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Snam Rete Gas 2

Health, safety and environmental policy 4

Snam Rete Gas and the environment 5

Occupational health and safety 8

Health, safety and environmental management 11

Organisation 11

Improvement objectives 11

Training 12

Research and development 12

Audits 13

Legislation 13

Reporting methods 14

UNI EN ISO 14001 certification 15

Results 17

Energy consumption 17

Atmospheric emissions 17

Waste 22

Water consumption and waste water 22

Noise emissions 23

Environmental restoration 24

Pipeline monitoring 24

Substitution of ozone-depleting substances 24

Injury statistics 25

HSE expenditure 26

GNL Italia 28

Verification of the report 30

Data cards (Performance indicators)

C O N T E N T S

Note on methodsSnam Rete Gas’s Health Safety Environment Report for 2001 has been prepared using the guidelinesrecommended by the Environmental Reports Forum, promoted by the Eni Enrico Mattei Foundation.The report illustrates all the activities performed in Italy in connection with natural gas transmission anddispatching and LNG re-gasification. These activities were performed in the first six months by Snam SpA(Snam) and in the last six months by Snam Rete Gas SpA (Snam Rete Gas).

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2001 was an important year for Snam Rete Gas.Since becoming operative on 1 July, following thetransfer of natural gas transmission and LNG re-gasification activities from Snam, we have dealtsuccessfully both with the new regulated marketsituation and with the stock exchange listing ofour shares. Good financial and operating resultshave been achieved and high standards have beenmaintained in terms of health, safety andenvironmental protection according to our policyof sustainable development.

With this HSE report, we are continuing Snam’stradition of providing annual information about thehealth, safety and environmental aspects of ouractivities, the aim being to encourage an open andconstructive dialogue with all our stakeholders.

For us, the report is also a management toolbecause it enables us to verify the progress madeand identify areas where there may be room forimprovement.

The actions taken, the investments made, theapplication of new technologies and thecontinuous improvement in procedures made itpossible for us to achieve tangible results in 2001with a significant improvement in theenvironmental indicators for energy consumptionand atmospheric emissions.

In recognition of our commitment to theenvironment, ISO 14001 certification of theenvironmental management systems in place atcompressor stations and the LNG re-gasificationterminal was maintained following inspections bythe certification body.

The report illustrates the actions undertaken andthe results achieved, with particular reference to:restoring land after laying new pipes; inspectinggas pipelines; monitoring geologically unstableareas; curbing energy consumption andatmospheric emissions; eliminating ozone-depleting substances in fire-extinguishingsystems; reducing noise emissions; trainingpersonnel; taking preventive action and providinghealth surveillance for employees.

The natural gas transmission and LNG re-gasification services offered by Snam Rete Gasprovide a source of energy which has a lowenvironmental impact and makes an importantcontribution towards meeting Italy’s energy needs.This makes it possible to increase energyefficiency, reduce atmospheric emissions andimprove the quality of the environment. In 2001, the use of natural gas transmitted by our network in Italy, as an alternative to coal andpetroleum products, prevented the emission intothe atmosphere of 59 million tonnes of carbondioxide.

The satisfactory financial results achieved,together with the results illustrated in this report,bear witness to Snam Rete Gas’s commitment to ensuring that economic development and the protection of health, safety and theenvironment are fully compatible and this success acts as an incentive to do even better in the future.

Chairman

Salvatore Russo

L E T T E R F R O M T H E C H A I R M A N

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Snam Rete Gas belongs to the Eni Group and isresponsible for natural gas transmission anddispatching activities. In addition, it is currently theonly provider of LNG (liquefied natural gas)re-gasification services in Italy.

On 1 July 2001, all the activities formerly carried outby Snam in connection with natural gas transmissionand dispatching and LNG re-gasification weretransferred to Snam Rete Gas.

On 1 November 2001, the LNG re-gasificationactivities were transferred to a new company – GNLItalia SpA (GNL Italia) – controlled 100% by SnamRete Gas.

In 2001, Snam Rete Gas also managed 9 compressorstations on behalf of Snam and Stoccaggi Gas Italia.These stations pump gas into storage fields.

During the 2001 financial period, which from theoperating point of view involved only the last sixmonths, Snam Rete Gas earned consolidated netincome totalling o 183 million, whilst operating profitamounted to o 448 million.

At the end of 2001, Snam Rete Gas employeesnumbered 2,973, including 119 working for GNLItalia.

In order to assess performance on health, safety and environmental issues compared with previousyears, the data provided in this report cover theperiod 1997-2001 and refer to activities carried outin Italy concerning natural gas transmission, LNG re-gasification and gas compression for storagepurposes.

These activities were carried out by Snam until 30 June 2001 and by Snam Rete Gas from 1 July 2001.

Natural gas consumption in Italy in 2001 totalledapproximately 71.2 billion cubic metres, an increase of 0.7% compared with 2000.

The volume of gas transmitted in 2001, comprising gas sent into the transmission network from imports and Italian production fields, totalled 69.6 billion cubic metres, a reduction of 5%compared with 2000.

S N A M R E T E G A S

Key economic and operating data

Operating data (last 6 months) (million o) 2001

Total revenue 932

Operating profit 448

Consolidated net income 183

Snam Rete Gas employees at 31.12.2001 (no.)

Total 2,973

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In 2001, the volume of natural gas compressed by thestations managed by Snam Rete Gas and sent tostorage fields amounted to approximately 6.2 billioncubic metres, a reduction of 35% compared with 2000.

The LNG re-gasification terminal sent approximately3.6 billion cubic metres of gas into the transmissionsystem, in line with the previous year.

The length of the pipeline network increased from 29,131 kilometres in 2000 to 29,607 kilometresin 2001.

The average distance travelled by the gas in thepipeline network from the entry point to the finaldelivery point decreased from 503 kilometres in 2000to 442 kilometres in 2001.

Volume of natural gas transmitted

75,000

15,000

30,000

45,000

60,000

106 m3

20012000199919981997

Length of pipeline network

35,000

7,000

14,000

21,000

28,000

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20012000199919981997

The Snam Rete Gas transmission system consists of a network of more than 29,600 kilometres of pipeline extendingover most of Italy, with pipes ranging from 100 to 1,200 millimetres in diameter operating at pressures of between 5 and 75 bar. It has 11 compressor stations (10 in operation and 1 under construction) and 560 pressure reductionplants. System management is controlled by the Dispatching Centre at San Donato Milanese in collaboration withoperating units throughout Italy.The transmission system is managed by 8 regional centres which, by means of 74 local operating units, are incharge of the operation, maintenance and supervision of the whole system. These units are responsible for ensuringthat the network functions in compliance with specific technical standards and with current legislation andregulations, guaranteeing the required level of service, safety and environmental protection.

S N A M R E T E G A S T R A N S M I S S I O N S Y S T E M

North-westNorthNorth-eastCentre-westCentre-eastSouth-westSouth-eastSicily

R E G I O N A L C E N T R E S

Compressor Stations

Regional Network

National Network

LNG TERMINAL

IMPORTS FROM ALGERIA

IMPORTS FROM NORTHERN EUROPE

T R A N S M I S S I O N N E T W O R K

RIMINI

MELIZZANO

MONTESANO

TARSIA

MALBORGHETTO

MASERA

MESSINA

ENNA

ISTRANA

GALLESE

TERRANUOVA B.

IMPORTS FROM RUSSIA

In a policy of sustainabledevelopment, the health andsafety of employees and thirdparties, and the protection ofthe environment, are prime andconstant objectives for SnamRete Gas, whose commitment isto bring about a continuousimprovement in all its activities.

The principles underlying Snam Rete Gas’s HSEpolicy are to:

use natural resources in a sustainable manner andprevent pollution;manage activities in compliance with the provisionsof law, rules, regulations and company procedurescontaining integrations and improvements;aim for technological excellence to ensure levels ofsafety, environmental protection and energyefficiency in line with the best internationalbusiness practices;locate, design, construct, manage anddecommission plants and conduct activities withproper regard for working and naturalenvironments, adopting a preventive approach inorder to protect the health and safety of employeesand third parties;identify the health, safety and environmentalhazards arising from ongoing and new activities,assess the associated risks and take steps toprevent and manage them;establish procedures, alongside the preventive

measures, in order to identifyand respond to emergencies andcontrol the consequences of anyaccidents;

train and inform employees,raise their awareness andinvolve them, so that theytake part actively and

responsibly in the implementation of principlesand the achievement of objectives;carry out, at different levels, environmentalmonitoring and periodic revisions and updates ofprocedures, using audit and reporting systemswhich make it possible to assess performance andreview objectives and programmes;inform employees, trade unions, the authorities andthe general public about prevention programmesand the results achieved, maintaining a climate ofcooperation with local, national and internationalauthorities and associations;employ the services of qualified suppliers andcontractors who can contribute to continuousimprovement in health, safety and environmentalstandards;promote research and technological innovation toimprove environmental performance and safetystandards in the company’s activities;make available adequate resources to implementthis policy.

