AN INNOVATIVE APPROACH TO IMPROVED PIPELINE INTEGRITY MANAGEMENT

AN INNOVATIVE APPROACH TO IMPROVED PIPELINE INTEGRITY MANAGEMENT

PRESENTERS Presenter Michael Glven, PE Senir Vice President G2 Integrated Slutins Mderatr Christian Carlsn, Marketing Manager G2 Integrated Slutins 2

ABOUT G2 INTEGRATED SOLUTIONS G2 Integrated Slutins delivers expertise t pipeline peratrs, utility cmpanies, and ther energy stakehlders in seven specialized service disciplines: Asset Integrity Engineering Gespatial Systems and Services Regulatry Cmpliance Field Services Technlgy Services Strategic Cnsulting G2-IS has ffices lcated in Hustn, Texas (Crprate Headquarters), Angletn, Texas, Cncrd, Califrnia, and Denver, Clrad. Fr mre infrmatin visit www.g2-is.cm 3

AN INNOVATIVE APPROACH TO IMPROVED PIPELINE INTEGRITY MANAGEMENT

INTEGRITY MANAGEMENT PROGRAM PROGRAM IMPROVEMENT - MATURITY CURVE Imprve Prcess Reduce Expsure Safety Efficiency Cmpliance Availability Staff Attritin Reputatin 1 2 3 4 5 Cmpliant Develping Cmpetent Optimizing Excellent Reactive Predictive 5

INTEGRITY MANAGEMENT PROGRAM THE ROLE OF PROCESS IMPROVEMENT IN PROGRAM MATURITY Ptential Issues Expsures Integrity Related Break-Dwns r Events Related t Peple, Prcess & Technlgy Safety Efficiency Cmpliance Availability Staff Attritin Reputatin Integrity Management Prcesses 6

INTEGRITY MANAGEMENT PROGRAM MATURITY CURVE Imprve Prcess Reduce Expsure 1 2 3 4 5 Cmpliant Develping Cmpetent Optimizing Excellent Reactive Predictive 7

KEY ISSUE #1 RECENT INCIDENTS THE ROLE OF PROCESS Cnsider hw prcess break-dwns were significant cntributrs in recent incidents. 8

KEY ISSUE #1 RECENT INCIDENTS SAN BRUNO SEPTEMBER 9, 2010 NTSB REPORT The cmpany s pipeline integrity management prgram, which shuld have ensured the safety f the system, was deficient and ineffective because it: 1. Was based n incmplete and inaccurate pipeline infrmatin 2. Did nt cnsider the design and materials cntributin t the risk f a pipeline failure 3. Failed t cnsider the presence f previusly identified welded seam cracks as part f its risk assessment 4. Resulted in the selectin f an examinatin methd that culd nt detect welded seam defects 5. Led t internal assessments f the prgram that were superficial and resulted in n imprvements. 9

KEY ISSUE #1 RECENT INCIDENTS MARSHALL, MICHIGAN JULY 25, 2010 NTSB REPORT The prbable cause f the pipeline rupture was crrsin fatigue cracks that grew and calesced frm crack and crrsin defects under disbnded plyethylene tape cating, prducing a substantial crude il release that went undetected by the cntrl center fr ver 17 hurs. The rupture and prlnged release were made pssible by 1. Deficient integrity management prcedures, which allwed welldcumented crack defects in crrded areas t prpagate until the pipeline failed. 2. Inadequate training f cntrl center persnnel, which allwed the rupture t remain undetected fr 17 hurs and thrugh tw startups f the pipeline. 3. Insufficient public awareness and educatin, which allwed the release t cntinue fr nearly 14 hurs after the first ntificatin f an dr t lcal emergency respnse agencies. 10

KEY ISSUE #2 - SHORTFALLS OF RISK ANALYSIS THE ROLE OF RISK IN INTEGRITY PROCESSES Are yu using risk results t drive risk mitigatin decisin-making prcesses? Are results timely and being used by ther integrity prcesses? Given the investment yu may be making in risk analysis, hw are risk results used t drive verall prgram imprvement? 11

