HSEMS Audit Team Briefing Sessions T1 103097 SIEP

HSE-MS Audit Team Briefing Sessions T-1 10/30/97 SIEP - EPS-HE

Team Briefing programme Why do we audit? l When do we audit? l Link Model HSE-MS auditing l What do we audit? l Audit methodology l What do we audit against? l Ten principles of HSE-MS (EP-95000 questionnaire) l Site visits & interviews l Report Writing l Audit rating l Audit schedule l Audit Team task distribution l T-2 10/30/97 SIEP - EPS-HE

Risk definition Risk = Frequency * Consequence T-3 10/30/97 SIEP - EPS-HE

Escalating Impact of Errors Insurable Risks - Assets / Liabilities 1970 Torrey Canyon 1980 Amoco Cadiz 1986 Piper Alpha 1990 Exxon Valdez 1993 Braer 1995 Sea Empress $ 10 Million $ 100 , , $ 3000? , , $ 10000 , , $ 200? , , $ 150+ , , Next ? ? ? T-4 10/30/97 SIEP - EPS-HE

Escalating Impact of Errors Non Insurable Risks - Commercial/Financial 1970 Shell Nuclear Initiative $ 1000? million 1990 Showa Shell $ 1500 , , 1996 Barings Bank $ 2000 , , 1996 Brent Spar $ 100? , , 1996 Shell Nigeria $ ? ? ? , , Next ? ? ? T-5 10/30/97 SIEP - EPS-HE

Escalating Impact of Errors High Impact events - All avoidable l Bhopal l Exxon Valdez l Herald of Free Enterprise l Estonia - 2000+ people Environment 180 lives 800 people Next ? ? ? Consequences l Leading to new standards (cost effective? ) l Loss of business T-6 10/30/97 SIEP - EPS-HE

Business Risk ". . the safety and environmental risks of our operations are perhaps the largest business risk we run, . . " Moody-Stuart letter 17/3/92 to Opco MDs and GMs T-7 10/30/97 SIEP - EPS-HE

Risk management Risk = Frequency * Consequence l Changing goalposts ! l Steady (reduced? ) frequencies l Increasing consequences Have we gained ? Risk of error needs to be massively reduced! T-8 10/30/97 SIEP - EPS-HE

SIEP View “There should be absolutely no question of operational urgency or other pressures taking priority over safety. It has been repeatedly demonstrated that improved safety in operations goes hand in hand with greater efficiency, quality and cost effectiveness. . . I would therefore request you to ensure that work does not start before it is confirmed that essential safety systems are in place and that staff are accountable for this requirement. Where we cannot ensure safety, operations should be suspended. M Moody-Stuart 24/4/92 T-9 10/30/97 SIEP - EPS-HE

EP 93 -1600 (Nov 1993) E&P Guideline on Audits and Reviews Group Policy: It is the responsibility of the Chief Executivs and managers of the Group Companies to set up, maintain and operate an appropriate framework of business controls. The process of internal audit provides a means for independently reviewing these controls. Audit plans should be drawn up which cover all aspects of a Company’s activities (including operational, commercial, technical, health, safety and environmental aspects). Appropriate resources with skills matching the objectives should be used to conduct audits. The Company’s Internal Audit Committee should approve the audit plan, monitor progress against plan, review significant control findings, and ensure that agreed action plans are followed up. The Group policy applies both to SIEP-EP and the E&P Operating Companies. T-10 10/30/97 SIEP - EPS-HE

HSE Audits & Reviews 84 -98 Health Environmental Management Activity Rig Seismic Start up Facility 50 45 40 35 30 25 20 15 10 5 0 84 T-11 10/30/97 85 86 87 88 89 90 91 92 93 94 95 96 97 98 SIEP - EPS-HE

New World (post SIEP reorganisation) frequency SIEP led E&P Audits l On OU (Opco) request l SIEP steering/guidance to be provided by RBDs, upon detection that OUs do no longer operate with boundaries of Group standards Coordinate schedule such that same ground is not covered twice within recommended period T-12 10/30/97 SIEP - EPS-HE

Business Controls Business controls are the structured means which management uses to help it achieve the objectives which have been set for the company. T-13 10/30/97 SIEP - EPS-HE

Business Controls Framework Business Environment Business Objectives Processes Control Mechanisms • Organisation • Policy • Procedures • Supervision Control • Management review and appraisal Application Business Operations T-14 10/30/97 SIEP - EPS-HE

Model Management System Policy & Objectives Organisation Responsibilities & Resources Improve Standards & Procedures Implementation & Monitoring Correct Control Review & Appraisal T-15 10/30/97 SIEP - EPS-HE

HSE Management System Leadership and Commitment Policy and Strategic Objectives Organisation, Responsibilities Resources, Standards & Doc. Hazard and Effects Management Planning & Procedures Implementation Audit Management Review T-16 10/30/97 Corrective Action Monitoring Corrective Action & Improvement SIEP - EPS-HE

Mapping HSE-MS as per model HSE-MS for auditing Leadership & Commitment Policy & Strategic Objectives Organisation, Responsibilities, Organisation & Responsibilities Resources, Resources & Competence Assurance Standards & Doc. Control HEMP Planning & Procedures Standards, Procedures & Doc. Control Implementation & Monitoring Audit & Corrective Action Management Review & Improvement T-17 10/30/97 SIEP - EPS-HE

