Safety Management can bedefined as:. the reduction of risk to a levelthat is as low as is reasonablypracticable.Safety CultureSafety culture is a reflection of "theattitudes, beliefs, perceptions andvalues that employees share inrelation to safety".RP 1173 Pipeline Safety Management Systems"I think we need to takeanother look at your riskmanagement strategy. n

Energy Industry has had several highprofile incidentsOperational ErrorsRelaxed sat etysystemsrequirementsFriction betweenowners, operatorsand contractorsUnusual operationsMedia hypeDeepwell Horizon Offshore 2010Public perceptionRP 1173 Pipeline Safety Management Systems

Explosionsand spillsacross theUnited StatesMarcellus Drilling Rig June 7, 2010Marshall, MN July 25, 2010RP 1173 Pipeline Safety Management Systems

Contributing factors fromthe aspect of pipelinematerials, installation andoperation came together ina perfect storm which werefurther complicated byissues of training, qualitycontrol, poor internal andexternal communications,Lack of understanding,threat recognition andoversightRP 1173 Pipeline Safety Management SystemsSeptember 9, 2010

NTSB Reports Major IncidentsHome Accident Investigations Repori P ipelineP IPELI NE ACCIDENT REPORTSThe NTSB issues an accident report following the investigation. These reports are available online for reports issued since 1996, with older reports coming online soon.The reports listing is sortable by the event date, report date, city, and state. Click on any of those headings to sort the data.Title; Event date3: Report date456: City.7: StateNTSB #NTIS #Preliminary Report: Pipeline explosionand fire3/12120143/31/2014Manhattan, NewYork CityNYColumbia Gas Transmission CorporationPipeline lleYNPAR-14·01). PDFSummaryLarge Crude Oil Spill from DamagedEnbridge Energy Pipeline9/7/20109/30/2013RomeovilleILPAS-13·03). PDFSummaryEnterprise Products Natural Gas PipelineExcavation Damage, Rupture, and fire6/ 7120109/9/2013CleburneTXPAS-13·02). PDFSummaryRupture of Florida Gas Trans.missionPipeline and Release of Natural Gas5/4/20098/13/2013Palm CityFlPAS-13-01). PDFFIAi TextEnbridge Incorporated Hazardousliquid Pipeline Rupture and ·916501)- PDFSummaryPacific Gas and Electric CompanyNatural Gas Transmission PipelineRupture and Fire9/9/20108/30/2011San BrunoCAPAR-11-01PB2011 ·916501)- PDFSummaryExplosion, Release, and Ignition ofNatural Gas12124120085/18/2010Rancho CordovaCAPAS-10-01)- PDFFUI TextRP 1173 Pipeline Safety Management Systems). PDF

James Reason's Accident Model "Swiss Cheese"- Major accidents happen when all the layers holes line up.The layers of cheeserepresent the protective safetyculture layers of management,supervision , reporting, learning ,training , system design,protective equipment anddevices, rules and procedures - - and Divine intervention thatwould prevent a catastrophicloss.RP 1173 Pipeline Safety Management Systems ---'11.1 - lITechnicall11OrganizationalCONTROLS11 PeopleI

All Gas & Liquid Incidents InjuriesNational, All Pipeline Systems, All Reported Incidents: Injuries 1994-2013Gas&Liquid,.,().,Ill II·;::'Q().c:J. ().,OjP "National, Hazardous Liquid, All Reported Incidents: Injuries 1994-2013 LiquidsIll II·;::.::sc-.,o {)P " Source: PHMSA Significant Incidents Files, Sept 3. 2014RP 1173 Pipeline Safety Management Systems

Gas Distribution Vs. TransmissionNational, Gas Distribution, All Reported Incidents: Count 1994-2013.cQI"O·u'().,c"OQIt 0Cl.QIa:ccr::P '()()p,'.,OJ f'.('jSource: PHMSA Significantlncidents Ries, Sept 3. 2014National, Gas Transmission, All Reported Incidents: Count 1994- 20 13.c o" QI·u ., "Oc"OQIt q," 0Cl.QI ccti'()p,' Source: PHMSA Sigmficant Incidents Files, Sept 3. 2014RP 1173 Pipeline Safety Management Systems

