Implementation of a Gloabl Approach to Asset and Operating Integrity - Mark Leigh

7/30/2019 Implementation of a Gloabl Approach to Asset and Operating Integrity - Mark Leigh

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2008 OSHA Oil & Gas Safety

Conference

Development and Implementation ofan A&OI Program

Mark LeighFunctional Excellence Team Leader

Asset & Operating Integrity

December 3, 2008


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FOR THE PURPOSES OF THE SAFE HARBOR PROVISIONS

OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995The following presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section

21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. You can identify our

forward-looking statements by words such as anticipates, expects, intends, plans, projects, believes, estimates, and similar expressions.

Forward-looking statements relating to ConocoPhillips operations are based on managements expectations, estimates and projections about

ConocoPhillips and the petroleum industry in general on the date these presentations were given. These statements are not guarantees of future

performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Further, certain forward-looking statements are based

upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what isexpressed or forecast in such forward-looking statements.

Factors that could cause actual results or events to differ materially include, but are not limited to, crude oil and natural gas prices; refining and marketing

margins; potential failure to achieve, and potential delays in achieving expected reserves or production levels from existing and future oil and gas

development projects due to operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground

accumulations of oil and gas; unsuccessful exploratory drilling activities; lack of exploration success; potential disruption or unexpected technical

difficulties in developing new products and manufacturing processes; potential failure of new products to achieve acceptance in the market; unexpected

cost increases or technical difficulties in constructing or modifying company manufacturing or refining facilities; unexpected difficulties in manufacturing,

transporting or refining synthetic crude oil; international monetary conditions and exchange controls; potential liability for remedial actions under existing

or future environmental regulations; potential liability resulting from pending or future litigation; general domestic and international economic and political

conditions, as well as changes in tax and other laws applicable to ConocoPhillips business. Other factors that could cause actual results to differ

materially from those described in the forward-looking statements include other economic, business, competitive and/or regulatory factors affecting

ConocoPhillips business generally as set forth in ConocoPhillips filings with the Securities and Exchange Commission (SEC), including our Form 10-K

for the year ending December 31, 2007, as updated by our quarterly and current reports on Forms 10-Q and 8-K, respectively. ConocoPhillips is under

no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information,

future events or otherwise.

CAUTIONARY STATEMENT


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Agenda

Business Case for A&OI

Operations ExcellenceWhat does good look like? A&OI Program elements Assessment program Examples of Strategic Improvement Plans Summary


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ConocoPhillips - Company Overview

E&P Employees . . . . . . . . . . . . . . . . . . . 11,859

Total World Production . . . . . . . . 1.880 MMBOED


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Upstream Portfolio

Risk is assessed using a risk matrix Losses of containment have different

risk exposures Risk is lowered by decreasing the

likelihood and/or consequence of an

eventConsequence

Likeliho

od

Diverse Asset Base


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Challenges

High equipment density People live on site Problematic Escape Evacuation and

Rescue

Loss of containment impacts

Large number of remote facilities Low manning levels Some limited communications and automation Most gathering systems and pipelines cannot

be pigged.

High water cut and aging facilities

Offshore ..

Onshore ..


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Asset Integrity

Capability of an asset to contain its contents.

Operating IntegrityAbility and competency of the workforce to safely operateand maintain an asset.

A&OI is key to managing risk.

One of the 15 elements of the HSE Management System

An asset has integrity when it performs as intended and isoperated and maintained within its design parameters

at an acceptable risk over its entire service life.

Some definitions


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Business Case for Asset & Operating Integrity

Safe Operationfor our employees,the public, and contractors;

Environmentally Responsible

performance;

Confidencethat asset liabilities are

managed and the company reputationwill go uncompromised;

Assuranceto Senior Management

that business is managed through audit

results and compliance exception

reporting;

Managed Business Value(costs

and benefits) throughout the lifecycle

of our assets.

Humber RefineryApril 2001

Transco PipelineSeptember 2008

Texas CityRefinery

March 2005

Eugene IslandGulf of Mexico

March 2001


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System Relationships

All hazards & risks are managed under the HSE MS Standard


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A&OI PS&OP&SM&R

IntegratedOperations

IntegratedOperations

HumanPerformance

Leadership &Management

Health, Safety &Environment

Each of the 8 OE Systems are dependent andsupportive of one another

OE Framework

1. Defines Excellence in

Operations.