Audit Definition Audit is the systematic process whereby it is established that business controls: are complete and consistent are cost-effective and efficient safeguard the company’s resources and promote their effective use provide, and protect the integrity of, required records and information comply with laws and regulations T-18 10/30/97 SIEP - EPS-HE

Internal Audit Mission To provide, as an integral part of the management review process, independent advice on the maintenance and improvement of a well-balanced business control framework appropriate to the organisation T-19 10/30/97 SIEP - EPS-HE

Structure of Questionnaires Generic Questionnaire (common to all HSE Audits) Leadership & Commitment Policy & Strategic Objectives Organisation & Responsibilities Resources & Competence Hazards and Effects Management Planning Standards, Procedures & Doc. Control Implementation & Monitoring Audit & Corrective Action Management Review This is an example only. Team leader to modify as needed Subsidiary Questionnaire Facilities Start-Up Seismic Drilling T-20 10/30/97 Subsidiary Questionnaire Activity Environmt Health SIEP - EPS-HE

Objective & Strategy Objective: To provide assurance that HSE management system is effective Strategy Look for unknown problems Focus on gaps between areas of responsibility Investigate identified deficiencies in depth - find underlying causes Record all areas investigated, noting any omissions T-21 10/30/97 SIEP - EPS-HE

Audit Overview l Based on National and Company standards l Sampling process l Overall impression usually negative attempt to balance but focus on improvement l Focus on controls l Recommendations illustrate rather than limit solution l Ownership by whole team facts supported by whole team judgement by consensus T-22 10/30/97 SIEP - EPS-HE

Start Up Audit l Verification prior to start-up of the facility that: HSE management is effective during development and construction Recommendations of design reviews, Hazops etc. have been followed up Hardware is fit for intended purpose and complies with standards Operating, maintenance and emergency procedures are available, adequate, and understood People have been trained for their work T-23 10/30/97 SIEP - EPS-HE

Areas Covered l Auditee Organisation Competence l HSE Management Effectiveness of management controls l Equipment and Operability Fitness for purpose l Design Process Reviews and change control l Other Client's request T-24 10/30/97 SIEP - EPS-HE

Cause and Effect Cause Business objectives? Policy failing? Organisation failing? Procedural failing? Review & App. failing? Supervisory failing? Detailed findings/deficiencies/problems T-25 10/30/97 Recommendation Problem SIEP - EPS-HE

Audit Process Familiarisation • Terms of reference • Control Assessment Matrix • Audit programme (incl. test plans) Review & Testing Site visit Study Documentation Interviews Test findings Reporting Drafting T-26 10/30/97 Editing Report Finalisation Rating Present Findings SIEP - EPS-HE

Audit process Kick-off meeting Summary Background data Present to Auditee Audit Rating Audit Programme & Questionnaire Assess structure of controls Level of detail Summarise Findings Cluster issues Test controls Establish state of controls Detail findings Clear findings Very detailed Familiarisation T-27 10/30/97 Review & testing Reporting SIEP - EPS-HE Audit report

Terms of Reference OBJECTIVE To assess the effectiveness of Barendrecht - Ziedewij gas production and evacuation system HSE-MS. l Verify that: relevant Safety Case is implemented and that the systems are operated accordingly HSE risks are adequately identified and those considered acceptable are managed at ALARP levels. l SCOPE Prod. ops. and maint. activities at the B & Z installations l All interfaces with relevant facilities. l Corporate MSs, other than SC management and documents, standards and organisation elements directly related to routine operations of the systems are excluded. Example only: Team leader to edit T-28 10/30/97 SIEP - EPS-HE

Terms of Reference Special attention Awareness of and compliance with the management of hazards l Adequacy of measures (planned or in place) to rectify the shortcomings identified in the V&G document, l Adequacy of emergency response and recovery measures, l Example only: Team leader to edit T-29 10/30/97 SIEP - EPS-HE

Standards Laws and regulations of The Netherlands l Permit requirements l Current NAM (BUO) standards and procedures l V&G document. l The audit may also include comment on any shortfall in the above in relation to Shell Group and industry standards. Audit will be conducted along EP 95000 methodology Example only: Team leader to edit T-30 10/30/97 SIEP - EPS-HE

Standards Does it meet legal requirements? l Does it meet current NAM standards? l if not, upgrade automatically Does it meet current SIEP standard? l Does it meet current industry standard? l if not, upgrade if cost-effective T-31 10/30/97 SIEP - EPS-HE

Leadership & Commitment HSE an integral part of business Do managers effectively balance any conflict in the competing requirements to safeguard technical integrity and to optimise cashflow? l Do staff believe that management and supervisors are serious about the priority of HSE matters? l Do managers and supervisors periodically visit worksites and attend departmental safety meetings? l Do managers and supervisors lead by example - do they follow their own rules? l T-32 10/30/97 SIEP - EPS-HE