AOPL Significant ImprovementsMajor Spill Causes140100806040-31%200CorrosionThird PartyEquip/Non-PipeMaterial/Seam/WeldOperator Error3 yr. avg.1999-2001 to 2010-20 12# of Barrels Released#of Pipeline Releases3001002508020060150401002050003 yr. avg.1999-2001to2010-2012(In thous.} 3 yr. avg.1999-2001to2010-2012RP 1173 Pipeline Safety Management Systems

Insufficiencies in leadership, An acceptance of deviation, Complacency, A lack of communication, Little or no training on new procedures Little or no understanding of the law,company policy, good engineeringpractice and material selection.RP 1173 Pipeline Safety Management Systems

Stakeholders are oyeesCustomersCongressionalPublic at largeRegulatory agenciesIndustry related groups affected by falloutRP 1173 Pipeline Safety Management Systems

Stakeholder RelationshipsFinancialOperationsTrainingRP 1173 Pipeline Safety Management Systems

Logic Of Investing In A PSMSReasons and drivers for adopting such a system: Ethical - we have a moral obligation todeliver our product without injury to our ownemployees, ratepayers, stockholders, theenvironment and general public Legal - In a court of law we are bound bythe regulatory system we are governed by Financial - Accidents cost way more thanthat what we invest in safety systemsRP 1173 Pipeline Safety Management Systems

Meaningful metrics in IM- NTSB recommendation to PHMSA to develop- On July 10, 2014 issued:Guidance 1for Strengthening Pipeline SafetyThrough Rigorous Program Evaluation andMeaningful Metrics- Note: This document is to provide guidancedescribing methods to evaluate and measure IMprogram effectiveness. This document is not a regulation and creates no new legalobligations.RP 1173 Pipeline Safety Management Systems

NTSB 2012 Recommended Action SMSs continuously identify, ad dress, and monitor threats to the safety of companyoperations by doing the following :1. Proactively address safety issues before they become incidents/accidents.2. Document safety procedures and requiring strict adherence to the proceduresby safety personnel.3. Treat operator errors as system deficiencies and not as reasons to punish andintimidate operators.4. Require senior company management to commit to operational safety.5. Identify personnel responsible for safety initiatives and oversight.6. Implement a non-punitive method for employees to report safety hazards.7. Continuously identify and address risks in all safety-critical aspects ofoperations.8. Provide safety assurance by regularly evaluating (or a uditing) operations andcontractors to identify and address risks.3-PHMSA Web Conference APl-11 73 0pening - Path Forward - RM.pdfRP 1173 Pipeline Safety Management Systems

NTSB Report- Marshall, Ml - July 10, 2012 -API Workshop on Management Systems October 4 , 2012 - Initial Meeting of SMS Development Team Members - December 18, 2012Revision 6.0: June 30, 2014API 1173 - Pipeline Safety Managem ent SystemIDTaskJul1 Draft R-05 (Revision 5)2 Draft R-063 Draft R-07-2013Aug Sep OCt Nov Dec4 External Reader Group Review/Comment R-07S Draft R-086 Draft R-09-7 Draft R-108 Publie Wortsllop #19 Public I Stalceholder Reluse - R· 10Jan2014Feb Mar Apr May Jun JulOct Nov Dec2/ll10 PublK Comment Period R-10Aug Sep4/1111 Comment Resolution I Draft R-1112 Publtc Wortsllop #27f215 API Balloting (OTG I Final Public Comment Period)6/2016 ANSI Bal loting6/2D8/ 117 Comment Resolution/ Draft R-1218 API Re-BallotU/ 119 ANSI Re-Ballot9/1520 Comment Resolution I Draft R-1321 Presentation of final draft of API 1173Wortgroup Meeti!lgs11/ 11.2 /1 .7/ 10111239126 10/11 U/ZO 12/16l/5RP 1173 Pipeline Safety Management Systems9-1021-2929-30 25-26

What A PSMS Should Look Like RP 1173 Defines what constitutes such aprocedure SimplifiedPlan,Do,Check,s.-*e,," /"1,:o.-.· .,a.ActWhere are you now and where do youwa nt lo be?\ Can Stock Photo- csp16142911How do youmanage your improvementand measure your progress?RP 1173 Pipeline Safety Management Systems\How do you move forward?

