Chad Zamarin Chief Operating Officer NiSource Midstream Services For :

1. Integrity Management Continuous ImprovementFitness For Service and Management of Pre-Regulation Pipe Chad Zamarin Chief Operating Officer NiSource Midstream Services For: Gas Pipeline Advisory Committee December 13, 2012

2. What Is Fitness For Service (FFS)? The ability of a system or componentto provide continued service, within established regulations and margins for safety • Well-accepted approach to evaluate condition of a system or component to determine acceptability for continued operation • Applied in petroleum refining, petrochemical, pulp and paper, nuclear, coal and gas-fired electric power industries • One of the first acknowledged threat specific applications was in the pipeline industry • B31G, a method for calculating the remaining strength of pipelines in areas with metal loss, first published in 1984

3. Fitness For Service (FFS) for pipelines Disciplined approach to assessing the condition of a pipeline component or system to demonstrate safety and reliability • Not a bypass for strong regulations – in fact, a basis for strong regulations • Process focused • Based on sound engineering • Numerous examples within existing regulatory framework • Alternative MAOP (liquids and gas) • ERW Seam Integrity • Threat specific integrity assessment • Defect specific engineering critical assessment (ECA)

4. Significant Focus on Records and MAOP • PHMSA Advisory Bulletins • NTSB Recommendations • California MAOP Order MAOP impacts numerous key functions • Understanding MAOP and related properties are critical to operating a safe pipeline system “Traceable, verifiable and complete” 3

5. INGAA Commitments Fitness For Service for Pre-Regulation Pipe and MAOP Validation Recognized need to define and implement a “fitness for service” protocol for pipelines built prior to regulations Develop and apply guidance, including a process for systematically validating records and the MAOP. Process will address NTSB recommendations and PHMSA advisory to demonstrate traceable, verifiable and complete records Where records do not meet this standard, a process will include MAOP validation protocol to be applied within a defined period of time

6. Fitness For Service for Pre-Regulation Pipe and MAOP Validation • Augmenting risk assessment and threat management to address material threats more aggressively for previously untested pipe. • Where traceable, verifiable and complete records exist to establish MAOP, and there is a pressure test to 1.25xMAOP, continue to operate under 49 CFR 192. • Where records are incomplete, or if the pressure test does not meet above criteria or there is no historical pressure test, apply FFS Process For Managing Pre-Regulation Pipe. • Where records do not exist or are incomplete for a segment containing short sections of pipe in a replacement project or tie in of a line or appurtenance prior to the Federal regulations coming into effect, assign the segment as a high priority for hydrostatic pressure testing, direct examination and testing or replacement (San Bruno Provision – High Priority Slide 13). • Evaluate use of historical pressure tests and piggability • INGAA is working with AGA, API, AOPL and research community to develop ILI technology to evaluate material and construction threats in lieu of hydrostatic pressure testing.

7. Process for Traceable, Verifiable and Complete Records Locate Records Traceable, Verifiable and Complete Record Guidance Compile Data Are There Gaps In Data? Are Gaps Resolved? No Define Means To Resolve Gaps Verify Data Document Gaps Yes Lack of Pressure Test Meeting 1.25xMAOP - Apply Process For Managing Pre-Regulation Pipe No Yes Apply MOC In Changing Records Link To Data Base and Retain Valid Data

8. Process For Managing Pre-Regulation Pipe Fitness For Service for Pre-Regulation Pipe and MAOP Validation • Legislation included an MAOP / records requirement, broad stakeholder need • INGAA commissioned workgroup focused on records and MAOP • Broad Industry Involvement • Operators are already aggressively researching their systems

9. Process For Managing Pre-Regulation Pipe Fitness For Service for Pre-Regulation Pipe and MAOP Validation • FFS Process based on prior precedent – hazardous liquids regulation • Highest risk pipelines likely require pressure test if records are not available • Medium risk pipelines will require test or equivalent measure on longer timeline • Continue operating low risk pipelines under current regulations

10. Process For Managing Pre-Regulation Pipe Fitness For Service for Pre-Regulation Pipe and MAOP Validation Discussion Draft – Work In Progress

11. Risk Based Alternative Process For Managing Pre-Regulation Pipe Fitness For Service for Pre-Regulation Pipe and MAOP Validation Risk Based Alternative Draws From Approach Used for Hazardous Liquid Pipelines at 49 CFR 195.303 LF-ERW is low frequency electric resistance welded; EFW is electric fusion or flash welded; and JF is joint factor as defined at 49 CFR 192.113 Discussion Draft – Work In Progress

12. Fitness For Service for Pre-Regulation Pipe and MAOP Validation Executive Champion Chad Zamarin Chief Operating Officer NiSource Midstream Services czamarin@nisource.com Technical LeadMark HerethManaging DirectorBlacksmith Group/P-PICmlh@p-pic.com