North American Energy Infrastructure Policy

Philip GondaSteven MaysRobert Floyd

Josh Kapp

Background• DOH defines the U.S. Energy infrastructure:

– electricity, petroleum and natural gas. – 80 % under private ownership

• Electricity – generated at more than 6400 power plants, – moved over 200,000 miles of transmission lines – distributed to 143 million customers.

• Federal regulation – Federal Energy Regulatory Commission

• Regulates wholesale/interstate electricity sales• Oversight of the reliability of Bulk Power Supply through NERC

– North American Electric Reliability Corporation• Establishes and enforces Bulk Power System standards.

• The Nations Bulk Power system – 8 regions

• U.S. • Canada • portion of Mexico.

• Oil/Gas Pipeline– Over 500,000 miles w/in U.S. – Federal government lacking sufficient regulation personnel

Cyber Attacks • Issues: Cyber vulnerabilities w/in the National Energy Infrastructure

– U.S. economy, emergency services and defense/security forces dependent on the Bulk Power System

– System has become increasingly reliant on computers and integrated into the World Wide Web and national networks. • Smart Grid• Remote Stations

– U. S. computer systems are under increasing attacks • Director of National Intelligence

– “dramatic increase in the frequency of malicious cyber activity targeting U.S. computer systems

• Secretary of Defense believes U.S. – “high risk of cyber attacks against U.S. critical infrastructures and network, the opponents are

increasing their cyber capabilities and represent … a serious menace”

– U.S. Bulk Power System cyber systems are not protected• NERC responsible for establishing/enforcing cyber security standards• Currently only 8 standards in place

– Process cumbersome, slow and hard to enforce

• Presently only Electric and Nuclear sectors have some cyber security standards

http://securityaffairs.co/wordpress/9403/security/secretary-of-defense-panetta-on-u-s-cyber-capabilities.html

Cyber Attacks• Effects:

– Destruction of Services• Stuxnet• Rolling Blackouts

– Denial of Services• Ping of Death• Zero day exploits• Coordinated cyber and offensive actions

– Russia/ Georgian conflict was the first cyber attack and kinetic operation coordination

• Corrective Actions: – Incentivizes acceptance of Standards

• Reimburse cost of security equipment to private industry

– Active testing• NERC White hat system assessment• Provides security status of Bulk Power System cyber security• Populates cyber vulnerability/ mitigating action database

– Collaborative info sharing• Central site for push/pull cyber security information • Patch Tuesday

http://www.nytimes.com/2008/08/13/technology/13cyber.html?_r=0

Physical Attacks on Electric Grid• Issues:

– Attacks include physical damage from • Terrorist• Weather• Competitors• Employees• Activists

– Complete reliance upon Electricity– Integration of all other major energy sources rely upon electricity from the grid. – Substations and Large High Voltage Transformers Limited Security– Limited Spare Parts Available– Low Probability vs Massive Impact

• Effects: – Outages could last for weeks to months– Cascading Blackouts– Economic – Health and Human Welfare

Physical Attacks on Electric Grid

• Corrective Actions: – Increase Surveillance and Security on site– Incentives to promote the development,

manufacture and stock piling of temporary spare parts

– Increase investment in current infrastructure as well as Research and Development.

– Increase Resiliency by creating a more dense network of High Voltage Transformers

Pipeline Infrastructure Issues• Issues: • Aging infrastructure

– Unpredictable failure modes– Weather effects – Effects

• 1050 Incidents • 36% Structural/material damage • +$700 million • 2000 injuries and fatalities• 350,000 barrels of oil lost or spilled.

• Inadequate Federal Manning Levels– Effects

• Delegated Regulation• Inconsistent regulation • Excavation and Farming activities• 23% Excavation Damage

Pipeline Significant Incidents

Pipeline Policy Proposal

• Leverage technology – Survey and assess the quality of pipeline– Ease manpower burden– Reduce disruption & destruction

• Information sharing & Transparency– Shared understanding of failure modes– Collectively mitigate risks

Energy Demand• Issues: US is projected to become an energy exporter @ 2020. Energy for

transportation and increased electrical demand of emerging economies drive concerns– If world competition increases, world price increases– If North American reserves are not fully realized, we again become and importer and

need to compete on the world market• Effects:

– Diminishing Economy due to increased costs– Competition with other emerging countries (China / India)

• Corrective Actions:– State department helping industry in developing India and China. Encourage their

membership in the Organization for Economic Cooperation and Development (OECD)– Continued R & D to encourage diversification is sources of energy, specifically Natural

Gas, and Renewables– Continued R& D and incentives in Transportation sector to promote alternative fuels

(Bio,Hybrid, CNG), and increase use availability of public transportation.

Transportation Projections

Questions?