EI Process Safety Management Framework EI Process Safety

EI Process Safety Management Framework EI Process Safety Survey Industry Good Practice for Process Safety Management www. energyinst. org/PSM-framework www. eipss. com Martin W. Ball John W. Pond EIPSS Ltd. May 2012 The Apex of the Pyramid

Agenda • Energy Institute • EI Process Safety Management Framework (EIPSMF) • EI Process Safety Survey (EIPSS)

Who ? • The leading chartered professional membership body supporting individuals & organisations across the energy industry. – 13, 500 individual members – 300 company members – Across 100 countries • • • Professional Recognition Sustains personal career development (training & accreditation) Information & Guidance – Technical work programme – Publications • Networking – Branch structure

Context Buncefield Jaipur Process Safety Management Key to Managing Operational Risk Texas City Deepwater Horizon

Escalating Consequences • Escalating Consequences of Incidents • Individuals called to account in public Texas City Deepwater Horizon Exxon Valdez Piper Alpha Bophal Flixborough • Increased scrutiny by regulators and governments • Investor Confidence undermined

Industry Challenge • • • Integrity of operation Maximise Income Minimise Costs Effective Capital Investment Effective People & Organisation What we need to Achieve “Flawless” Operation Don’t Hurt Anyone Don’t Harm Environment x % ROCE Investment Income Feed Selection How we Achieve it Plan Operation Set-up Operation Facility Availability Net Income HSE Compliance Operational Integrity Personnel Development Expenditure Maint’ce Cost Energy Use Cats & Loss Chems People O/head

PSM in Context “Flawless” Operation Don’t Hurt Anyone Don’t Harm Environment x % ROCE What we need to Achieve Investment Income Feed Selection How we Achieve Plan Operation Set-up Operation Facility Availability Net Income HSE Compliance Operational Integrity Personnel Development Expenditure Maint’ce Cost Energy Use Cats & Loss Chems People PSM Framework needs to enable us to answer two key questions … … with confidence 1. How will we assure the integrity of the operation? 2. How will we know …. we are doing it ? O/head

Need to know? ‘How likely am I to have an incident-free day tomorrow? ’ The two key questions – How will we do that? – How will we know we are doing it? “I think” means “I don't know”

EIPSMF Development • Initial meetings of EI Process Safety Committee discussed committee scope and ‘process safety’ scope: – Lack of clarity within and between companies as to scope of process safety. – Identified benefit in promoting a common high-level framework for PSM across all sectors of the energy industry. – Proposals to develop PSM framework in EI technical work programme received high level of support. • Development approach: – Workshops with participants representing a cross-section of the energy industry sectors and stakeholders, including industrial insurers, UK HSE, etc. – Subsequent wider stakeholder review. – Developed by the industry for the industry.

The need • Workshop participants supported the need for PSM framework: – Provide a vision for PSM. – Define a model for and raise profile of PSM within their organisations. – Define what needs to be in place to maintain ‘licence to operate”. – Help to define roles, responsibilities & accountabilities for PSM. – Easy to understand how to achieve suitable PSM. – Provide a basis for assessment, benchmarking and verification.

PSM Framework Structure Increasing Detail • Focus Areas – 4 High level key components of the Framework. • Elements – 20 key aspects of the operation we need to manage appropriately in order to assure the integrity of the operation. • Expectations – 202 things we should be doing in order to assure the integrity of the operation. • Guidelines – How to meet the Expectations Good Practices + PI’s (PSPI’s)

PSM Framework “Focus Areas” Process Safety Leadership Review & Improvement Assured Operational Integrity Risk Management Risk Identification & Assessment

PSM Framework “Elements” 01. Leadership Commitment & Responsibility 11. Standards & Practices 02. Identification & Compliance with Legislation & Industry Standards 03. Employee Selection, Placement and Competency and Health Assurance 12. Management of Change & Project Management 13. Operational Readiness & Process Start - up 04. Workforce Involvement 14. Emergency Preparedness 05. Communication with Stakeholders 15. Inspection & Maintenance 06. Hazard Identification & Risk Assessment 16. Management of Safety Critical Devices 07. Documentation, Records & Knowledge Management 08. Operating Manuals & Procedures 17. Work Control , Permit to Work & Task Risk Management 09. Process and Operational Status Monitoring, and Handover 10. Management of Operational Interfaces 18. Contractor & Supplier Selection & Mg’t 19. Incident Reporting & Investigation 20, Audit, Assurance and Management Review & Intervention

PSM Framework Expectations Element 16 Management of safety critical devices • • 16. 1 16. 2 16. 3 16. 4 An essential requirement for HS&E and process safety is that safety critical equipment and devices (SCDs) are in service and operating correctly. Management must ensure that safety critical equipment and devices are identified and appropriately managed, so that they are in service and functioning correctly. SCDs are uniquely identified on an asset register which provides up-to-date asset lists and equipment records, including location and equipment specification data. The asset register provides a basis for the planning of SCD testing, inspection and maintenance programmes are in place. There are defined standards and the programmes are proportionate to the risk associated with failure of the SCDs. There are procedures to ensure that SCD testing, inspection and maintenance programmes are reviewed regularly commensurate with risk, using findings from the programme, industry experience and incidents to identify and address issues and opportunities for improvement, so that they are kept up to date as living systems. Etc.