Policy & Strategic Objectives Challenging policy and objectives understood by all l l l l Is there a Health, Safety and Environment policy? Are strategic objectives defined (also for HSE aspects)? Do the policy and objectives require continuous improvement, and set a leadership goal? Are objectives cascaded to tasks and targets for all staff? Does the policy contain an explicit statement that work should be stopped/not started if unsafe? Are the policy and objectives endorsed by the present chief executive? Are they readily available to employees and contractors? Do employees and contractors understand policy and objectives? Is Contractors' HSE management is consistent with Company's? T-33 10/30/97 SIEP - EPS-HE

Organisation & Responsibilities Is the organisation appropriate? l Are boundaries and interfaces adequately described? l Are responsibilities defined to fully cover all activities? l Is there an appropriate balance between line staff and advisers? l Do all staff have job descriptions (also defining HSE aspects)? l Do staff understand accept their responsibilities and authorities? l T-34 10/30/97 SIEP - EPS-HE

Resources & Competence Assurance Are resources adequate for effective HSE management? l Are job competence needs defined? l Are individual competencies assessed against the job requirements? l Are the mandatory competency requirements being complied with? l Is there an structured HSE training system? l Does the HSE training system meet line requirements? l Is the HSE training system being used? l T-35 10/30/97 SIEP - EPS-HE

HEMP Hazards are known, ALARP and contained Have all hazards and effects been identified? l Are consistent screening criteria avalable? l Have all risks and effects from hazards been evaluated ? l Have appropriate measures been defined and implemented to reduce intolerable risks to tolerable levels? l Have appropriate measures been defined and implemented to reduce tolerable risks to ALARP level? l Have tolerable risks been elliminated where practicable? l Are the procedures and other measures and practices effective in containing hazards at ALARP level? l T-36 10/30/97 SIEP - EPS-HE

Managing risk High Avoid ? ? ? Likely magnitude of loss REDUCE Accept ? ? ? Manage Alarp Low T-37 10/30/97 Eliminate High Probability of occurrence SIEP - EPS-HE

Insurance and Risk management Business objectives ? Cause Policy failing? HSE Management System Organisation failing? Procedural failing? Review & App. failing? Supervisory failing? Detailed findings/deficiencies/problems T-38 10/30/97 Recommendation Problem SIEP - EPS-HE

Risk Assessment Matrix Definitions Consequence consequence of scenarios that can develop from the release of a hazard given the available barriers and defences (in incidents or near misses the hazard has been released already whereas in all other cases the hazard has not yet been released) Probability probability is estimated on the basis of historical evidence that the assessed consequence has materialised (i. e. not the probability of the release of the hazard) T-39 10/30/97 SIEP - EPS-HE

Weakness Classification Matrix Severity People Assets Environment Reputation 0 No injury or damage to health No damage No effect No impact 1 Slight injury or health effects Slight damage Slight effect Slight impact 2 Minor injury or health effects Minor damage Minor effect Minor impact 3 Major injury Local or health damage effects Localised effect Considerable impact 4 Single fatality Major or permanent damage total disability Major effect National impact Massive effect International impact 5 Multiple fatalities Extensive damage A B Never heard of in EP industry Has occurred in EP industry C D E Happens Has occurred in several times a the audited OU year in the audited OU audited facility Manage for continuous improvement Incorporate risk reduction Measures Intolerable eliminate Serious: Exposes OU to a major extent in terms of achievement of corporate HSE objectives or results. High: Though not serious, essential to be brought to Management attention. Includes medium weaknesses as repeat from previous reports. Medium: Could result in perceptible and undesirable effect on achievement of HSE objectives. Low: No major HSE impact at process level, correction will assure greater effectiveness/efficiency in process concerned. T-40 10/30/97 SIEP - EPS-HE

Weakness Classification Matrix Severity Peopl e Assets Environment Reputation 0 No injury or damage to health No damage No effect No impact 1 Slight injury or health effects Slight damage Slight effect Slight impact 2 Minor injury or health effects Minor damage Minor effect Minor impact 3 Major injury Local or health damage effects Localised effect Considerable impact 4 Single fatality Major or permanent damage total disability Major effect National impact Massive effect International impact 5 Multiple fatalities Extensive damage A B Never heard of in EP industry Has occurred in EP industry C D E Happens Has occurred in several times a the audited OU year in the audited OU audited facility Low Medium High Serious: Exposes OU to a major extent in terms of achievement of corporate HSE objectives or results. High: Though not serious, essential to be brought to Management attention. Includes medium weaknesses as repeat from previous reports. Medium: Could result in perceptible and undesirable effect on achievement of HSE objectives. Low: No major HSE impact at process level, correction will assure greater effectiveness/efficiency in process concerned. T-41 10/30/97 SIEP - EPS-HE

Risk to People Severity Description 0 No injury or damage to health 1 Slight injury or health effects (including first aid case and medical treatment case) - Not affecting work performance or causing disability. 2 Minor injury or health effects (Lost Time Injury) - Affecting work performance, such as restriction to activities (Restricted Work Case)or a need to take a few days to fully recover (Lost Work Case). Limited health effects which are reversible, eg skin irritation, food poisoning. 3 Major injury or health effects (including Permanent Disability) Affecting work performance in the longer term, such as a prolonged absence from work. Irreversible health damage without loss of life, eg noise induced hearing loss, chronic back injuries. 4 Single fatality or permanent total disability. From an accident or occupational illness (poisoning, cancer). 5 Multiple fatalities - From an accident or occupational illness (poisoning, cancer). T-42 10/30/97 SIEP - EPS-HE

