Center for Offshore Safety SEMS and SEMS II: The Latest on Auditing – Requirements, Learning's, Developments and Opportunities October 9, 2013 Jeff Ostmeyer, EHS Advisor OstmeyerJ@centerforoffshoresafety.org www.centerforoffshoresafety.org

COS Mission The Center for Offshore Safety is designed to promote the highest level of safety for offshore drilling, completions, and operations through leadership and effective management systems addressing communication, teamwork, and independent third-party auditing and certification.

COS Vision & Path Forward One-stop central source for: Information & knowledge Auditor accreditation Program certification Tools and technical assistance Promote an industry culture of incident- free operations Process safety in addition to personal safety Emphasis on behavior No harm to people, no harm to environment Elevate the industry’s quality and safety standards Create and share good practices Continuous improvement

Dates and SEMS Auditing Effective Nov. 15, 2010 and required operators to implement a SEMS program by Nov. 15, 2011. Also required operators to submit their first complete SEMS audit to BSEE by Nov. 15, 2013. SEMS II Effective on June 4, 2013 but operators have until June 4, 2014 to comply, except for auditing requirements. All SEMS audits must be in compliance with the SEMS II Rule by June 4, 2015.

COS Independent 3rd Party SEMS Auditing Types of audits Audits of Audit Service Providers (ASP) Office and Witness audits Accreditation vs. Certification Types of industry audits COS SEMS Audits Minimum 15% sample of facilities each cycle

Audit Characteristics Characteristics of different types of audits Audit Characteristics % Compliance Focus % System Focus Typically Performed By Typical Frequency Key Driver Inspection Prescriptive 100 Field Daily/ weekly/ monthly Compliance/ Requirement Assessment Prescriptive or Performance 0-100 Field or SME Ad hoc Perceived need – Risk Compliance Audit 80-90 10-20 Independent audit team 1-3 years/ location Compliance/ Requirement Management System Audit * Performance 3-5 years/ Business unit or Region Risk – Assurance Corporate Responsibility * SEMS Audit

SEMS Audit Reporting Timeline SEMS audit Initiated Contract with ASP to perform a SEMS audit COS provided a courtesy notification Audit Starts Auditing Complete – Formal audit close-out meeting between ASP and Operator Draft audit report provided by ASP Audit likely includes office and offshore components. Audit Plan prepared As Agreed to by member and ASP 6 Months Maximum 3 years 30 Days Minimum 30 Days Operator decides that audit will meet BSEE requirements Audit Plan provided to BSEE ASP issues a COS Standard Audit Report to the Operator Report identifies Non-Conformances NCs (does not include corrective action plans) BSEE Audit Complete As Agreed to by member and ASP COS Member implements corrective action plan COS member consults with ASP on a verification process. Corrective action plans developed to address NC’s identified in the Audit Report Corrective action plans include timing and responsible parties If audit to fulfill BSEE requirement – ASP submits the report to BSEE with corrective action plans included ASP accepts and verifies corrective actions; all NCs must be closed out for ASP to certify ASP issues COS SEMS Certificate ASP provides completed COS Standard Audit Report with corrective action plans to COS in order to share good practices. Audit Closed COS Member Company maintains their SEMS program COS Member Company starts next COS certification audit within 3 year period

SEMS Audit Reporting Timeline SEMS audit Initiated Contract with ASP to perform a SEMS audit COS provided a courtesy notification Audit Starts Audit Plan prepared As agreed by member and ASP 3 years Minimum 30 Days Operator decides audit will meet BSEE requirements Audit Plan provided to BSEE As agreed by member and ASP

SEMS Audit Reporting Timeline Audit Starts Auditing Complete – Formal audit close-out meeting between ASP and Operator Draft audit report provided by ASP Audit likely includes office and offshore components. 6 Months Maximum 3 years 30 Days ASP issues a COS Standard Audit Report to the Operator Report identifies NCs (does not include corrective action plans) BSEE Audit Complete

SEMS Audit Reporting Timeline Audit Starts 6 Months Maximum 3 years 30 Days ASP issues a COS Standard Audit Report to the Operator Report identifies Non-Conformances NCs (does not include corrective action plans) BSEE Audit Complete COS Member implements corrective action plan COS member consults with ASP on a verification process. Corrective action plans developed to address NC’s identified in the Audit Report Corrective action plans include timing and responsible parties If audit to fulfill BSEE requirement – ASP submits the report to BSEE with corrective action plans included ASP accepts and verifies corrective actions; all NCs must be closed out for ASP to certify ASP issues a COS SEMS Certificate ASP provides completed COS Standard Audit Report with corrective action plans to COS in order to share good practices. Audit Closed

