Upload
sharon-townsend
View
240
Download
0
Tags:
Embed Size (px)
Citation preview
Occidental Petroleum Corporation
Occidental Petroleum’s Worldwide Standard of Care---------------------------------------
Presented by Richard A. SwanVice President -
Health, Environment and Safety
November 4, 2003
Occidental Petroleum Corporation
Oxy Business Segments
• Occidental Oil and Gas Corporation– Worldwide Oil and Gas Exploration and
Production Activities– 2002 Sales - $4.6 billion
• Occidental Chemical Corporation– U. S. Chemical Manufacturing Activities – 2002 Sales - $2.7 billion
• Glenn Springs Holdings, Inc.– Centralized Site Remediation
Occidental Petroleum Corporation
2002 Daily Production
Occidental Petroleum Corporation
United States
Elk HillsElk Hills37 Million BOE37 Million BOE
2002 Production
THUMSTHUMS9 Million Barrels9 Million Barrels
HugotonHugoton13 Million BOE13 Million BOE
OXY PermianOXY Permian60 Million BOE60 Million BOE
Horn MountainHorn MountainDecember December
StartupStartup
Occidental Petroleum Corporation
Corporate Governance• Key governance items at Occidental– Annual election of Board of Directors– 10 of 12 Board members are independent outsiders– Lead outside Director– Confidential voting by shareholders– No poison pill– Formal “code of business conduct”– Stock ownership guidelines for officers– Performance-based incentives for senior executives
• Occidental’s governance highly rated– Rated 10.0 by GovernanceMetrics International
Occidental Petroleum Corporation
ENVIRONMENTAL, HEALTH AND SAFETY COMMITTEE (ECOB)
BOARD OF DIRECTORS
DIRECTOR,ENVIRONMENTAL
AFFAIRSCarl Wirdak
CORP. MGR., HESCOMPLIANCE ASSURANCE
Coni Manders
MANAGER,SAFETY AND PROCESS RISK
Harold Schambach
PRESIDENT AND SENIOR OPERATING OFFICER
VICE PRESIDENT,HEALTH, ENVIRONMENT AND
SAFETYRick Swan
HES STEERING TEAMDIRECTOR, HES - REGULATORY
AFFAIRS (OCCIDENTAL INT’L)Al Collins
GLENN SPRINGS HOLDINGS, INC.(SITE REMEDIATION)
VP - HEALTH, ENVIRONMENT & SAFETY OCCIDENTAL PETROLEUM (Swan)
DIRECTOR, HES and SECURITYOCCIDENTAL OIL & GAS (Scott)
VP - HEALTH, ENVIRONMENT & SAFETY OCCIDENTAL CHEMICAL (Kemp)
DIRECTOR - HES REGULATORY AFFAIRSOCCIDENTAL INTERNATIONAL (Collins)
DIRECTOR – HEALTH, ENVIRONMENT & SAFETYGLENN SPRINGS HOLDINGS (Terwilliger)
MANAGER – SAFETY & SECURITY SERVICESCORPORATE HQS AND SERVICES (Hallen)
CORPORATE DIRECTOR,SAFETY AND PROCESS
RISKGeorge Buxton
CHAIRMAN ANDCHIEF EXECUTIVE OFFICER
EVP, GENERAL COUNSELAND SECRETARY
CHIEF FINANCIAL OFFICER &EXEC.V.P.-CORP.DEVELOPMENT
HES COUNSEL
HES Functional Organization
Occidental Petroleum Corporation
EHS Committee (ECOB)
• Established in 1981
• Four “independent” Board members
• Meets 5 – 6 times annually with OPC HES staff, OPC President (senior operating officer), and General Counsel (Chief Compliance Officer)
Occidental Petroleum Corporation
EHS Committee
• Reviews status of HES issues, company compliance, remediation projects and significant incidents
• Provides written reports to full Board• Reviews all facility HES audit and
assessment reports
Occidental Petroleum Corporation
OPC HES PolicyRoles and Responsibilities
OIL & GAS OXYCHEM
OPC
OPC ROLE•Strategy•Policy•Oversight•Consultation•Coordination
Industry Segments•Implement industry specific HES programs that achieve a consistent worldwide standard of care•Plan, measure and report performance•Assess and improve HES management system
GSHI
Occidental Petroleum Corporation
To protect people and the environment, while creating stockholder value through
efficient Health, Environment and Safety (HES) management.