The HSE policy was approved by the Chairman ofSnam Rete Gas on 18 December 2001.

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Concern for the environment is shown in every stage ofSnam Rete Gas’s activities.

The criteria and procedures used for the location,design, construction, management anddecommissioning of plants and for the conduct ofactivities comply with high environmental protectionand safety standards.

The most significant environmental issues associatedwith Snam Rete Gas’s activities concern the temporarydisturbance of land when new transmissioninfrastructure is being constructed and theatmospheric emissions from the gas turbines used incompressor stations.

A gas pipeline route is chosen from a number ofalternatives in the light of environmental impact,transmission safety and technical-economic feasibility.Specifically, the aim is to avoid or disturb as little aspossible areas of special natural or cultural interest,archaeological areas, geologically unstable areas andinhabited areas or those where new housing is planned.In the construction phase, trenches are excavated forthe pipe-laying operations using technologies thatinterfere as little as possible with the surroundings.Once the pipes have been laid, the land is restored verycarefully so that it is returned to its original condition.

When plants and pipelines are in operation, they aresubjected to regular checks and maintenance to ensure

high safety standards. The integrity of pipelines is alsochecked by running devices known as “intelligentpigs” through them, enabling possible faults to bedetected. Special attention is paid to the transmissionroute which is inspected regularly with motor vehicles,helicopters and on foot, so as to detect potentiallydangerous situations caused, for example, by workbeing carried out by third parties in the vicinity of thepipeline. Similarly, any movements that could causelandslides at specific points of the route are keptunder control.

By using natural gas as its principal fuel, Snam Rete Gas is able to reduce atmosphericemissions of sulphur oxides, particulate, carbonmonoxide and volatile organic compounds to aminimum. To limit emissions of nitrogen oxides fromgas turbines, low-emission burner systems are used incompressor stations.

To curb energy consumption, high-efficiency gasturbines are installed and software programs are usedto optimise gas transmission.

The transmission of natural gas provides a source of energy with a low environmental impact to millions of homes, as well as to industries and electricity generators, and this means that energyefficiency is enhanced, atmospheric emissions are reduced and the quality of the environment is improved.

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MicrotunnellingExtending the pipeline network means that numerousnatural and man-made obstacles have to be crossed.Where possible, this is done using advancedtechnologies such as horizontal drilling andmicrotunnelling.Microtunnelling consists in drilling a tunnel with ashielded mill driven into the ground by a hydraulicsystem commanded by an operator using an electronicdirectional control device.Microtunnelling and horizontal drilling make itpossible to avoid open trenches and most of thereinstatement work required after traditional diggingmethods.

Land reinstatementThe aim of reinstatement operations is to restore landaffected by pipe-laying to its original condition anduse, in the shortest possible time, by reconstructingthe plant cover and protecting surface soil from anykind of erosion. Steps are taken to channel surfacewater into natural valleys, protect ground water(springs, wells, aquifers), consolidate the banks andbeds of all waterways involved and restore thelandscape. Reforestation and grassing is subject toprior assessment and agreements with the relevantforestry authorities.These operations are preceded by a study concerningthe weather conditions in the area, the characteristicsof the land concerned and its plant cover.

Internal inspection of pipelinesTo guarantee an efficient and safe transmission serviceand limit natural gas emissions, network maintenanceand monitoring is high on the list of preventiveactions.It is now common practice to inspect the internalsurface of a pipeline while itis still in service, usingstate-of-the-art technologies.These include devices knownas “intelligent pigs” whichtravel inside the pipeline,propelled by the differencebetween upstream anddownstream gas pressure,measuring and recordinginformation about itscharacteristics and condition.Considerable technologicalprogress has been made inthis sector and Snam Rete

Gas now uses intelligent pigs on a systematic basis.They are efficient and reliable devices which canlocate, identify and establish the magnitude of anydefects in a pipeline, without having to interrupt theflow of gas.In this way it is possible to check pipelines on aregular basis and analyse their condition over time, soas to ensure transmission safety and safeguard theenvironment.

Monitoring unstable areasThe pipeline network crosses all Italian regions, withthe exception of Sardinia, involving vast areas of hillsand mountains in the Apennines and the Alps. It is notpossible, therefore, to avoid laying sections of pipelinein some of the potentially unstable areas that exist inmuch of Italy. As a consequence, if pipelinemaintenance is to be carried out correctly, it isindispensable to know which sections are located inareas with geological risks and the characteristics ofthese areas, so as to be able to take suitable measuresto ensure operating safety.A record is kept of the unstable areas and periodicgeological controls are carried out.In the most unstable areas, pipelines are kept underconstant control with suitable instruments that providethe information needed to operate the lines with dueregard for the environment and safety.

Remote monitoring and diagnosticsSnam Rete Gas is implementing a remote monitoringand diagnostics project for compressor stations, theaim being to develop an ICT (informationcommunication technology) system that can transmitautomatically technical and operating data regardingthe performance of the machinery installed at thesestations.

With this system, abnormalsituations and/or reducedefficiency will be recorded inreal time and measures torestore optimum operatingconditions will be facilitatedwith a consequent reductionin energy consumption andatmospheric emissions. It willalso be possible to planpro-active maintenancewhich reduces the risk ofemergency shut-downs anddamage to the compressorunits.

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T H E E N V I R O N M E N T A L B E N E F I T S O F N A T U R A L G A S

Natural gas can make a major contribution toimproving the quality of the environment because itcan be transmitted in underground pipelines, becauseof its inherent chemical-physical properties andbecause it can be used in high-efficiency low-emission technologies, not only in fixedinstallations but also as a vehicle fuel.To supply the energy equivalent of 190 million cubic

metres of natural gas per day – the average quantitytransmitted in Snam Rete Gas’s underground pipelinenetwork in 2001 – a large number of road tankers (for petroleum products) and railway wagons (for coal)would have to be used, as shown in the table below,causing problems due to the lack of adequatetransport infrastructure and the high environmentalimpacts involved.

The emissions of sulphur compounds, particulate,aromatic hydrocarbons and harmful metalcompounds produced bynatural gas combustion arenegligible. Nitrogen oxideemissions, too, are generallylower than those produced bythe combustion of other liquidfuels and coal.The carbon dioxide producedby natural gas combustion is25-30% less than thatproduced by petroleumproducts and 40-50% less thancoal, for the same energyinput. Emissions per unit ofenergy output can be furtherreduced by using natural gas in high-efficiencyapplications and technologies. The environmentalbenefits of natural gas over other fossil fuels areeven greater if we consider that it has a lower

environmental impact during the production stageand that its underground storage in depleted fields

and its supply direct to the enduser in underground pipeseliminate the environmentalimpacts connected with thestorage and transport of coaland petroleum products.In 2001, the use of natural gasin Italy as an alternative tocoal and petroleum products inpower stations, in industrialplants and in theresidential/commercial andautomotive sectors preventedthe emission into theatmosphere of approximately

59 million tonnes of carbon dioxide, 1.02 milliontonnes of sulphur oxides, 151,000 tonnes of nitrogen oxides and 68,000 tonnes of particulate.

Estimate of emissions avoidedin Italy in 2001 thanks to the use

of natural gas

Carbon dioxide Sulphur oxides

Nitrogen oxides Particulate

thousand tonnes

-59,000

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Fuel transport(energy transported 6.6 * 106 GJ per day)

Fuel Quantity Means of transport

Natural gas 190 * 106 m3/day 1 underground network

Petroleum products 160,500 t/day 4,340 road tankers per day

Coal 251,600 t/day 4,930 railway wagons per day

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For Snam Rete Gas, 2001 was characterised by majororganisational changes which involved the corporateprevention and protection service as regards bothmanagement aspects and compliance with currentlegislation.

As soon as the new companies Snam Rete Gas andGNL Italia were formed, work began to update thehealth and safety documents as required by law.

For Snam Rete Gas, as required by Legislative Decree626/94, 13 “production units” have been identified (5 for the head office at San Donato Milanese and 8 for the regional centres) and the relevant “assignors ofwork” have been defined for each unit.