PSM Framework status/testimonials • • Published December 2010 >500 downloads in >40 Countries by January 2012 • ‘I am impressed with this document…. I seek to use some information in Element 7 • • Documentation, records and knowledge management’ Upstream Operations, QGC (BG), Australia ‘A fine piece of work indeed & well worth all the effort I feel. There are several elements where we are seeking to develop strategies to meet the expectations. E. ON Central Networks, UK ‘…. The value of this guidance … is that it sets out a clear framework on which to develop and implement a process safety management system and from which effective 'on the ground' control measures can be derived and maintained. …’ Gordon Macdonald, Director - Hazardous Installations Directorate, UK HSE

EI PSMF Application Can be applied to: – Any region – Any industry sector • Oil - E&P through to filling stations • Chemicals • Power – Generation through to distribution Implementation – Doesn’t replace existing HS&EMS provides a basis for: • Gap analysis and optimisation • Benchmarking

EIPSMF • EI Process Safety Management Framework developed with industry wide support. – Participants represented a cross-section of the energy industry sectors and stakeholders, including industrial insurers, UK HSE, etc. – Subsequent wider stakeholder review. • EIPSMF developed: “For the industry by the industry” • EI Process Safety Management Framework represents: – – Current Energy Industry PSM good practices Comprehensive Structured Endorsed by UK HSE

EIPSS EI Process Safety Survey • Self-assessment of compliance with Expectations of EIPSMF • Benchmarking against selectable internal peer groups • Benchmarking against selectable industry sector and geographical peer groups • Online service – launched in 2011 • Real time information • Participants can join at any time • Independent - Energy Institute • Anonymity assurance • Does not require EI Membership

EIPSS – Why? • Enables senior executives and managers to : – Have a clear and consistent understanding of compliance and performance levels across their organisations on an absolute basis and relative to their peers. – Identify areas of strength and weakness – understand how likely they are to have “an incident free day tomorrow” – Have a sound basis for development of compliance / performance improvement plans

EIPSS – Why? • Business Challenges – – – Aging assets Margin pressure M&A activity (seller & buyer side due diligence) Changing regimes (maintenance, etc. ) Need to demonstrate compliance • Benefits – Consistent, systematic approach against a recognised framework – Alleviate Fear Uncertainty & Doubt – Potential Cost of NOT acting

EIPSS Applicability Can be applied to: • Any region (geography) • Any industry sector – Oil - E&P through to filling stations – Chemicals – Power – Generation through to distribution Implementation/Application: • EIPSS Agnostic to HS&EMS being used. • EIPSMF provides a consistent reference base line for : • Profiling Compliance – Identification of Strengths & Weaknesses • Gap Assessment & Development of Improvement Plans • Benchmarking

EIPSS Output Absolute measurement Process Safety Profile – graphical & intuitive

EIPSS Output EIPSS – Survey statistics: Industry Segment & Geography selectable

EIPSS Output Profile is Absolute in respect to EIPSMF and Relative in respect to selected peer group Process Safety Profile Overlaid on Selected Peer Group Statistics

EIPSS Output Tabular Graphical • Overall rating • Position in peer group • Peer group quartile boundaries • Peer group “Overall rating” distribution curve. • Appropriate next level of detail • Ratings for each Element or Expectation. • Peer group quartile boundaries for next level of detail. Process Safety Profile with drill-down to detail • Appropriate next level of detail • Ratings for each Element or Expectation overlaid on Peer group performance quartiles.

EIPSS Multi - Site • Multi – site option provides increased reporting flexibility for larger and more complex organisations, providing capability to: – Benchmark internally. (Organisation or specific Division can be selected as Peer Groups) – Benchmark overall Organisation or Specific Division against selected Peer Groups. – “Drill down” to identify excellence & Issues. Reporting Group 0 Reporting Group 2 Reporting Group 1 Site 2 Site 3 Site 4 Site 5

EIPSS Multi-Site Output • Graphical Report for Organisation or Selected Division shows range of performance and median for the group overlaid on statistics for selected Peer Group. • Tabular reports & “drill downs” highlight high and low performing Divisions & Sites.

EIPSS Multi-Site Output Tabular Reports display: • Range of performance and median for: – Selected reporting group – Next level down in the organisation. – Elements or Expectations (as appropriate) for selected reporting group. – Peer group quartile boundaries

EIPSS Input • • Input easily managed by response to multiple choice questions Data entry privileges can be controlled by element.

EIPSMF & EIPSS EI Process Safety Management Framework – – Defines a model for effective Process Safety Management Defines what needs to be in place in order to manage process safety risk Developed by the industry for the industry Endorsed by UK HSE EI Process Safety Survey – Consistent, systematic assessment of compliance – Compliance benchmarking – Real time information • Applicable to any major hazard installation • Applicable to all Safety Management Systems • Available to non members of the EI

EI Process Safety Management Framework EI Process Safety Survey Industry Good Practice for Process Safety Management www. energyinst. org/PSM-framework www. eipss. com Martin W. Ball John W. Pond EIPSS Ltd. May 2012 The Apex of the Pyramid