Pipeline Integrity Management Overview 2005

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. Overview Marty Matheson American Petroleum Institute

3. The National Network 160,000 miles national transmission network • Crude oil to refineries • Refined products to end users Volumes per year • 1.6 trillion barrel miles crude oil • 1.7 trillion barrel miles refined products • 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. Energy Heating Home heating oil Propane Fuels Automotive Aviation Railroads Ships and barges Power plants Military bases Raw materials Pharmaceuticals Plastics Cosmetics Fertilizers Construction materials Benefits

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

7. Our vision is an oil pipeline industry that -- • conducts operations safely and with respect for the environment; • 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.

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

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

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

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

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

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

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

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. TOTAL, ALL CAUSES CORROSION THIRD PARTY EQUIP./NON-PIPE OPERATOR/OPER'N MAT'L/SEAM/WELD Onshore Pipe Incidents, '99-'03

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

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

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

20. TOTAL, ALL CAUSES CORROSION THIRD PARTY EQUIP./NON-PIPE OPERATOR/OPER'N MAT'L/SEAM/WELD Onshore Pipe Incidents, '99-'03

22. Lessons Learned API/AOPL Pipeline Industry Panel

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

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

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. Onshore Pipe Incidents, 1999-2003

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

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

31. Top Side Deformations Example: Frequency of ROW Patrol • 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

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

33. Centralized “One Call” System

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

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

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

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

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

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

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

48. Organizational Changes to Support IMP – Before: • 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. • For the most part, division resources operated independently. • Corporate support resources from parent company provided integrity-related capacity and some coordination efforts.

49. Organizational Changes to Support IMP – Today: • Division support organization (IM expertise & superior local knowledge). Fosters asset-specific knowledge sharing & accountability. • Corporate support team reassigned to pipeline operations group. • 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.

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.