Does It Mean Pipeline Safety Management SystemStandard API RP 1173 (RecommendedProcess) Pursuing continuous improvement bymaking pipelines and operations safer A coordinated (also termed holistic)approach to ensure the methods andpractices we use to protect our plant,operations and stakeholders which willultimately reduce avoidable incidentsand accidents Practiced by the aviation, nuclear andsimilar high profile industriesRP 1173 Pipeline Safety Management SystemsOn NeAccidents

Other Industry Models - DuPont DuPont Is A Very High Profile ManufacturerHas 22 elementsRP 1173 has 1O Elements1. and Management CommitmentStakeholder EngagementRisk ManagementOperational ControlsIncident Investigation and EvaluationSafety AssuranceManagement Review and Continuous ImprovementEmergency Preparedness and ResponseCompetence, Awareness and TrainingDocumentation and RecordskeepingRP 1173 Pipeline Safety Management Systems

Canada's Safety Culture Initiative SAFETY is an overriding value and priority Everyone is aware of known hazards and vigilant to newthreats Employees feel empowered and recognized for makingsafe decisions No one would hesitate to report a safety hazard, thecommitment of an error or the introduction of a threatwithout fear of reprisal or disciplinary action; even themost junior Everyone works safely with or without people watching Everyone is continuously learning from their ownexperiences, and those of others with the goal ofadvancing safety.RP 1173 Pipeline Safety Management Systems

Canada's National Energy Board Safety Culture Drivers----Driver # 1 - Production Pressure Example- I.e.; It's cold delivery pressures are falling- We can't do any overtimeDriver #2 - Complacency Example- Oh it's OK we've exceeded MAOP before- It's never been a problem beforeDriver #3 - Accepting Deviations Example- It's been like that since I began working hereDriver #4- Tolerance of Inadequate systems and resources Example- Poor communications and inadequate funding of projectsRP 1173 Pipeline Safety Management Systems

Canada's National Energy Board Safety Culture Deterrents----Deterrent # 1 - Leadership committed to doing it safely Example- Competent engineering designs, practices and funding- Do it right or don't do itDeterrent #2 - Vigilance Example- Management by walking around and seeing it done properly- Ensuring everybody knows the right way to get it doneDeterrent #3 - Empowerment and Accountability Example- You have a duty to make it safe and you are expected to do itDeterrent #4 - Resiliency Example- Able to resolve difficult situations and adjust resourcesRP 1173 Pipeline Safety Management Systems

Coordinated Industry Approach Oil, Gas, Regulatory Initiative- API-AOPL-AGA-APGA- GPTCAdAAssociation of Oil Pipe Linest11)AmericanPetroleumInstituteAmencan Gas As ociationAmerican Public Gas Association- INGAA GAS PIPINC \ ology.- NAPSR- PHMSAco 1111111' / f ccPHMSAU.t Depat'"nenl al rcri!pOll :II.onPlpoand Hoiarefous MaJtr1ials alefy Adml11 motionRP 1173 Pipeline Safety Management Systems

Pipeline Safety Excellence Initiative1) Embrace a joint set of safety principles,2) Undertake continuous industrywide safety improvement efforts,3) Report annually on industrywide pipeline safety performance, and4) Annually assess and pursue high priority pipeline safety initiativesRP 1173 Pipeline Safety Management Systems

In 2014, the liquid pipeline industry is launching itsPipeline Safety initiative. It reflects the shared values and commitment wehave to building and operating safe pipelines. One of those pipeline safety values iscommunicating with stakeholders. Pipeline operators are committed to sharingpublicly the results of industrywide safetyperformance. At its heart, Pipeline Safety Excellence TM is aboutcontinuously improving pipeline safety until wereach the ultimate goal of zero incidents.RP 1173 Pipeline Safety Management Systems

AOPL & API 2012 Joint Principles Zero IncidentsOrganization-Wide CommitmentA Culture of SafetyContinuous ImprovementLearn from ExperienceSafety Systems for SuccessEmploy TechnologyCommunicate with StakeholdersRP 1173 Pipeline Safety Management Systems

RP 1173 Pipeline Safety Management Systems

VII I. AppendicesLinking Recommendations to Standards and RegulationsBuilding Confidence in Pipeline SafetyThe ro le of management systems in achieving our goal of zero incidentsAn INGAA IMCI W hite PaperOctober 2012*RP 1173 Pipeline Safety Management Systems

