Mid-Continent Exploration and Production Safety Network Update

1. Mid Continent Exploration and Production Safety Network (MCEPS) & FRC Update

2. MCEPS • Alliance between the oil and gas industry and OSHA • Formed in 2008 • Purpose is to promote safety, health and environmental improvement in the exploration and production of oil and gas in Oklahoma, Kansas, and the Texas Panhandle.

3. MCEPS • The alliance with OSHA has the goal of reducing fatalities and serious injuries in the energy industry • A significant decline has been documented in Oklahoma’s injuries and fatalities in the oil and gas industry • Alliance has been renewed and will be signed next week

4. OSHA Inspection Activity • Oklahoma Area Office conducted 70 inspections in the oil and gas industry through October 1, 2009 to August 19, 2010. • The MCEPS meetings are one of the formats used by OSHA to share the information with industry to prevent recurring citation within the industry.

5. OSHA Inspection Activity • Most frequently cited standard by OKC’s Area Office: 5(a)(1) General Duty Clause of the OSHAct • Operation of a drilling rig with derrick of unknown manufacturer and load rating capacity. • Operation of a drilling rig without developing an inspection and repair procedures program.

6. OSHA Inspection Activity 5(a)(1) General Duty Clause of the OSHAct • Absence of emergency escape device (Geronimo) • Access to Geronimo blocked by wind tarp. • Unsafe/Improper rigging: • Missing structural pin keepers • Improperly rigged guy wires • Living quarters located within the fall radius of rig mast.

7. OSHA Inspection Activity 5(a)(1) General Duty Clause of the OSHAct • Emergency escape device not installed according to manufacturer instructions • Improper use of fall protection • Notification of crane operator of rig component weights and attachment points prior to lifting operation

8. OSHA Inspection Activity 1910.305 Electrical: Wiring methods, components and equipment for general use • 305(g) Flexible cords and cables • 305(a) Temporary wiring • 305(d) Switchboards and panelboards • 305(e) Cabinets or cutout boxes in wet locations • 305(b) Protection of conductors entering boxes

9. OSHA Inspection Activity 1910.184 Material Handling and Storage: Slings • 184(e) Sling Identification: alloy steel chain slings • 184(f) Wire rope slings: load rating 1910.23 Waling and Working Surfaces • 23(a) Protection for floor openings • 23(c) Protection for open sided floors • 23(e) Railing and toe boards

10. OSHA Inspection Activity 1910.1200 Hazard Communication • 1200(f) Labeling of containers of hazardous chemicals • 1200(g) Material Safety Data Sheet preparation 1910.307 Electrical: Hazardous locations • 307(b) Equipment & wiring requirements • 307(c) Conduit requirements

11. OSHA Inspection Activity 1910.181 Material Handling & Storage: Derricks • 181(c) Load ratings and markings • 181(d) Derrick inspection • 181(g) Rope inspection • 181(j) Load handling: size of load 1910.178 Powered Industrial Trucks • 178(a) General requirements • 178(j) Operator training

12. OSHA Inspection Activity Since the issuance of the FRC Memorandum, there have been no citations for violations of 1910.132 related to FRC during this time period. • There may be pending citations yet to be issued.

13. Fatality/Catastrophic Investigations Total 15 SIC 07 Agriculture 01 SIC 13 Oil & Gas 03 SIC 15 & 16 Construction 04 SIC 20-39 Manufacturing 04 SIC 42 Transportation 01 SIC 50 Wholesale trade 01 SIC 73 Services 01

14. Fatality/Catastrophic Investigations • 1389 Oil & Gas • Struck by rear dome lid from exploding tank truck (propane torch used to heat butterfly valve on back of tank truck) • Cigarette lit while employee was draining a tank resulting in an explosion • 1611 Highway Construction • Struck by exploding tire debris • Struck by car in work zone

15. Fatality/Catastrophic Investigations • 1771 Concrete Work • Fall from silo after stepping on a loose section of form • 1791 Structural Steel Erection • Struck by piece of steel • 1381 Drilling Oil & Gas Wells • Struck by load from crane • 2499 Wood Products • Fall through skylight on roof

16. Fatality/Catastrophic Investigations • 0782 Lawn & Garden Services • Worker found near tank batteries with mower at bottom of tank (Cause unknown) • 3569 Aircraft Parts • While working on airbrakes of tractor trailer, truck became engaged dragging the employee under the truck and pinning him between front tire and engine of moving truck

17. Fatality/Catastrophic Investigations • 3321 Gray and Ductile Iron Foundries • Electrical shock resulting in fall from heights • 4213 Trucking • Fall from truck while unstrapping cargo • 5093 Scrap & Waste Materials • Crushed by falling section when working inside boiler • 7389 Business Ser vices • Fall through roof

18. Program Plan-Inspection Activity Program 2010 2011 Total Inspections 791 858 Oil & Gas 45 50 Heat Stress --- 05 Construction 405 435

19. Points of Interest • OSHA has initiated early stages of rulemaking for Injury & Illness Prevention Program Rule • OSHA revised the Outreach training program requirements- 10 hour course over 2 days and 30 hour course over 4 days

20. Points of Interest • OSHA’s Crane & Derricks in Construction Final Rule was published August 9, 2010 with effective date of November 8, 2010. Some provisions have delayed effective dates. • April 28, 2010- Memorandum: OSHA training standards to the field requiring safety training in language workers understand.

21. Points of Interest • April 22, 2010- Memorandum: Administrative Enhancements to OSHA’s Penalty Policy • Addressed changes expected in OSHA’s penalty structure and calculation procedures • A general increase of overall amount for all penalties

22. MCEPS Direct Impact to Industry • Frac Tank explosions • Crane standard as applicable to winch trucks • Roundtable discussions • FRC Issue

23. Flame Resistant Clothing • FRC issue began 2 years ago with citations issued in North Dakota region • OSHA citation issued to drilling company including operator • Meeting held in Denver with OSHA and industry representatives

24. Flame Resistant Clothing • FRC Survey from MCEPS, IADC, IPAA, and AESC • Industry discussion groups • Request to OSHA: • Industry input to regulation guidance • Update the injury and fatality study

25. Flame Resistant Clothing • FRC Memorandum issued March 19, 2010. • Culminated in meeting with OSHA in Washington DC on August 16, 2010. • Those included were OSHA, IADC, IPAA, AESC, API, and STEPS groups including the Permian Basin, National STEPS and MCEPS.

26. DC Memorandum Meeting • The FRC Memorandum will not be recalled. • OSHA took the concerns of industry seriously and was surprised by the number of responses. • Flash fires in upstream are a low probability but high consequence. • Memorandum is not an official letter of interpretation but a guidance document.

27. DC Memorandum Meeting • Formal rulemaking is a long process. • OSHA was not aware of the proactive organizational approach to working with OSHA and felt that industry was not willing to work with OSHA. • FRC Memorandum can be revised. • Perception that hazard assessment done by industry is inconsistent and inadequate.

28. DC Memorandum Meeting • No phase in period for implementation was included although is will take considerable time to comply. • Statistics quoted were inaccurate and not applicable.

29. FRC: Moving Forward • Information presented will be shared with the Assistant Secretary and industry respectfully asked for a timely response. • Industry associations will educate members on hazard assessment and OSHA will provide guidance. • Task force was suggested.

30. Improving Safety in the Industry • SafeLandUSA • Shared Audit • OSHA/Industry Alliances Working together- industry, including operators and contractors, to improve communication and safety procedures.

31. Thank you! Any Questions?