Risk to Assets Severity Description 0 Zero damage. 1 Slight damage - No disruption to operation (costs less than US$10, 000). 2 Minor damage - Brief disruption (costs less than US$100, 000). 3 Local damage - Partial shutdown (can be restarted but costs up to US$500, 000). 4 Major damage - Partial operation loss (2 weeks shutdown, costs up to US$10, 000. 5 Extensive damage - Substantial or total loss of operation (costs in excess of US$10, 000) T-43 10/30/97 SIEP - EPS-HE

Risk to Environment Severity Description 0 Zero effect - No environmental damage. No change in the environment. No financial consequences. 1 Slight effect - Local environmental damage. Within the fence and within systems. Negligible financial consequences. 2 Minor effect - Contamination. Damage sufficiently large to attack the environment. Single exceedance of statutory or prescribed criterion. Single complaint. No permanent effect on the environment. 3 Localised effect - Limited loss of discharges known toxicity. Repeated exceedance of statutory or prescribed limit. Affecting neighbourhood. 4 Major effect - Severe environmental damage. The company is required to take extensive measures to restore contaminated environment to its original state. Extended exceedance of statutory or prescribed limits. 5 Massive effect - Persistent severe environmental damage or severe nuisance extending over a large area. In terms of commercial or recreational use or nature conservancy, a major economic loss for the company. Constant, high exceedance of statutory or prescribed limits. T-44 10/30/97 SIEP - EPS-HE

Risk to Reputation Severity Description 0 No impact - No public awareness. 1 Slight impact - Public awareness may exist, but there is no public concern. 2 Limited impact - Some local public concern. Some local media and/or political attention with potentially adverse aspects for company operations. 3 3 Considerable impact - Regional public concern. Extensive adverse attention in local media. Slight national media and/or local/regional political attention. Adverse stance of local government and/or action groups. 4 National impact - National public concern. Extensive adverse attention in the national media. Regional/national policies with potentially restrictive measures and/or impact on grant of licences. Mobilisation of action group. 5 International impact - International public attention. Extensive adverse attention in international media. National/international policies with potentially severe impact on access to new areas, grants of licences and/or tax legislation. T-45 10/30/97 SIEP - EPS-HE

Classification findings/recommendations Weakness Serious High Medium Low ** Definition Exposes company to a major extent in terms of achievement of corporate HSE objectives or results Though not serious, is essential to be brought to attention of senior management team. Includes any medium weakness which is repeat finding from previous report. Could result in perceptible and undesirable effect on achievement of HSE objectives. No major HSE impact at process level, correction will assure greater effectiveness/efficiency. ** Low Recommendations will be kept out of body audit report. Will be appended to report as memo to auditee. T-46 10/30/97 SIEP - EPS-HE

Bow-tie Concept Harm to people and damage to assets or environment Events and Circumstances BARRIERS H A Z A R D C O N S E Q U E N C E S Undesirable event with potential for harm or damage Engineering activities Maintenance activities Operations activities T-47 10/30/97 SIEP - EPS-HE

HSE Risk Management SAFETY / HSE CASE l l l COMPANY CONTRACTOR Demonstration (regulator, shareholder Major hazards of Engineering Design installation Hardware Quantitative risk assessment Safety-critical activities Latent failures WORKPLACE HAZARD MANAGEMENT l l l Execution (Minor) hazards at the workplace Operations People Qualitative risk assessment Hazardous activities Active failures T-48 10/30/97 SIEP - EPS-HE

Contractor HSE What is contracted? equipment and personnel specified product or service l Contractor HSE management system l Pre-qualification: can contractor meet all HSE req’s? l Role of contractholder/ single point responsibility l Contract HSE plan have all hazards been identified are controls in place to eliminate/control hazards are systems in place to verify: audits and inspections l T-49 10/30/97 SIEP - EPS-HE

Managing HSE Risk OU Contractor Policy HSE-MS Process HSE Case Task T-50 10/30/97 Manage workplace hazards interface documents contractual requirements HSE Plan Rig specific HSE Case Manage workplace hazards SIEP - EPS-HE

Documented systems e. g. for drilling operations industry guidance Policy and vision processes (high level) Company HSE-MS ? Departmental MS Contract HSE Requirements processes (detailed) HSE-Case for Company Operation task level Workplace hazard management system T-51 10/30/97 Common Interface Document Contractor HSE-MS HSE-Case for Equipment + Site Addendum Workplace hazard management system SIEP - EPS-HE

Report - Contents Chapter 1 Mgt Summary Chapter 2 Audit admin. HSE-MS elements Leader ship & Commitment Policy & Strategic objectives Organisation & Responsibilities Resources & competence assurance HEMP Planning Standards, Procs, Doc. Control Implementation & Monitoring Summary of Ten HSE-MS Elements Audit Management review Chapter 3 - HSE- MS 3. 1 Leadership & commitment 3. 2 Policy & Strategic Objectives 3. 3 Organisation & Responsibilities 3. 4 Resources & Competence 3. 5 HEMP 3. 6 Planning 3. 7 Standards, Procedures & DC 3. 8 Implementation & Monitoring 3. 9 Audit 3. 10 Management Review Chapter 4 - HSE in Business Detailed description of adequacy & deficiencies of barriers and controls to manage the main risks & hazards Description of main risks/hazards and summary of adequacy barriers/controls to manage these T-52 10/30/97 SIEP - EPS-HE