2. Tools to measure & improve

operations performance.

3. Monitors asset metrics &

provide objective analysis.4. Assess technologies for their

application.

5. Create environment that

values knowledge sharing.

Operating Expectations OE Framework

Containmentrisks

Equipment

performance

Integrated

PlanningMaximising

production


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Guidance documents:-

Standards

Recommended Practices

Guidelines

etc

Assessment guides are part

of guidance documents

Method to evaluate each

functional area

May drill down to the

process/practice level.

Provide insight for setting

goals and developing

plans

The OE Toolkit consists of guidance documents and assessment guides these

are used as the inputs to set operating goals and assess and develop SIPs.

Operating ExpectationsWhat Good looks like


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1.0Planning1.1 Policy & Leadership

1.2 Risk Assessment and Management

1.3 Legal Requirements & Standards of Operation

1.4 Strategic Planning, Goals & Objectives

2.0Implementation2.1 Structure & Responsibility

2.2 Programs & Procedures

2.3 Inspection, Testing and Maintenance

2.4 Emergency Preparedness

2.5 Awareness, Training and Competency

2.6 NonConformance, Investigation and Corrective Action

2.7 Communications

2.8 Document Control and Records

3.0Assessment & Verification

3.1 Measuring and Monitoring

3.2 Audits

4.0Review & Adjust 4.1 Review

Core ElementsPracticesProcesses Core ElementsPractices

Implementation/Operation

Check

Correct

Review

HSE Policy

A&OI Philosophy

Objective

Performance & Condition Targets

Plans (Strategic and Annual)

Implementation/Operation

Check

Correct

HSE Policy

A&OI Philosophy

Objective

Performance & Condition Targets

Plans (Strategic and Annual)

Essential Elements of Recommended Practice


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1.0Planning 1.1 Policy & Leadership

1.2 Risk Assessment and Management

1.3 Legal Requirements & Standards of Operation

PracticesProcesses Practices

Scoring Methodology

Each numbered item scored 0 to 4

The system shall provide for communicating the policies anddemonstratingmanagements commitment to an HSE culture thatdrives towards zero accidents and incidents

Statement from governingDocument or Standard

1 Each BU should establish and maintain a documented A&OI Philosophy.

2 BU Management shall demonstrate visible and active leadership..

3 Each BU or Asset/Operating Unit shall maintain a documented A&OI Program

4 Means for ensuring that .A&OI requirements are effectively communicated to contractors and vendors

5 The A&OI Program shall address the management of change (MOC).

6 BU leadership shall review and assess compliance..

Detailed line items


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Displaying the results

0Awareness

Building

1Program

Development

2Implementing

3Managed

4Optimising

95 individual sub-elements scored

Desired level

Early SIP* focus areasMulti-year time frame?

* Strategic Improvement Plan

Asset continues to implementPrograms this year?

Asset has achieved desired levelIn these elements


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Systematic Effort to Improve A&OI Programs

A&OI assessments conductedon all operated assets

Self assessments against the

A&OI recommended practice

A&OI gaps identified

Improvement plans validated

and in place to close gaps

We have improved our understanding and are working to reduce our risk
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Strategic Improvement Plan Examples

Belanak (Offshore Indonesia)

Improve valve and heat exchanger programs

Improve Safety Critical Equipment program

Enhance management of change process

Develop well integrity program

UK Southern Gas Basin

Improve inspection programs

Conduct more risk assessments

Develop performance standards for

critical equipment

Enhance engineering standards and

document control practices


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Further implementation issues

Develop a view of a desired future state

Understand the different time required to

achieve this

Same approach may result in different detailplans Risk Based and Fit for Purpose

system

Decide when to move from Self Assessment

to Audit approach Have a plan !


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Poor Asset integrity is a threat tocorporate reputation if not properly

managed

Set expectations and drive improvement:

Common management program

Systematic assessment process

Improve understanding of asset condition

Our aim is to reduce the risk of significantfailure

In Summary

Asset and Operating Integrity is a key component of

HSE Management and ConocoPhillips Operations
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Implementation of a Gloabl Approach to Asset and Operating Integrity - Mark Leigh

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