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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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