Year 2000 problem 10 to 30 % of all chips affected l Problem as yet ill defined- Crunch in 1999? Everybody wants updates at the same time l Old systems will not be updated- replace in time l Processes may stop, Customers and Suppliers may stop. l Safeguarding systems may stop unnoticed l In HSE area most systems are hardwired, but F&G system likely affected l T-53 10/30/97 SIEP - EPS-HE

Planning Structured and comprehensive l l l Is there an effective integrated planning process, including short, medium and venture life plans? Do plans align with corporate objectives? Do plans cover all activities necessary to protect asset integrity? Is there an annual HSE plan? Emergency response (ER) Are adequate ER plans and procedures in place within a defined hierarchy? l Are ER plans and procedures available where required? l Are ER plans and procedures known and understood and used? l Are ER plans and procedures and plans systematically reviewed/updated? l T-54 10/30/97 SIEP - EPS-HE

Standards, Procedures & Doc. Control Are standards clearly defined and appropriate? l Are adequate procedures in place within a defined hierarchy? l Are procedures appropriate to the operation and do they define mandatory aspects? l Are procedures available where required? l Are procedures known and understood and used? l Are procedures and plans systematically reviewed/updated? l Is there an effective document control system? l T-55 10/30/97 SIEP - EPS-HE

Implementation & Monitoring l l l Is work implemented in line with plans and procedures? Do supervisors regularly check the work of their subordinates and provide remedial advice as needed? Are performance measurement and control systems established? Are improvement targets set and achieved, are there regular reviews at all levels? Is performance measured against SMART targets and are appropriate and timely reports generated? Are control breakdowns investigated and remedied? Is non-compliance adequately dealt with? Is the monitoring system responsive to developmental change? Is there a structured system for HSE communication? Is there an adequate system for incident investigation reporting? Are staff (at all levels) HSE motivated? T-56 10/30/97 SIEP - EPS-HE

Audit A structured programme in place Is there an Internal Audit Committee? l Is there an integrated audit programme? l How is the audit programme managed? l Are audits truly independent? l Are the audit resources adequate and competent? l Are audit recommendations comprehensively followed-up? l Is the follow-up process adequately reported? l Is there a system for lateral application of audit recommendations? l T-57 10/30/97 SIEP - EPS-HE

Management Review Management retain overview and stimulate improvement l l l l Is there a comprehensive HSE review (at least annually)? Is there an effective management inspection visit programme? Is asset integrity periodically assessed by management? Are audit reports (singly and cumulatively) reviewed by management? Are incident investigations (singly and cumulatively) reviewed by management? Do managers of an appropriate level lead investigations of serious incidents? What improvements have resulted from the management review process? Do management have their eyes on (the right) ball? T-58 10/30/97 SIEP - EPS-HE

Work Site Programme Procedures Standards Job order T-59 10/30/97 Job report Production SIEP - EPS-HE

Deficiencies Policy Deficiency? Control Deficiency? Detail Lateral? T-60 10/30/97 Control Lateral? Detail Deficiency Control Lateral? Detail Lateral? SIEP - EPS-HE

Findings l. Require Verification eg: Interview confirming written procedure Observation of activity confirming written procedure Mo. M confirming interview Observation of hardware confirming standard T-61 10/30/97 SIEP - EPS-HE

Questionnaires l Define area to be covered, and divided between the team members l Reduce gaps and oversights l Reduce overlap and repetition l Suggest subjects and detail for new auditors l Help structure interviews and research l Stimulate imagination to add l Must be edited, tailored, NOT a check list T-62 10/30/97 SIEP - EPS-HE

Generic Questions Equipment Aspects l l l What is it? What does it do? Does it work? How do you know? How often tested / maintained? Test / maintenance covered by procedure? Procedure available? - correct? - followed? Is special equipment needed? - available? - used? Test / maintenance checked by supervisor? Results recorded? Reliability calculated? Procedure / frequency systemmatically reviewed / adjusted? T-63 10/30/97 SIEP - EPS-HE

Generic Questions Competence Aspects Are job needs defined? Are each individual’s skills recorded? l Is there a gap analysis? l Is supplementary training planned? l Has competence been verified? l By whom? - against what criteria? l Who checks your work? l What exactly is checked? - how often? l Is feedback provided? l What training has been received? (also on-the-job) l What further training is required? l l T-64 10/30/97 SIEP - EPS-HE

Generic Questions Procedural Aspects l Are all safety-crital aspects covered by procedures? l Are mandatory aspects identified? l Is each procedure: l comprehensive, clear and concise? l available where required? l known and used? l authorised by an appropriate person? l a controlled document? l systemmatically reviewed? l Are staff encouraged to improve procedures? l Do procedures satisfy underlying objectives? T-65 10/30/97 SIEP - EPS-HE

Interviewing - Preparation l Review collected documents & data l Team members select areas Edit questionnaire for selected areas Discuss finalised questionnaires Identify site interviewees l Adjust areas selected to give full coverage l Ask Auditee to schedule interviews One hour each on interviewee's territory T-66 10/30/97 SIEP - EPS-HE

