…the year in reviewInternational Association of Oil & Gas Producers

Highlights of 2007

Advances in advocacy

OGP represents the upstream industry before a wide range of interna-

tional bodies. In 2007 the Association succeeded in gaining acceptance for the industry’s point of view in several of these forums. One of the most notable breakthroughs came at the end of the year, when the European Council and the European Parliament agreed to a compromise on their proposed Marine Strategy Direc-tive. Initially, the European Parliament had discussed establishing areas that would be closed to any extractive uses.

This would have put a severe limitation on access to some of the region’s most important oil and gas reserves. The Directive as published fully answers OGP concerns.Another amendment would have completely forbidden any releases into the water column, including those that posed no potential hazard. Now, in line with OGP recommendations, no such draconian measures are included. In-stead, Member States will now take into account the release of substances and contamination by hazardous substances when drawing up initial assessments of their marine environments.

A third concern involved noise. Again, though noise and acoustics figure in the compromise Directive, they are included as issues ‘that need to be considered in the framework of the Marine Strategy,’ rather than as matters that are specifi-cally addressed. Expressing his delight at the results of the compromise between the Council and the Parliament, Euro-pean Environment Commissioner Stavros Dimas said ‘It is absolutely vital for the EU to protect its marine waters and to clean up the seas and oceans.’ OGP members were also pleased at the outcome. ‘The Marine Strategy issue has been with us for a long while... as a

Raphael Vermeir, March 2008

W hen you look back over a full year of OGP activities and achievements, you realise what an amazing organisation we belong to. With help from just a

small secretariat, OGP committees, subcommittees and task forces continue to have an enormous impact across a wide range of upstream activities. Our voice is heard by legislators, regulators and operational colleagues around the world. Having been in post as Chair only since August 2007, I can’t take much credit for any of this. But I can give credit where it’s due: to the men and women from E&P companies and organisations who provide the sweat equity on which we rely, to OGP’s employees in London and Brussels and to my predecessor, Rhonda Zygocki, and colleagues on the Management Committee. As you read this summary of what OGP accomplished in 2007, I’d like you to do so in the context of where we’re heading. At a time in our industry when human and financial resources are at a premium, at OGP we have to be clinical about prioritising our efforts. That probably means doing less, but concentrating more of our efforts on issues that really matter to our member companies and associations. Those issues will include facility security, asset integrity, the marine environment and security of supply.Of course, we won’t be alone in dealing with these matters. And we shouldn’t be, since other international, regional and national organisations also have a great deal to contribute. However, given limited resources, we have to make certain that we avoid duplication of effort. One way to do that is to maximise the effectiveness of communications externally and among our own committees. That way, we can ensure that all risks relevant to our industry are covered.As shown in this report, in 2007 we made considerable progress in managing many of those risks. We can do more by taking responsibility ourselves to make certain that OGP guidelines and best practices become more widely known – and implemented – in our own companies and organisations. By this time next year, I hope that’s something we can demonstrate throughout our industry.

An introduction from the Chair:

potentially huge threat to our industry,’ Raphael Vermeir commented. ‘Now, however, much of that threat has been lifted.’The industry scored a similar success with the OSPAR Commission for the Protection of the Marine Environment of the North East Atlantic on the issue of carbon capture and storage (CCS). Consistent with OGP’s long-term CCS position, OSPAR voted at its annual meet-ing in June to allow carbon storage in geological formations under the seabed. The Convention also issued guidelines for risk assessment and management of that activity. OSPAR contracting parties will now be assessing how CCS can be integrated into their policies to address atmospheric carbon dioxide concentra-tions and ocean acidification.More widely on the advocacy front, OGP cemented relations with the Interna-tional Regulators Forum when Executive Director Charles Bowen addressed the group’s second Offshore Safety Confer-ence. He confirmed that ‘structurally and mechanically sound facilities that perform the processes and produce the

products they were designed to deliver’ are major goals of the upstream industry. Moreover, we are achieving these goals through ‘rigorous application of appro-

priate management systems,’ supported by the work of OGP’s Asset Integrity Task Force.