SEMS Audit Reporting Timeline Audit Starts 6 Months Maximum 3 years 30 Days Minimum 30 Days Operator decides that audit will meet BSEE requirements Audit Plan provided to BSEE COS Member Company maintains their SEMS program COS Member Company starts next COS certification audit within 3 year period

SEMS Audit Reporting Timeline SEMS audit Initiated Contract with ASP to perform a SEMS audit COS provided a courtesy notification Audit Starts Auditing Complete – Formal audit close-out meeting between ASP and Operator Draft audit report provided by ASP Audit likely includes office and offshore components. Audit Plan prepared As agreed by member and ASP 6 Months Maximum 3 years 30 Days Minimum 30 Days Operator decides audit will meet BSEE requirements Audit Plan provided to BSEE ASP issues a COS Standard Audit Report to the Operator Report identifies Non-Conformances NCs (does not include corrective action plans) BSEE Audit Complete As agreed by member and ASP COS Member implements corrective action plan 60 Days - SEMS II COS member consults with ASP on a verification process. Corrective action plans developed to address NC’s identified in the Audit Report Corrective action plans include timing and responsible parties If audit to fulfill BSEE requirement – ASP submits the report to BSEE with corrective action plans included ASP accepts and verifies corrective actions; all NCs must be closed out for ASP to certify ASP issues COS SEMS Certificate ASP provides completed COS Standard Audit Report with corrective action plans to COS in order to share good practices. Audit Closed COS Member Company maintains their SEMS program COS Member Company starts next COS certification audit within 3 year period

Goals of this presentation What will the auditors look for? Each element of SEMS Is each element in place? Is each element being implemented? Is each element effective? NOTE: The question in the COS protocol is the question the auditor must answer…Not the question the auditor asks!

SEMS Elements General – Principles & Scope Safety & Environmental Information Hazards Analysis Management of Change Operating Procedures Safe Work Practices Training Mechanical Integrity Pre-Startup Review Emergency Response & Control Investigation of Accidents Auditing the Program Records & Documentation Stop Work Authority * Ultimate Work Authority * Employee Participation Plan * Reporting Unsafe Conditions * * SEMS II - not required in first audit

General – Principles & Scope SEMS Elements General – Principles & Scope This provides the overall definition of the Operator’s SEMS compliance program. This section includes requirements for management responsibilities, buy-in and support. Format: Written documents.

Safety & Environmental Information SEMS Elements Safety & Environmental Information Deals with process safety information which requires an employer to compile a complete list of hazards and a plan to deal with those hazards. Operator’s SEMS must include information that provides the basis for implementing all SEMS program elements, process design information, operating procedures and mechanical design information. Format: Written Plan & supporting documents. Strongly related to Hazard Analysis (#3), Operating Procedures (#5) and Safe Work Practices (#6).

SEMS Elements Hazards Analysis The operator must ensure the development and implementation of a hazards analysis program (facility level) and a job safety analysis (operations/task level) for all facilities. Format: Likely includes review of hazard analyses, recommendations, and actions, and JSA’s.

SEMS Elements Management of Change Operator must develop and implement written Management of Change procedures (MoC) for modifications associated with the following: (1) Equipment, (2) Operating procedures, (3) Personnel changes (including contractors), (4) Materials and (5) Operating conditions. Format: Written Documents

SEMS Elements Operating Procedures Must develop and implement written operating procedures which provide instructions for conducting safe and environmentally sound activities involved in each operation addressed in the SEMS program. Some specific minimum requirements for what must be included in operating procedures. Format: Written document.

SEMS Elements Safe Work Practices This is a huge element. The SEMS program must establish and implement safe work practices designed to minimize risks associated with operating, maintenance and modification activities as well as the handling of materials and substances which could affect safety or the environment. The SEMS program must also document contractor selection criteria, including the contractor's safety and environmental performance. Operators must ensure that contractors have their own written safe work practices. Contractors may adopt appropriate sections of the operator's SEMS program. Operator and contractor must document their agreement on appropriate contractor safety and environmental policies and practices before the contractor begins work at the operator's facilities. Format: Written documents.

SEMS Elements Training Not just training, but knowledge and skills! SEMS program must address: Initial training, Periodic training, Communication of changes and verification of contractor’s personnel training. Must also address operating procedures, safe work practices and emergency response and control measures. Must document the qualifications of instructors. Format: Learning Management System (LMS), training matrix, e-learning, onsite training.

SEMS Elements Mechanical Integrity The operator must develop and implement written procedures which provide instructions to ensure the mechanical integrity and safe operation of equipment through inspection, testing and quality assurance. The procedures must address: design, procurement, fabrication, installation, calibration and maintenance of equipment; training; inspections; correction of deficiencies; installation of new equipment; construction; verification of various equipment aspects; maintenance; parts; repairs. Format: Written documents; extensive use of SMEs; heavy archival requirements. This is the most Involved of all of the requirements. The Operators will take care of this and tell Contractors what they need to do to meet these requirements.

