BACK COVER - PAGE 8 FOLD FRONT COVER - PAGE 1

About Solomon Associates Having provided benchmarking and performance improvement consulting services
since 1980, Solomon has become “the” Performance Improvement Company for the
energy industry. We help clients realize the full technical and financial potential of
Natural Gas Transmission System Study
their existing assets and new capital projects. Comparative Performance Analysis
As an experienced company that values confidentiality and long-term relationships,
we strive to develop and hone the most creative and effective strategies to
maximize client performance through our Comparative Performance Analysis™
(CPA™) studies and consulting services. Our team of experts has on average 25 years
of industry expertise in numerous fields. At Solomon, our goal is to become your
trusted advisor and improve each operation we analyze.

Today, companies in more than 70 countries rely on our benchmarking, performance

improvement programs, and unique methodologies to keep their businesses
competitive.

Contact
John Jungman
Vice President, Pipelines & Terminals
Phone: +1.972.739.1723
Fax: +1.972.726.9999
Email: [email protected]

One Lincoln Centre

5400 LBJ Freeway, Suite 1400
Dallas, TX 75240
www.SolomonOnline.com

© 2013 HSB Solomon Associates LLC, a wholly owned subsidiary of HSB Group, Inc.

FOLD
 INSIDE FRONT COVER - PAGE 2 FOLD PAGE 7

It’s a complicated task to stay competitive given Pinpoint Your Improvement Opportunities
We help you today’s market conditions. Not only do you have to
meet or exceed all regulatory standards of operational The overarching goal of these studies is to help you identify areas to consider when improving operational performance. Our gap
maximize your performance, you also have to keep cost performance a
top priority. The near zero tolerance for environmental
analysis is the starting point to provide significant insight into performance improvement opportunities in both cost and personnel.

operational
impacts has resulted in ever-increasing pressure to Other areas included in your analysis are:
improve personnel training, inspection, and maintenance
costs. Overall, the need to maintain a high level of
performance. pipeline integrity is more critical than ever. Peer Group Analysis
Solomon compares clients’ study results
Individual Client Reports
Each participant receives electronic files that provide immediate insight into your
Solomon’s Worldwide Natural Gas Transmission System with peers that exhibit physical or operations; plus, they let you conduct additional in-house, custom analysis. Some
Performance Analysis (NGTS Study) provides the operational similarities (i.e., capacity, reporting features include:
foundation to answer the critical questions that will diameter, or geographical location). • Client Tables – These summary management reports and analysis tools are
keep you at the top of your game, like “How does our This comparison provides further invaluable for identifying improvement opportunities. Included are three types
cost performance compare to other diverse pipelines analysis and additional confirmation of of tables, customized for each business unit, that provide key performance
in our region?” and “How can we truly determine best cost and work-hour gaps. indicator ranking tables, gap analysis tables, and calculation details for each
performance for both cost and reliability?” Participation
system.
in Solomon’s Comparative Performance Analysis™ (CPA™)
study allows you to accurately measure current asset Performance Group Analysis • Study Data Tables – The Study.xls workbook includes all data tables with study
performance, providing a sound and consistent basis for averages, enabling you to perform your own data analysis. Study averages
While masking the client’s identity
managing continuous process improvements. The end are provided for both physical characteristic peer groups and performance
through data construction, this analysis
result is a means to support the financial and operational groups. Cost data is provided for three divisors.
presents rankings and performance
optimization of your pipeline operations. ranges for key performance indicators. In addition, you receive a printed, bound study book that includes an executive
summary, overall general industry observations, and a methodology section.
Natural Gas Transmission System
In-Person Study Results Review
By meeting in a face-to-face setting
Pipeline at your office, we can thoroughly
Onshore review your individual results with a The Result
Offshore focus on your performance issues and
successes. This setting allows for open With your Solomon CPA, you will be able to yield the maximum result from your
Compressor Stations discussion of the analysis and possible pipeline system by having the data you need to formulate a concrete plan for
performance improvement solutions. performance improvement and a method to monitor your success over time.
Turbine Drivers
Engine Drivers
Electric Motor Drivers

