Hazardous Liquid Integrity Management

Risk Analysis

May 24, 2016

• Define risk and pipeline risk • How pipeline operators conduct risk analysis • Facility risk analysis • Re-evaluation of risk • Complete cycle of integrity management

Agenda

HCAs & Segment Identification

Risk Analysis

Integrity Assessments and Results Review

Remedial Action P&MMs

Continual Process of Evaluation

Program Evaluation

Integrity Life-Cycle

Pipeline Integrity Management in HCAs

49 CFR 195.452(l)(1)(ii)

• (l) What records must be kept? – (1) An operator must maintain for review during an inspection:

• (i) A written integrity management program in accordance with paragraph (b) of this section.

• (ii) Documents to support the decisions and analyses, including any modifications, justifications, variances, deviations and determinations made, and actions taken, to implement and evaluate each element of the integrity management program listed in paragraph (f) of this section.

No “Magic Bullet”

Hazardous Liquid Integrity Management

The Liquid IM Rule specifies how pipeline operators must identify, prioritize, assess, evaluate, repair and validate the

integrity of hazardous liquid pipelines that could, in the event of a leak or failure, affect High Consequence Areas (HCAs)

within the United States.

Why Do Risk Analysis?

Mayflower, Arkansas

Bellingham, Washington

San Bruno, California

Complete Cycle HCAs

Repairs/P&MMs

Risk Analysis

Assessment

Applicability

• Hazardous Liquids Pipelines

• Facilities (e.g. breakout tanks)

Risk Analysis Training Goals

• What is the significance of risk analysis in an Integrity Management Program?

• How are risk analysis programs developed and implemented?

Risk Analysis

• 49 CFR 195.452(g) – What is an information analysis? In periodically evaluating the integrity of

each pipeline segment (paragraph (j) of this section), an operator must analyze all available information about the integrity of the entire pipeline and the consequences of a failure.

• 49 CFR 195.452(i)(2) – Risk Analysis Criteria. In identifying the need for additional preventive and

mitigative measures, an operator must evaluate the likelihood of a pipeline release occurring and how a release could affect the high consequence area. This determination must consider all relevant risk factors.

• API 1160, Managing System Integrity for Hazardous Liquids Pipelines – Risk estimation is the process of combining frequency and severity

estimates into a risk value.

Defining Risk

Likelihood Consequence Risk

Risk is the chance of a negative outcome event occurring (likelihood) and the impact that negative outcome has

(consequence)

Pipeline Risk

Assesses the chance that a failure could occur (likelihood) and the negative effects (consequences)

that could result from a pipeline release.

Risk Analysis Process

Segment ID Results

Risk Factor Information (Likelihood & Consequence)

Method of Analysis/Integration

Risk Analysis Results

Assessment Methods & Schedules

P&MMs

Likelihood of Failure

• Pipeline Threat Categories – Third Party Damage

– External Corrosion

– Internal Corrosion

– SCC

– Weather & Outside Forces

– Construction

– Manufacturing

– Equipment

– Incorrect Operations

Likelihood Consequence Risk

Threats

Threats

Interactive Threats

• Definition – Coincidence of two or more threats on a pipeline segment

Earth movement exacerbating construction-related defects

Incorrect operations in an area with SCC (pressure spike on weak pipe)

Interactive Threats • Example: Earth movement exacerbating construction-

related defects

Interactive Threats

• Example: Incorrect operations in an area with SCC (pressure spike on weak pipe)

Consequence of Failure

• Impacts to: – Population

– Environment

– Business

– Other

• Impact Severity – Product

– Volatility

– Spill Volume

– Spill Transport

Likelihood Consequence Risk

How Operators Conduct Risk Analysis

Risk Analysis Methodologies

• Matrix Model

• Indexing Model

• Probabilistic Model

Matrix Model

• Subject Matter Experts (SME)

• Simplistic scaling (ex. High, Medium, Low)

Matrix Model

• Limitations

– Reliance on SMEs

– Unable to conduct “drilldowns” or dynamic segmentation

– Does not allow for complex mathematical relationships

– Non-comprehensive analysis

Matrix Model Subjectivity

SMEs

Rankings

Risk Analysis

Indexing Model

• Relative risk

• Data driven

• Risk ranking

• Risk driver analysis and drilldowns

• P&MM decision support

Indexing Model

• Risk Assessment Methodology – API 1160

Likelihood of Failure

(LOF)

Consequence of Failure

(COF)

Risk of Failure (ROF)

Indexing Model

Indexing Model

• Limitations

– Relative Risk vs. Actual Risk

– Often employs incomplete/inaccurate data

– Weightings and mathematical relationships (algorithms) are vendor driven vs. operator driven (weightings based on vendor opinion)

– Software errors

– Outputs often inconsistent with field SME feedback

– Ability to sufficiently demonstrate risk reductions

– Difficult to account for interactive threats

Probabilistic Models

• Complex mathematics/statistics

• Less subjectivity – Quantitative

• Increasing use in the industry

• Data driven analysis

• Predictive Tool

Probabilistic Models

• Limitations

– Relatively new to the industry

– Requires more sophisticated software

– Heavy reliance on complete/accurate data – data completeness/quality issues

– Software errors

– Requires more complex mathematics, statistics, and logic

– Can require that the algorithm be based on actual and verifiable pipeline performance/history

– Requires significant documentation/justification

Risk Analysis Tools: Software

• Various software platforms employed by the industry

– Range in complexity from simple screening to complex software tools

Vendor Algorithms

• Canned math – “Black Box” algorithm and defaults

– Off the shelf math

– Operator cannot demonstrate math or data flow

– Not a reflection of operator’s operational history

– No incorporation of lessons learned/insights gained from IM activities

– Inaccurate picture of risk

Historical Issues

• Simplistic risk approaches that do not provide comprehensive or meaningful risk analysis

• Use of vendor software without incorporating lessons learned, history, etc.

