…the year in reviewInternational Association of Oil & Gas Producers

Highlights of 2009

Engaging & informing decision-makers

At a time of global economic uncertainty, fluctuating levels of oil & gas demand

and concerns over future supplies, OGP was active in presenting members’ views. Key audiences included international legislators, civil servants, non-governmental organisations and others whose views and actions can have a bearing on upstream success.As the Arctic became an area of greater upstream attention in 2009, OGP’s links with relevant Arctic bodies strengthened. In May, for the first time, an Association

delegation attended a Ministerial Meeting of the Arctic Council in Tromsø, Norway. Former US Vice President Al Gore was the keynote speaker. As official observers, the OGP team joined 300 delegates from the eight Arctic Council member countries and also met with representatives of the six native peoples in the region.In July, members of OGP’s Arctic Co-ordination Task Force (ACTF) participated in the first meeting of Barents 2020, a Russia/Norway cooperation project aiming to harmonise petroleum industry standards for health, safety and the environment in Europe’s northernmost waters. As Task Force member Mitch Winkler of Shell described it, the session ‘was a tremendous

opportunity to learn from and to help influence a leading project…bringing an external mindset to bear…’On the other side of the world, OGP Ex-ecutive Director Charles Bowen addressed a conference run by Australia’s national association, APPEA, in Darwin. Speaking before industry leaders from around the world and the region, he updated the meeting on developments in asset integrity and aviation safety, with special emphasis on a recent spate of helicopter incidents. ‘It was important to fly the OGP flag at this event, one of the most significant meetings of its sort in the region and organised by one of our most active national association members,’ he says.

Raphael Vermeir, March 2010

I  last wrote the introduction to OGP’s annual review during a time of great uncertainty. The world economy was heading downwards and no one could tell how far it would fall. Nor 

could anyone predict precisely what impact this would have on our industry.Times indeed proved difficult. But we have come through. And OGP rose to the challenges of constrained budgets, tighter travel restrictions and limitations on members’ sweat equity.We did this, in large part, by getting our priorities right; by concentrating on those issues that mattered most. Our focus in 2009 on asset integrity and helicopter safety are good examples. The extension of the ground-breaking joint industry programme on sound and marine life was a particular triumph, since it is now enabling more valuable research on an issue that can have a direct impact on upstream operations.In 2009 we succeeded in widening our contacts with national and regional associations, building on foundations laid in 2008. Although aforementioned travel restrictions precluded a planned meeting in Australia, we still strengthened our relationships with a number of industry bodies including APPEA, API, ARPEL, ASSOMINERARIA, Energy Institute, IADC, IAGC, IPIECA, NOGEPA, Oil & Gas UK, OLF and WEG. We also worked closely with Brussels-based organisations such as EUROPIA and EUROGAS.Another noteworthy achievement during the past year has been the expansion of the Association’s membership base. We are now bigger and more globally diverse than ever. Given our growing focus on existing Arctic operations and the potential for growth in that region, it’s particularly important that in 2009 OGP welcomed new members from Greenland and Russia.Which brings me to another success in 2009 – a year that saw the transformation of the European Union with new European Commission members and a newly-elected European Parliament. OGP’s Brussels team did an excellent job in keeping members on top of the situation and laid the groundwork for an upstream display in the European Parliament. This took place during the week of 22 March, 2010. Among the leading figures it attracted was Energy Commissioner Günther Oettinger.Of course, we also had our own ballot in OGP, with members re-electing the entire Manage-ment Committee slate. This provided welcome continuity during times of uncertainty. So I look forward to continuing my role with the able support of my fellow Management Committee officers and colleagues.One thing that becomes apparent in such difficult times is the dynamism of OGP. Ours is an organisation that constantly adapts to the upstream industry’s needs. For that, we should give thanks to both our members and OGP’s secretariat.Due to their efforts, and despite the downturn, OGP enters 2010 in a strong position both operationally and financially.

