“How Industry Learns” --- Proposed Project ---

1. “How Industry Learns” --- Proposed Project --- Karen Paulk, ConocoPhillips, Chair, Process Safety Group & Ron Chittim, API CRE Chairs & Sponsors Workshop May 15, 2011 Seattle, WA

2. Recent Media Quotes from CSB, USW & OSHA • “We have a problem with the refinery industry,” (whose investigations of refinery accidents have uncovered a pattern of safety lapse)” • “We have decreasing staff levels, disinvestment in safety, a lack of training, and accidents or near-misses — indicators of catastrophe — being ignored” • “Serious incidents at refineries continue to occur at alarming frequency” • “U.S. oil refiners are compromising mechanical integrity of their equipment by extending cycles on their plants” • “Oil industry’s “run to failure” mentality” • “It’s all about the money - the refiners run the units longer to sell as much product as possible” • “The large number of fatal or catastrophic incidents in the petroleum refining industry indicates the need for a national emphasis program.”

3. Problem Statement • Public perception that refineries are not operating safely and responsibly • Continued allegations by CSB, USW and others that refiners are not “serious” about safety • Not learning lessons from refinery incidents • Aging refinery equipment • Upcoming 2012 Labor negotiations • Health & Safety will be a major focus of USW • Refinery safety issue has some attention in Congress

4. Proposed Project – How to Address Problem Statement • Focus is on safety first (vs. cost, business impact, etc.) • Develop general statements to describe current industry efforts • Develop specific statements with clear examples • Examples need to be impactful, highlight efforts and must be easily understood • Consider both reactive and proactive efforts • Sustained “evergreen” effort • Address short-term need • Develop longer-term plan to formalize effort • Result – ready resource that describes “step-change” or significant efforts vs. incremental activities

5. Resources & Information Needed to Address Problem Statement • Need input from CRE, PSG & SFPG - as part of standards management efforts, consider identifying: • Improvements in safety or fill a safety gap • Responses to learnings from issues/incidents in refineries • Significant steps taken to improve mechanical integrity • New provisions that monitor condition/prevent failure by triggering maintenance/repair/replacement • Risk prevention & mitigation improvements • Other (?) • CRE Sponsors & Subcommittee Chairs – communicate this project to task forces and encourage information collection per above

6. Resources & Information Needed to Address Problem Statement • Contact other standards developing organizations and other industry groups for examples of efforts to add to this project • Probably consider as a Phase 2 • When appropriate, think beyond “standards” (e.g., training, certification, workshops, etc..) • API staff will collect input and develop draft communications package for review and comment • API staff and committee leadership to develop long-term structure

7. What is Industry Doing to Address “How Industry Learns?” General Statements – Work in Progress • ”Network” of subject matter experts review, update, and strengthen industry standards for refinery maintenance, inspection, and repair • Mechanical integrity is addressed through conformance with API equipment specific standards and recommended practices • National and regional safety conferences where lessons-learned are shared among industry representatives • API’s Inspector Certification Programs have certified about 8000 inspectors in U.S. employed by over 2000 companies • API is collecting leading and lagging incident data per API RP 754 – Process Safety Performance Indicators • Mechanical integrity of equipment is managed by condition, not age

8. What is Industry Doing to Address “How Industry Learns?” Specific Efforts – Potential Examples - work in progress (needs further explanation) • PetroArch Database - sustainable documentation of the data that underpins the technical basis of many codes and standards • API 510/570 Pressure Vessel and Piping - inclusion of MOC and internal/external auditing language • API 580/581 Risk-Based Inspection - what, when, and how to inspect based on documented prioritization using consequence and probability • API RP 584 Integrity Operating Windows – establishing damage avoidance parameters • API RP 571 Damage Mechanisms - identification and effectiveness • [add Process Safety and Fire & Safety examples]

9. Back Up Slides

10. Dr. Moure-Eraso urges companies to take action to prevent accidents, including: • Implement a robust mechanical integrity programs with an emphasis on thorough inspections of critical equipment • Monitor process safety performance using appropriate leading and lagging indicators to measure process safety before major accidents occur • Maintain an open and trusting safety culture where near-misses and loss of containment incidents are reported and investigated