Assignors of work, executives and supervisors areassisted by a corporate prevention and protectionservice, consisting of 15 technical experts (one at eachregional centre and seven at head office), which worksin conjunction with units specialised in industrialhygiene and safety matters relating to contractors.

For GNL Italia, an ad hoc prevention and protectionservice has been set up.

Having reorganised corporate structures, and with theparticipation of the employees concerned (unit heads,prevention and protection service, workers’ safetyofficers, occupational physician), the health and safetydocuments required by Legislative Decree 626/94 wereupdated. In addition, the coordinated health and safetydocuments required by Legislative Decree 624/96 wereprepared for the 9 compressor stations which are usedfor storage operations and which have been transferredto the new company Stoccaggi Gas Italia.Assessment of occupational hazards continued and thisincluded verifying the suitability of personal safetydevices and general-purpose safety equipment. Thisactivity involved comparing samples from differentsuppliers and seeking the opinion of the actual users,the aim being to improve the quality and comfort of theequipment.At the same time, work went ahead to update thecriteria used for the distribution of personal safety

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devices and work clothes, the relevant technicalspecifications and the software for the management ofprocurement activities and subsequent consignmentsto all personnel concerned.

As regards training activities, special training wasprovided for new workers’ safety officers as required bylaw. Employees in charge of emergency responseattended training courses on fire prevention, firefighting and first aid, held by specialised externalorganisations.With regard to initiatives to keep employees informed,the prevention and protection service continued toorganise meetings to raise awareness of risks, as wellas training programmes for each job position based onthe specific tasks involved.

In particular, as regards the “driving risk”, a targetedinitiative started in 2001 and will end in the first fewmonths of 2002. The aim is to make employees whodrive company vehicles more aware of the mostimportant rules of conduct that need to be followed toensure “safe driving”, also taking into considerationthe behaviour of other road-users.Still on the subject of information, special attention ispaid to internal communication by constantlyupdating the “Health & Safety” site on the companyintranet.This site can be accessed by all users and makes itpossible to disseminate and file, in real time,information on legislation and corporate proceduresand regulations, as well as safety information sheets ondangerous substances used.

When Snam Rete Gas wasformed, the location of all itsSan Donato Milanese officeswas optimised. This has madeit necessary to reorganise andupdate measures relating tofire prevention, fire fighting,emergency response,evacuation and first aid for thenew workplaces.

To this end, the relevantcontingency plans have beenrevised, new operationalstructures have been createdand awareness initiatives havebeen organised for employeeswith regard to fire preventionregulations and what to do inan emergency.

To provide more incisive and effective information for people visiting the newoffices, the prevention and protection service hasprepared a leaflet containing the main safety regulations and rules of conduct in an emergency. A plan of the buildings is also provided showing the escape routes leading toassembly points.

The leaflet is available at the main reception desk, in Italian and English, and is given to visitors when they sign in.

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Regarding fire prevention, emergency response andevacuation of employees from workplaces, 112contingency plans are in place, operated by dedicatedstructures involving 476 suitably trained employees.Periodic fire-drills were organised in 2001 as requiredby law.Fire-protection systems and equipment were subjectedto maintenance and checks at regular intervals, inaccordance with current legislation, and warning signsand notices in workplaces were updated.

Another activity in 2001 consisted in updating thelists of dangerous substances used by operatingunits, in order to assess whether these substancescould pose any health risks for the employeesconcerned.

When monitoring work environments, particularattention was paid to the periodic control of the levelsof noise emitted by plant and equipment, so as toverify the personal exposure levels of employees.

In compliance with Law 422 of 29 December 2000,the company repeated its periodic survey involvingvisual display unit operators. Each terminal operatorfilled in a questionnaire detailing, in particular, the number of hours of VDU use per week and any comments about problems concerning theworkstation and work environment (space, furnishings,lighting, etc.).

With the latest survey, the lists of terminal operatorswere updated and, in collaboration with anoccupational physician, the relevant healthsurveillance programme was put in place according toa protocol established by the physician.In addition, for new terminal operators, a specifictraining course is organised.

Regarding health surveillance of employees,agreements have been reached with occupationalphysicians who, depending on the risks, have drawnup protocols of specific tests.For employees included in these health surveillanceprogrammes, 381 medical examinations were carriedout in 2001, along with 1,423 tests comprising 951laboratory analyses and 472 scans.As regards the safety aspects of contract workperformed by third parties, contractors were dulyinformed about the hazards that exist and thepreventive action and contingency measures in placein company offices and facilities where they areworking, the aim being to encourage coordination andcooperation.Contractors are subject to qualification procedures,from the safety point of view, before they tender andare assessed at the end of the contract.The 120-hour training courses continued forCoordinators for safety matters at the projectpreparations stage and the project execution stage, asrequired by current regulations.

O R G A N I S A T I O N

Snam Rete Gas has an HSE Committee whose dutiesare (i) to define HSE policy and the guidelines to beused to prepare the corporate plan and operatingprogrammes for its implementation, and (ii) tomonitor the progress and results of the initiativesapproved.

For activities involving the preparation andmonitoring of improvement plans and programmesrelating to industrial hygiene and safety,environmental protection and management and auditsystems, there is a dedicated “Health, Safety,Environment and Quality” unit.

The HSE management system implemented by SnamRete Gas is based on in-house organisationalregulations which establish departmental andindividual responsibilities and the procedures to befollowed in the planning, construction, operating anddecommissioning stages pertaining to all companyactivities, the aim being to ensure compliance with thelaw and with corporate HSE policy.In the Snam Rete Gas organisational structure, unitmanagers are required to take responsibility for thehealth, safety and environmental aspects of theactivities lying within their province.

To optimise HSE management, the company isimplementing some specific management systems.

In particular, the environmental management systemsoperating at gas compressor stations and the LNG re-gasification terminal have achieved UNI ENI ISO14001 certification and the management systemregarding the health and safety of employees has beendeveloped in compliance with the BS 8800 standardand Eni guidelines.

I M P R O V E M E N T O B J E C T I V E S

In its activities, and with the objective of continuouslyimproving its performance in terms of health, safetyand environmental protection, Snam Rete Gas isoperating in order to:

reduce energy consumption by installinghigh-efficiency gas turbines and using advancedsoftware systems to optimise gas transmissionprogrammes in terms of operating and energyefficiency;reduce atmospheric emissions of natural gas andnitrogen oxides by using low-emission technologiesand devices, where technically and economicallyfeasible;use advanced technologies to limit disturbance tothe land when laying pipelines and, once thesehave been laid, to return it to its original conditionwith careful restoration operations;monitor the structural integrity of pipelines withvarious systems to ensure high safety standards;replace the ozone-depleting substances used infire-extinguishing systems;

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promote research and development activities aimedat reducing environmental impact and improvingsafety conditions;ensure the safety of employees by carefullyassessing occupational hazards, introducingimprovements and implementing management andoperating procedures, as well as safety plans;safeguard the health of employees by means ofspecific health surveillance programmes.

T R A I N I N G

The company constantly organises training andfollow-up courses to inform and instruct operatingpersonnel about the risks connected with its activities.In particular, the training courses regarding health,safety and environmental issues are aimed atinstructing employees and raising their awareness sothat they operate responsibly and with insight.

Courses were organised on: safety for operators, safetyat construction sites, risk assessment, first aid, firefighting, legislative updates, internal ecoauditing

qualifications, and environmental managementsystems. The overall attendance figure was 1,361 for atotal of 16,711 hours.

Training courses were also held for a variety of jobpositions in the company and, although they cannot beclassified as training activities devoted to safety andenvironmental protection, they provide employees withskills that are indispensable if they are to carry out theirduties correctly and safely. Courses were organised forcompany employees for a total of 73,840 hours oftraining with an overall attendance figure of 3,340.In 2001, approximately o 420,000 were spent on HSE-related training for personnel who now work forSnam Rete Gas.

R E S E A R C H A N D D E V E L O P M E N T

Snam Rete Gas’s environmental research anddevelopment effort is aimed at reducing theenvironmental impact of its activities, improving safetyconditions and developing technologies for natural gastransmission which are more efficient and less polluting.

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In the research sector, Snam Rete Gas is developingsystems to monitor emissions from gas turbinesinstalled in its compressor stations.At present, the methods for assessing these emissionsfall under two main categories:

Direct methods, which consist in installingcombustion gas analysers on the flue-gas stacks ofthe turbines;Indirect methods, which consist of simulationmodels that can determine the extent of theemissions from a turbine by processing itsoperational parameters.

