Managing potential risk in Wells

Bernard Looney
Executive Vice President - Developments
Cautionary Statement

This presentation and the associated slides and discussion contain certain
forward-looking statements concerning the businesses, operations and
strategy of BP. By their nature, forward-looking statements involve risks
and uncertainties because they relate to events and depend on
circumstances that will or may occur in the future. Actual results may
differ from those expressed in such statements depending on a variety of
factors, including changes in regulatory standards and operational
requirements; the availability of personnel and other resources; the
successful engagement with BP's external stakeholders, including
industry-wide bodies and contractors; the requirements of BP's existing
contractual and legal obligations; the timing and successful
implementation of Bly Report governance, including BP's centralised wells
organisation and the Safety & Operational Risk Organisation; the timing
and successful implementation of the Bly Report recommendations; and
other factors discussed elsewhere in this presentation, the associated
slides or under “Risk factors” in our Annual Report and Form 20-F 2010 as
filed with the US Securities and Exchange Commission (SEC).

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Our approach to managing potential risk in Wells

Global Wells Organization Consistency

– launched in the fourth quarter of 2010

Framework to reduce risk in Wells Focus

– outlined further the group in the first quarter of 2011

BP investigation (Bly Report) recommendations Prevention

– work began in fourth quarter of 2010

Verification and audit Assurance

– site and group-level changes rolling out now

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 Global Wells Organization, with S&OR assurance

Group CEO
Bob Dudley

EVP Production EVP Developments EVP Exploration EVP Strat. & Integration EVP Safety &
Bob Fryar Bernard Looney Mike Daly Andy Hopwood Operational Risk
Mark Bly

VP Global Wells SVP Global Projects

VP S&OR Dev’ts

4 VPs - Areas VP – Engineering VP – Bly Report VP S&OR Wells

Managing: Managing: Managing: Managing:

• Delivery in • Developing & • Delivery of the • Setting standards
compliance with embedding Bly Report
regulations standards recommendations • Providing
assurance of
• Conformance • Discipline compliance and
with BP standards leadership teams conformance
and practices
• Building capability
• Knowledge
management

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 Framework to further reduce risk in Wells

Our strategic framework works to further reduce risk in Wells

Further reducing the frequency of an event through:

1. Prevention
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Reducing the consequences if one occurs
by focusing on: Prevention
2. Containment and isolation 2
3. Spill response Containment
and isolation
4. Relief wells
5. Crisis management

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Enhanced BP standards are being Spill
developed or updated in each of response
these areas. 5
4 Crisis
Relief wells management

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Prevention

Prevention is managed via:

• A new centralised wells organization under a single Head of Global Wells

• A 7-point multi-year agenda:

1. Standards including OMS
2. Compliance
3. Capability
4. Risk
5. Redefine performance
6. Contractor management
7. Technology

• Prioritized implementation of the Bly Report recommendations

However these activities take time to deliver with quality down to the front line, across our global
operations. As such, in parallel we are also:

• Issuing interim guidance and standards

• Increasing our oversight of our operations

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 Immediate actions, interim guidance & standards

• Blow-out preventers
Riser

• Cementing

BOP • Risk management reviews

Sea Floor

• Negative pressure testing

Casing
• Assessment

• Verification

• Process safety performance management

• Contractor and service provider oversight

These actions started in
September 2010 and have
Reservoir
been rolled out in the regions.
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 Bly Report

6 7
3 5 • BP’s investigation into the Deepwater Horizon accident drew upon the
expertise of more than 50 technical and other specialists from
within BP and the industry
Riser
4
• The Bly Report concluded that there were multiple causes involving
8 multiple parties
BOP
Sea Floor
• Eight key findings
1. The annulus cement barrier did not isolate the hydrocarbons
Casing 2. The shoe track barriers did not isolate the hydrocarbons
3. Negative pressure test accepted - well integrity not established
4. Influx not recognised until hydrocarbons were in the riser
5. Well control response actions failed to regain control of the well
6. Diversion to the mud gas separator – gas vented onto rig
7. Fire and gas system did not prevent ignition
8. BOP emergency mode did not seal the well

• 26 recommendations impacting people,

process and plant
1
Reservoir

2
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 Bly Report

• Requires implementation with quality and integrity properly balanced

alongside pace to ensure embedment at the front line in a sustainable way.
• Covers BP-owned and contractor-operated operations
− Around a dozen countries
− 60+ offshore and onshore rigs
− 20+ cementing facilities located across the globe
− 16 rig contractors
• Requires engagement with internal and external stakeholders
− With some involving actions by industry-wide bodies and contractors
• Must take into account multiple regulatory bodies
• Allows for changes as we learn from industry efforts and other investigations
• Interdependencies within the program and with other functions and activities
within BP

