1. 1 Overview Charlie Williams – Shell API Summer Standardization Conference 28 June 2011 1

2. “Industry must establish its own self-policing mechanism to increase safety in the industry” – Presidential Oil Spill Commission – January 2011 API Executive Committee & Board Approval March 2011 Membership open to all companies (operators & contractors) that work in deepwater (1000 ft or more) Organized within API to leverage resources & capabilities of GIS & Standards groups Features aligned with recommendations of Presidential Commission Located in Houston, Texas Start-up 3rd quarter 2011 Overview – COS (Center for Offshore Safety) 2

3. Benchmarking Step Change in Safety - UK-based partnership Responsible Care® - chemical industry’s global initiative INPO (Institute of Nuclear Power Operations) mission to promote highest levels of safety & reliability & excellence – in operation of nuclear power plants OSHA Voluntary Protection Program (VPP), Government sponsored partnership with businesses - promotes excellence in occupational safety & health Safety Case Regime - regulatory based safety initiative in a number of countries. 3

4. Center for Offshore Safety Our Mission... Promote the highest level of safety for offshore drilling, completions, & operations by effective leadership, communication, teamwork, utilization of disciplined safety management systems & independent third-party auditing & certification. 4

5. Our Objectives... Achieve operational excellence by: Enhancing & continuously improving industry's safety performance Demonstrating that the public can have confidence & trust in the oil & gas industry safety mgt programs Increasing public awareness of industry's safety mgt & performance Stimulating industry cooperation by sharing best practices & learning from each other regarding safety Provide a platform for collaboration between industry, the government, & other stakeholders Center for Offshore Safety 5

6. COS Key Operating Features Full Industry Participation Stakeholder Engagement Independent Auditing & Program Validation Information Sharing Continuous Improvement in Safety Mgt Operational Excellence in Safety Mgt 6

7. COS responsibilities: Providing expert assistance to member companies, Certification of third party auditors & member audits to RP75 complementary with government regulations Compiling & analyzing key industry safety metrics COS sponsored functions to facilitate sharing & learning Identifying & promoting opportunities for industry to continuously improve Working with Industry leaders to assure improvement opportunities & deficiencies are addressed promptly Communicating & working with government & other stakeholders Center for Offshore Safety 7

8. COS – Auditing API RP 75 Recommended Practice for Development of a Safety and Environmental Management Program for Offshore Operations and Facilities - std to measure performance via third-party auditing & certification. Audits will include BOEMRE’s requirements for SEMS per “Workplace Safety Rule” Audit checklists developed & pilot audits underway “Audit Guidance” document being drafted – Provide analysis on use of checklist – Guidance on conducting API RP 75 audits 8

9. Membership in the Center for Offshore Safety... Membership is mandatory for API members Membership is encouraged for non-API companies including contractors Members will be expected to actively participate in programs & activities, & to maintain a high level of safety performance supported by COS and share “blind” audit results, best practices, & safety statistics The COS's objective is to be supportive & help all industry achieve high levels of safety Center for Offshore Safety 9

10. API GIS Committee API Upstream Committee API Executive Committee External Advisory Group Government entities Academia reps Others as appropriate Independent 3 rd Party Auditors Center for Offshore Safety Governing Board Up to 17 members Chairman (API-member company rep) Producing/Operating companies (6 max) Drilling Contractor companies (3 max) Service & Supply companies (3 max) Industry Association representatives (3 max) COS Executive Director Center for Offshore Safety Executive Director Technical Support and Administrative Staff 3 rd party auditor certification program API Global Industry Services operations 10

11. COS Governing Board 13 to 17 Members Chair (API-member 3-yr term) - from API Upstream Committee - approved by API Executive Committee 5 to 6 Producing/Operating companies (2-yr terms) 2 to 3 Drilling Contractor companies (2-yr terms) 2 to 3 Service & Supply companies (2-yr terms) 2 to 3 Industry Association representatives (2-yr terms) COS Executive Director Center for Offshore Safety 11

12. COS Staff Requirements Hire Executive Director Build on existing API staff capabilities –Legal –Finance –Information Systems & Data Management –Certification & Licensing Use 4-5 seconded mid-career company staff to expedite COS development & implementation (first 6 months) –Outreach/Education to industry, government, & public –Practical SEMS implementation & operation expertise –Best practice evaluation/development –Data analysis & report preparation –SEMS Program development 12

13. COS ORGANIZATION CHART Other API GIS Resources - Law - Accounting - Etc. Industry Loaned Professionals API Staff COS Staff 3rd Party Consultants 3rd Party Auditors Draft (August, 2011) 13

14. COS ORGANIZATION CHART Other API GIS Resources - Law - Accounting - Etc. Industry Loaned Professionals API Staff COS Staff 3rd Party Consultants 3rd Party Auditors *Deputy Director position dependent on outcome of 18 month organizational structure analysis. Draft (24 Months) 14

15. COS Roll Out Timeline June 2 – Industry Outreach Meeting June 17 – Nominations for Board Chair, Board Members, Seconded Employees July 15 – Select Board Chair & Board Members July 18 – Select Seconded Employees August 1 – Hire/Seconded Exec Director August 1 – COS Startup August 15 – First COS Governing Board Meeting 15

16. BOD Orientation CEO Commit Third Party Auditor Accreditation Membership % Target COS Conference Upstream Comm Review 20122011 Industry Outreach Meeting COS BOD Initial Board Meeting Strategic Plan (1-3yr) Performance Metrics Exec Comm Review Member Orientation Session COS Transition Milestones AprilMayJuneJulyAugustSept.Oct.Nov.Dec.Jan.Feb.MarchAprilMay 16

17. Questions 17

18. Our Guiding Principles... 1.Industry leaders will demonstrate a visible commitment to safety, 2.Operators, contractors, and suppliers will work together to create a pervasive culture of safety, 3.Decision making at all levels will not compromise safety, 4.Safety processes, equipment, training, and technology will undergo constant examination and improvement, Center for Offshore Safety 18

19. Our Guiding Principles (continued)... 5.Members will share learnings and embrace API Standards, and best practices, to promote continual improvement, 6.Open communication and transparency of safety information will be utilized to build mutual trust among stakeholders and promote collective improvement in industry performance, 7.Collaborative approaches will be utilized to drive safe and responsible operations, 8.Everyone will be personally responsible for safety and empowered to take action. Center for Offshore Safety 19