Meter-Regulator Stations

FOLD
 PAGE 6 FOLD PAGE 3

Benefits of the NGTS Study Key Features of the NGTS Study

Know Where Your Operations Are Doing Well and What Areas Need Work

MNVE Gaps Quantify performance improvement opportunities through gap Performance comparisons at business-unit level
analysis.
Pipeline 55,200 Common nomenclature and rigorous data validation
Determine competitive position within industry peer groups.
Determine Your Gaps

Operations 1,750 Comparisons by geographic regions

Maintenance (1,900) Establish performance targets and measure progress using Solomon
Complexity divisors for reliable comparison of diverse
indicators.
facilities
Technical Support (1,200)
Assess future performance impact of planned capital improvements/ Cost and work-hour gap analysis based on real data and
Administrative (1,100) modifications. identification with performance averages
Target Group Average
MNVE at Equal EPC
52,750 Demonstrate performance/capability to financial institutions and Detailed analysis of total cash expenditures, work
Thousand US Dollars security analysts. hours, and reliability
With a Solomon CPA, you will receive an MNVE gap analysis that can serve as the starting point for your performance improvement program. By Build corporate trust through performance improvement activity. Absolute client confidentiality
breaking it down into cost components, you gain significant insight into enhancement opportunities in both cost and personnel.

Drill Down to Specific Opportunities for Performance Improvement The Study Process

MNVE Expenditure Detail Comparisons Energy Consumption Personnel Work Hours Step 1 Step 2 Step 3 Step 4
1.4 High 16 We assist you in selecting We provide you industry We segregate the data into We provide you with
Pinpoint the Opportunities

Q1 Q2 Q3 Q4
1.2 14 the correct combination of tried-and-tested training, the categories that most an analysis of your

Work Hours per kEPC

Equivalent* kDth/Tcf-mi

12 business units to maximize input forms, and affect the operational performance—the areas
US $ per kEPC

1.0
10 value for your NGTS Study. instructions to efficiently and financial performance where you are doing well
0.8
8 collect data for your of NGTS facilities, and and the ones where you
0.6 Y
6 facilities. then normalize the data have room to improve.
0.4 X
4 to provide an accurate
0.2 2 comparison of diverse
0 0 operations.
Total North Target PL Low Target Study PL PL
0 25 50 75 100
Study America Group X Group Avg X Y
Total Tcf-mi, %
O&M Personnel O&M Contract Materials *”Eqivalent” refers to 9.09 MWh/Dth conversion factor Operations Major Maintenance
G&A Personnel G&A Contract Non-Personnel (efficiency factor included) Tech Support Administrative Contract

By segregating your data into the categories that most affect the operational and financial performance of your facilities, we can pinpoint the
specific areas on which to focus performance improvement efforts.

FOLD
 PAGE 4 FOLD PAGE 5

The Difference Is Solomon’s Normalizing Factors We Give You 360 Degree Insight
We understand that every NGTS is unique with different geographic and operating Solomon studies give you perspectives at two levels—the big picture of
characteristics. That is why we ensure that each participating operation is reviewed where you stand compared to your peers and the details you need to Visualize Your True Competitive Position
from an in-depth perspective with normalized data to provide a view of your true take an informed and targeted approach to improve performance.
competitive position. MNVE Expenditure – Competitiveness
Demonstrating how your company is performing in total cash
High
Our correlation (measured by r²) for Equivalent Pipeline Complexity (EPC™) indicates expenditures compared to all industry participants, our analysis uses Q1 Q2 Q3 Q4

Annualzied MNVE, US $/Tcf-mi

that greater than 90% of the controllable fixed costs variability among study specific divisors to give you a true view of your standing in areas like
participants—what we call manageable non-volume-related expenditures (MNVE)—can MNVE and energy expenses. The analysis reviews the following:
be explained using the factors that comprise EPC. Our correlation ranges are based on
Y
analysis results from more than 30 transmission systems comprising more than 150,000
miles of pipe and over 1,000 compressor and meter-regulator stations.
Manageable Non-Volume Expenditures
The MNVE per EPC metric takes into account the physical design characteristics Reflecting manageable or controllable fixed costs, the MNVE per
of the individual operation such as diameter, length, horsepower, and number of EPC provides a basis to realistically identify cost-based performance
receipt/delivery stations, etc. to give you a basis to realistically identify performance improvement areas.
improvement in these areas no matter how diverse the other facilities participating in X

the study. Low

0 25 50 75 100
Maintenance Costs
Participation, %
You get the most accurate “apples-to-apples” comparison of your operational The study analyzes maintenance costs, an important subset of cash
performance to any competitor in the study. operating expenditures and MNVE, by function and activity to provide
different perspectives for measuring performance. By using annualized Expenditure Comparisons, US $/MNVE per kEPC
maintenance costs for both compressor driver overhauls and pipeline 1,600
Q1 Q2 Q3 Q4