The indirect, or forecasting, methods are based, on theone hand, on a thorough theoretical knowledge of thechemical, thermodynamic and fluid-dynamicmechanisms of the combustion process(phenomenological approach) and, on the other hand,on an extensive data bank of empirical measurementsof emissions at different turbine load conditions(statistical approach).In practical applications, simulation methods combine

these two approaches, correlating a series of data withequations developed theoretically. In this way, theadvantages of both methods are preserved and thedisadvantages eliminated. The advantage of indirectsystems is to eliminate the critical factors associatedwith the use of sophisticated equipment to analyseemissions, which needs frequent checks by specialisedpersonnel if it is to stay reliable.In collaboration with the Universities of Salerno andNaples, Snam Rete Gas has carried out research whichhas made it possible to develop an integrated system ofmathematical models and calculation codes to forecastemissions of nitrogen oxides and carbon monoxidefrom gas turbines installed in compressor stations.In addition, in collaboration with Nuovo Pignone, aproject is under way to use indirect methods foremission monitoring. Important experiments have beenconducted on one PGT 10 unit at the TerranuovaBracciolini compressor station and, as part of theremote monitoring and diagnostics project, on the PGT25 units at the Gallese, Melizzano, Enna, Tarsia andIstrana stations.

E M I S S I O N F O R E C A S T I N G M O D E L S

More specifically, activities in 2001 concerned: thedevelopment of mathematical models to forecastemissions from gas turbines; life cycle analyses fornatural gas and other fuels; methods for estimatingnatural gas emissions; the development of methods toanalyse the safety of the gas transmission network andcompressor stations; and safety assessments relating toseveral processes carried out by the LNG re-gasification plant.

A U D I T S

Environmental and safety audits are carried out incompliance with the principles set out in Snam ReteGas policy.

To verify the correct implementation and effectivenessof the environmental and safety management systemsin place and identify areas susceptible ofimprovement, as well as verifying compliance with thelaw, routine internal audits are carried out.These audits are planned in such a way as toguarantee that every operating unit is auditedperiodically.The auditing activities are performed by a team ofsuitably trained/qualified people. In particular, thehead of the audit team is usually a qualifiedenvironmental auditor or a person with equivalentexperience.

When necessary, in addition to routine internal auditsto ascertain compliance with management systems,targeted audits are carried out to verify specifictechnical-operating situations and identify appropriateimprovements.

In 2001, a total of 31 audits were performed, involvingall the compressor stations, the LNG re-gasificationterminal and some of the offices at San DonatoMilanese. Of these audits, 27 were carried out by aninternal team and 4 by an external team.

L E G I S L A T I O N

Snam Rete Gas’s activities are subject to national andlocal environmental and safety legislation,international agreements and control and authorisationprocedures.There are dedicated offices in the company’sorganisation which:

collect and update the legislative framework,identifying the regulations that apply to thecompany’s activities and arranging for theiranalysis and dissemination to the operating unitsand offices concerned;file all deeds of authorisation and plan theirupdating;prepare specific procedures for the implementationof legislation and regulations;

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verify compliance with regulations andauthorisations.

R E P O R T I N G M E T H O D S

Snam Rete Gas’s 2001 HSE Report has been preparedusing the guidelines recommended by theEnvironmental Reporting Forum, promoted by the EniEnrico Mattei Foundation.

Operating, environmental and economic datacharacterising activities in Italy relating to natural gastransmission, LNG re-gasification and gas compressionfor storage purposes have been analysed.

In particular, the following data have been taken intoconsideration:

characteristic data on the activities performed;energy consumption;atmospheric emissions;waste production;water consumption and waste water;injury statistics;costs incurred for health, safety and theenvironment.

Quantities of natural gas transmitted refer to gas with agross calorific value of 38.1 MJ/m3.The figures for atmospheric emissions have beencalculated mainly on the basis of measurements or, inthe absence of measured data, using emission factorsrecommended by the US Environmental ProtectionAgency (US-EPA) and by the CORINAIR(COoRdination INformation AIR) project.Natural gas emissions have been estimated using themethod worked out by the Gas Research Institute(GRI) in conjunction with US-EPA, applied to SnamRete Gas’s plant configuration.

Injury trends have been established on the basis ofconventional frequency and severity rates.

The frequency rate corresponds to the number ofinjuries, resulting in inability to work for at least oneday, for every million hours worked.The severity rate corresponds to the number of workingdays lost, relative to injuries resulting in inability towork for at least one day, for every thousand hoursworked.

Capital expenditures and operating expenses refer tocosts incurred in connection with company activitiesand other action aimed specifically and primarily atenvironmental protection, health and safety.Safety expenditure does not include capitalexpenditures relating to network and plant safety andoperating expenses for network and plant maintenanceand control, unless they also have a substantialenvironmental content. For example, expenditures forsafety valves, remote-controlled valves, increased pipethickness, greater burial depth for pipes with respectto current legislation, route changes, etc., are notincluded. These costs (which are considered anintegral part of company activities) account for a highpercentage of the company’s total capital expendituresand operating expenses.

To better qualify the information collected and relate itto company activities, environmental performanceindicators have been defined which make it possible tocompare data referring to different years irrespective ofchanges in these activities.

The reliability, completeness and uniformity over timeof the environmental and economic data included inthe report are ensured by a computerised procedurewhereby data are collected by all the operating unitsconcerned and are processed and verified by thecentral unit in charge of preparing the HSE report.

The methods used to prepare the report may beimproved and the data may be revised to take intoaccount new and more in-depth classification criteria.

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The environmental management systems in place atgas compressor stations and the LNG re-gasificationterminal are certified to UNI EN ISO 14001.Certification is valid for 3 years during which timevisits are paid by the certification bodyapproximately every nine months. In 2001, theorganisation in question – DNV Italia (Det NorskeVeritas) – carried out the audits needed to maintaincertified status which was confirmed.The audits took place in July at the LNG terminaland in October at three compressor stations chosenat random by DNV.

A few minor cases of non-conformity were foundduring these audits and some recommendations weremade. Head office structures and operating unitstook remedial action which was also aimed atpreventing any recurrence of the situationsconcerned.

At the end of 2001, Snam Rete Gas’s topmanagement reviewed the environmentalmanagement system in order to verify its adequacyand effectiveness and approved the newenvironmental programme for 2002.

U N I E N I S O 1 4 0 0 1 C E R T I F I C A T I O N

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2 0 0 1 E N V I R O N M E N T A L I M P R O V E M E N T P R O G R A M M EO B J E C T I V E S A N D T A R G E T S A C H I E V E D

– Reduce noise Sound-absorbent barriers installed in the Messina station

– Dispose of asbestos Roofing containing asbestos eliminatedin the Enna and Rimini stations

– Reduce atmospheric emissions Heat generator in the Messina station replacedof combustion products with a more energy-efficient unit

– Reduce energy consumption

W O R K I N P R O G R E S S

O B J E C T I V E T A R G E T

– Dispose of asbestos Replacement and subsequent disposal of roofing containing asbestosat the Melizzano station, by 31/12/2002

– Reduce atmospheric emissions of natural gas Installation of low-emission equipment and turbinesand combustion products in the new Masera station, by 31/12/2002

– Reduce atmospheric emissions of combustion products Replacement of heat generators in 4 stations, – Reduce energy consumption with more energy-efficient units, by 31/12/2004

– Reduce energy consumption Use of remote-monitoring and diagnostics programs, by 31/12/2003

– Eliminate ozone-depleting substances Modification of all fire-extinguishing systems, by 31/12/2005

– Prevent accidental discharges (surface and subsurface) Replacement of underground tanks, by 31/12/2004

2 0 0 2 E N V I R O N M E N T A L I M P R O V E M E N T P R O G R A M M EN E W O B J E C T I V E S A N D T A R G E T S

O B J E C T I V E T A R G E T

– Prevent accidental discharges (surface and subsurface) Creation of suitable areas for loading and offloading oil productsat 4 stations, by 31/12/2002

– Improve waste management Creation of 7 areas for the temporary selective storageof waste, by 31/12/2002

– Improve waste water management Complete a study to optimise waste water management,by 31/12/2002

E N V I R O N M E N T A L I M P R O V E M E N T P R O G R A M M E S A N D T A R G E T SF O R C O M P R E S S O R S T A T I O N S

With a view to continuous improvement and in theframework of the environmental management systemfor compressor stations, the environmental programmefor 2002 has been defined. The tables below show the

objectives and targets achieved in connection with the2001 programme, those where work is in progress andthe new objectives and targets set out in the 2002environmental programme.

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Data in this section refer toactivities in Italy inconnection with natural gastransmission, LNGre-gasification and thecompression of gas sent tostorage fields.

