Lessons Learned in MAOP Validation Process

1. Lessons Learned in MAOP Validation Process August 21, 2012 Chris Foley Vice President RCP Inc. PROFESSIONAL ENGINEERS. REGULATORY EXPERTS. TRUSTED PARTNERS. www.rcp.com

2. Professional Engineering Consulting Firm • Pipeline Regulatory Compliance & Engineering • Asset / Compliance Management Software Applications • Pipeline Integrity Assessment Support • Acquisition Due Diligence • Long-Term Pipeline Compliance / Engineering Staff Support • Hydrotest Planning & Certification • MAOP Services • MAOP Studies (as a service) • Turnkey MAOP Validation Services • MAOP Validation Software

3. Comprehensive Tool • MAOP calculator tool • Analysis as a service & available to operators via license agreement • Comprehensive • Gas/Liquid, Onshore/Offshore, Steel/Plastic, Federal/State/LOI’s • Identifies potential MAOP deficiencies • Data gaps • Source documentation (gaps and/or questionable quality) • Differences in calculated MAOP vs. established MAOP • Links source documents to data (Traceability) • Creates a traceable association between data and source documentation • Accepts data sets in various formats (.xls, PODS, APDM) • Historical documentation / manual edits to existing data sets • .xls templates (RCP pre-configured or operator/3rd party developed) • Customizable to fit operator terminology or other specific needs • GIS data models (impartial to type or version) • Linear data (stationing/measurement) • Non-linear (distribution networks) tolerant

4. Turnkey MAOP Validation Process

5. Preparation • Evaluate current MAOP process • Determine document quality and grading standards • Single vs. complimentary document types • Deliverables & sustainability goals • Source document gaps, MAOP calculation variances, correct GIS data • Link source documents to MAOP calculated variables • Map process flow & update procedures • Imaging • Electronic library • Data repository • MAOP calculator / Reporting capabilities (slice & dice) • Location for document review • Main office, field office, off-site • # of people and their roles • Schedule, miles of pipeline, record quantity, record quality

7. Pilot • Small grouping • System location / type / pre or post regulation • Source document type • Hydrotest, Alignment sheets • Source Documentation • One touch philosophy • Organize / Index • Test and improve MAOP validation process design

8. MAOP Execution Process Flow Diagram • Source Document Electronic Library RCP Document Review & Data Extraction Capture MAOP Data to MaxOp® Operator SME Review and Gap Closure Attach Cover Sheet and Return to Box Station Corrections QC Box (Revise as Necessary) Pipeline Identification Flag Issues That Require Operator Feedback “Smart” Segmentation Update GIS data Assign Default Values Resolve Data Gaps Run MaxOp® Calculator MAOPCalculationResults Iterative Process Improvement Established MAOP vs. Calculated MAOP Research & fill missing data gaps Validated MAOP Segments Improve document quality, if possible Non-ValidatedMAOPSegments Update data sets with better data Source Document Grading Profile Re-run MAOP analysis & compare results vs. established MAOP

9. Document Review Source document data posted to MaxOpTM cover sheet Unique ID assigned to each source document / folder / file Bar code creates a traceable link from the data back to the source document (scanned image)

10. Quality Control Challenges • Historical documentation • Stationing listed (if any) may not match current GIS standards • Unsure if the document is the most current for that segment • Ex. HQ alignment sheets vs. redlines @ field offices • Filing structure isn’t conducive to limiting research to Class 3 & 4 and HCA’s • Organized by WO / AFE# • Merging of GIS & Historical documentation • What is the source of the electronic data (GIS, risk, .xls, ILI, etc.)? • Historical takes precedence unless otherwise determined by operator (PHMSA ADB) • Terminology of documentation not matching GIS terminology • Ex. line identification – Line #2 South TX Jct. vs. Route Code 12345 • Expertise of Document Review & QC Personnel • Natural trade-off’s between quantity, speed, quality & cost • Steep learning curve, must be willing to invest in strong training & QC process • Document review can be tedious; must let those who have mastered this process to promote up to QC / other roles

11. Discrepancy Resolution • PHMSA ADB 12-06 • Annual report due 3-15-2013 • Class 3 & 4 and HCAs in Class 1 & 2 (Annual Report NOPR?) • Gaps in source documentation • Poor quality document grades • Calculated MAOP < Established MAOP • Are there newer or higher quality source documents elsewhere (“Complimentary Documents”)? • Linear reference & stationing issues • Non-linear (distribution system) replacement projects • Old source document replaced with new one

12. Identify Potential MAOP Deficiencies

13. Prioritize & Mitigate “Problem Segments” • What is PHMSA’s next step after the 2013 annual report? • PHMSA Annual Report Revisions NOPR (4/13/2012) • All transmission mileage validated (not just class 3&4 and class 1&2 HCA) • Deadline March 15, 2013 (not July 3, 2013 per PHMSA reauthorization bill) • Industry Comments • Hydrotest or other? • Anyone want to go in w/me to buy/build hydrotest company?!?! • Schedule and priority? • Likely some risk-based approach

14. NOPR Annual Report Section Q

15. NOPR Annual Report Section R

16. SustainabilityWork / Asset Management Systems • Link source documents to MAOP data • GIS (PODS, APDM, other) • MAOP Data Books (hard copy vs. electronic) • Develop/improve MAOP procedures • Data capture • Data repository • Responsibilities • Don’t want to repeat this effort!

17. Questions? Chris Foley RCP Inc. Vice President cfoley@rcp.com (713) 655-8080