res MFL in 1998 Operator #1 ran early generation Hi-Res MFL in 1998 Same section experienced two corrosion leaks in two weeks in late 2003 Same section experienced two corrosion leaks in two weeks in late 2003 Operator #2 ran new MFL tool from same vendor Operator #2 ran new MFL tool from same vendor No consistent correlation between reports No consistent correlation between reports 1998 data could not be re-evaluated because vendor no longer supported the software. 1998 data could not be re-evaluated because vendor no longer supported the software. Operator #1 ran early generation Hi-Res MFL in 1998 Operator #1 ran early generation Hi-Res MFL in 1998 Same section experienced two corrosion leaks in two weeks in late 2003 Same section experienced two corrosion leaks in two weeks in late 2003 Operator #2 ran new MFL tool from same vendor Operator #2 ran new MFL tool from same vendor No consistent correlation between reports No consistent correlation between reports 1998 data could not be re-evaluated because vendor no longer supported the software. 1998 data could not be re-evaluated because vendor no longer supported the software. Example: ILI Challenge

72. 72 Challenge: Applying IMP to Facilities Observations Risk to the public is low: 90% remain on co. property Risk to the public is low: 90% remain on co. property Already being addressed without enforcement focus Already being addressed without enforcement focusNeeds Data-based recommendations for IM (underway) Data-based recommendations for IM (underway) Discussion/dialog between operators and inspectors before compliance audits specific to facilities Discussion/dialog between operators and inspectors before compliance audits specific to facilities

73. 73 Facilities Piping and Equipment: High Numbers, Low Consequences Account for 52% of PPTS releases Account for 52% of PPTS releases Generally small: 76% <5 barrels Generally small: 76% <5 barrels DIVERSE: 56% caused by failure of equipment or non-pipe component DIVERSE: 56% caused by failure of equipment or non-pipe component 5-49 bbls <5 bbls 76% By Size Range 50+ bbls Oper. Err. By Cause All Other Corr. Equip/Non-Pipe 56% 56%

74. 74 Challenge: EFRDs Observations EFRDs only potentially impact large spills EFRDs only potentially impact large spills EFRDs do not contribute to prevention EFRDs do not contribute to prevention EFRDs amount to another “hole” in the pipe and thus add as well as reduce risk overall EFRDs amount to another “hole” in the pipe and thus add as well as reduce risk overall Value of EFRD is site specific Value of EFRD is site specific EFRDs only potentially impact large spills EFRDs only potentially impact large spills EFRDs do not contribute to prevention EFRDs do not contribute to prevention EFRDs amount to another “hole” in the pipe and thus add as well as reduce risk overall EFRDs amount to another “hole” in the pipe and thus add as well as reduce risk overall Value of EFRD is site specific Value of EFRD is site specific

75. 75 Onshore Pipe Incidents, 2003

76. 76 Challenge: EFRDs Observations EFRDs only potentially impact large spills EFRDs only potentially impact large spills EFRDs do not contribute to prevention EFRDs do not contribute to prevention EFRDs amount to another “hole” in the pipe and thus add as well as reduce risk overall EFRDs amount to another “hole” in the pipe and thus add as well as reduce risk overall Value of EFRD is site specific Value of EFRD is site specificNeeds Simplified analysis that is sufficient Simplified analysis that is sufficient Reasonable expectations for EFRDs (installation, capability to reduce spills size, and document) Reasonable expectations for EFRDs (installation, capability to reduce spills size, and document) Needs Simplified analysis that is sufficient Simplified analysis that is sufficient Reasonable expectations for EFRDs (installation, capability to reduce spills size, and document) Reasonable expectations for EFRDs (installation, capability to reduce spills size, and document)

77. 77 Challenge: Preventive and Mitigative Actions Observations Operators have never done just the minimum; so existing actions may be enough Operators have never done just the minimum; so existing actions may be enough Existing actions have resulted in the long term trend in accident reductions Existing actions have resulted in the long term trend in accident reductionsNeeds Reasonable expectations based on an already improving record industry-wide Reasonable expectations based on an already improving record industry-wide Don’t go overboard on evaluation or documentation; let the operator’s performance be a significant portion of the documentation. Don’t go overboard on evaluation or documentation; let the operator’s performance be a significant portion of the documentation.

78. 78 Challenge: Continuing Improvement Observations PPTS and analytical capability in place PPTS and analytical capability in place Trends currently in the right direction Trends currently in the right directionNeeds Fight complacency Fight complacency Exploit data and information Exploit data and information Encourage experimentation and innovation Encourage experimentation and innovation

79. 79 What do we do? We transport flammable, hazardous, useful products to customers under strict federal and state requirements through towns, cities, neighborhoods, and cross country where people live, work and play. We MUST do it safely and reliably.

80. 80 Our vision is an oil pipeline industry that -- conducts operations safely and with respect for the environment; conducts operations safely and with respect for the environment; respects the privilege to operate granted to it by the public; and respects the privilege to operate granted to it by the public; and provides reliable transportation of the crude oil and refined products upon which America and all Americans rely. provides reliable transportation of the crude oil and refined products upon which America and all Americans rely.

81. 81 Oil Pipeline Spill Performance