Risk-Based Integrity Project Ranking

Kinder Morgan, Inc. (KMI) is one of the largest midstream energy companies in North America, operating more than 30,000 miles of natural gas and product pipelines. Major interstate natural gas pipeline assets include Natural Gas Pipeline Company of America (NGPL), Kinder Morgan Interstate Gas Transmission, L.L.C., TransColorado and Trailblazer. NGPL transports up to 5.7 billion cubic feet (Bcf)/day) of natural gas through 10,000 miles of pipeline and has 210 Bcf of working gas storage. Other gas pipeline operations in intrastate service include Kinder Morgan Texas Pipeline, L.P., Kinder Morgan Tejas Pipeline, L.P., Northern Gas Company and Rocky Mountain Natural Gas Company. KMI affiliates also own and operate significant liquid pipelines, CO2 pipelines, bulk and liquids terminals, natural gas retail distribution and electric generation. KMI has a long history of performance under a risk based Integrity Management Program. Integrity maintenance projects carried out in a given year are selected from a list of proposals submitted by individual pipeline operations managers. A variety of integrity project proposals are received for specific pipeline segments each year, including replacements, in-line inspections and hydrostatic tests. KMI’s Risk Engineering group performs a risk-based evaluation of the projects proposed in any given year to identify the most cost effective collection of projects that provide the greatest level of risk reduction. The approach is based on a benefit cost ratio, defined as the expected risk reduction in dollars per mile over the project useful life, divided by the total project cost. Risk reduction is estimated using a quantitative risk analysis approach in which the failure rate reduction achieved by carrying out a given project is multiplied by the expected failure costs. The project ranking provides a useful guide for selecting projects that fit within the maintenance budget while providing the greatest risk reduction. The benefit cost results can also be used as a tool to justify the maintenance budget. This paper describes the quantitative risk evaluation approach and demonstrates its benefits, which include substantial potential savings and a convincing case to support the decisions made.