Environmental data andindicators are summarised in Tables 1.1, 1.2 and 1.4in the enclosed Performance Indicator cards.

E N E R G Y C O N S U M P T I O N

Energy consumption in 2001 totalled approximately12,700 TJ.Compared with 2000, total energy consumption wasdown by 25%. This is due mainly to the reduction inthe volume of gas transmitted and the quantity sentinto storage, a decrease in the average distancetravelled by the gas and optimisation of transmissionconditions.

Most of the energy used was natural gas, whichaccounted for more than 91% of the total energyneeded for the activities.

Of the total energy consumed, gas turbines operatingin compressor stations accounted for 74%. These turbines drive centrifugal compressors thatprovide the pressure needed to transmit the gas(transmission consumption - 6,271 TJ) or send it to the underground storage fields (storageconsumption - 3,202 TJ).This result has been achieved over the years,

thanks to targeted energysaving programmes and by installinghigh-efficiency turbinesincluding aeroderivativeturbines with an energyefficiency of 37%.

Energy consumption fortransmission activities fell from around 9,470 TJ in2000 to around 6,960 TJ in 2001.

The energy consumption indicator for gastransmission activities shows a decrease from 0.37%in 2000 to 0.29% in 2001.

Natural gas consumption at the compressor stationsis controlled and optimised by the DispatchingCentre with specific software programs. These programs make it possible to determine the best efficiency point for each station and the best operating conditions for the import linesand to plan the optimum use and operation of the compressor stations used for storage. The energy saving achieved by applying theseinformation systems is estimated to be in the regionof 4-6%.

A T M O S P H E R I C E M I S S I O N S

Most of the atmospheric emissions of pollutingsubstances are caused by combustion processes.The use of natural gas as the main source of energyhelps to minimise emissions of sulphur oxides andparticulate.

R E S U L T S

Over the past few years, in order to reduce nitrogenoxide emissions caused by the combustion of naturalgas in the gas turbines used in compressor stations,some existing turbines have been retrofitted and newones have been installed with low-emission burnersystems.

NOx emissions deriving from transmission activitiesfell from approximately 1,480 tonnes in 2000 toapproximately 1,010 tonnes in 2001.

The action taken in recent years to curb atmosphericemissions has led to a substantial reduction innitrogen oxide emissions.

In 2001, compared with 2000, the NOx emissionsindicator relating to transmission activities fell from20 to 15 kilograms per million cubic metres of gastransmitted.

Greenhouse gas emissions deriving from Snam ReteGas’s activities consist of carbon dioxide and methane, which is the main component ofnatural gas.

Carbon dioxide is produced during combustionprocesses and is directly correlated to fuel

consumption. In 2001, the reduction in energyconsumption caused a reduction in total CO2emissions which fell from about 895,000 tonnes in2000 to about 660,000 tonnes in 2001.

Carbon dioxide emissions deriving from transmissionactivities fell from about 520,000 tonnes in 2000 toabout 381,000 tonnes in 2001.

The CO2 emissions indicator relating to transmissionactivities fell from 7.1 to 5.5 tonnes per millioncubic metres of gas transmitted.

Natural gas emissions originate partly from thenormal operation of plants and partly fromdischarges during maintenance operations or as aresult of accidents. They can be divided into fourcategories: vented emissions, fugitive emissions,emissions from pneumatic actuators powered by gas,and emissions of unburnt gas in flue-gas fromcombustion plants.

There was a reduction in natural gas emissions in2001, from 55 million cubic metres in 2000 to 43 million, with a consequent reduction inmethane emissions, from 36,300 tonnes in 2000 to 29,000 tonnes in 2001.

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Energy consumption

Natural gas

18,000

15,000

12,000

9,000

3,000

TJ

6,000

20012000199919981997Electricity Other energy

Percentage breakdownof energy consumption by activity

Gas transmission 54%

LNG re-gasification 16%

Gas storage 25%

Other(general services) 5%

Gas transmitted and energy consumption for transmission activities

Gas transmitted

Consumption for transmisson

80,000

60,000

40,000

12,000TJ106 m3

9,000

6,000

20,000 3,000

20012000199919981997

Energy consumption/energy transmitted(Transmission activities)

0.6

0.4

%

0.2

20012000199919981997

Energy consumption/energy transmitted*average distance travelled

(Transmission activities)

1.0

0.6

%/103 km

0.4

0.2

0.8

20012000199919981997

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E N V I R O N M E N T A L A S S E S S M E N T O F T H E S N A M R E T E G A ST R A N S M I S S I O N S Y S T E M

Data for 1,000 cubic metres of natural gasEnergy consumption 100 MJ (corresponding to approx. 0.4% of the energy transmitted)

Atmospheric emissions emissions produced emissions avoided

NOx 14.5 g 2,190 g

SO2 0.03 g 14,750 g

CO2 5.5 kg 850 kg

CH4 0.3 kg –

CO2 eq. 12.5 kg 850 kg

Waste produced 20 g

3

2

1

PIPELINE NETWORK

NATURAL GAS FIELDS

DISPATCHING CENTRE

6

5

4

COMPRESSOR STATIONS (STORAGE)

COMPRESSOR STATIONS (TRANSMISSION)

IMPORT POINTS 10

8

7 PRESSURE REDUCTION PLANTS

LNG RE-GASIFICATION (GNL ITALIA)

UNDERGROUND STORAGE

9 12

11

GAS TANKERS URBAN DISTRIBUTION NETWORKS

INDUSTRIAL USERS AND POWER STATIONS

G A S T R A N S M I S S I O N S Y S T E M

2

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12

11

13

4

5

7

3

3

68

1

10

13 RESIDENTIAL AND COMMERCIAL USERS

S N A M R E T E G A S

In 2001, the transmission of 1,000 cubic metres of natural gas in Snam Rete Gas’s network used the energy and produced the atmospheric emissionsand waste indicated below. The use of 1,000 cubicmetres of natural gas in Italy as an alternative to coal and petroleum products in thermal power

stations, in industrial plants and in theresidential/commercial and automotive sectorsprevented the emission into the atmosphere of far larger quantities of nitrogen oxides, sulphur oxides and carbon dioxide than thoseproduced during transmission.

1,000 cubic metres of natural gas correspond to approximately 34.5 GJ and represent the average consumptionof a family in the 6-month winter period.

Percentage breakdownof NOx emissions by activity

Gas transmission 57%

LNG re-gasification 4%

Gas storage 35%

Other(general services) 4%

NOx emissions/gas transmitted(Transmission activities)

40

30

20

10

kg/106 m3

20012000199919981997

NOx emissions

Transmission

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2,000

1,000

t

20012000199919981997Other activities

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The reduction in natural gas emissions is attributableto the action taken to curb them and to the boil-offrecovery unit at the LNG re-gasification terminalhaving resumed normal operation.

Compared with 2000, there was a 6% reduction innatural gas emissions deriving from transmissionactivities, from approximately 37 million cubic metresto approximately 35 million in 2001. The natural gasemissions/gas transmitted indicator also registered areduction.

In 2001, there was a decrease of 30% in totalgreenhouse gas emissions compared with 2000 due tothe reduction in energy consumption and in naturalgas emissions. The greenhouse gas emissions indicatorrelating to transmission activities fell by 14%.

The tonnes of carbon dioxide equivalent have beencalculated on the basis of the global warming potentialof carbon dioxide and methane emissions, as indicatedby IPCC (Intergovernmental Panel on ClimateChange).

CO2 emissions

Transmission20012000199919981997

Other activities

1,000,000

750,000

500,000

t

250,000

CO2 emissions/gas transmitted (Transmission activities)

9,000

3,000

kg/106 m3

6,000

20012000199919981997

Substantial investments have been made in recent yearsto renew the gas turbines used in compressor stations.Special attention has been paid to environmental factors,concentrating on technology involving low-emission gasturbines that use premixed combustion chambers.With performance on a par with that of traditionaldiffusive combustion chambers, this technology makes it

possible to reduce emissions of pollutants, namelynitrogen oxides (NOx) and carbon monoxide (CO), tobelow 100 milligrams per cubic metre.In 2001, Snam Rete Gas’s transmission activitiesinvolved the use of 11 low-emission turbines out of atotal of 34 turbine units, i.e. approximately 32% of thetotal number in operation.