Equivalent Pipeline Complexity integrity rather than single study-year performance, which can vary

Annualized MNVE, US $/kEPC

Pearson Correlation Coefficient (r ) for Pipeline System Divisors
2
1,400
widely from year to year, we provide a clearer view of your performance.
r2 Developed using a patented
regression analysis of key 1,200
Diameter – length (in-mi, in-km) 0.77 Personnel Costs and Work Hours
pipeline characteristics versus Y
1,000 Current Study
Pipeline length 0.65 MNVE, EPC provides a better Understanding personnel effectiveness and efficiency is critical to
Y
Utilized capacity (Tcf-mi, m3-km) 0.41 methodology to normalize overall operating performance. We provide personnel cost metrics that X
800
pipeline industry performance indicate the number of work hours required to operate an NGTS at X Previous Study
Installed horse power 0.46
than either Tcf-miles (m3- optimal levels of performance. Included are all company operations, 600
Replacement value 0.69 kilometers) or diameter inch- maintenance, technical support, and administrative employees, as well
Equivalent Pipeline Complexity >0.90 miles (inch-kilometers). as contractors. 400
0 25 50 75 100
Participation, %
Energy Costs
Solomon separates energy costs into two components—unit energy cost Unlike using simple divisors that can mask your true performance
and energy consumption. Energy consumption per Tcf-mile (per m³-km) level, for instance giving large-diameter pipelines an advantage due to
their scale, with EPC as the normalizer, you can realistically identify
is comparable globally for pipeline size and other peer groups.
your competitive position on an apples-to-apples basis no matter what
the physical characteristics of other study facilities.

FOLD
 PAGE 4 FOLD PAGE 5

The Difference Is Solomon’s Normalizing Factors We Give You 360 Degree Insight
We understand that every NGTS is unique with different geographic and operating Solomon studies give you perspectives at two levels—the big picture of
characteristics. That is why we ensure that each participating operation is reviewed where you stand compared to your peers and the details you need to Visualize Your True Competitive Position
from an in-depth perspective with normalized data to provide a view of your true take an informed and targeted approach to improve performance.
competitive position. MNVE Expenditure – Competitiveness
Demonstrating how your company is performing in total cash
High
Our correlation (measured by r²) for Equivalent Pipeline Complexity (EPC™) indicates expenditures compared to all industry participants, our analysis uses Q1 Q2 Q3 Q4

Annualzied MNVE, US $/Tcf-mi

that greater than 90% of the controllable fixed costs variability among study specific divisors to give you a true view of your standing in areas like
participants—what we call manageable non-volume-related expenditures (MNVE)—can MNVE and energy expenses. The analysis reviews the following:
be explained using the factors that comprise EPC. Our correlation ranges are based on
Y
analysis results from more than 30 transmission systems comprising more than 150,000
miles of pipe and over 1,000 compressor and meter-regulator stations.
Manageable Non-Volume Expenditures
The MNVE per EPC metric takes into account the physical design characteristics Reflecting manageable or controllable fixed costs, the MNVE per
of the individual operation such as diameter, length, horsepower, and number of EPC provides a basis to realistically identify cost-based performance
receipt/delivery stations, etc. to give you a basis to realistically identify performance improvement areas.
improvement in these areas no matter how diverse the other facilities participating in X

the study. Low

0 25 50 75 100
Maintenance Costs
Participation, %
You get the most accurate “apples-to-apples” comparison of your operational The study analyzes maintenance costs, an important subset of cash
performance to any competitor in the study. operating expenditures and MNVE, by function and activity to provide
different perspectives for measuring performance. By using annualized Expenditure Comparisons, US $/MNVE per kEPC
maintenance costs for both compressor driver overhauls and pipeline 1,600
Q1 Q2 Q3 Q4

