HSE Management: Safety, Security & Sustainability Prescriptive and Standards Based Regulations

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1 HSE Management: Safety, Security & Sustainability Prescriptive and Standards Based Regulations Kathy Kanocz - VP Safety and Sustainability November 12, 2013

2 What happened on this day in history? November In Philadelphia, the first Sunday football game was played The first drive up banking facility opened at the Exchange National Bank The first drive-up banking facility opened at the Exchange National Bank in Chicago, IL.

3 Statoil Positioned in Attractive E&P areas Arctic RoW 1 Barents Sea Norwegian Sea North Sea Sea Caspian Azerbaijan North America Unconventional North America 2 Unconvetional 2 Angola US Gulf of Mexico Brazil Tanzania Cluster / Potential Cluster Statoil presence

4 Statoil North America: A Strong Team of ~ 2100 & A Strong Portfolio Chukchi Sea Anchorage Beaufort Sea Calgary Oil Sands Bakken EC Canada St. Johns Eagle Ford Williston Marcellus Austin Houston Stamford Washington Mexico City DW GOM Terminal Bahamas

5 Offshore Assets Onshore Assets Statoil North America in 2020

6 Statement by CEO Helge Lund Following Algeria "The safety of 22,000 employees is my responsibility. This is the hardest part of my job. I have a deep and personal commitment to it. Safety is the only thing that keeps me awake at night. It is the responsibility of our leaders to create a culture that is based on thinking and asking what is the safe way forward. We all feed to see, act and respond on the right risk picture and what does not seem to be right 6 Classificati on: Internal

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10 Global Companies Operate in Many Regulatory Environments Management System Regulatory Compliance Continual improvement 10 Classification: Internal

11 Comparison of few key points Prescriptive Outline actions, technologies, procedures and the means by which to achieve compliance Performance Based Emphasis is on goals that must be achieved but do not specify means to reach goals Regulatory authorities define the requirements Risk-based and focused Regulatory agencies monitor compliance based on check list type approach to requirements being met Emphasizes control and accountability Detailed approaches makes compliance of entities cumbersome and not always match risk Compliance is based audits and inspections Does not easily allow for technology advancements Requires regulators to be able to measure, monitor and communicate on performance of regulated entities Operator s responsibility to make sure they as a minimum meet these requirements, as well as for making improvements as they go along New technologies easier to apply but for small companies defining compliance could be costly Operating entities define requirements 11 Classification: Internal

12 Regulatory Requirements are in the middle 12 Classification: Internal

13 Gulf of Mexico Post Macondo regulators described desire to move toward performance based regulations Added additional prescriptive requirements with more longer term standards Key Challenges - public perception, ability to monitor, ability to show different approaches were equivalent, need to take actions fast Additional regulations put in place very prescriptive

14 As International Global Operator Different regulatory approaches make: Multiple ways of measuring performance One approach globally challenging Ensuring Institutional learning's more complex Qualitative interpretations Actual measurements Predictions Determination of the appropriate level of risk Different measurements of performance 14 Classification: Internal

15 Statoil Approach Global Process Owner over each Safety and Sustainability Process Technical expert with risk focus Owners of process and technical requirements Full time responsibility Single point of accountability for: Review of BA requirements and compliance needs for that process Review of learned related to that process Identify and approve all improvement suggestions Approves deviations Requirements set up as: One process across entire organization for those that can apply across organization Onshore requirements Offshore requirements 15 Classification: Internal

16 Competency Center Centralized organization for global technical expertise Drives learning and evaluation of application of best practices globally 16 Classification: Internal

17 Challenges Statoil s heritage is from performance based regulatory regimen Complexity of the internal requirements Prescriptive regulatory agencies expect to see requirements in same terminology and format as regulations Cross referencing complex Conflicts do arise that must result in deviations Beyond regulatory requirements 17 Classification: Internal

18 Serious Incident Frequency Serious injury/damage/loss is defined all instances which have the actual or potential severity of class 1 or 2. Goal is to focus on major accidents. 18 Classification: Internal

19 Theory Supports When Focus is on Personal Safety Reduction in TRIF but SIF stay flat TRIF SIF 1 0 year 1 year 2 year 3 year 4 19

20 STO SIF and TRIF frequency (million hours) We have had focus on SIF and not personal safety Statoil and contractors 4 3 Frequency Number SIF SIF Frequency TRIF Total

21 Safety Pyramid Theory Fatalities 1 Serious Days Away from Work 30 Medical Treatments 300 Adaptation to Traditional Fatalities Serious Days Away from Work First Aids 3,000 Medical Treatments Observations 300,000 Traditional model First Aids Observations 20% of incidents are low probability High consequence Process safety, transportation, life safety principles, golden rules 21

22 Safety is not about the numbers Safety is about people making choices to do the right thing. Companies can have the best policies, procedures, tool and rule but. People turn the wrenches People operate the pumps People drive the trucks People open the valves People work on the drill floor 22