Interviewing - Pairing Each auditor paired: to witness deficiencies to confirm adequacy to question the other’s assumptions to minimise misunderstandings between interviewer and interviewee T-67 10/30/97 SIEP - EPS-HE

Interviewing - Organisation l Make an appointment on interviewee's territory Pick relevant areas, highlight key questions l Agree timing and stick to it l Make notes on questionnaire l Keep quiet during other's time l Be on time and don’t overrun l Cover all key points or make another appointment Thank interviewee l Compare overall impressions l The better one is prepared for the interview , the more one gets from it ! T-68 10/30/97 SIEP - EPS-HE

Interviewing - Approach l Minimise stress 2 interviewers only (max one hour) Introduce interviewers l Outline aims of audit l Normal Opco routine supported by Dept. Audit of system - not individuals Aim to improve future - not witch hunt past Open report and presentation Report is view of audit team - not of sources Ask interviewee’s background l Use open questions and listen to replies l Avoid judgments, but do not condone l Do not argue or attack l T-69 10/30/97 SIEP - EPS-HE

Report - Contents Chapter 1 Mgt Summary Chapter 2 Audit admin. HSE-MS elements Leader ship & Commitment Policy & Strategic objectives Organisation & Responsibilities Resources & competence assurance HEMP Planning Standards, Procs, Doc. Control Implementation & Monitoring Summary of Ten HSE-MS Elements Audit Management review Chapter 3 - HSE- MS 3. 1 Leadership & commitment 3. 2 Policy & Strategic Objectives 3. 3 Organisation & Responsibilities 3. 4 Resources & Competence 3. 5 HEMP 3. 6 Planning 3. 7 Standards, Procedures & DC 3. 8 Implementation & Monitoring 3. 9 Audit 3. 10 Management Review T-70 10/30/97 Chapter 4 - HSE in Business 4. 1 Containment 4. 2 Control of ignition 4. 3 Safeguarding systems 4. 4 Operator/process interfaces 4. 5 Personnel emergency services 4. 6 Fire hazard management 4. 7 Workplace practices 4. 8 Occupational Health 4. 9 Transport & logistics 4. 10 Service contractors SIEP - EPS-HE

Report Objectives Issues, effects, causes identified Practicable recommendations corrective action Opinion on adequacy of control framework For auditee(s) and for management T-71 10/30/97 SIEP - EPS-HE

Report - Text Handling Team Author 1 st Draft Critic Team 2 nd Draft Auditee Team Discussion Auditee Report T-72 10/30/97 SIEP - EPS-HE

Report - Style l Standard index and format l Team editor solely responsible for English l Minimise recommendations "to study" l Factual rather than opinion IS/IS NOT rather than TEAM CONSIDER if necessary verify further l No time for perfection not "agreed" by auditee not binding on auditee T-73 10/30/97 SIEP - EPS-HE

Report - Text Drafting Outline section format l Describe the situation as found l Comment on good as well as bad l Discuss improvement l Action: “Improve. . ” l All text to all team l Check text with severest critic l Agree facts and feasibility l Welcome support l Mark up changes for later inclusion l Keep it short, punchy and to-the-point Do not attempt to duplicate process design manuals or give a process description aimed at the inexperienced report readers T-74 10/30/97 SIEP - EPS-HE

Report - Text Drafting Tips and hints: Write everything in style “Normal”. l Don’t attempt to format your text i. e. do not put TABS and CRs in an attempt to “make it look nice”. l Use document “EMPTY. DOC” as at emplate for every new report section. l Make a separate file for every new section you have written or have to write. Give meaningful document name e. g. 419 mm. doc Put name and date in document footer Use your spelling checker (UK English not US) l Use your team mate(s) to read your drafts l Read AUDITKIT documents l STYLE. DOC and FORMAT. DOC Remember: Some 30% of what you have written may be modified or removed during the team editing sessions. Don’t waste your/our time. T-75 10/30/97 SIEP - EPS-HE

Report - Actions l Stand Alone, Clear & Concise l SMAR(T) l Specific allows and ensure that remedied Measurable completion Achievable Realistic Time-based audit Auditee - as specific as expertise sufficiently specific to deficiency will indeed be - must be able to define - must be possible should be fit-for-purpose timeframe not included in report - to be decided by Motivational Start with an active verb - verify, issue, revise, replace, remove, provide, install, define or appoint SIEP - EPS-HE Avoid - consider, coordinate, ensure, initiate, T-76 10/30/97 Definitive when read in isolation Not longer than three lines

Classification of actions Four step activity (refer to classify. doc) 1. Determine the category (People, Assets, Environment, Reputation). 2. Determine the severity level (refer to standard definitions). 3. Determine the context ie position A, B, C, D, E. 4. Code/classify the actions eg: (P)H = People High (A)M = Assets Medium 5. Classify Chapter 3 and 4 actions as per HSE element T-77 10/30/97 SIEP - EPS-HE