Equivalent Pipeline Complexity integrity rather than single study-year performance, which can vary

Annualized MNVE, US $/kEPC

Pearson Correlation Coeffiecient (r ) for Pipeline System Divisors
2
1,400
widely from year to year, we provide a clearer view of your performance.
r 2 Developed using a patented
regression analysis of key 1,200
Diameter – length (in-mi, in-km) 0.77 Personnel Costs and Work Hours
pipeline characteristics versus Y
1,000 Current Study
Pipeline length 0.65 MNVE, EPC provides a better Understanding personnel effectiveness and efficiency is critical to
Y
Utilized capacity (Tcf-mi, m3-km) 0.41 methodology to normalize overall operating performance. We provide personnel cost metrics that X
800
pipeline industry performance indicate the number of work hours required to operate an NGTS at X Previous Study
Installed horse power 0.46
than either Tcf-miles (m3- optimal levels of performance. Included are all company operations, 600
Replacement value 0.69 kilometers) or diameter inch- maintenance, technical support, and administrative employees, as well
Equivalent Pipeline Complexity >0.90 miles (inch-kilometers). as contractors. 400
0 25 50 75 100
Participation, %
Energy Costs
Solomon separates energy costs into two components—unit energy cost Unlike using simple divisors that can mask your true performance
and energy consumption. Energy consumption per Tcf-mile (per m³-km) level, for instance giving large-diameter pipelines an advantage due to
their scale, with EPC as the normalizer, you can realistically identify
is comparable globally for pipeline size and other peer groups.
your competitive position on an apples-to-apples basis no matter what
the physical characteristics of other study facilities.

FOLD
 PAGE 6 FOLD PAGE 3

Benefits of the NGTS Study Key Features of the NGTS Study

Know Where Your Operations Are Doing Well and What Areas Need Work

MNVE Gaps Quantify performance improvement opportunities through gap Performance comparisons at business-unit level
analysis.
Pipeline 55,200 Common nomenclature and rigorous data validation
Determine competitive position within industry peer groups.
Determine Your Gaps

Operations 1,750 Comparisons by geographic regions

Maintenance (1,900) Establish performance targets and measure progress using Solomon
Complexity divisors for reliable comparison of diverse
indicators.
facilities
Technical Support (1,200)
Assess future performance impact of planned capital improvements/ Cost and work-hour gap analysis based on real data and
Administrative (1,100) modifications. identification with performance averages
Target Group Average
MNVE at Equal EPC
52,750 Demonstrate performance/capability to financial institutions and Detailed analysis of total cash expenditures, work
Thousand US Dollars security analysts. hours, and reliability
With a Solomon CPA, you will receive an MNVE gap analysis that can serve as the starting point for your performance improvement program. By Build corporate trust through performance improvement activity. Absolute client confidentiality
breaking it down into cost components, you gain significant insight into enhancement opportunities in both cost and personnel.

Drill Down to Specific Opportunities for Performance Improvement The Study Process

MNVE Expenditure Detail Comparisons Energy Consumption Personnel Work Hours Step 1 Step 2 Step 3 Step 4
1.4 High 16 We assist you in selecting We provide you industry We segregate the data into We provide you with
Pinpoint the Opportunities

Q1 Q2 Q3 Q4
1.2 14 the correct combination of tried-and-tested training, the categories that most an analysis of your

Work Hours per kEPC

Equivalent* kDth/Tcf-mi

12 business units to maximize input forms, and affect the operational performance—the areas
US $ per kEPC

1.0
10 value for your NGTS Study. instructions to efficiently and financial performance where you are doing well
0.8
8 collect data for your of NGTS facilities, and and the ones where you
0.6 Y
6 facilities. then normalize the data have room to improve.
0.4 X
4 to provide an accurate
0.2 2 comparison of diverse
0 0 operations.
Total North Target PL Low Target Study PL PL
0 25 50 75 100
Study America Group X Group Avg X Y
Total Tcf-mi, %
O&M Personnel O&M Contract Materials *”Eqivalent” refers to 9.09 MWh/Dth conversion factor Operations Major Maintenance
G&A Personnel G&A Contract Non-Personnel (efficiency factor included) Tech Support Administrative Contract

By segregating your data into the categories that most affect the operational and financial performance of your facilities, we can pinpoint the
specific areas on which to focus performance improvement efforts.