H I G H - E F F I C I E N C Y L O W - E M I S S I O N G A S T U R B I N E S

Percentage breakdown of natural gas emissions

Vented 24.5%

Pneumatic actuators 41.0%

Fugitive 34.1%

Unburnt gas 0.4%

60

40

20

Natural gas emissions

Transmission20012000199919981997

Other activities

106 m3

Compressor stations (storage) 16%

Compressor stations (transmission) 20%

Transmission network 16%

LNG terminal 4% Pressure reduction and regulating plants 44%

Percentage breakdown of natural gas emissions by type of installation

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There is growing scientific evidence that greenhousegas emissions have an influence on climate change.The Intergovernmental Panel on Climate Changeanalyses the causes and effects of changes inclimate. According to IPCC, emissions caused byhuman activities contribute to the increase in thegreenhouse effect, with carbon dioxide accountingfor 65% of these emissions, methane for 19%,chlorofluorocarbons for 10% and nitrous oxide for6%.An increase in the use of natural gas as analternative to petroleum products and coal, whichemit larger quantities of CO2, is one of the mostpromising and feasible options for reducing CO2emissions. Natural gas can play an important role inachieving the target set for Italy in the KyotoProtocol, which is to reduce greenhouse gasemissions by 2008-2012 by 6.5% compared with the1990 figure.The combustion ofnatural gas produces25-30% less carbondioxide compared withpetroleum productsand 40-50% lesscompared with coal,for the same energyinput. Emissions perunit of energy outputcan be further reducedby using natural gas inhigh-efficiencyapplications andtechnologies, such ascondensing boilers,cogeneration plants and combined cycle plants forelectricity generation. A gas-fired combined cyclewith a 56-58% energy efficiency, compared with theapproximate 40% efficiency of conventional steamcycles, can reduce CO2 emissions by 52% comparedwith a traditional plant powered by fuel oil and by62% compared with a coal-fired plant.Natural gas also has the edge on other fossil fuels asregards the reduction of greenhouse gas emissions,even taking into account the emissions of methane,the main component of natural gas, from extractionto end use.Life cycle analysis shows that, in electricitygeneration, the total greenhouse gas emissions –expressed as CO2 equivalent and calculated takinginto consideration carbon dioxide and methaneemissions and their global warming potential (1 forCO2 and 21 for CH4) – in the life cycle of natural gasare 53-65% lower than in the coal cycle and 47-60%lower than in the oil cycle. The ranges shown for the

percentage reductions reflect differences in theactivities included in the life cycle and in thesources of information.Snam Rete Gas’s policy has always been to curbemissions of natural gas, and consequently ofmethane, for safety, operational and economicreasons. In recent years, its commitment hasincreased in response to the problem of climatechange.Estimating emissions of natural gas from Snam ReteGas’s transmission system is part of thiscommitment. This is carried out using a methoddeveloped by the Gas Research Institute (GRI), inconjunction with the US Environmental ProtectionAgency (US-EPA), and adapted to Snam Rete Gas’splant configuration with an ad hoc research projectand measurement campaigns in the field.The results are published annually in the HSE

report.Work completed bySnam Rete Gas to curband reduce natural gasemissions includes:

installing gasrecovery systems in6 compressorstations; activating electric-hydraulic startersystems for 17turbines;eliminating theautomatic ventingof gas from allturbines with dry

seals (27 out of the 34 turbines used fortransmission); installing valve actuators with pressurisationsystems powered by air instead of gas in 2compressor stations.

Natural gas emissions originating from thetransmission activities carried out by Snam Rete Gasin 2001 totalled less than 35 million cubic metres,corresponding to approximately 23,000 tonnes ofmethane. Compared with 1993, this is a reduction ofaround 15% despite an increase of more than 35%in the volume of gas transmitted.This reduction is all the more significant if we consider that in Italy, according to figurespublished by ANPA (the Italian environmentalprotection agency), there was an increase of 4.4% in total greenhouse gas emissions between 1990 and 1999 and a 2.6% increase in total methaneemissions.

C L I M A T E C H A N G E A N D N A T U R A L G A S T R A N S M I S S I O N

Greenhouse gas emissionsin the life cycle of fossil fuels

used to generate electricity

End use

CoalOilNaturalgas*

Russiangas

Italiangas

Other stages

1,200

1,000

800

g CO2 eq.

400

600

200

* Literature data

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W A S T E

The quantities of waste produced by Snam Rete Gas’sactivities are very limited and are due mainly to themaintenance and operation of plants and pipelines, toflushing operations before new large-diameterpipelines go into service and to the cleaning of septictanks that are used at some facilities to treat domesticsewage.As regards the management of the main types ofspecial waste, the operating units located throughoutItaly have reached an agreement with Ambiente SpA,an Eni Group company specialised in wastemanagement.Used oil and spent batteries containing lead areconsigned direct to the national consortia responsiblefor their recovery.To improve waste management, a programme is underway to create areas for the temporary selective storageof waste at compressor stations.

The total production of special waste in 2001amounted to 1,658 tonnes.Of the total waste produced, 91% belongs to thenon-hazardous category and 40% was recovered.

Waste produced in transmission activities increasedfrom approximately 1,020 tonnes in 2000 toapproximately 1,410 tonnes in 2001.Selective waste collection continued at head office and this made it possible to recover and recycle about100 tonnes of paper and cardboard.

W A T E R C O N S U M P T I O N A N D W A S T E W A T E R

Water consumption and waste water in gastransmission activities have little significance from theenvironmental point of view, due to the limitedquantities involved and the type of waste waterdischarged.

In 2001, water offtake consisted of about 2.3 millioncubic metres of sea-water and 0.6 million cubic metresof fresh water.The sea-water is used to cool the auxiliary powerplants at the LNG re-gasification terminal and thefresh water is used mainly for office activities, fireextinguishing systems and irrigating green areas.

A study was completed in 2001 aimed at improvingwaste water management at the LNG terminal.

Percentage breakdownof natural gas emissions by activity

Gas transmission 80%

LNG re-gasification 4%

Gas storage 16%

Natural gas emissions/gas transmitted(Transmission activities)

0.08

0.06

0.04

%

0.02

20012000199919981997

Greenhouse gas emissions/ gas transmitted

(Transmission activities)

20

15

10

t CO2 eq./106 m3

5

20012000199919981997

Waste production

Transmission20012000199919981997

Other activities

2,000

1,500

1,000

500

t

Water consumption

Transmission20012000199919981997

Other activities

5,000

4,000

2,000

3,000

1,000

103 m3

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In addition, a start was made on a study to improvewaste water management at compressor stations.

The reduction in water consumption (22%) and inwaste water (3%) compared with 2000 is due to lessfresh water having been used in offices.

N O I S E E M I S S I O N S

The measures taken to reduce noise pollution fromtransmission facilities involve installing insulatedcabins, sound-absorbing hoods, low-noise valves andsilencers on vents and burying pipes.

The main sources of noise in the gas transmissionsystem are the compressor stations, which areusually in rural areas along the primary pipelinenetwork, and the pressure reduction stations, which link pipelines operating at differentpressures and enable gas to be supplied to thedistribution networks.

To minimise noise from its facilities, Snam ReteGas’s underlying policy is one of prevention. Thisinvolves the correct dimensioning of plants in theproject preparation stage, accompanied by anacoustic impact forecast.For existing facilities, when plant revamping is nottechnically and/or economically feasible,adjustments are made to plant operating conditions.

Compressor stationsGas turbines are installed in special insulatedcabins and suitable silencers are fitted to the

flue-gas stacks. Gas filters and coolers are anothersource of noise and, if necessary, these areinsulated with a layer of rock wool or sound-absorbent barriers are installed in theimmediate vicinity.

Pressure reduction stationsNearly all the pressure reduction plants areequipped with low-noise valves. Acoustic treatment also involves installingremovable sound-absorbing hoods for plants in theopen and insulating buildings in the case ofcovered plants. Where possible, gas feed pipes are buriedcompletely or housed in covered inspection pits.

MonitoringTo verify sound levels, environmental noiseassessments to measure emissions are carried out atregular intervals.

N O I S E A B A T E M E N T

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In 2001, as part of the programme to improvecontinuously the environmental performance ofcompressor stations, sound-absorbent barriers wereinstalled at the Messina compressor station at acost of more than o 0.3 million.

E N V I R O N M E N T A L R E S T O R A T I O N

Most of the environmental restoration work carriedout in 2001 concerned the following pipelines:scale-up of the pipeline importing gas from northernEurope (Masera-Mortara section) in Piedmont;Polaveno-Darfo pipeline in Lombardy; Mestre-Trieste pipeline scale-up (Villa Opicina-S.Giuseppe della Chiusa section) and Flaibano-Pordenone pipeline, in Friuli-Venetia Julia;main Genoa spine (Fegino route change) in Liguria;Bernalda-Brindisi pipeline in Basilicata andApulia.