Report example 4. 1. 1 Wells, flowlines and manifolds (incl. risers) Dynamic risers are of Wellstream design. The production lines have PVDF pressure barriers, a material that has shown several failures recently. Testing of a new end fitting construction to investigate the PVDF problem has been completed to the satisfaction of XXXX. Service life is expected to be ten years and the failure mechanism is the development of a small leak which can be detected in the turret. The expectation, based on model and laboratory tests, is that this leak will develop to a full blown failure over a period of several months. In this case, the full flowline contents will flow in an uncontrolled way into or in the vicinity of, the turret. A contingency plan should be developed, as little experience with this failure mode exists. Action (R)S 4. 1. 1 (a) (6) Develop a riser failure contingency plan. Riser leak detection equipment (annulus flow metering) will be installed. This equipment is safety critical and its effectiveness should be ensured at all times. At present, it is not covered in the Safety Case. A maintenance and inspection programme should be developed, reflecting its importance. Action (E)H 4. 1. 1(b) Safety (5) Include Riser leak risk and detection system in the Case. Action (A)H 4. 1. 1(c) (7) Develop a maintenance programme for riser leak detection equipment. T-78 10/30/97 SIEP - EPS-HE

Report example 3. 8. 4 Incident investigation reporting The standard of incident investigation has improved to acceptable standards during the past two months. There remains however a number of areas related to Incident investigation reporting which give cause for concern. There is no formal agreed procedure for the prompt communication of incidents between X, Y and Z representatives. There have been occasions where incident occurrence was communicated via third parties e. g. the recent turret fire. Action (P)H 3. 8. 4(a) (8) Enforce contractual terms for incident notification. Severity Rating (SR) and the subsequent level of management involvement is a problem area. Contractor management are reluctant to participate in formal investigations and try to reduce the SR. Higher motivation is required. Action (P)H 3. 8. 4(b) SR; participation in (8) Adhere to procedures for establishing incident improve level of contractor management incident investigations. There is no evidence to suggest that near miss reporting is practiced at the yard or is promoted, supported or valued by the SMT. Important learning values are missed. Action (P)M 3. 8. 4(c) T-79 10/30/97 (8) Implement a near miss reporting system. SIEP - EPS-HE

Bad Action Item “If engineers and users require MC information, they should access the CAIRS system. However if a hard copy needs to be sighted, usually a copy is available at either the Plant or Warehouse. Only as a last resort should copies be requested from Information Services”. Identify potential users and train them in the use of CAIRS. T-80 10/30/97 SIEP - EPS-HE

Bad Action Item “As there is a potential for a legal liability situation to develop, the Corporate policy and guidelines (proposed) should address this issue. Staff should be made aware of the potential for legal liability and where responsibilities lie”. 1 2 T-81 10/30/97 Include legal liabilities in proposed Corporate policy and guidelines. Develop course and train XYZ staff in legal liability. SIEP - EPS-HE

Bad Action Item “Management endorsement be obtained to conduct a review to establish what impact there has been on safety and quality standards of not having a QA/QC group within the Operations Division. Also to review whethere is a need for such a group and how QA/QC requirements for Operations Division should be addressed in future”. T-82 10/30/97 SIEP - EPS-HE

SHELL-SPEAK - 1 l FREQUENT * When I remember l REGULAR * When the Boss remembers l AD HOC * When I’m forced to. l PERIODIC * Once in a Blue Moon l ENSURE * An object dressed up as a task l ENSURE COMPLIANCE * An object dressed up as a macho task l MONITOR * I’ll watch but I’m not responsible. . . unless it works! SIPM - EPO/65 T-83 10/30/97 SIEP - EPS-HE

SHELL-SPEAK - 2 l CO-ORDINATE * They get the work, I get the credit l SUPERVISE * As with Co-ordinate, but I’m bigger than them l DEVELOP AWARENESS * It may happen anyway; if it does I get the credit l ACTIVELY ENCOURAGE * I’ll clap my hands; it shows I’m awake. l AUTHORIZE * Where’s my rubber stamp? l SUPPORT * I’ll read it before I stamp it. T-84 10/30/97 SIEP - EPS-HE SIPM - EPO/65

SHELL-SPEAK - 3 l INITIATE, ESTABLISH, etc. * I tell them to do it. l ALL * SOME l KEY PERSONNEL * Whoever is easily spared. * Whoever is in at the time. l APPROPRIATE * Most convenient l RELEVANT * At least I can see the connection l ARRANGE * I’ll have my secretary do something. T-85 10/30/97 SIEP - EPS-HE SIPM - EPO/65

Team Editing - Objectives i Agree & confirm documentation of facts ii Build consensus and common view (total report supported by all team members) iii Obtain ownership by all team members iv Ensure clarity and conciseness v Eliminate irrelevant detail and repetition vi Unify style and correct grammar (also define audit-specific global checks) T-86 10/30/97 SIEP - EPS-HE

Team Editing - Process l One sub-section at a time: i ii iv v vi viii ix x Is text understandable - can it be clarified? Does it demonstrate sampling of the subject area? Are findings factually correct? Are there any sensitivities? Do all findings have related actions? Are all actions preceded by findings? Are actions SMAR(T)? Minimise additional sub-headings Ungroup actions Unify style and correct grammar 60 -90 minute sessions l Anyone may call for time-out l T-87 10/30/97 SIEP - EPS-HE

Audit Report Schedule Report % Complete Example only: Team leader to edit The Hague 100 % Team editing & summary 50 % 1 6 13 18 Audit Days T-88 10/30/97 SIEP - EPS-HE