HES Strategic Objective
Occidental Petroleum Corporation
• To have effective and efficient HES management systems in place in all business segments
• That enable the company to achieve continual improvement in HES performance, and thereby
• Be recognized as a company committed to responsible HES management
HES Strategic Goals
Occidental Petroleum Corporation
• Oxy’s first approach – Meet the intent of U. S. laws• U. S. laws may be to prescriptive for
foreign locals• U. S. laws may require excess paperwork• U. S. laws may require technology or
management practices unavailable in foreign locals
• Foreign requirements may exceed U. S.
Problem: Establishing Worldwide Standards
Occidental Petroleum Corporation
Worldwide Standard of Care
Definition: “The set of HES performance expectations and goals established by an Industry Segment that provide people and the environment a consistent level of protection from HES risks inherent in the various similar business activities of the Industry Segment, wherever located.”
Occidental Petroleum Corporation
Worldwide Standard of Care“Beyond Compliance”
• Compliance with all applicable HES laws and regulations is a minimum
• Correct or stop any activities with an unacceptable risk to people’s health and safety or the environment
• Set worldwide business segment HES performance objectives
• A risk evaluation and mitigation program that achieves consistent results worldwide
Occidental Petroleum Corporation
HES Management System
Program Review assesses how well each Segment is managing the above programs (Policy 89:10:00)
Inherent Risks (arising from chemicals, process technology, siting, etc.)
Residual Risks (remaining after appropriate HES programs are in place)
Operations Risks
(arising from operating practices, maintenance practices, HES programs, etc.)
Legal Risks (arising from need to comply with laws, etc.)
QA/QC ProgramHES
Risk Mgmt.
Incident Investigation (management system performance feedback)
Occidental Petroleum Corporation
HES QA/QC Program
• 50+ major facility locations worldwide • Risk-based audit frequency (2 - 3 yrs.)• Reports include:
– Assessment of status of facility’s HES compliance and programs
– Specific audit findings– Impact of findings on facility’s risk level– Corrective action plans
• Each full audit report provided to ECOB
Occidental Petroleum Corporation
HES Risk Management• Structured process for assessing HES
risks and mitigation opportunities• Provides information for risk mitigation
decisions and resource allocation• Establishes a system of authorities for
risk acceptance • Facility can not accept risks above a
certain level without annual review by senior Segment management
• Annual risk status review verifies that a consistent SOC is being achieved
Occidental Petroleum Corporation
Process for Evaluating Risks
Methodology consists of:– Identifying potential failure scenarios– Determining the potential consequences– Determining the likelihood that each
consequence will occur– Using a consequence-probability matrix to
determine the response level– Determining appropriate risk response
Occidental Petroleum Corporation
Identify Scenarios• Typical scenarios:
– Failure of piping or process vessels
– Loss of utilities (electricity, water, air, etc.)
– Failure of control systems
• Hypothetical scenario:
– A natural gas pipe breaks causing an explosion/fire in a facility
– Natural gas is clean (no Hydrogen Sulfide)
– No neighbors within a mile radius
– Facility is occupied part-time by two employees
Occidental Petroleum Corporation
Define Consequences
POTENTIAL CONSEQUENCE TABLE
Potential Consequence Type* Level 3 Level 4 Level 5Onsite PermanentIncapacitating Injury
1 2 or 3 >3
Environmental impairmenta) Cleanup/remediationb) Food chain/terrestrial
life/aquatic life impacts
Adversea) < 1 yearb) Minor
Seriousa) >1 yearb) Moderate
Extensivea) Not possibleb) Extensive
Offsite property damage Minor Moderate ExtensiveOffsite human impact Minor Moderate Permanent
Incapacitating Injuryor significant health
impactOnsite property damage or lossof production revenue
$10MM to $25MM $25MM to $100 MM >$100MM
Public reaction Adverse Serious Threatens continuedFacility operation
*Criteria for Potential Consequence Levels 1 and 2 are to be defined by IS.
