America’s Natural Gas Utilities’ Distribution Pipelines

November 2, 2006

The Connection To the Customer

Topics Covered

Fast Facts Gas Utility Pipeline Safety

Regulatory Oversight Excavation Damage Impacts Safety Priorities Managing Distribution Integrity We Are In This Together

Natural Gas Utilities

Deliver 23% of energy used in the United States Distribute to 63 million homes and 5 million

businesses through 1.9 million miles of pipeline to meet customer needs

Work closely with emergency responders, firefighters and communities to ensure safety

Designed for operational excellence in the safe, secure, environmentally-friendly and cost-effective delivery of natural gas

Natural Gas Pipeline System

Pipeline Safety Legislation

Congress

Investigates Major AccidentsMakes Recommendations

Sets Minimum Regulation

Pipeline and HazardousMaterials Safety Administration

Office of Pipeline Safety

State AgenciesDirect Oversight

May Be More Stringent

Gas Utility Pipeline Safety Regulatory Oversight

Excavation Damage Causes Most Incidents

0

10

20

30

40

50

60

70

2001 2002 2003 2004 2005

Year

Num

ber

of In

cide

nts

Excav/Mech Damage

Other Outside Force

Natural Force

Misc/Unknown

Mat'l/Weld Defect

Equip/Op Error

Corrosion

Number of Incidents

Excavation by 3rd party, earth movement, flooding, vandalism

Excavation by utility operator, corrosion, materials, welds

11

Natural Gas Utilities Safety Priorities

Increased Focus on Excavation Damage Prevention Distribution Integrity Management Enhancements Transmission Integrity Management in Populated

Areas Operator Qualification Public Awareness of Pipelines and Safety Deliverability Continuity (Hurricane Preparedness,

Pandemic Flu, Infrastructure Security)

Managing Distribution Integrity

DOT Stakeholder teams formed in 2005State and federal regulatorsUtility operatorsFirefighter and public representation

Multiple meetings held throughout 2005 American Gas Foundation used as study

starting point DOT study completed January, 2006 Proposed rule anticipated by year end

What We Have Learned

Distribution pipeline systems operations are SAFE, but we can do moreOverall Approach

Excavation damage nation-wide education program and federal legislation to prevent excavation damage

High-level regulation Implementation guidanceContinue research and development

Operator written integrity management plan requirementsAddress leaks responsiblyPerform a risk assessment to determine if excess flow valves should be installed (if not already

installing devices)Collect meaningful performance measures

We Are In This Together

Natural Gas Utilities, Regulators, Legislators and the Public

Should Support A Common Sense, Risk-Based, And

Technically Sound Approach To:

Maintain or rebuild infrastructure Manage Increased excavation activityContinue to deliver natural gas safely, reliably, and efficiently, by not placing undue burden on consumerMeet the energy needs today and in the future

Questions?

Lori S. Traweek

Senior Vice President,

Operations & Engineering

202-824-7330

Ltraweek@aga.org

Natural Gas Operations: Always In Focus