INGAA Regulatory Approach Begin withB31 .8s Integrate CFR192 and GasIntegrityManagementInspectionManual :InspectionProtocol withSupplementalGuidance, Jan1, 2008, Rev. 5Gu.11\111\iTll.! tla., '""l)lsb·iu l»n flplrs' /irt:TSYourCompanyPSMS' Pla:tRP 1173 Pipeline Safety Management SystemsrirnJ't., \fl n. . .,.,.lllCol l.\TlV''P\11I1M·'· ····- ------ -·----M .h . U*-""t . .hllU',,. . . -.i:-: :---- HMSAC')M la l"lrilr).b.!l'M' Ir ,."'-""'.lll\1M 6o11 P.uKoh\111 . .1. Qio11.- . .--------·- --·-":'-

Plan, Do, Check, ActRisk mentManagemen1ReviewACTLeadership andManagementCommibnentCompetence,AwarenessDOand TrainingDocumen1a1ion andRecord KeepingSlakeholderEngagementCllB:KIncident Investigation. Evaluation andLessons Learll(!dSafety AssuranoeMeeting Roll Out RP 1173July 02, 2014 Alexandria, VAContinuous Improvement is the GoalRP 1173 Pipeline Safety Management Systems

Guidance Manual July 10, 2014Guidance forStrengthening PipelineSafety ThroughRigorous ProgramEvaluation andMeaningful MetricsOrHow to comply with:49CFR195 Liquids49CFR 192 Gas Xmsn49CFR 192 Gas Dist.ADB-2012-10 (121s120 12).- ------- --IIIIIIIIII\'IIIIIIIIIII'.RP 1173 Pipeline Safety Management Systems------ .-,,,.,.

1. Leadership and Management Commitment2. Stakeholder Engagement3. Risk Management4. Operational Controls5. Incident Investigation6. Safety Assurance7. Management Review8. Emergency Preparedness and Response9. Competence, Awareness and Training10. Documentation and RecordskeepingRP 1173 Pipeline Safety Management Systems

Plan -Assess The ExposureDo - Develop an E-Plan with:1. Operational Controls2. Establishes competence3. Provide training4. Document plans andrequired goal metrics5. Engage stakeholdersInternalEmployees, OwnersExternalPublic, Regulatory &E RespondersRisk ContinuousImprovementACTManagementReviewCheck - Investigate, EvaluateAct - Change For The Sake OfContinuous ImprovementRP 1173 Pipeline Safety Management SystemsLeadership andManagementCommitmentDOCompetence,Awarenessand TrainingDocumentation andRecord KeepingStakeholderEngagementCHECKIncident Investigation, Evaluation andLessons LearnedSafety Assurance

Process safetyleadershipRisk ident iificationand assessmentRisk ma.nagementReview andi mp ro·vementRP 1173 Pipeline Safety Management Systems

Distribution ooerators Hello! RP 1173 Pipeline Safety Management Systems

July 10, 2014 Distribution Affected Up to this point 192 & 195 Reference- Guidance 1For Strengthening Pipeline SafetyThrough Rigorous Program Evaluation andMeaningful Metrics- This document is to provide guidance describingmethods to evaluate and measure IM programeffectiveness. This document is NOT a regulation and creates no new legalobligationsRP 1173 Pipeline Safety Management Systems

#1 Element - Leadership What must leadership do to make this work ?- Accountability For Resource AllocationShall Be Assigned To An Executive with Responsible Authority- Top Management to 1st line supervisor must makeresources available to build a safety culture Time Money Manpower 13 Points of Guidance I Direction- Top Management to 1st line supervisor must becommitted to the elements and lead by example No Ignoring the principles of the anticipated safety culture Provide goals and accountability for what is expected Build a dialogue and promote openness without retribution forreporting errors omissions or personal inadvertent mistakes Provide feedback on progress and be flexible to change thingsthat aren't workingRP 1173 Pipeline Safety Management Systems

#2 Stakeholder Engagement PSMS Plan Shall Provide A Methodology For TwoWay Communication and Engagement With:- Internal Stakeholders All Owners, Employees, Contractors and Suppliers- External Stakeholders Regulatory, Public, Abutters, Responders, other public.agencies PSMS Plan Shall Provide Designated Personnel- To Interact & Describe the Goals, Methods andOrganization of the Safety Management System- Those Persons Who Will Receive and DistributeNecessary Operating CommunicationsRP 1173 Pipeline Safety Management Systems

