Research and Development Projects and Standards Development for Pipeline Safety

1. Research and Development Projects and Standards Development for Pipeline Safety National Association of Pipeline Safety Representatives Brainerd, Minnesota April 20, 2004 John S. Zurcher

2. Pipeline Industry Technology Development Characterization of Requirements Technology R&D Communication And Education Issues and Concerns Refine Requirements Industrial Application Commercialization Public Congress Regulators Industry Academia Standards Developers DOE/NIST Long Term > 5 yrs Standards Developers AOPL/API INGAA/AGA Regulators Academia Requirements for New or Improved Technology INGAA/AGA AOPL/API OPS/DOE GTI/PRCI GMRC Companies Suppliers Pipeline Companies, Material Suppliers, Contractors, Constructors, etc. OPS Mid Tern 3-5 yrs PRCI/GTI Near Term < 3 yrs • Standards • Developers: • Codes • Standards • Practices • Regulations: • OPS • EPA • MMS

3. Pipeline Safety - Layers of Protection Regulations OPS 49 CFR 192 Codes ASME B31.8 Standards NACE RP-0169 & RP-0502 API RP-1163 Practices Close Internal Survey Direct Current Voltage Gradient Hydrotesting Inline Inspection Programs ASME B31.8 S Integrity Management Standard Mfg Const Internal SCC Research Development & Demonstration Continuallyproducing thenext layers External Corrosion Threat

4. The Safety Performance of Natural Gas Transmission and Gathering Systems • A very small percentage of operators experience a reportable incident, range of 33 in 2000 to 56 in 98 • Safety incidents seldom cause fatalities, reportable injuries fell from 12.1 per year in 85-94 to 6.7 for 95-01 • Largest cause of onshore incidents is “third party damage” and second is “corrosion” • New technology, new management mechanisms and improved operations standards prevent safety incidents • Study was completed Q1-03 • Incidents per unit of gas transported fell by 40% from the three years 85-87 to 99-01

5. Relative Risk Comparison Gas Transmission Pipeline Lightning Hot Tap Water Electric Transmission Lines Drowning in Bathtub Slip, Trip, Stumble

7. Fatigue in Energy Pipelines due to Internal Pressure • A new study was initiated at beginning of this year • Initial scope is to develop a “Primer” on fatigue then look at the effects of cyclic loading due to variations in operating pressure on pipelines • Kiefner and Associates was selected as contractor to develop technical information and incorporate liquid industry findings • Gap analysis will be conducted to identify future research, if needed • One expected output is the development of a process which identifies when and if fatigue is an issue for a given pipeline segment • Peer review is anticipated through a University

8. Gas Pipeline Systems Performance Metrics • Draft of Interim report has been completed • Presently on hold due to uncertainty in direction by the Office of Pipeline Safety • Section 1 - Includes the four metrics from the B31.8S Standard, this is the present OPS solution • Section 2 - looks at customer interruptions, gas capacity reductions, and number of permits required to implement the IMP, this may be used on voluntary basis • Section 3 – very detailed for each of the nine threats and all the OPS required operation and maintenance requirements, this will not be used

9. Vintage Pipe • This project is to provide additional information for the manufacturing and construction threats for the Integrity Management Program • Battelle is working on the report, to be published by the end of 2003 • Report focuses on issues that are related to material and construction vintage issues, primarily pre-70 • Includes information on certain materials and certain construction techniques that may require additional efforts in the Integrity Management process • Report will also give guidance on remediation do’s and don’ts

10. New Industry Standards Status • External Corrosion Direct Assessment – NACE RP-0502 completed in October of 2002 and published. Presently being revised. • Internal Corrosion Direct Assessment – NACE RP-0104, dry gas, planned for completion in mid 2004. Wet gas systems to be completed in 2005. • Stress Corrosion Cracking Direct Assessment – NACE RP-0204, planned for completion in late 2004. • In-line Inspection Systems Qualification – API 1163, planned for completion in mid 2004, umbrella standard for in-line inspections • In-line Inspection Operations – NACE RP0102 to be revised in early 2004 to reflect changes in other standards.

11. New Industry Standards Status • In-line Inspection Personnel Qualifications – ASNT ILI PQ - 2003, planned for completion in mid 2004. • Communications with Public – API 1162, final draft available for review on API web site. This was approved and is being published. • Internal Corrosion Control – expired standard that is being re-instituted, issues with lack of change in re-write • Qualification of Pipeline Personnel – ASME B31Q, this standard is being drafted with planned completion in late 2004. • ASME B31.8S – being revised for technical and editorial changes plus new appendix on Confirmatory Direct Assessment

12. Reporting on Incidents by Threat • B31.8S used the 22 threats identified in previous incident studies by Kiefner • OPS’s new Incident Report has 25 threats. No one is sure how this discrepancy occurred. For the time being a interim solution has been identified • The desire to merge gas and liquid reporting format into a single fluid reporting format is being discussed • A desire to standardize internationally has been expressed by the industry and the US regulators, first step may be a North America Standard

13. Trends in R&D and Standards Development • More coordination among standards developers and more guidance by pipeline industry in general • OTC preliminarily approved concept of increasing technology transfer through standards and other publications • OTC approved alignment of PRCI activities with standards development • B31.4 and B31.8 to work more closely beginning in 2004. Includes considerations for joint publications such as integrity management (B31S), damage prevention (B31P), dent and gouge assessment (B31D), and B31G re-write. • Re-affirmation of existing standards (API 1110) and elimination of duplicates (API 1160)

14. 2004 Research Projects • Compendium of Best Practices With Current and Emerging Technologies to Prevent Mechanical Damage • Improvement of the Utility of the National Pipeline Mapping System • Locate Mechanical Damage on Pipelines • Continued Sage Use of Early Generation Pipelines • Reliability-Based Design Alternatives • Optimize Integrity Assessment Intervals • Improved Underground Storage Integrity Assessment • Managing of Stress Corrosion Cracking

15. 2004 Research Projects • New Materials and Welding Process to Lower the Costs of New Pipeline Construction • Determination of Maximum Safe Surface Loads • Leak Detection and Notification • Prevention of Critical Pipeline Strains • Effective Flow Measurement • Solutions for Adverse Crossings • Product Quality • Improved Cavern Design and Operations • Improve Application and Inspection Techniques for Field Coatings

16. Research Funding Beyond 2004 • 2004 Research Budget for Transmission is approximately $12 million • 2004 Research Budget for Distribution is approximately $50 million • In 2004, FERC funding will expire leaving research to be funded on a voluntary basis • DOT funding has increased dramatically in recent years to where it now stands at over $10 million per year • How do companies justify collaborative research in the present environment ?????

17. Cost of Managing Integrity No Rule - PLSIA 2002 $10.9 B Rule Using PLSIA 2002 $10.9 B Proposed Rule $10.3 B Cost Estimates are by OPS over 20 years Final Rule $4.7 B