KEY ISSUE #3 REGULATORY INITIATIVES NEW RULES Gas Mega-Rule Key Prcess Areas Impacted repair criteria fr bth HCA and nn-hca areas assessment methds validating & integrating pipeline data risk assessments knwledge gained thrugh the IM prgram crrsin cntrl management f change gathering lines safety features n launchers and receivers API RP 1173 Pipeline Safety Management Systems industry respnse t recent incidents Prcess is mentined 111 times API RP 1173 PDCA 12

INTEGRITY MANAGEMENT PROGRAM APPLYING A PROCESS BASED APPROACH Imprve Prcess Reduce Expsure Safety Efficiency Cmpliance Availability Staff Attritin Reputatin 1 2 3 4 5 Cmpliant Develping Cmpetent Optimizing Excellent Reactive Predictive 13

INTEGRITY MANAGEMENT PROGRAM MATURITY CURVE Imprve Prcess Reduce Expsure Safety Efficiency Cmpliance Availability Staff Attritin Reputatin 1 2 3 4 5 Cmpliant Develping Cmpetent Optimizing Excellent Reactive Predictive 14

A PROCESS BASED APPROACH REDUCING EXPOSURE BY IMPROVING PROCESS 15

PROCESS BASED APPROACH KEY TAKE AWAYS Key Take-Aways Explanatin f Apprach Example with Templates Recmmended Resurces 16

Gvernance s Functinal s TYPICAL INTEGRITY PROGRAM INTEGRITY PROGRAM ELEMENTS Integrated Layers Management Drivers Business Public Regulatrs Assessment Management Mitigatin Management Dig & Repair Management.. mre Dcument Management Data Management Change Management Objectives Efficiency Cmpliance Safety Reliability Reputatin Availability Knwledge Cmmunicatins Management.. mre Resurces ($ PPT) Peple Prcess Technlgy 17

TRADITIONAL RISK VIEW USING FAILURE RISK TO DRIVE IMPROVED PROGRAM RESULTS Resurces are Generally Directed t Areas Exceeding Threshlds alng Asset Asset Expsure (nrmalized $/mile) $ PPT Spend Current Target Perfrmance Gap -Based View 18

TRADITIONAL RISK VIEW USING FAILURE RISK TO DRIVE IMPROVED PROGRAM RESULTS Determine Expsure - Asset ($/mile-time, 0-10, matrix, etc.) Identify Current vs. Target Expsure (perfrmance gap) Clse Gap thru $ PPT Spend ($/mile-time, $/prject, $/asset, etc.) Determine Benefit Reductin in Expsure Asset Expsure (nrmalized $/mile) $ PPT Spend Current Target Perfrmance Gap -Based View 19

A PROCESS BASED VIEW IMPROVING RESULTS THRU IMPROVED PROCESS In this Case, is Actually Managed within s s & Underlying Prcesses are where the Real Wrk Happens Imprving Results happens by wrking n these Prcesses Assessment Dig & Repair Crrsin Recrds OQ MOC Public Aware Current Expsure (nrmalized $/mile) $ PPT Spend Target Perfrmance Gap -Based View 20

PROCESS BASED VIEW REDUCING EXPOSURE IN OTHER AREAS Imprving Efficiency Imprving Asset Availability 21

A PROCESS BASED VIEW AGGREGATING METRICS Aggregated View A Cmplete Picture f Expsures Drive Imprvement thru Imprved Prcesses Build Mitigatin Strategy frm the View Assessment Dig & Repair Crrsin Recrds OQ MOC Public Aware Current Expsure (nrmalized $/mile) $ PPT Spend Cst r Efficiency Availability Cmpliance Cst r Efficiency Availability Cmpliance Cst Availability Cmpliance Cst r Efficiency Availability Cmpliance Cst r Efficiency Availability Cmpliance Cst r Efficiency Availability Cmpliance Cst Availability Cmpliance Target Perfrmance Gap -Based View 22

