Creating management line of sight APOSHO November 2011

... the installation of a proper system to provide against the commission of such offenses and the provision of adequate supervision to see that the system was properly carried out...

Freehills BP Texas City

The Panel recognizes that Browne is a very visible chief executive officer. Browne is generally noted for his leadership in various areas, including reducing carbon dioxide emissions and developing the use of alternative fuels. During the last eight years, Browne has spoken frequently on these issues across the globe. In 2005, The Financial Times named him the fifth most respected business leader in the world. Browne’s passion and commitment for climate change is particularly apparent. In hindsight, the Panel believes that if Browne had demonstrated comparable leadership on and commitment to process safety, that leadership and commitment would likely have resulted in a higher level of process safety performance in BP’s U.S. refineries. As observed in the 2003 Conference Board report on best practices in corporate safety and health, “[i]f the top executive believes in the worth of the strategies, sets expectations for other managers, follows through on those expectations, and commits appropriate resources, shared beliefs, norms, and practices will evolve.”

... did not come within a ‘bulls roar’ of sensible oilfield practice.... company’s systems and processes were so deficient and its key personnel so lacking in basic competence...

Beyond your comprehension that [well control] might be compromised......leisurely approach by senior management insufficiently vigilant... Q.... the CEO didn't properly inform himself of the nature and extent of the project manager's supervision of the affairs of the well construction department? A. It would appear so, yes.

... most of the mistakes and oversights at Macondo can be traced back to a single overarching failure— a failure of management...

The best minds in the senior leadership of a company should be paying close attention to those risks. But it didn't happen here. And now we are all paying the consequences because those of you at the top don't seem to have a clue about what was going on on this rig.

Aspirations Systems hazards risks & controls Culture Workforce perception of management commitment Includes ‘legal’ hazards & risks Quality & Effectiveness Minimum expectations of Courts Effective Participation

1. Know obligations & risks. 2. Have a process that brings systems failures to your attention. 3. Respond personally and in a timely manner to systems failures. 4. Independently verify from time to time. 1. Planning. Safety a demonstrable part of business decisions 2. Active monitoring. Safety tours Talking with employees 3. Reactive monitoring. Safety investigations Sign off on incidents Management review panels/committees 4. Visibility. Committees (in addition to the above)

1. Know obligations & risks. 2. Have a process that brings systems failures to your attention. 3. Respond personally and in a timely manner to systems failures. 4. Independently verify from time to time. 1. Planning. Safety a demonstrable part of business decisions 2. Active monitoring. Safety tours Talking with employees 3. Reactive monitoring. Safety investigations Sign off on incidents Management review panels/committees 4. Visibility. Committees (in addition to the above) Defendable decision making

Defendable decision making BP Texas City Lord John-Browne Gulf of Mexico Tony Hayward John Guide Brett Coacles Montara Craig Duncan Andy Jacob

Why do systems fail?

You Systemic Markers Individual Work Practices Critical: Processes Activities Hazards Controls Feedback Loops Warning Signs Incident investigations Audits KPIs Reporting “Walk arounds” Budget/schedule slippage Org change Key personnel change “No news” Success

2007: Budget cuts Incentive schemes Strategic presentation 2009: World’s deepest well 31 March 2010: Only 6 centralizers available 15 April 2010 “Wrong” centralizers “Errors” 16 – 20 April 2010 $1M a day, 6 weeks behind schedule, $58M over budget 18 Hour turn around