API Q1 and ISO/TS 29001 A Case Study in Successful Collaboration Stacey Hagen, Drilling Materials Sr. QA Advisor – OCTG Lead Chair, API Subcommittee on Quality

Overview ExxonMobil Background ExxonMobil’s standards strategy API Q1/ISO 29001 Case Study Conclusions

Company Background Formed in 2000 as the result of the merger of Exxon and Mobil corporations Now the world’s largest publicly owned oil company 2006 net income of $39 billion US: Total liquid and gas production available for sale was 4.2 million oil-equivalent barrels per day Refinery throughput of 5.6 million barrels per day On March 30, 2007 announced participation in China’s first fully integrated refining, petrochemical and fuels marketing joint venture with foreign participation Agreement between Sinopec, Fuijan Province, ExxonMobil and Saudi Aramco

Standards Strategy ExxonMobil has long been active in national and international standardization Member of the American Petroleum Institute (API), the leading oil industry standards developing organization since 1919 Chairman and CEO Rex Tillerson currently serves as Chairman of the API Board Involvement in ISO activities since 1947, providing the chair of TC28, “Petroleum Products and Lubricants” since its inception and holding a variety of other positions in TC28 as well as TC67, “Oilfield Equipment, Materials, and Offshore Structures” and TC193, “Natural Gas”

Standards Strategy Participation is based on business / industry need Resource cost assessed against standards added value Standards value – combination of business benefits, priority, and spend Provide leadership where ExxonMobil has resources and expertise Standardization – vehicle to improved performance Improved safety Improved reliability Reduce costs and enhanced supplier base

Standards Strategy ExxonMobil participation in Upstream oil & gas 50 technical professionals actively participate on API/ISO committees Annual prioritization of standards activities and proposals Steering team reviews accomplishments and forward plans

Steering Team Floating Structures Subsea & Flexibles Drilling Quality Materials Drilling Cementing Completion Equipment Drlg Equipment & Riser Fire & Blast & Platform Reassessment Metering Field Bus Design (Process Instruments) Quality Pipelines Fixed Structures Coiled Tubing Subsea - Wellheads Well Control Derricks, Wind Loads Drilling & Servicing Equipment Steering Team Civil / LNG Germany ISO Coordination Drilling Fluids OCTG & Line Pipe

API Q1/ISO TS 29001 Case Study API has been developing standards since 1923 and is recognized as “de facto” international standards1 Industry undergoes tremendous transformation and growth: 1970’s North Sea Discoveries, 1980’s frontier areas including China, Africa, Middle East TC 67 reactivated in 1989, API assumes secretariat on behalf of ANSI in 1995 1 “Standards & Competitiveness: Coordination for Results removing Standards-Related Trade Barriers Through Effective Collaboration”, US DOC report, May 2004.

API Q1/ISO TS 29001 Case Study API Q1, “Specifications for Quality Systems” first published in 1985, two years prior to initial publication of ISO 9000 series API Q1 and API product specifications form the basis of API’s Monogram Program API Monogram Program is the leading industry conformity assessment program, with 2120 licensed facilities worldwide China has largest number of licenses issued to date, 560

API Q1/ISO TS 29001 Case Study Why does oil and gas industry need more than ISO 9001:2000? Failure of goods and services can have severe consequences Need for consistency in manufacturing API Q1 contains 9001 text in its entirety and 45 additional requirements Control Features Independent Design Review Final Acceptance Inspection

API Q1/ISO TS 29001 Case Study Oil industry determined need for a sector-specific solution similar to automotive Standard to be developed in liaison with the TC 176 to ensure harmonization Q1 was recognized as model for an international sector-specific document so that final API and ISO standards would be identical

API Q1/ISO TS 29001 Case Study How best to align API Q1 and ISO as a sector specific quality standard? API’s Subcommittee on Quality proposed a NWI to align a revision of API Q1 and the development of sector specific quality requirements in March, 2002 Draft Technical Specification January 2003 Publication June 2003

API Q1/ISO TS 29001 Case Study One standard accepted globally One assessment / certification body accepted globally Ensures consistency in audits Eliminates variances in interpretations Prerequisite for doing business

API Q1/ISO TS 29001 Case Study Conclusions: API and ISO can work together successfully if the vision and commitment is agreed at the project’s onset ExxonMobil and the international Oil and Gas industry will continue to push frontier boundaries in the search for oil and gas, requiring more stringent quality assurance requirements API Q1/ISO TS 29001 will continue to help the oil and gas industry ensure consistency in manufacturing and reliability of products.

API – www.api.org, standards@api.org Xie Xie (Thank you) Contact Information: Stacey Hagen Drilling Materials Sr. QA Advisor – OCTG Lead ExxonMobil Global Service Company 16945 Northchase Dr Houston, TX 77060 stacey.w.hagen@exxonmobil.com API – www.api.org, standards@api.org ISO – www.iso.org, central@iso.org

Back-Up Slide Definitions: API Spec Q1 Specification for Quality Programs for the Petroleum, Petrochemical and Natural Gas Industry ISO TS29001 Petroleum, Petrochemical and Natural Gas Industries – Sector Specific Quality Management Systems – Requirements for Product and Service Supply Organizations NWI New Work Item TC Technical Committee

Back-Up Slide Example clause – ensures that documented methods are available for audit

Back-Up Slide Example clause – ensures independent review of designs

Back-Up Slide Example clause – ensures final acceptance inspection of product