Finalisation of Report l Plug gaps l Gather all outstanding data l Check classified actions l Collate appendices: Summary sheet Glossary of abbreviations Classified action list Correspondence on TOR l Global checks T-89 10/30/97 spelling, references, etc. SIEP - EPS-HE

Global Checks l Spell check: correct normal spelling pick-up abbreviations in custom dictionary ensure consistency of abbreviations ensure consistent spelling of place names l Miscellaneous: H 2 S, CO 2, quote marks, apostrophies, spaces, bold, italic etc. Other audit-specific (defined during team edit) T-90 10/30/97 SIEP - EPS-HE

Completion of Audit l Give team-edited draft report to Auditee l Assessment and audit opinion Draft Main Findings l Agree wording of Main Findings with Auditee l l Incorporate feedback agreed with Auditee l Dry-run presentation within team l Make final presentation to management l Finalise report editing l Present final draft report to Auditee (formal report to be issued within one month) T-91 10/30/97 SIEP - EPS-HE

Audit opinion Leadership and Commitment Policy and Strategic Objectives Organisation and Responsibilities Resources and Competence Assurance HEMP Planning Standards, Procedures & Doc Control Implementation and Monitoring Audit Management Review Overall Opinion: T-92 10/30/97 Satisfactory / Unsatisfactory SIEP - EPS-HE

HSE-MS Element Assessment ++ A high standard of control requiring no additional management attention. + A high enough standard of control for improvements to be handled by the normal management involvement. - Essential controls are in place, but the deficiencies require focused management intervention. -T-93 10/30/97 Essential controls are missing or ineffective. Prompt management action is needed. SIEP - EPS-HE

Audit Opinion Satisfactory Although some control weaknesses were identified which require timely corrective actions, such weaknesses, either individually or taken in the aggregate, do not significantly impair the overall controls of the unit of the organisation T-94 10/30/97 SIEP - EPS-HE

Audit Opinion Unsatisfactory Controls lack essential elements or sufficient attention by the unit. The weaknesses identified, individually or in the aggregate, significantly impair important controls of the unit to the extent that prompt corrective measures by management are necessary to bring such controls to a satisfactory level T-95 10/30/97 SIEP - EPS-HE

Linking Audit to Business Controls Policy Organisation Leadership & Commitment + + Policy & Strategic Objectives + + Organise & Responsibilities - - Resources & Comp Assurance - - HEMP + Planning - Procedures - -- -- Implement & Communicate - - Management Review T-96 10/30/97 + + - Mgment Review - Standards, Procs & Doc Contr Audit Supervision - + + Example only: Team leader to edit SIEP - EPS-HE

Classified recommendations per HSE-MS element This is an example only. Team leader to modify as needed Management Review Audit: Classification Low Implement & Monitor Medium Stand, Procs & D/C Planning High HEMP Serious Resources & Comp Org. & Resp Policy & Strat. Obj Leadership & Commitment 0 2 4 6 8 10 12 14 16 18 No. of recommendations Serious: Exposes OU to a major extent in terms of achievement of corporate HSE objectives or results. High: Though not serious, essential to be brought to Management attention. Includes medium weaknesses as repeat from previous reports. Medium: Could result in perceptible and undesirable effect on achievement of HSE objectives. Low: No major HSE impact at process level, correction will assure greater effectiveness/efficiency in process concerned. T-97 10/30/97 SIEP - EPS-HE

Classified recommendations per risk category This is an example only. Team leader to modify as needed Reputation Classification Low Environment Medium High Assets Serious People 0 5 10 15 20 25 30 35 no. of recommendations Serious: Exposes OU to a major extent in terms of achievement of corporate HSE objectives or results. High: Though not serious, essential to be brought to Management attention. Includes medium weaknesses as repeat from previous reports. Medium: Could result in perceptible and undesirable effect on achievement of HSE objectives. Low: No major HSE impact at process level, correction will assure greater effectiveness/efficiency in process concerned. T-98 10/30/97 SIEP - EPS-HE

Schedule Week 1 Week 2 Week 3 1 2 3 4 5 6 7 8 9 10 1112 13 14 15 16 17 18 19 Opening Presentation Briefing by NAM "Crash" course in auditing Assign tasks Study material Develop quests & interviews Site visits X X X X XXX X X Discuss findings with team X X Discuss findings with auditee XX Report writing & verification X Team review prelim draft X Audit assessment XX Editing / classify action items X Example only. Final draft / presentation Team leader to modify as needed. Interviews & facts verification T-99 10/30/97 SIEP - EPS-HE

Task distribution l l l Management introduction Team preparation/planning Site visits Interviews Team Leader Audit Team site supervision/workforce management interviews Audit Team Preparation 1 st draft Review/verification 1 st draft Preparation 2 nd draft Team editing Compile report Presentation of findings Audit Team Principal Auditee Local supervision/management Senior Management T-100 10/30/97 Audit Team Leader Team Leader SIEP - EPS-HE

Team Leader role Identify audit objectives Focus audit thrust Avoid significant omissions Significant risk area T-101 10/30/97 Avoid immaterial Minimal risk area Eliminate the “waffle” Minimal risk Significant risk area Minimal risk area Significant risk area SIEP - EPS-HE