The types of restoration work undertaken consistessentially of:

soil consolidation and drainage to make theareas concerned stable and safe;introduction of supporting structures to reinstateor improve the original contours of slopes andhillsides;introduction of protection structures for workinvolving river crossings in order to regulate theflow of water and reinstate the river-bed;regulation of surface water to protect the newlyreprofiled land from erosion caused by slope-wash;reconstruction of plant cover to restore theoriginal landscape with targeted works.

One particular restoration job worthy of mentioninvolved transplanting areas of Mediterranean bushalong the right-of-way of the Bernalda-Brindisipipeline.

In addition, to minimise the environmental impactof the Pontremoli-Parma pipeline, approximatelyfive kilometres of pipe were laid in a tunnel usingadvanced no-dig technologies, in the vicinity of

mounts Cervellino, Tavolana, Spinetta andCucchero and the area called Bosco di Felino.

Due to the flooding that affected many regions innorthern Italy in 2000, particularly Piedmont,Liguria, Emilia and the Aosta Valley, extraordinaryenvironmental restoration work continued in severalareas where pipelines are in operation. This workwill be completed in 2002.

P I P E L I N E M O N I T O R I N G

When plants and pipelines are in operation, theyare subjected to regular checks and maintenance toensure high safety standards.In 2001, some 1,280 kilometres of network wereinspected with “intelligent pigs” and some 9,900kilometres were monitored by helicopter.The programme of monitoring by helicopterinvolved weekly and monthly flights over the linefor a total of more than 352,000 kilometres.To prevent pipeline damage caused by corrosion, inaddition to the normal precautions (cathodicprotection, special types of coating, etc.), electricalsurveys were carried out on some 600 kilometres ofpipeline during the year to check its integrity andtake remedial action where necessary.Pipelines laid in unstable areas continued to bemonitored with strain gauges in 2001. During the year,geological surveys were carried out on 880 kilometresof network, including 500 kilometres of pipelineinvolved in this type of survey for the first time.To prevent any interference with and/or damage tothe subsea pipelines that cross the Strait ofMessina, a campaign of visual/instrumentalinspections of the pipes and the shore ends tookplace in 2001. The purpose of this was to check theintegrity of the pipes and the environmentalconditions in their vicinity.

S U B S T I T U T I O N O F O Z O N E - D E P L E T I N G

S U B S T A N C E S

Campaigns conducted in recent years with thespecific aim of eliminating halon and CFC have

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been completed. In 2001, to reduce the quantity ofother ozone-depleting substances, a new programmewas launched to eliminate HCFC.

Under this programme, new fine water spraysystems are to be installed in all compressorstations currently equipped with fire-extinguishingsystems that use NAF-S-III (HCFC).

In 2001, 9 fire-extinguishing systems werereplaced. The programme is expected to becompleted before the end of 2005, three yearsahead of the deadline set in current legislation.

I N J U R Y S T A T I S T I C S

To gauge performance in terms of safety, referenceis made to the frequency and severity ratescalculated for injuries suffered by employees atwork.In 2001, the frequency rate was 16.9 and theseverity rate was 0.4. These rates cannot becompared with those for prior years due to theorganisational changes that have taken place.

As far as accident factors are concerned, the mostimportant are “falls” (for the kind of accident),

Analysis of statistics for recent years shows thatinjuries caused by road accidents, both in workinghours and when commuting, represent a highpercentage of total injuries.The company has always supported initiatives aimed ateliminating or limiting the “driving risk”. These actionshave led to a substantial reduction in the percentage ofinjuries caused by road accidents, from 43% in 1997 to34% in 2001. There has also been a steady increase inthe percentage of accidents attributable to third parties,highlighting the growing attention being paid by ouremployees when driving company vehicles.The measures taken by the company have been of aparallel nature, involving both the human element(awareness campaigns,organisational measures, etc.) andthe vehicles (replacinglow-powered vehicles with othersof a higher category, improvingsafety standards with righthandrear-view mirrors, air bags, airconditioning). In addition, neworganisational tools have beenintroduced to ensure the correctmanagement and maintenance ofthe vehicles.As a follow-up to the aboveactions and as part of the

company’s prevention and continuous improvementpolicy, the HSE Committee has decided to launch anew campaign to raise the awareness of thoseemployees who are the most frequent users of companyvehicles.This initiative, which began in 2001 and will endduring the first few months of 2002, is aimed atillustrating the rules of conduct for safe driving. Inparticular, aspects relating to “the human element”,“the vehicle”, “work organisation” and “theenvironment” are analysed, but even the mostelementary rules of caution and observance of thehighway code are discussed.For this awareness campaign, technical experts from the

prevention and protection service,based both at head office and atthe regional centres, attended aspecial training course prior toholding a series of meetings withall the employees concerned.During these meetings, whenparticipants are also required tofill in a questionnaire by way ofself-assessment, the employeesare given a safety handbook on“Driving motor vehicles” preparedby the prevention and protectionservice.

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“means of transport” (for the agent), “driving” and“inspections and controls” (for the activities) and“lack of attention” (for the cause).

There was a reduction in road accidents comparedwith last year, both during working hours and whencommuting. The so-called “commuting accidents”are those that occur when employees are travellingbetween their homes and places of work. Inparticular, it is to be noted that most of the roadaccidents were the fault of third parties. These latteraccidents accounted for 81% of the total, comparedwith 65% in 2000, confirming that our employeesare paying more and more attention when driving.Despite this improvement, injuries caused by roadaccidents continue to represent a high percentage(34% in 2001) of total injuries.

The in-house process regarding notification ofaccidents and injuries is managed by means of adedicated back-up system operating via e-mail.This makes it possible for the people concerned(assignors of work, unit heads, prevention andprotection service) to be advised in real time aboutthe accident and its dynamics and the status of thefollow-up activities.

H S E E X P E N D I T U R E

Expenditure has been recorded and classified byanalysing capital expenditures and operatingexpenses and identifying those incurred specificallyand primarily for health, safety and theenvironment.In 2001, HSE expenditure totalled approximately o 64.5 million.

The expenditure incurred in 2001 and in prioryears has made it possible to maintain highenvironmental protection and safety standards whenconstructing and operating plants, in accordancewith the company’s policy and its objectives forcontinuous improvement.

The item “air/climate protection” mainly includes capital expenditures in connection with the elimination of HCFC in fire-extinguishingsystems, the replacement of a heat generator and the installation of some hydraulic startersystems (to replace gas-activated systems) for gas turbines in compressor stations, as well asother measures taken to limit and monitoratmospheric emissions.

HSE expenditure

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Capital expenditures

Air/climate protection 5% Landscape protection/ restoration 67%Training 1%

Health and safety 12%

Other environmental protection activities 15%

Percentage breakdown of expenditure

The item “landscape protection/restoration”comprises expenditure for restoration work afterpipe laying and maintenance and expenditure forthe landscaping and maintenance of green areas atfacilities.Expenditure for restoration is represented by thesum of the ordinary expenditure, i.e. costs incurredto return the land to its condition prior toexcavation, and extraordinary expenditure, i.e.additional costs incurred to improve the originalcondition of the land.

The main costs making up the item “otherenvironmental protection activities” comprise thecosts incurred for noise abatement, soil protection,waste and waste water management and researchand development.

Table 1.3 in the enclosed Performance Indicatorcards gives a detailed list of HSE expenditure.

In 2001, approximately o 420,000 were spent onHSE training courses.

Safety expenditure in 2001 totalled approximatelyo 7.8 million, comprising the costs incurred for

studies, research, risk assessments pursuant toLegislative Decree 626/94, preparation of contingency plans, plant and equipment(automatic safety and fire-extinguishing systems,materials and warning signs), personal safetydevices and accident insurance.This expenditure does not include costs relating toplant safety, e.g. capital expenditures for safetyvalves, remote-controlled valves, increased pipethickness, greater burial depth for pipes withrespect to current legislation, route changes, etc.These account for a high percentage of thecompany’s total capital expenditures and operatingexpenses and are considered an integral part of thecompany’s activities.

To safeguard the health of employees,approximately o 1 million were spent in 2001 on studies, research, medical equipment, analysisand control apparatus, work on plants, industrial hygiene inspections and monitoring and medical tests.

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On 1 November 2001, all Snam Rete Gas’s LNG re-gasification activities were transferred to a new company, GNL Italia, controlled 100% bySnam Rete Gas.GNL Italia operates the Panigaglia terminal, locatedin the Fezzano di Portovenere district (province ofLa Spezia). This terminal is the only plant in Italythat receives and re-gasifies liquefied natural gas.Built between 1967 and 1970, it was revampedbetween 1990 and 1996 in order to process lightLNG. When revamping, special care was taken toensure that the terminal blended in with itssurroundings on the basis of a project prepared bythe University of Genoa’s School of LandscapeArchitecture.