Occidental Petroleum Corporation
Probabilities
• Stated as a frequency based on the number of years between events (1 in X years)
• General categories are:– >1/100 years (>1 x 10-2)– 1/1,000 years to 1/100 years– 1/10,000 years to 1/1,000 years– 1/1,000,000 years to 1/10,000 years– < 1/1,000,000 years (<1 x 10-6)
Occidental Petroleum Corporation
• Probability of pipe breaking (past experience, age, maintenance & inspection program, etc.)
• Probability of the gas being ignited (typical wind speed and direction, ignition sources, etc.)
• Probability of two people being within the radius of an explosion or fire (percent of time during a year that two or more people are in the area)
• Example: Use 1/5000 years as our probability
Determine Probabilities
Occidental Petroleum Corporation
Identify Response Category
>10-2 D E E
10-3 to 10-2 D(C**) D E
10-4 to 10-3 * D D
PR
OB
AB
ILIT
Y (
1X)
10-6 to 10-4 * * D
3 4 5
POTENTIAL CONSEQUENCE
LEVEL * Risk Response Category defined by IS.
** If no Permanent Incapacitating Injury.
Occidental Petroleum Corporation
Determine Response
CATEGORY RESPONSE
A - C Responses to HES Risks below Level D should be defined by the IS HES RiskManagement program and addressed as continuous improvement opportunities.
D Perform appropriate qualitative or quantitative risk analysis to verify risk level anddocument risk studies, potential hazards and relevant risk reducing measures.Facility management shall implement appropriate measures to achieve the ISWorldwide Standard of Care and inform senior IS management if risk can not bereduced to a lower category in a timely manner.
E Utilize opportunities identified in risk analysis to implement mitigation measures toachieve the IS Worldwide Standard of Care. If the risk can not be reduced to alower category in a timely manner, perform quantitative risk analysis to verify risklevel and assess mitigation opportunities. If a lower risk level is not achieved,concurrence of IS executive management is required. Opportunities to reduce riskshould be reviewed annually.
Occidental Petroleum Corporation
Interface with QA/QC Program
• Risk levels are used to set audit and assessment frequencies
• Risk inventories and profiles are the basis for the risk discussion in the executive summaries of audit/assessment reports
Occidental Petroleum Corporation
HES Program Review
• Corporate review of Segment HES programs and management systems
• Six to nine month process of interviews and site visits
• Assesses whether consistent worldwide standard of care is being achieved
• Report prepared for Segment CEO, OPC management and ECOB
• Segment CEO presents findings and response plans to ECOB
Occidental Petroleum Corporation
Health & Safety Performance
4.04.0
5.75.7
8.18.1
7.97.9
3.33.3
0.620.62
Occidental’s 2002 Injury & Illness RatesIndustry Comparisons*
* U.S. Bureau of Labor Statistics
Occidental Petroleum Corporation
Comparative Total Returns3 Years (1/1/00 - 12/31/02)*
(Percent)
* Data Source: Bloomberg
Occidental Petroleum Corporation
Market Indexes
12/31/01 12/31/02
Comparative Stock PerformanceComparative Stock Performance
Index: Dec. 31, 2001 = 100
Occidental Petroleum Corporation
Summary
• Occidental’s HES program has contributed to continuous improvement in HES and financial performance.
• Success attributable to a strong HES governance program, coupled with “beyond compliance” objectives.
Occidental Petroleum Corporation
Questions?