PHMSA Proposed Rulemaking:

Safety of Transmission and

Gathering Lines

Roundtable Discussion: What is

National Grid doing to prepare

for the Regulatory Changes?

Define• Need to define what the proposed rule means

Evaluate

• Need To evaluate National Grid’s Gaps

• Primarily MAOP, Material, and Modeling Gaps

Scope

• Need to clearly define the impact

• Financial, Manpower, Scheduling

Strategy

• Need to come up with a “Game Plan” to phase in required changes

• Ie, will the organization need to change?

Implement• Implementation – how do we execute on plan? What should we start doing now?

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What does the Proposed Rule Mean?

Retroactive vs forwardgoing?

Unclear Definitions: TVC, Transmission/Distribution Center,

Unclear Requirements: QRA/Probilistic Risk Assessment

with numerous new risk factors, Assessment and Verification

Schedule

Numerous submittals by Trade Groups, Professional

Organizations, Operators, and Private Parties

What will the final Rule Look Like?

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What are National Grid’s Gaps?

Starting 2012 - Comprehensive Record Review

Identified hydrotest and material documentation gaps

Estimates based on DOT pipe reviewed - does not

include non-DOT pipe which may have components

which will require assessment with conservative

assumptions

Main benefit – we now have an electronic record system

for quick retrieval of historical records rather than paper

files.

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What are National Grid’s Gaps?

DOT Transmission Pipe:

71 miles of pipe missing complete hydrostatic test

documentation

Based on proposed regulations all 478 miles of DOT pipe will

likely need to be tested or replaced due to material verification

gaps

Regulator Station Piping >20% SMYS with hydrostatic test

and/or material verification gaps (31 stations impacted)

194 miles of Moderate Consequence Area piping

Potential for non-DOT, ≥ 125 PSI pipelines to be added (700

miles)

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Modeling Gaps

Previously used a combination of two relative risk models

along with SME input

New requirements include:

Quantitative/probabilistic risk assessment – which data points ‘lends’ to high

level detailed analysis

New requirement will mandate up to 74 attributes be taken into account – many

of these have little to do with risk, ie chemical analysis

Will be extremely costly to implement and maintain

Assumption - all operators have a GIS system (we currently have 4 different

mapping systems with varying capabilities)

No implementation time line

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Assessment Gaps

Rule favors performing Inline inspection on Covered pipe.

Most of our pipelines are currently not piggable.

Many are assessed using robotic tool.

Both free-swimming and robotic tools typically not done

with crack detection tools

Other MCA-defined pipe will likely be assessed using DA

tools.

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Clearly Define the Impact

Financial:

Low End - $1.80B ($1.775B hydrotest replacement; $29 M reg station piping)

High End - $12.28B ($11.9B hydro and material replacement; $325M reg stn)

Largest component is in Upstate NY – due to mileage; smallest is NYC – good records)

Additional Annual Assessments $5.1M per year

Risk Model/data collection $50M per year

Manpower:

Added assessments

Risk analysis – highly skilled

Capital work (gas planning, record verification, construction, welding, etc.)

Mapping

Coordination of Supply (ie, NY Gas Group, NE suppliers)

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Clearly Define the Impact

Financial – $millions and potentially $billions

Where to obtain financing (rate case, capital, etc.)

Scheduling – even with adequate financing, manpower, and

coordination of supply sourcing, scheduling will be challenging:

Assessment activity in close proximity may affect results

Assessment and construction activity – may fight for resources

Seasonal limitations to some activities

Potential impact to non-IMP mandated or growth work

Many of the Safety Rule requirements have unspecified or

vague deadlines

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Organizational Change Requirements

Two Parallel Paths:

In 2012 Gas Trans. Engineering - three groups:

Integrity Management Program (IMP)

Integrity Verification Program (IVP)

Capital Projects (oversight of capital work both related to integrity

and other transmission projects – documentation)

Gas Enablement – 8 distinct corporate funding initiatives, including

current and future regulatory change

(To a lesser extent Rate Case filings will address global funding

issues)

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Implementation – What to do now (1)?

Lots of uncertainty surrounding the rule:

236 distinct comments received

Earliest ‘predicted’ final effective date May 2018

Start by Filling in some Gaps:

Explorer tool – expand applicability and range

Continue collecting metallurgical samples for gap analysis (even if

coupon not acceptable)

National Grid design standards require piggability

Implemented QRA on limited risk components

Management of Change – perform procedural review

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Implementation – What to do now (2)?

Peripheral Programs:

NPMS Program Changes – may help expedite much need

technology improvements, although costly

ROV/ASV Implementation – challenge is in pipeline

redundancy – is there an opportunity to meet requirements

concurrently

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