INTEGRITY MANAGEMENT SYSTEM FOR THE ULTRA DEEPWATER MEDGAZ PIPELINE 23rd World Gas Conference, Amsterdam 2006

Jay Chaudhuri, MEDGAZ S.A., Spain Don Mackinnon, JP Kenny Ltd., UK Gopi Rengasamy, Infosys Technologies Ltd., UK The MEDGAZ Project

Project Highlights • Designed to deliver 8 BCM/y gas during Phase 1; potential for capacity upgrade to 16 BCM/y by installing a parallel pipeline. • The Medgaz system will consist of an onshore compressor station at Beni Saf, Algeria (BSCS) • A deepwater 24 inch diameter pipeline across the Alboran sea – Maximum depth: 2155 m – deepest depth for an European pipeline – Approximate offshore length: 210 kms • A gas reception terminal near Almería, Spain (OPRT) • Has received backing/funding from EU-TEN programme • Spanish and Algerian institutional support for First Gas in early-2009

Ownership structure

TOTAL 12% ENDESA 20% 12% CEPSA GdF 12% 20% BP 12% 12%

2 Proposed Pipeline Route

3 Medgaz Project : Economic Rationale

• Spanish gas consumption has grown from 21.4 BCM in year 2002 to 28.3 BCM in year 2004 – Anticipated demand for year 2011 exceed 44 BCM

• Gas demand at 18% compound rate. – Contributing Factors • Manufacturing growth • Switching to ‘Kyoto Protocol’ friendly fuels

• Economic growth rationale for investments in infrastructure capacity of energy market

• Gas demand from CCGTs increased by 66% in 2005, compared to 2004 – Contributing factor: Start-up of a number of gas fuelled power stations (Source: Sedigas)

• Spain dependency on gas imports: 99.6% – LNG: 65% – Gas via pipeline: 35% – LNG price penalty factors: – liquefaction – sea transportation – re-gasification

4 Spanish Gas System Capacity (Source: CNE, 2004)

90,00

80,00

70,00

60,00

50,00

40,00 bcm/year

30,00

20,00

10,00

0,00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year

GME Larrau Medgaz Barcelona Cartagena Huelva Bilbao Mugardos Sagunto Annual demand Peak demand

5 LRMC supply cost (source: OME)

Supply costs* for potential gas supply for SPAIN (2010 - 2020)

ALGERIA via Medgaz ALGERIA via GME NETHERLANDS ALGERIA-LNG NORWAY-North Sea Troll EGYPT LNG LIBYA LNG NORWAY-North Sea Medium fields VENEZUELA-LNG TRINIDAD &TOBAGO-LNG QATAR LNG NIGERIA LNG IRAN LNG UAE LNG OMAN LNG YEMEN LNG NORWAY- LNG Snohvit NORWAY-Norwegian Sea

0,8 1 1,2 1,4 1,6 1,8 2 2,2 2,4 2,6 2,8 3 3,2 $/MBTU * Long Run Marginal Cost excluding producer country's royalty 6 Pipeline Integrity Management

• Pipeline integrity ‘core business’ objective for MEDGAZ

• Framework to resolve the issues of Pipeline Integrity Management resulting from conventional design-construction-operation approach

Long-term operational Phase Design phase Construction phase Phase

• Routing alternatives • Disjointed survey information and • Maintenance of accurate data CAD information from design and construction • Geophysical and geohazard phases and the project characterization of seabed and • Lack of simulation and accuracy ‘Knowledge Database’ underlying strata • Requirement of manual • Effective integration of In-Line- Contributing • In-service loading correlation of data at all stages Inspection database with the Factors construction ‘As-Built’ database • Construction/installation • Lack of centralized database assessments • Sub-optimal collaboration between survey, engineering, construction and handover to Operations

7 Managing Design Integrity

Design Issues • Minimisation of environmental impact • Protection of marine flora/fauna on the offshore and onshore sections on the Algerian and Spanish sides • Avoidance of natural obstacles that exist along the route • Low geological and geotechnical risks • Minimization of “free-span” risks

8 Managing Design Integrity: Leveraging Technology

ROV-TRITON XL-14

9 Managing Design Integrity: Geohazard evaluations

• Objective: To verify the integrity of the pipeline, thereby ensuring pipeline survival during extreme events. Assessments conducted • Geophysical interpretation • Probabilistic Seismic Hazard Assessment (PSHA) • Slope stability assessment • Probabilistic Fault displacement hazard analysis • Numerical runout modeling

Extreme failure events covered • Fault slip - reverse, normal and strike slip, and fault movement

• Slope failure - failure of the steeper slopes resulting in loss of support to the pipeline

• Mass sediment movements (turbidity flow and mud slide events) - impact of a fast- moving dense flow on the pipeline Canyon area on the Habibas Escarpment

10 Managing Design Integrity: Design code governance

• Medgaz pipeline design complies with the internationally known design code DNV OS - F101. • Extensive material and full-scale testing have been performed for design validation.