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 Bly Report program governance

Board SEEAC, chaired by non-executive director William Castell,

monitors BP’s global implementation of the measures
recommended in the Bly report through ongoing updates

Group operations Quarterly updates to the group operations risk committee, which includes Bob
risk committee Dudley and Mark Bly

Executive steering committee, includes Bernard Looney (EVP - Developments),

Mark Bly (EVP – Safety & Operational Risk), the Group Head of Operations Audit
Executive steering and the General Auditor, provides a bi-weekly report to the executive team
committee

Bly Report Global Wells Safety & Operational

program team Organization Risk audit
This dedicated team is developing The GWO is ultimately Independently confirm that
the standards and requisite responsible for the deliverables are verifiable
training, and coordinating the embedding the and actions closed. Perform
implementation across BP and recommendations in each audits to establish that the
with contractors of BP’s operational program is delivered.
regions

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 Programme organization

Project Team – c. 40 people assigned to date VP

Bly Project

Planning and Programme Manager Programme Manager Implementation

Programme Manager Implementation
Performance BOP & Well Audit & Manager Communications
Project Director Legal Integrity Management Manager
Director* Control Competency Regions Manager
(8 ToR) Contractors
(10 ToR) (8 ToR)

Work Stream Virtual Contractor

Work Stream Lead Work Stream Lead Regional
Admin Technical Assistant Lead Training Implementation
BOP/Well Control Cementing Coordinator 1
Competency System Team

External
Work Stream Lead
Industry/ Work Stream Lead Work Stream Lead Organisation Regional Contractors &
Project Coordinator Finance Contracts BOP/Well Control
Regulatory Performance Industry Training Capability Coordinator 2 Service Providers
Coordinator

Work Stream Lead Work Stream Lead Work Stream Lead Competency PSCM / Contract
Project Manager Sr. S&OR Advisor
Well Control Casing Design Conformance Assessment Advisors

Work Stream Lead Technical Authorities

Engineering Work Stream Lead & Operational
Scheduler Project Support
Technical Drilling Rig Subject Matter Rollout Coach
Practices Experts

Work Stream Lead Work Stream Lead

Technical Assistant Regional SPA
Competency Cementing

Work Stream Lead

Document Controller Technical Support
Cementing

Work Stream Lead

OMS

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Key steps taken to assure successful delivery

Knowledge
• Employ past learnings, i.e. Texas City
management

• Program vs project structure

Organization
• Internal and service supplier experts

Terms of • Alignment of recommendations with

references (ToRs) planned activities and deliverables

Action tracker • Accountability drives performance

Verification • Upfront alignment of deliverables with

tracker verification closeout requirements

Performance
• Actual versus planned performance
reporting
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 26 recommendations

BP’s drilling operating practices and management systems

1.Update and clarify cementing guidelines

2.Update requirements for BOP configuration
3. Update requirements for negative pressure tests
and lock-down rings
4. XXXX
5. Strengthen standards for XXX
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9
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Development timings still to be confirmed

The process for implementing the Bly Recommendations is firmly in place. The timelines are estimates based on existing facts, circumstances and planning
status. While these estimates reflect the team’s best judgment, they can change depending on circumstantial factors such as complexity, resource
availability and evolving regulatory requirements.
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 26 recommendations

Contractor and service provider oversight and assurance

The process for implementing the Bly Recommendations is firmly in place. The timelines are estimates based on existing facts, circumstances and planning
status. While these estimates reflect the team’s best judgment, they can change depending on circumstantial factors such as complexity, resource
availability and evolving regulatory requirements.
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Verification and audit

Self-verification
• Site visits by Executive Vice President to provide additional assurance
• Stage gate verification processes
• Enhanced rig start up checklist, including safety critical equipment, emergency drills
and personal competency

S&OR assurance – by deployed teams

• Approve rig start-up checklist
• Approve rig audit action item completion
• Approve any deviations and associated risk assessments
• Approve personnel in critical roles – with several rejected to date
• Verify Bly Report recommendation action closure
• Approve all enduring risk action plans ongoing

S&OR audit
• S&OR Audit remit will include Wells activities
• Rig audit will move into S&OR bringing independent assurance
• S&OR will verify the closure of all 26 Bly report recommendations

Group audit
• Group Audit will audit the S&OR assurance process
• They will conduct 3 audits in 2011
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Keeping you informed

• We’ll be providing periodic updates, indicating closure or progress of each

the Bly Report recommendations

• Available at bp.com/safety

• First update will be in July 2011 – until all actions are closed

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