INTEGRITY MANAGEMENT PROGRAM MATURITY CURVE Imprve Prcess Reduce Expsure Safety Efficiency Cmpliance Availability Staff Attritin Reputatin 1 2 3 4 5 Cmpliant Develping Cmpetent Optimizing Excellent Reactive Predictive 23

THE PROCESS APPROACH AN EXAMPLE 24

A FOUR STEP COLLABORATIVE APPROACH AN APPROACH FOR IMPROVED PROCESS PERFORMANCE Discver yur Prcesses Implement Imprvements Measure yur Prcesses Discver Imprvements 25

KEY RESOURCES PROCESS BASED PRACTICES Dcuments API RP 1173 Pipeline Safety Management Systems ISO 55000 Asset Management IAM Asset Management An Anatmy PHMSA & NEB Pipeline Regulatins & Prtcls PHMSA Advisry Bulletin ADB-2012-10 Web-Sites PrcessExcellenceNetwrk.cm (Prcess Best Practices) APQC.rg (American Prductivity and Quality Cuncil) BPM.cm (Business Prcess Best Practices) TheIAM.rg (Institute f Asset Management) 26

AN EXAMPLE APPLY APPROACH TO A PROGRAM Select the Dig & Repair Assessment Dig & Repair Crrsin Recrds OQ MOC Public Aware Current Expsure (nrmalized $/mile) $ PPT Spend Cst r Efficiency Availability Cmpliance Cst r Efficiency Availability Cmpliance Cst Availability Cmpliance Cst r Efficiency Availability Cmpliance Cst r Efficiency Availability Cmpliance Cst r Efficiency Availability Cmpliance Cst Availability Cmpliance Target Perfrmance Gap -Based View 27

STEP 1 COLLABORATIVE PROCESS DISCOVERY Discver yur Prcesses Implement Imprvements Measure yur Prcesses Discver Imprvements 28

DISCOVER YOUR PROCESSES DEVELOP PROGRAM CANVAS THROUGH WORK-SHOPS Bring Stakehlders Tgether Use a Mderatr t Facilitate Discussin Identify: Initiatin & End Pints Key Human & System Activities Key Inputs & Outputs Key Rule-Sets (Decisin-Making) Supprting Systems Integrated s Keep the Canvas t One Page Key Objective Achieve agreement with stakehlders n prgram scpe and cmmn language/vcabulary t supprt discussins arund prgram imprvement 29

PROGRAM CANVAS MS VISIO 30

STEP 2 DEVELOP METRICS AND MEASURE YOUR PROCESSES Discver yur Prcesses Implement Imprvements Measure yur Prcesses Discver Imprvements 31

MEASURE YOUR PROCESSES DEVELOP METRICS TO IDENTIFY IMPROVEMENT OPPORTUNITIES & PERFORMANCE GAPS Identify Metrics that Define State f & Prcesses Identify Area (Safety, Efficiency, Availability, etc.) Ability t get Metric (Data Availability, Cnfidence, etc.) Units (Ability t Nrmalize, Meaningful, etc.) Leading vs. Lagging (Leading mre Effective?) Reasnable Number (Select a Few fr Each Area t Start) Actinable (Metrics Shuld be Actinable) Key Pint If yu can't measure it, yu can't imprve it - Peter Drucker 32

MEASURE YOUR PROCESSES DETERMINE APPROPRIATE METRICS Metric Categry Example Metrics Leading\Lagging Current Target Gap Efficiency Lessns Learned (number/prject) 4 10 6 Cst per Dig ($/dig) 450,000 <300,000 150,000 Availability Pre-Planning Meetings (number/prject) 0 2 2 Lst Revenue ($/year) 500,000 <100,000 400,000 Current Mitigated Expsure ($/asset-yr) 200,000 150,000 50,000 Data Quality Gaps (number/mile) 20 0 20 Cmpliance Unacceptable Internal Audits (number/yr) 4 0 4 Fines ($/year) 500,000 <50,000 450,000 33