Some offshore assets have been operating for decades

The second phase of the OGP-man-aged Joint Industry Programme (JIP)

on E&P Sound and Marine Life marked the end of its first year in May 2007, with 14 companies as funding sponsors and one industry association. In addition to

core funding from participants, the JIP has also raised further funds through partnerships with other public agencies in Norway and the USA.By the end of 2007, the JIP had awarded almost 50 contracts worth a total of

just under $16 million. One of the most important of these projects, ‘Seismic sound source 3D characterization’, was conducted by US Naval Research Laboratory and the Universities of New Orleans, Southern Mississippi and Louisiana (Lafayette). Fieldwork finished in the autumn.Plans are underway for a comprehensive programme review meeting on all of the JIP’s research in October 2008 in Houston.

A whale of a project – and more

Getting more global

OGP is the world’s only organisation to represent the upstream industry

on a global basis. In 2007 five new memberships considerably broadened the Association’s international scope.Never having had a member from Iran, OGP was particularly pleased to welcome two new members from that country in the first two months of 2007: the newly formed Persian LNG, now better known as PLNG and Petropars, which is now assuming global status as an upstream operator. To ensure the wid-est possible benefit of its membership, by mid-year, Petropars had started an on-going programme to translate OGP reports into Farsi. OGP’s first member company from India joined in the summer, having stated its intention to do so at the Association’s April AGM in Delhi. ONGC holds the subcontinent’s largest share of hydrocar-bon acreage, providing 84% of India’s oil and gas production.In the autumn INPEX Holdings Inc. be-came OGP’s second member company from Japan. INPEX is active in Indonesia, Western Australia, the Caspian and the Middle East.From Canada OGP welcomed Calgary-based Talisman, which has interests extending to the rest of the Americas, the North Sea and southeast Asia.

Playing it safe

As usual, OGP provided the industry benchmark for global safety per-

formance with its report, Safety perform-ance indicators, the most comprehensive document of its kind, covering 2.94 billion hours worked in 84 countries.

Based on 2006 figures, Safety perform-ance indicators showed a 4% drop in the rate for total recordable incidents. Overall, there were 2.92 incidents (including fatalities, and cases resulting in lost and restricted workdays and/or medical treatment) per million hours worked. This was the lowest incident rate on record, achieved in a year that saw a 23% increase in reported upstream activity. On the downside, the global upstream industry’s fatal accident rate for the year was 3.9 deaths per 100 million hours worked. There were 115 fatalities reported by the 41 companies involved in the report, representing an increase of 11% on the previous year’s figure – which had been the lowest on record.

For the first time in several years, there was a reduction in the number of deaths resulting from vehicle incidents, which had been the largest single cause of fatalities associated with upstream production. Though no direct connection can be made at this early stage, it is encouraging to note that the drop follows the OGP Safety Committee’s particular focus on transport safety in 2005 and early 2006.

Decision-makers agree: there’s more where that came from

Provided upstream companies are given access to the acreage they

need for exploration and production purposes – and fair and stable fiscal regimes that encourage such activity – there should be enough oil and gas in the world to meet growing world energy demand for decades to come. That’s OGP’s take on security of supply and, according to research commissioned in 2007, the message has been received and accepted by decision-makers and opinion leaders in the European Union.The findings were part of a survey involv-ing 464 key figures in Brussels. More

than half of those questioned believed that oil and gas will last longer than 50 years – an increase of 10% since a similar poll asked the question two years ago. There was particular optimism on this point from the European Commis-sion, the Parliament and the Council.Regarding overall impressions of the upstream industry, the view was generally positive, with 15% deeming the industry ‘excellent’, 46% good and 33% acceptable. Only 6% had a poor view of upstream operators – down from 13% in 2005.

Where we’re from; where we’re working: numbers of head offices shown in blue; numbers of members active in a region are shown in black.

