Pipeline Safety Trust 2011 Annual Conference New Orleans

1. Pipeline Safety Trust2011 Annual ConferenceNew Orleans Leak Detection Liquid Pipeline Systems Larry Davied Magellan Midstream Partners, L.P. larry.davied@magellanlp.com

2. Magellan Midstream Partners, L.P. • Tulsa, Oklahoma Headquarters • Midwestern Based Pipeline System • 85 Fuels Terminals (East Coast, Midwest, Gulf Coast) • ~ 11,000 Miles of Liquid Pipelines • 4” to 36” Diameter (11” Weighted Average) • Products Transported: • Gasoline, Diesel, and Jet Fuel • Crude Oil • Heating Oil • Propane and Butane • Anhydrous Ammonia

4. Pipeline SCADA Systems • SCADA • Supervisory Control and Data Acquisition • Provides Remote Monitoring and Centralized Control Capabilities • Data Points Monitored includes: • Line Pressure • Flow Rate • Temperature • Pump/Motor/Engine Information • Product Density/Gravity • Tank Levels • Safety Device Information

5. SCADA Systems • Allow for Remote: • Opening/Closing of Valves • Starting/Stopping Pumps • Switching Tanks • Starting/Stopping P/L Deliveries and Receipts • Observing Terminals and Stations via video cameras • Alarm Receipts and Operational Notices • Directing Field Personnel • Contacting Emergency Responders

6. SCADA Operating Console

7. Pipeline MonitoringDOT PHMSA Regulations • CPM Leak Detection (195.134) – Design • CPM Leak Detection (195.444) – Operations and Maintenance • Pipeline Integrity Management (195.452) – Leak Detection for High Consequence Areas • Control Room Management (195.446) – NEW

8. DOT PHMSAControl Room Management - NEW • August 2011 Effective Date (for most sections) • Sections • General • Roles and Responsibilities • Adequate Information • Fatigue Mitigation • Alarm Management • Change Management • Operating Experience • Training • Compliance Validation • Compliance and Deviations

9. Pipeline MonitoringAPI Recommended Practices • API 1130 – Computational P/L Monitoring for Liquids • API 1164 – SCADA Security • API 1165 – SCADA Displays • API 1167 – SCADA Alarm Management • API 1168 – P/L Control Room Management

10. Leak Detection and P/L MonitoringLiquid Operator R&D Sponsored Projects • PL-1 Small Leak Detection for Liquid Pipelines • PL-1-1 Small Leak Detection in Liquid Pipelines – External Leak Detection Evaluation and Development • PL-1-2 New Look at Pipeline Variable Uncertainties and Their Effects on Leak Detection • PL-1-3 Alternatives For Small Seeper Leak Detection During In-service Hydrotesting • PL-2-1 Review and Develop Improved Technologies to Monitor Station / Facility Integrity at Unmanned Locations • ROW-3 Conceptual Pipeline Integrity & Security Management [RAM Program]

11. Liquid Pipeline SystemsSCADA Leak Detection • Significant historic and ongoing efforts and focus from Regulators, Public, Operators, and Industry Consultants/Contractors • Highly dedicated industry work groups focused on improvements, including development of Standards and Recommended Practices • Significant historic and ongoing Research and Development and applied SCADA software, hardware, and pipeline instrumentation systems • SCADA upgrades and enhancements frequently deployed • Post Incident scrutiny from Public, Regulators, Legislators, and Operators

12. …… And Yet ….. We still sometimes struggle with PROMPT: • Recognition, • Response, and • Reporting of Pipeline Leaks. RUPTUREand LARGE VOLUME RELEASEevents present the highest risk to Public Safety and Environmental Impact. While valuing the significant efforts and results in the pursuit of quicker detection of ever smaller releases, WE MUST BE GREAT IN “3R EXECUTION” for P/L Ruptures and Large Volume Release Events.

13. AOPL/API LeadershipLeak Detection Initiatives • August 2011 Formal Commitment to PHMSA for Operators to Improve Liquid P/L Safety • 7 Prioritized Initiatives • Leak Detection Improvement Initiative • Focus: P/L Ruptures and Large Volume Releases • Elements: Prompt Recognition, Response, and Reporting (3 R’s) • Goal: We Must be GREAT at 3R Execution • Recommended Leak Detection Evaluation on all Liquid Transmission Pipelines (PHMSA ANPRM)

14. Leak Detection – Liquid Pipelines Keeping People Safe And Protecting the Environment Are Paramount • #1 Goal: Don’t Have Leaks • #2 Goal: Quickly Recognize and React to Actual and Suspected Release Events • #3 Goal: Minimize False Alarms

15. Leak Detection Challenges(to name a few) • Original P/L System design and configuration • Varying vintage SCADA and leak detection applications • Batched Systems – Multiple Products • Multiple Phase Products • Reversible Flow Systems • Transient and Steady State flow conditions • Turbulent and Laminar Flow transitions • Intermittent P/L operations • Step change product temperature gradients • Elevation induced hydraulic variations • Varying P/L diameters, telescoping systems, restrictions, block valves, Tees, relief systems, control valves, and unique physical characteristics

16. Leak Detection Challenges(to name a few - MORE) • Multiple pump configurations – series, parallel, varying and multiple speed, electric and engine drives • Branch connections and multiple inlets, outlets, and partial flow alignments • Slack line and product separation static conditions • Instrumentation type, quantity, vintage, accuracy, and repeatability • Communication outages and back-up systems • Signal scan and refresh rates • Errant signal and data filtering • SCADA generated alarm quality and quantity • Operator sensory overload

17. Leak Detection Challenges(to name a few – MORE - Plus) • Human Factors • Fatigue • Relatively low incident rates of system failures for each operating company, and consequently even lower for each individual pipeline controller – experienced based learning opportunities • Simulator and hydraulic modeling training quality and frequency variances. • HVL versus Crude versus Condensate versus Refined Products physical property and hydraulic characteristics operated within a single SCADA console • HCA versus non-HCA system variances • Varying individual operating procedures • Employee turnover and training time for new Controllers • External and internal resource availability

18. Leak Detection Challenges • While challenges exist, SCADA Systems are capable of detecting actual and suspected leaks, from large to small rate releases • Equally important, SCADA Systems can detect when a pipeline segment is “behaving abnormally” • Difficult, does not imply “Impossible”, although there are limits imposed by science, technology, and application • One of the biggest challenges is accurately distinguishing between actual release events and false alarms. • False alarms can effectively desensitize the SCADA Operator, with a potential over reliance upon analysis and hydraulic rationalization (“I’ve seen this before, and it was caused by xxxx, so we can dismiss as a false alarm”)

19. 3R Execution Challenges • Strategic Shift (Large vs Small Releases) • Culture (React vs Analyze) • Applications (Distinguish Rupture from “all other events” and line imbalance signals) • Training, Drills, and Simulations Focus NOTE: 3R Execution is not dependent upon new technology or new SCADA Systems

20. 3R Path Forward • AOPL/API Liquid Pipeline Leadership Commitment • Leak Detection Initiative Work Group Established • Pilot Work Group Being Formed • Information sharing on how to “teach” SCADA Systems to: SCREAM RUPTURE! • Gather Input from Public, Emergency Responders, and Regulators on Pipeline Rupture Report • Should we distinguish between Confirmed Releases, Suspected Releases, and False Alarms?

21. Leak Detection Initiative We’re All in this Together Performance Gaps associated with P/L Rupture and Large Volume Release Events are an Industry Focus Liquid Pipeline Operators share a common goal to safely and responsibly operate and maintain our assets We Need Your Input, Feedback, Ideas, and Energy!