RP 1162 External Stakeholders Inform Abutters, Public, Emergency Responders,Public Agencies, Excavators and Other Affected Parties-195.440 and 192.616-Good Guideline Follow PHMSA Form 21 Public Awareness Program EffectivenessInspection, July 21, 20 11, Rev 0 Pipeline Safety-Damage PreventionEmergency ResponseEmergency ContactsGeneral Pipeline Awareness Measuring effectivenessNeed to How we are doing getting The Word out toour Stakeholders PAPERS the Public Awareness Program Effectiveness Research Survey(PAPERS),RP 1173 Pipeline Safety Management Systems

Murphy's Law Assessment Of The System- The bigger the length and complexity of the system the greater the riskof individual type failures.- Break it down into components, materials, & product composition.- Determine failure modes and frequencies. (Likelihood and consequences)- Go after the most human interactive catastrophic scenarios first Protect Life first and property second- Threats and hazards are more than just pipeline components Organizational Attitude - "Nothing ever happens here," We're too small"Culture with no sense of responsibility, inclusion or empowermentLack of system knowledge and operating principlesDisgruntled or complacent employees, contractors, ira te abutters andcustomers, Product supply, Environmental, Terrorism, public lack ofconfidence, Lack of Financial and resource support Lack of oversight, sharing of knowledge and failing to learn from othersmistakesRP 1173 Pipeline Safety Management Systems

0 & M Plan-Define how your system will be constructed, maintained and operated- and stick to it! Conduct annual reviews- Ensure that as components, procedures and processes change,everyone gets training (MOC)- Temporary, infrequent or unusual operations need to be supervisedclosely. Tailgates prior performing any work. Especially hot taps,purging and pressure testing. E-Plan- Test the response system to make sure it works. Consider distances,environmental, civil disruption and vandalism, supply curtailments andequipment resource sharing consortiums. Learn from others incidents.- Police, fire and first responder liaison is important prior to incidents MOC's- A process of documenting and defining change risks and responsibilityRP 1173 Pipeline Safety Management Systems

Use of contractors- The use of contractors or outsourcing operatingfunctions must be documented in the PSMS Designate who is responsible for the contractor Internal/External Contractor must adopt and perform to the principles Contractors must have safety orientation and training inpolicies Contractors must be evaluated (Inspection) Contractors must be aware of and communicate risks Contractors must participate in MOC process andprocedureRP 1173 Pipeline Safety Management Systems

Operational Control-Stop Order If you see something; Say something- Any person on the job site that recognizes adiscrepancy, impending failure or hazardoussituation is obligated and encouraged tocommunicate his perspective.- The spirit of this premise is to be able to bring allemployees into the process without fear ofridicule or repercussions.- This includes the most junior of positions to themost senior of executives. No safety question gets left unresolvedRP 1173 Pipeline Safety Management Systems

Secure the incident scene, Protect people and the environment, Maintain and recover importantevidence and testimony.RP 1173 Pipeline Safety Management Systems

Audit your programs- Did you meet your goals- Do your employees know the program andexpected results- Analyze your collected data- Performance evaluationsRP 1173 Pipeline Safety Management Systems

Management signs off on yearly audit- Based on goal progress make adjustments andsets new or continuing prioritysRP 1173 Pipeline Safety Management Systems

Emergency Preparedness and Response Ensure that all materials, training andresources are available to meetanticipated possible scenarios- Sister Industry company contacts- Suppliers- Contractor capabilitiesRP 1173 Pipeline Safety Management Systems

Competence, Awareness a !nd Training Operator Qualification- Technically competant- Safety, CPR, First Aid formalized programs- Awareness by experienceRP 1173 Pipeline Safety Management Systems

Documentation and Recordskeeping If it isn't on paper it never happened- MeaningfulRP 1173 Pipeline Safety Management Systems

RP 1173 Pipeline Safety Management Systems Marcellus Drilling Rig June 7, 2010 . Contributing factors from the aspect of pipeline materials, installation and . Jul Aug Sep OCt Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1 Draft R-05 (Revision 5) 2 Draft R-06 3 Draft R-07 4 External Reader Group Review/Comment R-07 S Draft R-08 .