An introduction from the Chair:

One of OGP’s most significant engage-ments with a non-governmental organisa-tion in 2009 was a response on behalf of members to Transparency International’s (TI) plans to undertake a new report promoting revenue transparency in the oil and gas sector.In a letter to TI’s Head of Private Sector Programmes, Charles Bowen expressed concern that the proposed methodology went ‘well beyond the framework’ of the authoritative Extractive Industries Transpar-ency Initiative (EITI). He also cautioned that the additional information proposed for TI’s industry questionnaire was ‘not germane to reporting payments as part of the EITI process. Nor does it hold governments accountable for their use of revenues. It also fails to shed light on a company’s anti-corruption policies.’ In response to these and other issues raised by OGP, TI said that distribution of the final methodology for the survey would be delayed to reflect the Association’s ‘helpful comments’.

Resolving disputeThe European Union was also an area of particular focus in 2009.OGP, as a member of the European Gas Coordination Group, was involved in talks to help resolve the headline-making dispute between Russia and the Ukraine that jeopardised European gas supplies. The Association’s input centred on the technical measures that the industry was taking to maximise indigenous production in Europe. OGP also stressed the potential for additional LNG cargoes to Europe to supplement EU supplies.

Indigenous productionIndigenous production was

also the topic when OGP staged a dinner debate at the

European Parliament during one of its Strasbourg sessions. At this event, par-

liamentarians were reminded that Europe remains the world’s fourth largest oil and gas producer. However, to maintain the associated benefits of improved security supply, tax revenues and employment there needs to be a favourable environment in terms of legislation and regulation, OGP said.European leaders also came to OGP. In March the Management Committee held a Brussels dinner that included guests from the European Commission, the diplomatic corps and European industry associations. The event took the form of a symposium. Discussion topics included the global economic crisis and its impact on energy investment, security of supply, the future of carbon capture and storage (CCS), major obstacles to gas infrastructure projects and the need to recruit young talent to the upstream industry.Later that month, OGP Chair Raphael Ver-meir led a briefing session for EU Energy Commissoner Andris Piebalgs. In response to the Commissioner’s question about why indigenous production seemed more advanced in the US, the OGP delegation referred to greater efficiencies in the American way of granting E&P permits.

Briefing the CommissionerAt midyear, EU Committee Chair Barry King led an OGP delegation to meet with DG TREN Director-General Matthias Ruete and Jan Panek, Head of the Coal &Oil Unit. Discussion focused on the EU’s Strategic Energy Review in general, with particular emphasis on European produc-tion, external relations, security of gas supply and CCS. Although the potential of CCS excited particular interest, EU Affairs Director Beate Raabe cautioned that ‘mak-ing the necessary alterations to existing infrastructure would have to be reviewed on a case-by-case basis.’

OGP’s advocacy activities extended beyond Europe as well. For example, at the OSPAR Convention the Association suc-cessfully argued the case for a self-standing text that addressed a new risk-based assessment on managing produced water from upstream operations. OSPAR has previously gone for a broader-brush approach. The issue will be resolved at the 2010 OSPAR ministerial meeting in September.

Spreading best practice

How is an upstream company to know where it stands on safety and environ-

mental performance? And in what areas might it consider ways to improve?For OGP members, the answer continues to be straightforward. They look to the Association’s annual publications on global, regional and company indicators.The 2009 edition of OGP’s Safety perform-ance indicators – 2008 data was compiled using the largest data base ever, covering 3.3 billion hours worked around the world.

The report showed mixed results.While lost time injury frequency (0.55 per million hours worked) and total record-able injury rates (2.08 per million hours worked) were at all time lows, the severity of incidents being reported showed an increase. There was a 4% rise in the fatal accident rate.Data showed that the most prevalent type of fatal incidents remained associated with vehicle operations, being struck by moving objects or falling victim to released energy – collectively accounting for almost half of all upstream fatalities.OGP’s report on Environmental perform-ance in the E&P industry – 2008 data covered upstream activities in 62 countries. It showed improvements in each of the five categories covered: gaseous emis-sions, aqueous discharges, non-aqueous drilling fluids on cuttings, spills and energy consumption and flaring.

