Improving Contractors HSE Performance in the Oil Industry

1. Improving Contractors HSE Performance in the Oil Industry

2. Introduction • Today’s oil industry is increasing its tendency to be more dependant on outsourcing most of activities for achieving its goals. • Evidences can be seen in areas such as seismic, drilling, construction, logistics and maintenance that are generally executed using specialized contractors

3. Health, Safety and Environment is turning to be a high priority for most of the oil industry majors involved in Exploration and Production activities such as BP, Shell, Exxon, Chevron and others • contractors are playing a definitive role due the high amount of man hours caused in their activities. • In some cases man hours worked and incidents can be in a proportion of 8/1 where 8 corresponds to the contractors

4. Background • Today’s legal and market requirements are getting more stringent and demanding to the Oil Industry companies. In today’s incident cases is unlikely that the liability process differentiate on the responsibilities of the licensed company or its contractors and normally happens that in case of serious incidents the chosen one to respond is the most visible one which in our case is the contracting company. Contractors are an inherent part of companies operational infrastructures and a committed engagement is required when a high HSE performance is a must.

5. Based on the analysis of 2381 million work-hours of data, submitted by 39 companies from operations in 75 countries Million Man Hours worked Man-hours Contractors Man-hours Company

6. FAR for Oil & Gas Producing Company Contractors • FAR & No of fatalities Fatal Accident Rate (FIR): The number of fatalities per 100,000,000 (100 million) hours worked

7. LTIFR for Oil & Gas Producing Company Contractors • FAR & No of fatalities Lost time injury frequency (LTIF): The number of lost time injuries (fatalities + lost workday cases) per 1,000,000 hours worked.

8. KOC Contractors • FAR & No of fatalities Industrial Disabling Injury frequency (IDIFR): The number of lost time injuries (fatalities + lost workday cases) per 200,000 hours worked.

9. A Successful Story Introduction • In the East side of the Colombian piedmont (South America) BP hired in 1995 a national construction company to build 142 well sites and 1200 km of pipelines to interconnect the wells with the 2 CPF’s From now on we will call this contractor company IC. • During the initial 6 months lots of work and interactions between BP and contractor was required to tackle the growing number of recordable incidents including 1 fatality. During the first year a total of 4.300.009 man-hours worked by IC resulted in, 94 recordable incidents and 1 fatality ending with a LTIFR 21.8 when the OGP were in 2.67 per million hours worked. • A plan was put together which leads IC to complete 4 years with out fatalities, 9’450.000 man-hours free of recordable cases ( 2 years) • IC is up to today the most reliable pipeline contractor in South America and one of the most awarded

10. Picture-1 Cusiana Field

11. Picture-2 Cusiana CPF

12. Picture 3 - Cusiana Environment Sensibilities

13. Picture 4 - Cusiana Project Interactions

14. Successful Story – Accident causes • Lack of HSE leadership by the line management • Lack of proper and solid training schemes • Lack of work planning by the supervisors • Lack of appropriate work procedures or procedures poorly applied. • Poor Risk assessment and management • Fear to report incidents due to blame culture • Lack of minor incident reports which leads to loose the early warning stage to prevent recurrences.

15. Successful Story – How Improved • Line management HSE agenda • HSE Induction programme • Daily tool box talk and JSA • HSE Function and Line working together • Transparent Incident reporting and investigation • Work procedures • Risk based Focus Programmes • Permit to Work System • Safety Observations • Monthly HSE leader programme • Monthly Contractors & Subcontractors evaluation • Monthly colour r code equipment & tools inspection • Defined HSE KPI’s & Awards scheme

16. Successful Story – The results • After couple of years the good results produced and the high commitment demonstrated by IC, and other 4 years contract extension was awarded by BP to IC. • IC turned to be in the rank of the few companies in South America making $60 million profit a year and the key success was their implementation of solid HSE structures interacting with QA & QC across their organization and using this processes as reference of reliable reputation to make business world wide. • IC was certified in ISO 9001, ISO 14001, OHSAS 18001. • IC has is been awarded with contracts of several million dollars not only in South America but in Europe and Africa

17. Recommended Model Contractor Interaction Oversight Program Identify HSE Risks Identify Oversight Expectations PLAN Identify Contractor Requirements Communicate Requirements Identify: Support CAMs, HSE Liaisons Roles & Resp. DO Provide Knowledge Resources for Contractor Implement Oversight Program Evaluates Contractor Performance Routine Oversight Audits CHECK Corrective & Preventive Action ACT Management Review

18. Recommended Model • Contract HSE requirements are clear, practicable and detailed enough and leaving room for addendums when required • Clear & frequent communications process company – contractor • Visible companies – contractor management commitment with HSE • HSE Risks update based on project stages • A solid HSE Induction process for contractor at all levels is a must

19. Recommended Model • Agree and communicate performance KPI’s • Identify & roll out HSE Focus Programmes • Transparent Incidents report process in a “ No Blame Culture” • Contractors Staff HSE agenda proactive driven • Continuous improvement driven evaluation process • HSE Forums • HSE Award program

20. What is KOC doing today? Contractor Health, Safety and Environment Oversight Procedure • Project Pre-planning • Designation of KOC Superintendent of contract • Contractor pre-qualification • Proposal process • Contract award and execution • Contract mobilization • On-site project kick-off • Contractor oversight • Contract demobilization and closeout

21. What is KOC doing today? • Clause 22 of General condition of the contracts • HSEMS guidelines for contractors • HSE Incident Reporting Procedure • Procedure for preparation of Project HSE plan • Guide to Contractors’ Monthly HSE performance reports • Participation during Safety Engineers’ seminar • Participation during Safety meetings • Participation in campaigns • HSEMS awareness sessions, awareness materials • Safety letters, Safety flash • Suggested each manager to develop HSE statistics for each project

22. Conclusions • A safe contractor workforce will be an efficient team player • Contractors HSE Improvement Processes is desperately needed to be consistent with companies HSE Policies and requires a systemic approach • Improvement success will depend upon peoples commitment to pursue the best possible results in a consistent and persistent activity • Contractors are at least 70% of our operations and part of our reputation is in their hands, are we doing something extra to ensure more reliability?