The terminal covers an area of some 45,000 squaremetres and consists of two storage tanks, each with acapacity of 50,000 cubic metres, vaporisationequipment and a berth for the gas tankers.The criteria for the design, construction andoperation of the Panigaglia terminal comply with verystringent international regulations and involve state-of-the-art technology in terms of safety andenvironmental protection.

In 2000, the LNG terminal site achieved UNI EN ISO 14001 certification of its environmentalmanagement system. This system is integrated with aplant safety management system complying withLegislative Decree 334/99.In July 2001, according to the procedures formaintaining certified status which involve a visit bythe certification body every nine months, DNV Italia

(Det Norske Veritas) carried out the relevant auditand confirmed certification.In December, the chairman of GNL Italia confirmedthe company’s HSE policy and its new environmentaland safety programme.

In the Panigaglia terminal, natural gas converted to the liquid phase by lowering its temperature to -160 °C is reconverted to the gaseous phase in asimple heating operation and sent to the gas pipelinenetwork.In 2001, the terminal sent approximately 3.6 billioncubic metres of gas to the network, consuming about2,010 TJ of energy.

Activities at the terminal in 2001 caused thefollowing atmospheric emissions: approximately 77 tonnes of nitrogen oxides, 48 tonnes of carbonmonoxide and 93,000 tonnes of carbon dioxide.Natural gas emissions totalled around 1.77 millioncubic metres, whereas sulphur oxide and particulateemissions are negligible.Waste production amounted to 109 tonnes. A total of2.3 million cubic metres of sea-water were used tocool auxiliary power plants.

Considering the operating trend at the terminal, therehas been little change in the environmentalindicators compared with last year, with the exceptionof natural gas emissions which fell fromapproximately 9.75 million cubic metres in 2000 to1.77 million in 2001.This reduction is due to the boil-off recovery unithaving resumed normal operation.

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Energy consumption for re-gasification/LNG sent to network

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2 0 0 2 E N V I R O M E N T A L A N D S A F E T Y I M P R O V E M E N T P R O G R A M M EE N V I R O N M E N T A L O B J E C T I V E E N V I R O N M E N T A L T A R G E T

– Reduce atmospheric emissions of natural gas Replacement of existing boil-off compressors, by 31/10/2002

– Reduce noise

– Prevent accidental discharges (surface and subsurface) Replacement of gas oil tanks, by 31/12/2002

– Improve waste water management Modification of the main drainage system, by 31/12/2002

– Dispose of asbestos Elimination of roofing containing asbestos on former turbine shed,by 31/12/2002

S A F E T Y O B J E C T I V E S A F E T Y T A R G E T

– Prevent conditions causing breakage of fragile parts Completion of a new plant configuration in conjunction with the replacementof the absorber of the existing boil-off compressors, by 31/10/2002

– Identify reliable gas leak detectors Completion of an assessment study regarding installation of a reliable systemto detect LNG losses, by 31/12/2002

G N L I T A L I A E N V I R O N M E N T A L A N D S A F E T Y I M P R O V E M E N TP R O G R A M M E S A N D T A R G E T S

With a view to continuous improvement and in theframework of the environmental management systemfor the re-gasification terminal, GNL Italia has

defined its environmental and safety programme.The tables below show the new objectives andtargets.

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V E R I F I C A T I O N O F T H E R E P O R T

Printed on ecological paperSplendorlux bilucido (cover) and Symbol Freelife gloss (text)

Format control:Snam Rete Gas/Health Safety Environment

Publishing coordination:Snam Rete Gas/Corporate Image department

Cover:On-Off - Milan

Cover photo:Laura Ronchi

Graphics:Angelini Design - Rome

Printed by:Union Printing SpA - Viterbo

June 2002

For enquiries:Snam Rete Gas SpA/Health Safety Environment Dept.

Piazza Santa Barbara, 7 - 20097 San Donato Milanese (Milan)Tel. +39.02.5201

Fax +39.02.520.38428e-mail: angelo.riva@snamretegas.it

www.snamretegas.it

P E R F O R M A N C E I N D I C A T O R S

Table 1.1 - Activities

1997 1998 1999 2000 2001

Natural gas pipeline network (km) 28,100 28,731 29,000 29,131 29,607

Average distance travelled by natural gas in Italy (km) 498 514 527 503 442

LNG sent to network (109 m3) 1.9 2.1 3.0 3.5 3.6

Natural gas transmitted (109 m3) 57.6 61.1 66.4 73.1 69.6

Natural gas stored (109 m3) 4.0 4.5 6.4 9.6 6.2

Pressure reduction plants (no.) 556 553 561 560 560

Compressor stations in operation (no.) 20 22 20 19 19

comprising:

company-owned (for transmission) 10

operated for third parties (for storage) 9

Power rating in compressor stations (MW) 884 975 971 962 962

comprising:

company-owned (for transmission) 588

operated for third parties (for storage) 374

Table 1.2 - Environmental data

1997 1998 1999 2000 2001

Energy consumption (TJ) 9,598 10,806 14,657 16,979 12,688

Natural gas emissions (106 m3) 48 48 50 55 43

CO2 emissions (103 t) 500 563 770 895 660

CO2 eq. emissions (103 t) 1,180 1,233 1,473 1,658 1,269

NOx emissions (t) 2,652 2,493 2,729 2,772 1,769

CO emissions (t) 774 841 859 964 644

SPM emissions (t) 30 31 39 49 42

SOx emissions (t) 5,1 5,0 6,0 7,0 6,0

Total waste production (t) 1,143 595 401 1,224 1,658

Non-hazardous waste production (t) 938 542 306 1,083 1,511

Hazardous waste production (t) 205 53 95 141 147

Water consumption (103 m3) 3,795 4,169 4,088 3,707 2,889

Waste water (103 m3) 3,532 3,783 3,524 2,693 2,622

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Table 1.3 - HSE expenditure

(thousand o)

1997 1998 1999 2000 2001

Cap. Ex. Op. Cap. Ex. Op. Cap. Ex. Op. Cap. Ex. Op. Cap. Ex. Op.

Air/climate protection 3,468 1,244 796 3,667 433 492 1,350 593 2,737 728

Waste water management 124 67 1 56 43 57 6 105 14 118

Waste treatment 17 227 0 397 0 170 8 504 106 517

Soil protection 0 360 34 828 0 230 73 54 533 124

Noise/vibration abatement 533 77 967 121 435 11 264 25 324 30

Landscape/nature protectionand environmental restoration 42,941 6,648 26,720 7,002 8,127 7,435 8,189 9,386 32,078 11,212

Research and development 0 3,584 0 1,741 0 723 0 513 0 280

Other environmental protection activities 527 8,907 1,479 7,339 1,280 8,961 6,456 7,616 4,418 2,991

Safety 208 3,155 1,131 10,911 1,362 5,344 1,841 6,935 1,417 5,367

Health 8 443 128 491 298 744 245 709 312 736

HSE training 0 740 0 1,209 0 1,303 0 455 0 418

Total 47,825 25,452 31,255 33,761 11,979 25,471 18,432 26,895 41,939 22,521

Total (capital expenditures and operating expenses) 73,277 65,017 37,450 45,327 64,460

Table 1.4 - Environmental indicators

1997 1998 1999 2000 2001

Total energy consumption(%) 0.48 0.51 0.64 0.67 0.53

Energy transmitted

Energy consumption for transmission(%/103 km) 0.61 0.64 0.78 0.75 0.66

Energy transmitted * av. dist. trav.

Energy consumption for storage(%) 1.44 1.47 1.42 1.49 1.49

Energy stored

Energy consumption for re-gasification(%) 1.65 1.74 1.61 1.73 1.62

LNG processed

Natural gas emissions for transmission(%) 0.069 0.061 0.059 0.051 0.049

Natural gas transmitted

CO2 emissions for transmission(kg/106 m3) 5,753 6,174 7,801 7,110 5,478

Natural gas transmitted

CO2 eq. emissions for transmission(kg/106 m3) 15,441 14,824 16,147 14,204 12,473

Natural gas transmitted

NOx emissions for transmission(kg/106 m3) 33 28 26 20 15

Natural gas transmitted

CO emissions for transmission(kg/106 m3) 11 9 8 7 5

Natural gas transmitted

P S B, S D M (MI) - I

T. + www.snamretegas.it