Safety Management Systems (SMS) & API RP 1173

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1 Pipeline and Hazardous Materials Safety Administration (PHMSA) perspective: Safety Management Systems (SMS) & API RP 1173 Western Energy Institute (WEI) Conference Phoenix, AZ April, 2018 Tom Finch Community Liaison - 1 -

2 Topics Summary of Federal Expectations Pipeline Advisory Committee SMS Working Group PHMSA information exchange with Operators regarding SMS implementation plans

3 SUMMARY OF FEDERAL EXPECTATIONS - 3 -

4 There are no expectations. Zip. Nada. None

5 PHMSA does not intend to regulate Safety Management Systems We do not intend to incorporate API s 1173 into regulation.

6 PHMSA has no expectations but PHMSA has hopes

7 Pipeline Safety with Context Measures ( ) Index (1988 = 1) Natural Gas Consumption (Trillion Cubic Feet Per Year) Petroleum Product Consumption (Million Barrels Per Day) Pipeline Mileage U.S. Population (Millions) Incidents with Death or Injury Major Hazardous Liquid Spills Calendar Year Data Sources: Energy Information Administration, Census Bureau, PHMSA Incident Data, PHMSA Annual Report Data

8 Gas Distribution Serious Incidents (Fatalities, multiple injuries, etc.) data as-of 2/6/2017

9 Gas Distribution Significant Incidents (Most reported incidents) data as-of 2/6/2017

10 Gas Transmission Serious Incidents data as-of 2/6/2017

11 Gas Transmission Significant Incidents data as-of 2/6/2017

12 We need to work together to understand what these trends are telling us and get ahead of any emerging issues before Congress decides new regulations are needed

13 We want to work with you to figure this out. PHMSA s hope is that SMS will take us to the next level in pipeline safety

14 SMS helps guide continual improvement

15 Reactive > Proactive -> Predictive

16 If SMS is So Great, Why Isn t PHMSA Turning it into a Regulation? Because

17 To achieve any level of effectiveness, the Industry (people and organizations) need to embrace the concepts, not just the letter of a law

18 Full adoption of SMS is accomplished by organizational and personal cultural change, a step change in belief and attitude

19 Copyright 2012 E.I DuPont

20 PHMSA has hopes

21 Hope that companies will take the first step on the journey Hope that companies will quickly realize value on this long process so the effort doesn t become sidelined as someone s project Hope that regulators won t interfere with the great progress being made in so many areas Hope that a bad incident doesn t cause Congress to force a regulation

22 PIPELINE ADVISORY COMMITTEE SMS WORKING GROUP

23 PAC SMS Working Group The PAC advises PHMSA (The SMS Working Group reports to the PAC) PAC Members are from industry, public and regulators. SMS Working Group Initial Focus Area: Key Performance Indicators to gauge progress of SMS implementation throughout gas and liquid industries

24 2016 PHMSA LPAC/GPAC SURVEY DATA (LIQUIDS AND GAS) 91% Yes Has your company committed to implementation of RP 1173? 86% Yes 47% Yes Has your company completed a gap analysis comparing your existing processes and procedures to the requirements of the RP? Has your company prioritized gaps and developed a plan to begin closing them?

25 PHMSA INFORMATION EXCHANGE WITH OPERATORS REGARDING SMS IMPLEMENTATION PLANS

26 PHMSA External SMS Team Byron Coy plus 5 other team members from our 5 Regions Working to better understand how companies are implementing SMS. Protocol Set based on 1173 and Safety Culture indicators Appears intimidating Industry concerns it will set cap on efforts

27 PHMSA External SMS Team Team had two info shares with companies NOT inspections, audits, reviews, evaluations, etc. Intent was to find out if we were focused on the right issues or if questions might have unintended impact. Reports that at least one, maybe both, companies felt audited. It is hard for inspectors to change communication styles. PHMSA learned a lot

28 PHMSA External SMS Team Question about what we do when we run into a company that is struggling. How can we provide incentives to encourage adoption? Decreased number of inspections? Credit given when safety problem or violations are found? How do we know when adoption is genuine? We are open to suggestions

29 Questions?