Finite Element Model - Buckling Collapse Analysis

11 Managing Construction Integrity: Traditional approach

Survey Data

As-built GIS Data Data (GPS)

Reports

CAD Operations & Survey Data CAD Design As-Builts Maintenance

12 Managing Construction Integrity: Fully Integrated GIS and CAD

CAD Survey Data Construction Design

Project Enterprise Construction Reports GIS Data Database

13 MIMS: Knowledge management based on different views of data

MIMS “As designed” View

MIMS DataModel Design Phase

PODS Data “As built” View (With updates from Geometry Construction phase) Geographic

Material Construction Phase Spatial hazards GIS data

• Link to GIS-CAD data “As maintained” • Other documents and file View (With updates •…. from annual •… Maintenance /Operations

Operations Phase

14 CAD – GIS – FEM : 3D Alignment Sheet

• 3D AutoCAD – ArcGIS data integrity • Export centerline of the 3D Pipe from AutoCAD and give thickness to represent the pipe in ArcGIS

15 MIMS: Logical architecture and Data handshake points

GIS Application GIS Spatial Data Financial & DTM Accounting Application

GIS Application Financial & Accounting Alignment Sheets CAD PDM Application

CAD Application: 2D Other Applications Pipeline MIMS Operations and Pipe Procurement Construction MIMS Data Integrator Data MIMS Information Pipe Tracking Database Application Engineering Integrated Other CAD/GIS Documents Database Maintenance Data /Regulatory GIS and Pipeline Survey Data Data and Format Mapping and Transformation layer Transformation and Mapping Format and Data (DTM, ILI and Sensor data) Converter for B2B Portal GIS/CAD Engineering Compatible CAD Database Application data PODS DataModel

16 MIMS Application Landscape & Business Systems Landscape

Business Systems Gas nomination, accounting & balancing

Invoices, Receipts Invoicing, Budgeting Payroll, HR Budgets, Effort Invoicing, Accruals Financials / Estimates (Man Hours) Project Accounting

eProcurement Human Resources

Purchase Requisition, Cost, Variance and Skills, Work Allocation, Goods receipt Asset Information Shifts MIMS Maintenance Management

CAD Document Inline Inspection (ILI) Management System Data Management System GIS

Pipe Tracking System FEM

Long-term operations IT components Design & Construction IT Components

17 CUSTOMER OF MEDGAZ SUPPLIER TO MEDGAZ MEDGAZ MEDGAZ /EXTERNAL PARTY /EXTERNAL PARTY

Engineering Parts Service EPC VendorsEPC ProvidersParts FIELD Provider PLANTMOBILE DATA OPERATION FEEDS DATA FEEDS OFFICE

OFFICE Shippers (Customers) PROCUREMENT/ FRONT PROCUREMENT/ FRONT ENGINEERING KNOWLEDGE DATA B2B PORTAL DATA WAREHOUSE MGMT WAREHOUSE Stakeholders PIPELINE - PIPELINE B2B PORTAL OPERATIONS - SYSTEM PROCUREMENT SYSTEM INFRASTRUCTURE/

SYSTEM(MIMS) REPORTING & ASSET OPERATIONAL MAINTENANCEASSET & PERFORMANCE MANAGEMENT Internal

OPERATIONS Team OPERATIONS MEDGAZINTEGRITY MANAGEMENT

KNOWLEDGE HR AND FINANCE & MGMT. ORGANIZATIONALHR AND ACCOUNTING FINANCE & PORTAL PLANNING APPS. ACCOUNTING Third Party APPS. Networks EXTERNAL COMMUNICATIONS/ BACKOFFICE Engg. Interested BACKOFFICE EPC Parts Internal Internal INTERNET Service Parties VendorsEPC Providers Team Team PORTAL Providers 18 Summary

- Medgaz is making significant investment in IT systems and operating processes to ensure that integrity management of the pipeline system becomes a core business function. - The proposed technology platforms will use proven engineering and database technologies; ensuring cost-effective implementation. - Higher system availability and lower operational cost are expected outcomes from efficient use of ‘knowledge management’ in Medgaz’s business processes.