Presentation to NARUC February 14, 2011

1. Presentation to NARUCFebruary 14, 2011 Accufcats Final Pipeline Safety: Keeping America’s Pipelines Safe and Secure By Richard B. Kuprewicz, President, Accufacts Inc.

2. Today’s Presentation • Focus Today on Gas Transmission Pipelines • Too early to judge DIMP (distribution regs) effectiveness • Based on Information Readily Available and In the Public Domain • Long Record of Providing Neutral Perspective • Audience can either listen or “spin” Accufcats Final

3. On the Regulatory Front • Something Terribly Wrong with Current Gas Transmission Integrity Management (“IM”) Applications • IM Regs very clear “It’s the gas pipeline operator’s responsibility!” • Operator must integrate, demonstrate, and back up IM decisions/program • “Oops, Whoops, We didn’t know” or “Can’t find the records” not a defense • PHMSA Advisory Bulletin ADB 11-01 • Suggests a problem with more than one operator • Fully support bulletin and PHMSA on this important matter • Gas Transmission IM Regulatory Improvements Needed • Industry has had almost ten years to get right, • or get wrong! Accufcats Final

4. Critical Gas Transmission IM Issues • Assessment Methods (Inspections) Used, Need to Be Public • All assessment methods have strengths and weaknesses • Some “internal inspections” can be really dumb, others really smart • Depends on the risk and the pipeline • No past history of a “proper pressure” (hydrotest) can be very bad. • Forget the “pressure reversal” boogeyman diversion • Pressure testing with gas in wrong area can be very bad • The NTSB Urgent Recommendations and hydrotesting got it right • Direct assessment has very limited applications • Use of “other technologies” places burden on the operator to demonstrate • Very rare for operator to rely on just one assessment method • IM Regulations specifically warn against use of one method • Pressure Spiking At-Risk Pipe!! • Tends to fail as rupture on a gas transmission pipeline • Apparent perversion of IM intent Accufcats Final

5. Gas Transmission IM & Transparency • How MAOP is determined and confidence? • Can’t quickly find these critical records! • Is the “safety factor” real? • Need to eliminate over pressure reporting waiver in 191.23(b)(4) • For steel transmission pipelines • Age is not the relevant issue • Vintage, however, can determine various risks • More missing records??? • Need public reporting of assessment methods, findings, and conditions • Report conditions/repairs in both HCAS and Non-HCAs • By risks found, time to repair condition, by state • Risk Management must have proper reporting to regulator and to public – or forget this approach Accufcats Final

6. Important Regulatory Observations • Remote or Automatic Closure Valves • Public discussion on applying to “exotic” pipelines warranted • > 24 inch transmission pipelines • Population and valve spacing very important • Laws of rupture science will provide proper guidance • Forget C-fer correlation for “exotics” • Rate Setting Function Needs to be Separated from Pipeline Safety Organizations • Inherent conflict of interest • Costs of “safety” overstated • Cost of “failures” understated • Self Regulated = Oxymoron • At Stake – Public Confidence and Credibility in This Important Infrastructure • Cannot support recent bills for PHMSA reauthorization • Technically flawed and illusionary safeties • Need to address the real gas transmission regulatory gaps Accufcats Final