Compliance and Integrity Resource Needs Oklahoma City, OKOctober 2016 IC-Solutions-LLC

www.ic-solutions-llc.com

Oklahoma City, OKdsollberger@ic-solutions-llc.com

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Pages Aug '15 impactedsections

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2004 - Part 192, 97 Amendments (130 pg)2015 – Part 192, 120 Amendments (153 pg)

Senate unanimously approves pipeline

safety reauthorization billNick Snow – O&G Journal Apr 4, 2016

“...finish implementing 2011 reauthorization bill..”,

“...increase inspection & enforcement staff..”

Senate vote sends 2016 pipeline safety bill to

White HouseNick Snow – O&G Journal June 20, 2016

“...PHMSA wide-range emergency order authority..”,

“...operators spend more than $2 billion to evaluate, maintain,

and perform preventative maintenance on their pipelines.”Upstream Independents protest PHMSA’s proposal for

gathering linesNick Snow – O&G Journal July 25, 2016

“The producers particularly protested PHMSA’s proposing to define

“onshore production facilities” as “terminat[ing] at the furthermost

downstream point where: measurement for the purpose of calculating

minerals severance occurs; or there is commingling of the flow stream of

two or more wells.”

Regulation - UPDATES

2 pages & 2 amendments per year to evaluate applicability, revise procedures, and implement.

Organization Total Assets

Conservation International Foundation 251,532,294

National Audubon Society Inc 450,334,791

Massachusetts Audubon Society Inc 243,744,134

Student Conservation Association Inc 24,259,646

Appalachian Mountain Club 133,871,838

Rocky Mountain Institute 18,910,188

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Number of Registered OrganizationsNTEE cat. C30 - Natural Resources

Conservation & Protection

Source: National Center for Charitable Statistics (NCCS)

Annual growth rate of 4.7%

NTEE Code major category “C –Environment” annual growth 2.3%

Built on Rocky Mountain Institute’s 30 years of research and work in the field, Reinventing Fire maps pathways for running a 158%-bigger U.S. economy in 2050 but needing no oil, no coal, and no nuclear energy.

Organization Total Assets

Conservation International Foundation 251,532,294

National Audubon Society 450,334,791

Massachusetts Audubon Society 243,744,134

Student Conservation Association 24,259,646

Appalachian Mountain Club 133,871,838

Rocky Mountain Institute 18,910,188

C - Environment 2015 gross receipts $12.1B

Regulation Incubators

• THE END

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2009 2010 2011 2012 2013 2014 2015 2016

ILI miles

PT mileage

Total inspect miles

Feature excavations

Gas Transmission Inspection

Data Source: PHMSA Annual Report

ILI Terms: POD POI, and Sizing

Inspection and ILI – Gas Transmission

• 2010-2015 Time Frame• Total inspection mileage increases by 4.4% per year avg.• Total mileage decreases by 0.15% per year avg.

• 2012-2015 subset to remove 2011 anomalies.• Total inspection mileage increase by 6.95% per year avg.

• Feature excavations because they met operators criteria increase by 34.9% per year avg.

Takeaway- We are looking more pipe every year and we are finding a greater number of excavation qualifying features.

Tool advancements and a more complicated ILI Decision

Corrosion Inspection:CaliperMFLUltrasoundEddy CurrentEMATLaser

Additional Service and Data:Information XYZSweeping & ScrappingSpeed ControlMulti-diameterPMI

1960 2020

1999 2015

2007

GE Multi-diameter MFL

1977

BG high-res MFL2001

DOT 195 App C

1993

PII wheeled UT

2004

DOT 192 Subpart O

1972

KALIPER

1964

Tuboscope 90°

May 04

Act Speed CntrlDec 2004

IMU

1963

Shell eddy current patent

Sep 02

EMAT

1986

UT tool

Dec 99

TFI crack tools

Sep 08

GE MagneScan TrainJun 14

PMI

2012

SmartPlug

82% of 2015 inspected pipe

ILI technology Renaissance

Cost of Compliance incident reviewLine 901, Plains Pipeline, Santa Barbara County, CA

