INGAA Foundation Spring Meeting San Antonio, Texas April 8, Allan Bradley, President & CEO Questar Pipeline

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1 INGAA Foundation Spring Meeting San Antonio, Texas April 8, 2010 Allan Bradley, President & CEO Questar Pipeline 1

2 We are doing a better job educating stakeholders. Natural gas should be a key component of U.S. energy and climate change policy. Abundant and American U.S. natural gas supply is 2,074 Tcf, up 39% in just two years. 98% North American Sustainable - 85 years of supply at current demand levels Cost - competitive as power generation and transportation fuel Clean-burning - its low-carbon content helps meet lower emissions standards Creates American jobs and supports the economy 2

3 Active Rig Count Gas production has held steady despite a 40% drop in rigs since the Oct. 08 peak Average Daily Production (Bcfd) 3

4 Producers are now in the well manufacturing business +243% +232% ,018-71% -3% -29% ,800 8,508 40,700 $7.0 $ Pinedale Field, Green River Basin, WY 4

5 1. Gas supply set to increase with fewer rigs on market than Producers ramping up drilling despite current low gas prices 3. Producers forecasting multi-year growth despite falling 2011 curve 4. Producers entering JV s or farm-out agreements at high prices 5. Basis differentials have mostly evaporated 6. International E&P companies are entering U.S. shale plays 7. Gas prices falling despite a cold winter; early storage injections 8. Global liquefaction capacity up 25% since 2008; U.S. imports still low 9. Europe continues to import LNG despite high storage levels 10. Gas demand is declining in traditional markets 5

6 Let s target two markets Power Generation Transportation Fuel (CNG & LNG) 6

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9 Pipeline Projects on the Horizon Panhandle Eastern (750) Kinder Morgan (360) Kinder Morgan (170) Northern Natural (82) Spectra (400) Bakken Pipeline (WIC) (100) Williston Basin (20) Vector (115) REX East Exp. (1,000) ANR (1,000) Trunkline (650) Southern Star (65) Seminole (80) Paso Norte Pipeline Project (380) Greasewood Lateral (Northwest) (200) Eastern & Western Flow Path (Questar) (2,000) White River Lateral (Questar) (810) Grassland Expansion (Williston Basin) (40) Bronco Pipeline (Spectra) (1,000) Kern River (500) Arvin Interconnection (Kern River) (300) Western Energy (1,000) BCF/D Total 3,737 Miles February 2010 (MMcf/d) MetroExpress (Iroquois) (300) Northeast Express (Rockies) (1,500) New Penn (Nisource) (500) Appalachia to Northeast (Spectra) (300) Spectra (800) Liberty Natural (2,400) NYMarc (Iroquois)(500) Northeast Upgrade (Tennessee) (636) Marcellus to Manhattan (Millinnium) (675) TEAM 2012 & 2013 (TETCO) (800) Dominion Keystone (Dominion) (1,000) Rockies Connector (Williams) (688) West to East Project (NFG) (625) Projects 2010, 11 & 12 (Equitrans) (900) Northeast Connector (Transco) (165) Columbia Penn (Columbia) (140) A/G Line Expansion (Natural)(139) Enogex Pipeline (Southern Star) (100) Gulfstream (750) Greenway Expansion (East Tennessee) (275) Centerville Expansion (Columbia Gulf) (235) Discovery Pipeline (Williams) (150) Worsham-Steed (Falcon Gas) (150) Gulf South (500) Gulf Coast Connector (NGS) (2,000) 800 Line Expansion (Tennessee) (400) Fayetteville (CenterPoint) (100) Henry Hub Expansion (Trunkline) (600) Haynesville (ANR) (1,800) Houston Market (KM Interstate) (400) Highland Trails (Southern Star)(1,000) ETX Exp (TETCO) (600) Henry Hub (Columbia Gulf) (200) Mid-Atlantic (Transco) (150) Eagle Hub Project (Lehman) (2,000) Mid-South (Transco) (230) Shenzi Lateral (Enbridge) (100) Tiger Exp (ETP) (600) Source: FERC Destin Pipeline (380) 9

10 Sound project execution spans four phases and embraces safety as top priority Phase 1: Market Development Phase 2: FERC Certification Phase 3: Construction Phase 4: Post- Completion Month: Project Conception Open Season Complete Request for Pre-Filing File Certificate Application FERC Issues Certificate FERC Issues Notice to Proceed Project Placed In-Service Project Completion 10

11 Phase 1: Market Development Project Management Team Front-End Engineering & Design Prelim. Environmental Review Capital Cost Estimate Rate Development Marketing Stakeholder Outreach Project Planning Meeting 11

12 The JDR process helps establish the project management team and identify all project permitting requirements to avoid project delays later. 12

13 Environmental Protection Agency U.S. Army Corps of Engineers Bureau of Land Management U.S. Forest Service U.S. Fish & Wildlife Service Federal Energy Regulatory Commission (FERC) Department of Transportation Occupational Safety and Health Administration (OSHA) State Agencies (DWR, DWQ, DAQ, etc.) Districts, Counties, and Local Entities 13