323

1524

131

935

829

123

2631

Total Recordable Incident Rate over the past 10 years (per million hours worked)

0

2

4

6

8

10

12OverallContractorCompany

2006200520042003200220012000199919981997

Only 6% of those polled had a negative impression of our industry

Acceptable33%

Excellent15%

Poor6%

Good46%

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www.ogp.org.uk

Well met again

Every year OGP holds two general meetings that aim to bring the global

upstream industry together in venues located in areas where industry interests are concentrated or in locations that are also hosting major industry events.For 2007’s Annual General Meeting (AGM) in April the Association gathered for the first time in India which, with one of the world’s fastest growing economies, is rapidly becoming a prime market for oil and gas as well as a significant producer in itself. The meeting in the capital city of Delhi attracted members from the Americas, Europe, the Middle East, elsewhere in Asia and of course from the sub-continent. One of the themes of the event was ‘putting recommended practices to work’, which involved an exploration of the ways to accelerate implementation of the guidelines OGP members work so hard to produce. Other highlights of the Delhi gathering were a Standards workshop that featured participation from the Bureau of Indian Standards,a safety workshop focussing on global solutions with a regional approach, and a gala evening sponsored by Schlumberger. November’s General Meeting took the members to Amsterdam, where Shell sponsored the event. There, the agenda included comments on the 2008 busi-ness plan, approval of the Association’s

Petrobras, Shell, Total and Baker Hughes. Standing down were Qatar Petroleum, Statoil and Schlumberger.The new roster of officers comprised Rhonda Zygocki of Chevron as Chair, Raphael Vermeir of ConocoPhillips 1st Vice Chair and Robert Olsen of ExxonMobil 2nd Vice Chair. Following the Chair’s resignation in the summer due to the pressures of a new company assignment, both Vice Chairs moved up one place and John Hollowell of Shell became the Management Committee’s 2nd Vice Chair.There were also significant changes in OGP’s extensive network of commit-tees, subcommittees and task forces. In chronological order, Gerard van der Graaf retired as Chair of the Land Transporation Task Force, Richard Snell announced his retirement as Chair of the Offshore Structures Committee, and Walter Schaefer stood down as Chair of the EU Committee’s Gas Work Group.The Secretariat saw the departure of Technical Manager Don Smith for Eni and his replacement by Carl Woolf, who joined OGP from the UK’s Royal Society of Chemistry, where he was International Development Manager. Joining OGP in the newly-created position of Committee Support Co-ordinator was Natalie Scarimbolo. Katie Wong became the voice of OGP when she joined mid-year as London Administrative Assistant and Receptionist.

budget and a review of the activities and achievements of OGP standing committees.

All change

It’s in the nature of dynamic organisa-tions to experience changes in roles

and responsibilities. OGP is no exception and in 2007 new faces appeared at every level of the organisation. At the top, members chose a new Man-agement Committee in a postal ballot that closed on 1st March. Eight operating companies were elected to lead the Association: BP, Chevron, ConocoPhil-lips, ExxonMobil, Hydro (since merged with Statoil to become StatoilHydro),

Position paper on standards•Surveying & positioning guidance note 1•Safety performance indicators – 2006•Fatigue management in the workplace•Environmental management in the E&P •industry – 2006 dataSafety performance of helicopter opera-•tions in the oil & gas industry – 2005 & 2006

ReportsOGP produced a total of 11 reports in 2007. Most of these, as well as many of the 400 others published since 1974, are available from the publications section of www.ogp.org.uk

Health & safety incident reporting users’ •guideStandards Bulletin 8•Travel guide•Aircraft management guidelines•

EventsIn 2007 OGP staged or actively participated in a wide range of events, including:

Standards in Eastern Europe, India & the •Far East, and Libya & North AfricaManaging upstream HSE issues•Lifetime Extension of fixed steel offshore •platformsEU Parliament promenade debate •on indigenous production, security of supply & gas flaring

Rakesh Jaggi of Schlumberger’s Delhi office addressing the OGP AGM