5/19/2015- Line 901, a 24” buried and insulated pipeline carrying heated crude oil from Exxon Mobile storage tanks in Las Flores Canyon to the Plains Gaviota Pumping station ruptured and released and approximate 2,934 bbl of crude oil of which 500 bbl migrated thru a highway culvert to the Pacific Ocean. No fatalities were associated with the release, property damage and cleanup cost are at $142,931,884 as of 12/23/2015. for images https://www.flickr.com/photos/jw4pixPenalties and Lawsuits phases are just beginning. • Central Coast Regional Water Quality violation $25,000/day & $25/gal• PHMSA estimated $200,000 penalty assessment for single day spill

PHMSA Failure Investigation Report identified contributory causes include:• Ineffective protection against external corrosion; coating & insulation system, CP system not effective beneath pipeline

insulation.• Failure to detect; ILI tool and analysis of ILI data did not characterize the extent of the depth.• Lack of timely detection;

• SCADA system lacked safety related alarms and staff did not identify abnormal conditions• Pipeline controller restarted Line 901 after rupture. • Pipeline leak detection system lacked instrumentation and algorithms to monitor line pack.• Lack of training for control room staff related to ER, shutdown, and leak detection.

Failure site feature:12.1”x7.4” 0.318 depth ~89% wall lossILI survey feature called (13 days before):5.38”x5.45” 47% wall loss

Where does Compliance activities end and Asset Management begin?

• Do you design and monitor cathodic protection for non-jurisdictional pipe?• Are you mapping your non-jurisdictional pipe?• Are your environmental risk(s) greater for your non-jurisdictional pipe?• Are your economic impacts as significant or more for your non-jurisdictional pipe?• Do you optimize your ILI and inspection excavations to document and investigate any

immediately adjacent features?

Asset Management can be tailored to make $ense.

• PetroSkills Pipeline and Terminal course content• “...key considerations for public and governmental interaction…”

• “...Safety, quality control, system reliability, availability, and regulatory compliance are integrated throughout the course...”

• “...regulatory and environmental compliance issues;..”

• Clarion Technical Conferences annual attendance to PPIM, Pipeline Pigging and Integrity Management averages great than 2,200 attendees.

• Clarion offers 18 various training, forum, or workshops related to pipeline inspection, integrity, compliance, and design.

Rule changes are requiring an increased commitment to compliance training.

Industry Training and Conference growth

IC-Solutions-LLC Services

IntegrityOperations Cathodic Protection InspectionCoordination

IC-Solutions LLC brings together 40 years of mid-continent pipeline operations, integrity, construction, and optimization experience. Our focus and primary product is regulatory compliance. We will utilize our extensive experience and background to ensure your

assets remain compliant and free of any jurisdictional interruptions; thereby leaving your schedule open for revenue generating and expense management activities. Our years of experience inside mid-sized organizations has established a value driven approach with all projects. We can help you unlock underutilized capacity and assist with operational challenges that appear in the form of

regulatory restrictions, inefficiencies or losses.

Derek Sollberger, PE – BSME, Texas Tech University, Lubbock Texas. I have served in engineering and construction roles from the end user to the well head. I have served in PM roles and Engineering & Construction Management positions that oversaw projects that range from $5MM to $980MM. For each employer, I have served in an integrity and compliance role. In addition to Midstream Capital Project Management, I have been utilized to develop and administer operation and integrity programs that ensured DOT compliance and cost effectively insure company assets retain integrity, value, and operational purpose. I have served in operational support duties for state & federal compliance efforts. I have had IMP administration responsibilities, and my projects have included: Risk analysis, ILI technology selection, ILI bid process, ILI tool confirmation & remediation, due diligence, and regulator audit preparation and representation.