MEASURE YOUR PROCESSES RELATE METRICS TO EXPOSURES Dig & Repair Expsure t Cracking ($/mile) Expsure (nrmalized $/mile) Cst r Efficiency Cst per Dig Expsure ($/mile) Availability Expsure t Service Interruptins ($/mile) Cmpliance Expsure t Audits & Fines ($/mile) Dig & Repair Expsure t Cracking ($/mile) Expsure (nrmalized $/mile) Cst r Efficiency Availability Cst per Dig Expsure ($/mile) Imprve Prcess Expsure t Service Interruptins ($/mile) Expsure (nrmalized $/mile) Dig & Repair Cst r Efficiency Expsure t Cracking ($/mile) Cst per Dig Expsure ($/mile) Cmpliance Expsure t Audits & Fines ($/mile) Availability Cmpliance Expsure t Service Interruptins ($/mile) Expsure t Audits & Fines ($/mile) 34

STEP 3 COLLABORATIVE DISCOVERY OF IMPROVEMENTS Discver yur Prcesses Manage Imprvements Measure yur Prcesses Discver Imprvements 35

DISCOVER IMPROVEMENTS A COLLABORATIVE APPROACH Discuss & Dcument Opprtunities fr Imprvement Fcus n the Elements w\in the Canvas Vet Opprtunities and Mitigatin Optins Generate 50-100 Imprvement Ideas per 36

DISCOVER IMPROVEMENTS IMPROVEMENT EXAMPLES (ALSO CALLED BACKLOG USER STORIES) Structure Item Efficiency Cmpliance Availability Stry We have had prblems with Sleeve material delays during dig repairs in the Western regin. I wuld like 100% assurance that sleeve materials will be available at least 5 days prir t scheduled dig related repairs. We smetimes find evidence f cracking near repair weld areas. This was nt previusly knwn and we wuld like t plan fr ptential crack areas prir, ensuring we have the prper prcedures & materials n-hand t address higher risk repairs. We have had prblems with demnstrating traceability f repairs t auditrs. Assessment digs are scheduled during peak use which causes lst tariff revenue. I wuld like t schedule assessments & repairs during lw utilizatin time perids. Pssible Events 5 1 10 1 Event Cst 80,000 500,000 100,000 250,000 Expsure 400,000 500,000 1,000,000 250,000 Mitigatin Optin Prvide Actual Material Inventry Pre-Ntificatin t Prject Manager Hire Engineer Expert t Perfrm Crack Analysis & Susceptibility Put in Place a System t Trace Field Activity t Materials Insert Penalty Clause fr ILI Cntractr Late Reprts Mitigatin Cst 90,000 150,000 250,000 50,000 Mitigatin Effectiveness 80% 80% 80% 50% Expsure Reduct. & ROI 320,000 3.56 400,000 2.67 800,000 2.56 125,000 2.50 Pririty Must Must Shuld Shuld 37

PROGRAM CANVAS HEAT MAP High Expsure Medium Expsure 38

STEP 4 MANAGE IMPROVEMENTS Discver yur Prcesses Manage Imprvements Measure yur Prcesses Discver Imprvements 39

STEP 4 CURRENT VS. TARGET Perfrmance Gap current target 40

STEP 4 SELECT IMPROVEMENTS TO MEET TARGET 41

STEP 4 SELECT STORIES TO MEET TARGETS 42

STEP 4 REDUCING OR MANAGING EXPOSURE Perfrmance Gap current target 43

SUMMARY AN APPROACH FOR IMPROVED INTEGRITY MANAGEMENT Imprve Prcess Reduce Expsure Leverage Existing Resurces Imprve Success Manage Imprvements Discver yur Prcesses Measure yur Prcesses Imprve Prcess Reduce Expsure Discver Imprvements 44

PARTICIPANT SURVEY & QUESTIONS CONTACT INFORMATION Presenter: Michael Glven Michael.Glven@g2-is.cm Email: Inf@g2-is.cm Phne: 713-260-4020 Website: www.g2-is.cm