Fatalities 2008

Vehicleincidents

25%

Struck by23%

Other 5%Fall 9%

Explosion/burn 18%

Electrical3%

Drowning 6%

Caught between 5%Air Transport 6%

The majority of participants in the OGP-managed joint industry programme

(JIP) on sound and marine life voted to extend their funding of what had been a three-year undertaking due to end in 2009.Now worth up to $35 million, the pro-gramme involves leading scientists and academic institutions around the world in helping to determine the potential impacts that upstream activities might have on marine life. All researchers have complete independence for their JIP projects, which are fully peer-reviewed in line with best research practice.By the end of 2009, the JIP had funded 64 scientifically robust projects, many of which have been co-funded by various government groups and in-volved regulatory agencies in their design. Thanks to the extension, JIP research continues to address sound and marine life issues in five categories:• Sound source characterisation and

propagation in the ocean• Physical, physiological and hearing

effects of sound on marine life• Behavioural reactions to sound in

the marine environment and their biological significance

• Mitigation, monitoring, data analysis and management

• New research toolsThe US Navy, which undertakes its own investigations in sound and marine life, has praised the JIP for working ‘inde-pendently as well as co-operatively with various agencies in the US Government to support the world’s leading research-ers in the field of marine mammal science. The work these scientists have performed has been critical to helping establish current mitigation strategies and criteria, and continues to sup-ply the basic information needed to improve upon established policies.’Updates on the JIP are available at http://www.soundandmarinelife.org.

Sound & marine life research extendedA broader membership base

By the end of 2009 OGP’s membership had expanded to include 72 production

companies, major service providers and national associations. This was an increase of 9% over the previous year.Expanded membership also extended the Association’s geographic reach: among the new companies in 2009 were Nunaoil, the first member from Greenland and Shtokman from Russia.

Promoting asset integrity

One of the year’s dominant issues was asset integrity – and determining the

best ways to achieve it. A September work-shop, organised by the Safety Committee’s Asset Integrity KPI Task Force, focused on key performance indicators. The two-day session in London involved some 60 par-ticipants drawn from both operational and corporate levels of upstream companies. Attendees also included regulators and experts from other associations including the Center for Chemical Process Safety (CCPS) and API.Recommendations included:• Adopting existing KPIs and measures on

the two most severe levels of incident• Producing guidance on additional KPIs,

building on OGP’s 2008 report Asset integrity – the key to managing major incident risks

• Identifying additional recommended metrics to apply at specific asset levels rather than industry-wide

These recommendations form the first step of a five-year plan that will see upstream companies and their service providers use common KPIs and enable benchmarking against industry asset integrity performance.

Well met

In addition to a solid calendar of committee, sub-committee and task force

meetings dedicated to specific issues and opportunities, twice a year OGP gathers for global meetings. These provide welcome opportunities for members to share fresh ideas, raise areas of concern and network with their peers.In May, for the first time, the Association gathered in Tokyo for its Annual Gen-eral Meeting. INPEX, which is based in the city, hosted the visit, which also attracted a broad cross-section of Japanese companies with upstream interests.Timely topics covered during the meeting included asset integrity, aviation safety, piracy, climate change, Arctic issues, sound and marine life and LNG best practices.Six months later, the venue for the Association’s regular EGM was Paris. The day- and-a-half session, sponsored by Total, drew delegates from 27 countries across six continents. EU Energy Commissioner Andris Piebalgs was a guest

at the EGM dinner and spoke about how climate change and security of energy supply could be the rallying points for an EU-wide coherent energy policy.Other outside speakers included Didier Houssin, the International Energy Agency’s Director of Energy Markets and Security, who gave insights into that organisation’s newly published World Energy Outlook.