SEMS Elements Pre-Startup Review Final check to make sure everything is complete and correct. Involves the Operator’s commissioning process; includes a pre-startup safety and environmental review for new and significantly modified facilities subject to Subpart S to confirm that specific criteria are met. Includes a training component. Format: Primarily Procedures. Partially LMS and training matrix.

Emergency Response & Control SEMS Elements Emergency Response & Control These plans must be validated by drills carried out in accordance with the SEMS training program. Program must include: Emergency Action Plan; Emergency Control Center(s) designated for each facility with access to the Emergency Action Plan, oil spill contingency plan, other safety and environmental information; training and drills. Format: Written documents with immediate retrieval and archival requirements. LMS, training matrix.

Investigation of Accidents SEMS Elements Investigation of Accidents The SEMS program must establish procedures for investigation of all incidents with serious safety or environmental consequences and require investigation of incidents determined by facility management or BSEE to possess the potential for serious safety or environmental consequences. Format: Written documents describing action. Immediate retrieval is important.

SEMS Elements Auditing the Program The SEMS program must be audited by either an independent third-party or the Operator’s designated and qualified personnel* According to the requirements of this subpart and API RP 75, Section 12 within 2 years of the initial implementation of the SEMS program and at least once every 3 years thereafter. (*As defined by BSEE) Format: Action with findings as written documents. COS Audit Service Providers meet this criteria. Only requirement is for a SEMS audit!

Records & Documentation SEMS Elements Records & Documentation Reports must be submitted to BSEE. Required by 30 CFR 250.1928 (in Subpart S). Requires significant archiving of up to six years, though the Legal Department may require a longer time period.

Stop Work Authority (30 CFR 250.1930) SEMS Elements Stop Work Authority (30 CFR 250.1930) Ultimate Work Authority (30 CFR 250.1931) Employee Participation Plan (30 CFR 250.1932) Reporting Unsafe Conditions (30 CFR 250.1933) Required by SEMS II. Although included in SEMS, are usually covered by the other elements. Not included in RP 75 as separate elements.

All of the Elements in one place SEMS Audit Protocol All of the Elements in one place Designed for auditors and is not an inspection document. 187 questions (SEMS I). Covers both RP75 and SEMS. RP 75 and SEMS Rule (30 CFR 250) Audit Checklist with Guidance Free access as part of COS services. www.centerforoffshoresafety.org

SEMS Audit Protocol Checklist All of the Elements in one place

COS SEMS Toolkit SEMS Audit Protocol COS-1-01 (Revision 2 complete) Compliance Readiness Worksheet COS-1-02 Operator-Contractor Letter Templates COS-1-03 Audit Guidance Document (Revisions starting) Why is the focus on SEMS? Because slips and falls do no result in major incidents. Failures in Safety Management do. Here is a simplified version of the SEMS elements. When SEMS is combined with a good safety culture it is the best barrier to a major incident. Safety Culture is the corporate culture is what enables staff compliance with your SEMS system. Also an effective SEMS helps develop a good Safety Culture

Accreditation & Certification COS-2-01 Qualification & Competence Requirements Audit Leads & Auditors* COS-2-02 Training Program Requirements for Auditors* COS-2-03 Certification to API RP 75 COS-2-04 Accreditation of Audit Service Providers* COS-2-05 Standardized Audit Report Form * Incorporated by reference in SEMS II Here are the recently completed audit tools. The include qualification and training requirements for auditors and ASP’s. COS will audit the ASP’s to assure training and audit quality is maintained.

The future of SEMS Auditing SEMS II A stop work authority which creates procedures and authorizes any and all offshore industry personnel who witness an imminent risk or dangerous activity to stop work. An ultimate work authority which requires offshore industry operators to clearly define who has ultimate work authority on a facility for operational safety and decision-making at any given time. An employee participation plan which provides an environment that promotes participation by offshore industry employees as well as their management to eliminate or mitigate safety hazards. Guidelines for reporting unsafe working conditions which enable offshore industry personnel to report possible violations of safety, environmental regulations requirements and threats of danger directly to BSEE. Additional requirements for conducting a job safety analysis. The team lead for an audit must be independent and represent an accredited audit service provider.

The future of COS SEMS Auditing Observing COS Audits – Continuous Improvement Expand Audit Protocol Guidance SEMS II Drilling focus Projects and Construction Contractors Lead Auditor Certification US Coast Guard

Questions, Comments or Concerns? 1990 Post Oak Blvd, Suite 1370 Houston, TX 77056 www.centerforoffshoresafety.org Jeff Ostmeyer, EHS Advisor OstmeyerJ@centerforoffshoresafety.org www.centerforoffshoresafety.org