14 Phase 2: FERC Certification Project Teamwork Refine economics Financing plan Internal project approvals Detailed schedule Detailed engineering Coordinate and communicate with stakeholders Detailed environmental review ROW agreements Prepare & file draft resource reports File FERC certificate application Order long-lead-time materials Contractor selection 14

15 Phase 3: Construction Aerial Construction Kickoff environmental & safety training Daily safety meetings Safety compliance Material & equipment tracking Proactive QA & QC process Construction activity monitoring Wildlife and other restrictions Variance requests & approvals Progress reporting Testing & commissioning 15

16 Phase 4: Post-Completion Project Assessment Demobilization Follow-up environmental reclamation Project audit Economic back-cast Final project evaluation report Did we meet schedule? Did we meet budget? Review safety & environmental results Contractor assessments Recommendations/lessons learned 16

17 Southern System Expansion II Goshen Delivery In Service: 11/1/07 Volume: 175 MDth/d Distance: 59 miles Cost: $108 MM Blind Canyon Compressor Payson Delivery ML104 Loop ML104 Ext Fidlar Compressor Questar Pipeline Other Pipelines Thistle Compressor Oak Springs Compressor Price 17

18 40 miles long w/ 1,000+ sites One of America s 11 Most Endangered Historic Places (National Trust for Historic Preservation, 2004) Proposed for listing on National Register of Historic Places BLM Special Recreational & Cultural Management Area National Scenic Backcountry Byway 18

19 Wilderness Society, Sierra Club, Natural Resources Defense Council National Trust for Historic Preservation Utah Rock Art Research Association Southern Utah Wilderness Alliance Nine Mile Canyon Coalition 19

20 ML 40 ML 104 Ext. 20

21 Avoided Nine Mile Canyon as much as possible Used ROW as an access road as much as possible Controlled dust with water Limited blasting, especially near Nine Mile Canyon Implemented additional mitigation along highly visible areas 21

22 Pipeline Corridor I have worked for 15 years on pipelines and the work that you have been a part of on the Questar line in Soldier Creek is the finest example of workmanship that I have seen. The sensitivity to visual resource has created a situation where visitors to the canyon will not even know that a major pipeline runs along the road. This was no simple task, and I would like to thank you for all of your hard work. You have exceeded my expectations for this project. Rob Sweeten, BLM Visual Resource Specialist 22

23 March 2009 INGAA Foundation Workshop on Safety Culture June 2009 INGAA Foundation Safety Intervention Workshop August 2009 INGAA Foundation establishes Safety Committee February 2010 INGAA Foundation approves Safety Committee Charter May 26, 2010 INGAA Foundation Safety Intervention Workshop Work Teams underway 23

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26 Questar continues to improve its safety programs Employee Involvement & Recognition Group Recognition Meals Employee Safety Committee People Based Safety Program Newsletter Near Miss Program Oversight Internal & 3 rd Party Audits Job Site Safety Incident Investigation 26

27 Goal: - To change the safety culture Initiatives: - Employee Safety Survey - Supervisor Brainstorming Sessions - Near Miss Program Enhancements - Visitor Safety Training Program - Safety Newsletter (Quarterly) - Standard Practice Revisions (ATV/OHV, Ball & Pig Receiver, Trapped Pressure, Valve Actuator) - Poster Contests (employees & families) - Field Reference cards (locating & digging, MAOP s, Standard Practices) - Contractor JSA Program - Ergonomics (stretching program) - Driving Safety Programs 27

28 Questar Pipeline Company - Injury Incidence Rates Injuries per 100 Full Time Employees Year Miles of Pipe DOT Incidents OSHA Recordable Injury Rate Leaks Horse Power , , , , , , , ,282 28

29 Questar Pipeline Company - DART Severity Rate Total Days Away, Restricted Duty or Job Transfer per 100 Employees

30 We still have a hard time backing up vehicles! Questar Pipeline Company - Vehicle Incident Rates Accidents per Million Miles Driven Reportable Vehicle Rate Avoidable (PIPE) Vehicle Rate 30

31 Event: A solvent with a flash point of 140 o F was used to clean oil from a hot compressor resulting in a fire Flame detectors worked properly & station ESD occurred No injuries, no damage Corrective Action: Solvent substitution / procedural changes Take-aways: Employee willing to risk personal embarrassment for the greater good Culture of open reporting & communication 31

32 Contractor clearing parallel ROW Exposed pipeline attempting to remove large rock No affiliate or contractor notice No safety training Follow INGAA Foundation s Guidelines for Parallel Construction of Pipelines 32

33 Vehicle accident involving a sub-contractor Driving a foam truck to the pipeline ROW Employee had been hired by sub-contractor 3 days earlier Missed safety training 33

34 Vehicle accident involving subcontractor Delivering a compressor discharge cooler to site Excessive speed caused truck to overturn Two-month project delay while replacement cooler manufactured and delivered Contributed to 14% project cost overrun 34

35 An explosion on Feb. 7, 2010 killed five people. Blast occurred during gas line purging operation Plant under construction since 2008 U.S. Chemical Safety Board is still investigating Kleen Energy Systems 620 MW gas-fired power plant Middletown, Conn. 35

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