SEMS Auditing: An I3P Auditor’s Perspective Summary/Analysis of Findings To Date Kevin Graham

1. SEMS Auditing: An I3P Auditor’s Perspective Summary/Analysis of Findings To Date Kevin Graham Philip Emanuel, Lead Auditor Michelle Duncan, Lead Auditor September 11, 2013

2. About M&H • M&H • Established in 1978 • More than 250 engineering and technical professionals • Offices in Houston and Lafayette • First I3P to conduct SEMS audit (Directed) • More than 2 dozen SEMS audits completed or in process • Our Services • Regulatory Compliance • Project Management • Design Engineering • Information Technology • Maintenance Management • Technical Documentation │2│

3. Our Approach to SEMS Auditing • Three types of Audits • Commissioned Contractor Audits • Gap Analysis • No Audit Plan, Final Report, or CAP submitted to BSEE • Formal I3P Audit • Based on COS SEMS Audit Protocol • Some items reorganized into separate questions • Placeholder for Operator-specific requirements not required by Subpart S or API RP75 M&H Presentation Photo Caption │3│

4. Three Phases (Gap Analysis/I3P) • Phase I: • Corporate-level documentation; program documents/procedures • Conducted at M&H offices • Phase II: • Program implementation • Conducted at Operator’s corporate office/shorebase location • Phase III: • Program implementation (facility-specific) • Site visit to each facility identified in Audit Plan

5. Number of Protocol Requirements by Element/Phase

6. Number of Protocol Requirements by Element

7. Number of Protocol Requirements by Element/Phase

8. Our Sample (Data Set) • 16 Separate Audits • Includes Gap Analysis and/or Formal I3P Audits • Gap Analysis Audits: 4 • 2 of these subsequently accepted by BSEE as meeting formal audit requirements • I3P Audits: 12 • 3 of these were BSEE-Directed • 1 of these utilized an Operator-defined protocol (not the COS Protocol) • 1 of these included only Phase I and II • Included both production and drilling (where appropriate)

9. No of Findings (Deficiencies) by Element/Phase

10. No of Findings (Deficiencies) by Element/Phase

11. No of Findings (Deficiencies) by Element/Phase

12. No of Findings (Deficiencies) by Element/Phase

13. Occurrence of Findings by Phase/Element – Difficulty Ranking

14. Element 5 - Operating Procedures:Most Common Deficiencies • 1. Failure to adequately address: • “Simultaneous Operations” • “Temporary Operations” • “Any lease or concession stipulations established by recognized governmental authority” • “Continuous and periodic discharge of hydrocarbon materials, contaminants, or undesired by-products into the environment is restricted by governmental limitations” • “Raw materials used in operations and the quality control procedures used in purchasing these raw materials” • Consideration of human factors associated with format, content, and intended use of operating procedures • Failure to include job title and reporting relationship of the person(s) responsible for each of the facility’s operating areas • Failure to consistently implement operating procedures

15. Element 4 - Management of Change:Most Common Deficiencies • MOC procedures fail to address: • Duration of the change, if temporary • Necessary time period to implement changes • Communication of the proposed change and the consequences of that change to appropriate personnel • Employees not adequately informed of the change prior to startup of the process or affected part of operation • Employees not trained in the change prior to startup of the process of affected part of operation • Where MOC results in a change in operating procedures, such changes not documented/dated

16. Element 7 - Training:Most Common Deficiencies • Refresher training not provided to maintain understanding of and adherence to current operating procedures • Failure to develop procedures for evaluating whether personnel possess the required knowledge and skills to carry out their duties and responsibilities, including startup and shutdown • Failure to develop and implement qualification criteria for operating and maintenance personnel • Failure of training program to address operating procedures

17. Element 6- Safe Work Practices:Most Common Deficiencies • Failure to consider human factors in development of safe work practices • No work authorization or “permit-to-work” system implemented for tasks involving lockout and tagout of electrical and mechanical energy sources • Failure to include provisions in permit-to-work system for adequate communication of work activities to shift changes and replacement personnel • Failure to include contractors in permit-to-work communications • Failure to develop and implement safe work practices to control the presence, entrance, and exit of contract employees in operation areas.

18. Element 8- Assurance of Quality/Mechanical Integrity:Most Common Deficiencies • Failure to document for each inspection/test performed of equipment/systems: • Name, position, and signature of the person who performed the inspection/test • Date of inspection/test • Failure of Mechanical Integrity procedures to address modification of existing equipment and systems and failure to ensure that procedures are modified for the application for which they will be used • Failure of testing, inspection, calibration, and monitoring programs for critical equipment to include: • Documentation of completed testing and inspection • Pressure vessel testing/inspection documentation not maintained for life of equipment • All other documentation not retained for a minimum of 2 years or as needed • Appropriate auditing procedures to ensure compliance with the program

19. General Notes and Other Observations • Most common findings in “other” elements • Failure to analyze/critique emergency response drills for the purpose of identifying and correcting weaknesses (Element 10 – Emergency Response) • Failure of the supervisor of the person in charge of the task to approve the JSA prior to commencement of the work (Element 3 – Hazards Analysis) • Management commitment/involvement led to fewer findings • Key variable in determining time/cost required to conduct audit has been quality of “Document/Records Management System” – not size of Operator company or number of facilities.

20. General Notes and Other Observations • The more robust the MOC program/process, the fewer program deficiencies • Level of BSEE involvement/participation in audits has varied • Competing mindsets: Is this about compliance? Or is this about management systems? • No clear definition/approach yet in verifying knowledge/skills • Greater focus on the “E” in SEMS is coming