FOLD
 INSIDE FRONT COVER - PAGE 2 FOLD PAGE 7

It’s a complicated task to stay competitive given Pinpoint Your Improvement Opportunities
We help you today’s market conditions. Not only do you have to
meet or exceed all regulatory standards of operational The overarching goal of these studies is to help you identify areas to consider when improving operational performance. Our gap
maximize your performance, you also have to keep cost performance a
top priority. The near zero tolerance for environmental
analysis is the starting point to provide significant insight into performance improvement opportunities in both cost and personnel.

operational
impacts has resulted in ever-increasing pressure to Other areas included in your analysis are:
improve personnel training, inspection, and maintenance
costs. Overall, the need to maintain a high level of
performance. pipeline integrity is more critical than ever. Peer Group Analysis
Solomon compares clients’ study results
Individual Client Reports
Each participant receives electronic files that provide immediate insight into your
Solomon’s Worldwide Natural Gas Transmission System with peers that exhibit physical or operations; plus, they let you conduct additional in-house, custom analysis. Some
Performance Analysis (NGTS Study) provides the operational similarities (i.e., capacity, reporting features include:
foundation to answer the critical questions that will diameter, or geographical location). • Client Tables – These summary management reports and analysis tools are
keep you at the top of your game, like “How does our This comparison provides further invaluable for identifying improvement opportunities. Included are three types
cost performance compare to other diverse pipelines analysis and additional confirmation of of tables, customized for each business unit, that provide key performance
in our region?” and “How can we truly determine best cost and work-hour gaps. indicator ranking tables, gap analysis tables, and calculation details for each
performance for both cost and reliability?” Participation
system.
in Solomon’s Comparative Performance Analysis™ (CPA™)
study allows you to accurately measure current asset Performance Group Analysis • Study Data Tables – The Study.xls workbook includes all data tables with study
performance, providing a sound and consistent basis for averages, enabling you to perform your own data analysis. Study averages
While masking the client’s identity
managing continuous process improvements. The end are provided for both physical characteristic peer groups and performance
through data construction, this analysis
result is a means to support the financial and operational groups. Cost data is provided for three divisors.
presents rankings and performance
optimization of your pipeline operations. ranges for key performance indicators. In addition, you receive a printed, bound study book that includes an executive
summary, overall general industry observations, and a methodology section.
Natural Gas Transmission System
In-Person Study Results Review
By meeting in a face-to-face setting
Pipeline at your office, we can thoroughly
Onshore review your individual results with a The Result
Offshore focus on your performance issues and
successes. This setting allows for open With your Solomon CPA, you will be able to yield the maximum result from your
Compressor Stations discussion of the analysis and possible pipeline system by having the data you need to formulate a concrete plan for
performance improvement solutions. performance improvement and a method to monitor your success over time.
Turbine Drivers
Engine Drivers
Electric Motor Drivers

Meter-Regulator Stations

FOLD
 BACK COVER - PAGE 8 FOLD FRONT COVER - PAGE 1

About Solomon Associates Having provided benchmarking and performance improvement consulting services
since 1980, Solomon has become “the” Performance Improvement Company for the
energy industry. We help clients realize the full technical and financial potential of
Natural Gas Transmission System Study
their existing assets and new capital projects. Comparative Performance Analysis
As an experienced company that values confidentiality and long-term relationships,
we strive to develop and hone the most creative and effective strategies to
maximize client performance through our Comparative Performance Analysis™
(CPA™) studies and consulting services. Our team of experts has on average 25 years
of industry expertise in numerous fields. At Solomon, our goal is to become your
trusted advisor and improve each operation we analyze.

Today, companies in more than 70 countries rely on our benchmarking, performance

improvement programs, and unique methodologies to keep their businesses
competitive.

Contact
John Jungman
Vice President, Pipelines & Terminals
Phone: +1.972.739.1723
Fax: +1.972.726.9999
Email: [email protected]

One Lincoln Centre

5400 LBJ Freeway, Suite 1400
Dallas, TX 75240
www.SolomonOnline.com

© 2013 HSB Solomon Associates LLC, a wholly owned subsidiary of HSB Group, Inc.

FOLD