Didier Houssin of the World Bank

Asset integrit

y –

the key to managing major incident risk

s

Report No. 415

December 2008

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Comings and goings 2009

An organisation is only as effective as the people who run it. In 2009 OGP

welcomed new committee officers at every level. The Association also said goodbye to some of its most dedicated supporters.At the top, the year saw the re-election of the previous Management Committee. As a result, the companies leading the Associa-tion remain as BP, Chevron, ConocoPhilips, ExxonMobil, Petrobras, Shell, Statoil, Total and Baker Hughes. Within that roster, however, there were changes to the MC’s list of officers. Brad Corson of ExxonMobil succeeded Rob Franklin as First Vice Chair and Joep Coppes of Shell followed John Hollowell to become Second Vice Chair.At the committee level, Ross Smith of BP succeeded Neil Reeve of Shell to become Chair of the Standards Committee. Mike Denkl of Schlumberger became Vice Chair of the Safety Committee following the resignation of Lee Turner of M-I SWACO (latterly SMITH International).The Asset Integrity KPI Task Force elected Ron Murray of BG Group as Chair and then Brett Doherty of RasGas as his replacement with Andy Robertson of Nexen as Vice Chair. The Environment Task Force chose Jim Parker of Shell as Chair, with Heide Mairs of ExxonMobil serving as Vice-Chair. Iain Chadwick of Chevron became the new Chair of the Marine Safety Subcommittee, supported by Alex Hammond of Shell as Vice Chair.The new addition to the Brussels secretariat was Annabel Holroyd, a familiar face since she had served as an intern in 2008. Annabel is now EU Affairs Officer.

• Helicopter guidelines for land seismic & helirig operations

• Managing HSE in a geophysical contract• Material standards and committees for the

international oil & gas industry• Registry developers guide• Safety performance indicators – 2008

data• Safety performance of helicopter opera-

tions in the oil & gas industry – 2007 data• Standards bulletin 10

Most of these, along with more than 200 other reports published since 1974, are freely downloadable from the publications section of www.ogp.org.uk.

ReportsOGP produced a total of 14 reports in 2009:• Health performance indicators• A guide to food and water safety• Diving recommended practice (Chinese

translation)• Diving worksite representative roles,

responsibilities & training• Drilling fluids and health risk manage-

ment• Environmental performance of the E&P

industry – 2008 data• Geohazards from seafloor instability

EventsIn 2009 OGP staged or actively par-ticipated in a wide range of events. These included:• Produced water workshop• Metocean week• Fish behaviour workshop• Asset integrity KPI workshop• Standards workshops in Kuala Lumpur,

Perth and Kazan

Top of the world

OGP’s Arctic Co-ordination Task Force (ACTF), which uniquely reports directly

to the Management Committee, held its first full scale meeting during a record-breaking cold snap in London.The two-day session gave the ACTF the opportunity to finalise draft terms of reference that are now enabling the group to become the technical and advocacy focal point for the exploration & production industry on a wide range of issues related to upstream Arctic activities.During the course of the year, the ACTF engaged with a number of national oil industry associations and established solid links with Barents 2020 (see page 1). In line with its remit, the ACTF identified issues as yet uncovered by other organisations

and produced six briefing papers for members’ use, which will form the

basis for the first in a series of fact sheets. The Task Force

also laid the groundwork for joint work on oil spills with IPIECA and API.In the third quarter, the Environment Commit-tee launched its own Arctic Environment Task Force (AETF). Its first task: to update ex-isting OGP guidelines on the Arctic environ-

ment, which originally date back to 1993. To

avoid duplication, the AET will work closely with the

ACTF.

A global presence

OGP is a dynamic organisation – in the issues tackled as well as in places they

are discussed. In 2009 the Association’s committees, subcommittees and task forces held meetings and workshops around the world.

The Standards Committee, for example, held workshops on the importance of international standards in Perth, Australia; Kuala Lumpur, Malaysia, and Kazan, Tartarstan. These events, which involved close liaison with national associations, governments, standards officials and pro-ducers, attracted hundreds of participants. Another Standards workshop coincided with the Association’s Paris EGM.In April the joint OGP/IPIECA Biodiversity Working Group sought to foster learning about the context for environmental impact assets and to share experiences on developing biodiversity with a cross section of sectors in the Asia/Pacific region. To that end, a workshop in Beijing drew 100 delegates from Mongolia, Cambodia, Myanmar, Thailand, Australia, India, the US and the UK as well as China.