• Insufficient technical justification

• Immature and inconsistently implemented risk analysis programs

Risk Process

Algorithm Definition

Data Acquisition

Data Validation Input Data into

Model

Run Risk Model Review and

Validate Results

Algorithm Review

The process of Risk Analysis should be explicitly documented to enable systematic and repeatable

execution of the process.

Facility Risk Analysis

• Different assets, different methodologies

• Process approach

– Type of equipment

– Facility comparisons

Common Facility Threats

• Dead leg pipe

• Abundant aboveground

• Unmarked belowground

• Lots of moving parts

Source: PHMSA OPS. Building Safe Communities: Pipeline Risk and its Application to Local Development Decisions. October 2010.

Historical Issues

• Implementation – it’s just not happening

• Disjointed organizations – facilities managed independently from line pipe

• Pipeline risk models are linear – facilities are not

Documentation

• Clear intent, purpose, and objectives

• Responsibility for each task

• Clearly defined data/information/resources required to complete the task

• Explanation of task execution method, frequency, and process triggers

• Documentation method and retention

• Communication of results

• Improvement process

Qualifications

• Training qualifications of staff implementing risk analysis – Operator defined training

requirements

– Documentation

– Industry conferences/training

– Vendor training

– Work experience

Historical Issues

• Insufficient process documentation/language

• Omission of training/qualification criteria for risk personnel

Risk Analysis - IMP

Risk Analysis

ILI Analysis

Maintenance

Operations

Leak Detection

Pipeline Inspection

Field Personnel

Pipeline Construction

GIS

1Call / Public Awareness

Corrosion Management

Assessment Program

P&MM

Algorithms

• Operator specific and transparent

– Based on product type/operational history

– Weightings defined

– Justification/rationale documented

Data

• Import from database of record (e.g., PODS, APDM)

• Other data sources?

Risk Analysis Software

Database of Record

(PODS/APDM)

Third Party Software

MS Excel/Access

GIS Design Data

Dat

a In

tegr

atio

n

Data Challenge

Risk Analysis Software

Data Challenge

Data Quality/Import Issues?

Risk Analysis Software

Data Challenge

• Poor Data Quality

– GIS databases (PODS/APDM) often have substantial data gaps or inaccurate data (e.g., incorrect valve types, locations, etc.)

Risk Management

High Risk Pipeline

Moderate Risk Pipeline

Low Risk Pipeline

Risk Analysis Software

Pipeline Data

Pipeline risk management is the “act of measuring pipeline risks, and acting on that information to reduce risks”

Results Validation

• Operator SMEs review software outputs and documents

• Feedback loop based on validation

• Changes to results?

Risk Analysis Outputs

• Risk Ranked Segments List

• Threat Drivers

• Risk “Cross Section”

Use of Results

• Assessment Planning

– Prioritized

– Method selection

– Interval determination

• P&MMs

• Program Evaluation

Historical Issues

• Risk outputs not validated by SMEs

• Risk outputs are not consistently employed in other program elements

• Keeping data fresh year over year

• Default values

Re-evaluation of Risk

• HCA Changes

• Operational changes (including change in MOP)

• Pipeline physical modification (including diameter changes)

• Change in product

• Pipeline reroute, new construction

• Correction to pipeline centerline

• New integrity assessment information

• Periodic update

• Change to risk model

• Documentation

Historical Issues

• Failure to re-evaluate risk model scoring/weightings on a consistent basis

• Failure to re-analyze risk to account for lessons learned, new industry information, and data changes

Validate Algorithm

• Industry incident data

• Company incident, near miss, and maintenance history

Complete Cycle

HCAs

Repairs/P&MMs

Risk Analysis

Assessment

Risk Analysis

• 49 CFR 195.452(g) – What is an information analysis? In periodically evaluating the integrity

of each pipeline segment (paragraph (j) of this section), an operator must analyze all available information about the integrity of the entire pipeline and the consequences of a failure.

• 49 CFR 195.452(i)(2) – Risk Analysis Criteria. In identifying the need for additional

preventive and mitigative measures, an operator must evaluate the likelihood of a pipeline release occurring and how a release could affect the high consequence area. This determination must consider all relevant risk factors.

• API 1160, Managing System Integrity for Hazardous Liquids Pipelines – Risk estimation is the process of combining frequency and

severity estimates into a risk value.

Questions to Ask

• What risk analysis methodology are you employing?

• Are you using third party software?

• What is your process for integrating data? Do third parties support this effort?

• What is your process for accounting for subjectivity involved in risk analysis?

• What’s the technical basis for your risk calculations (algorithm)?

Questions to Ask

• How do you ensure data completeness and quality?

• Can we trace data from field activities to your risk analysis?

• What are your highest risk segments?

• What’s driving your overall system risk?

• For your highest risk segments, what are your risk drivers?

Questions to Ask

• Are risk results consistent with SME views/opinions?

• How do you ensure systematic and repeatable implementation of your risk process? What are your training requirements associated with risk analysis?

• How are risk results used? How are they communicated?

Questions to Ask

• How does new information make it into your risk process?

• How often do you review your risk algorithm? How often is it updated to reflect lessons learned, new insights, etc.?

• How have risk results improved your overall system integrity?