North American Energy Infrastructure Policy

1. North American Energy Infrastructure Policy Philip Gonda Steven Mays Robert Floyd Josh Kapp

2. Background • DOH defines the U.S. Energy infrastructure: • electricity, petroleum and natural gas. • 80 % under private ownership • Electricity • generated at more than 6400 power plants, • moved over 200,000 miles of transmission lines • distributed to 143 million customers. • Federal regulation • Federal Energy Regulatory Commission • Regulates wholesale/interstate electricity sales • Oversight of the reliability of Bulk Power Supply through NERC • North American Electric Reliability Corporation • Establishes and enforces Bulk Power System standards. • The Nations Bulk Power system • 8 regions • U.S. • Canada • portion of Mexico. • Oil/Gas Pipeline • Over 500,000 miles w/in U.S. • Federal government lacking sufficient regulation personnel

3. Cyber Attacks • Issues: Cyber vulnerabilities w/in the National Energy Infrastructure • U.S. economy, emergency services and defense/security forces dependent on the Bulk Power System • System has become increasingly reliant on computers and integrated into the World Wide Web and national networks. • Smart Grid • Remote Stations • U. S. computer systems are under increasing attacks • Director of National Intelligence • “dramatic increase in the frequency of malicious cyber activity targeting U.S. computer systems • Secretary of Defense believes U.S. • “high risk of cyber attacks against U.S. critical infrastructures and network, the opponents are increasing their cyber capabilities and represent … a serious menace” • U.S. Bulk Power System cyber systems are not protected • NERC responsible for establishing/enforcing cyber security standards • Currently only 8 standards in place • Process cumbersome, slow and hard to enforce • Presently only Electric and Nuclear sectors have some cyber security standards http://securityaffairs.co/wordpress/9403/security/secretary-of-defense-panetta-on-u-s-cyber-capabilities.html

4. Cyber Attacks • Effects: • Destruction of Services • Stuxnet • Rolling Blackouts • Denial of Services • Ping of Death • Zero day exploits • Coordinated cyber and offensive actions • Russia/ Georgian conflict was the first cyber attack and kinetic operation coordination • Corrective Actions: • Incentivizes acceptance of Standards • Reimburse cost of security equipment to private industry • Active testing • NERC White hat system assessment • Provides security status of Bulk Power System cyber security • Populates cyber vulnerability/ mitigating action database • Collaborative info sharing • Central site for push/pull cyber security information • Patch Tuesday http://www.nytimes.com/2008/08/13/technology/13cyber.html?_r=0

5. Physical Attacks on Electric Grid • Issues: • Attacks include physical damage from • Terrorist • Weather • Competitors • Employees • Activists • Complete reliance upon Electricity • Integration of all other major energy sources rely upon electricity from the grid. • Substations and Large High Voltage Transformers Limited Security • Limited Spare Parts Available • Low Probability vs Massive Impact • Effects: • Outages could last for weeks to months • Cascading Blackouts • Economic • Health and Human Welfare

6. Physical Attacks on Electric Grid • Corrective Actions: • Increase Surveillance and Security on site • Incentives to promote the development, manufacture and stock piling of temporary spare parts • Increase investment in current infrastructure as well as Research and Development. • Increase Resiliency by creating a more dense network of High Voltage Transformers

7. Pipeline Infrastructure Issues • Issues: • Aging infrastructure • Unpredictable failure modes • Weather effects • Effects • 1050 Incidents • 36% Structural/material damage • +$700 million • 2000 injuries and fatalities • 350,000 barrels of oil lost or spilled. • Inadequate Federal Manning Levels • Effects • Delegated Regulation • Inconsistent regulation • Excavation and Farming activities • 23% Excavation Damage

8. Pipeline Significant Incidents

9. Pipeline Policy Proposal • Leverage technology • Survey and assess the quality of pipeline • Ease manpower burden • Reduce disruption & destruction • Information sharing & Transparency • Shared understanding of failure modes • Collectively mitigate risks

10. Energy Demand • Issues: US is projected to become an energy exporter @ 2020. Energy for transportation and increased electrical demand of emerging economies drive concerns • If world competition increases, world price increases • If North American reserves are not fully realized, we again become and importer and need to compete on the world market • Effects: • Diminishing Economy due to increased costs • Competition with other emerging countries (China / India) • Corrective Actions: • State department helping industry in developing India and China. Encourage their membership in the Organization for Economic Cooperation and Development (OECD) • Continued R & D to encourage diversification is sources of energy, specifically Natural Gas, and Renewables • Continued R& D and incentives in Transportation sector to promote alternative fuels (Bio,Hybrid, CNG), and increase use availability of public transportation.

13. Transportation Projections

14. Questions?