OTC 23677

Teamwork and Leadership in Challenging Times Jonathan Henson, HSE Director, Maersk Drilling USA, Inc.

Copyright 2012, Offshore Technology Conference This paper was prepared for presentation at the Offshore Technology Conference held in Houston, Texas, USA, 30 April–3 May 2012. This paper was selected for presentation by an OTC program committee following review of information contained in an abstract submitted by the author(s). Contents of the paper have not been reviewed by the Offshore Technology Conference and are subject to correction by the author(s). The material does not necessarily reflect any position of the Offshore Technology Conference, its officers, or members. Electronic reproduction, distribution, or storage of any part of this paper without the written consent of the Offshore Technology Conference is prohibited. Permission to reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract must contain conspicuous acknowledgment of OTC copyright.

Abstract Back in the fall of 2010, a colleague who manages our reporting system database, Synergi, asked an interesting question: Do you have any ‘feeling’ on something has improved or is going to the wrong direction, in terms of HSE events during day to day operations for the last 12 months or half a year? I will tell you how I answered this great question but first a little background. I am the Health, Safety and Environment Director at Maersk Drilling USA. Many of you may have seen trucks on the highway with Maersk containers on the trailer. Maersk Drilling is part of the AP Moller-Maersk Group headquartered in Copenhagen, Denmark. We operate one drilling rig in the Gulf of Mexico, the Maersk Developer. This is Maersk Drilling’s first venture in the Gulf of Mexico and commenced drilling in September 2009 for our client: Statoil. From September 2009 to April 2010, we drilled for Statoil. Then Macondo happened. We continued with the well until completion or June 2010 as permitted by the NTL. As you all know, the government imposed a Moratorium on drilling in the Gulf in May, 2009. From June, when we finished our first well, to March 2011, we did not drill. Imagine telling Nick Saben, Head Coach of the Alabama Crimson Tide the 2012 season was cancelled in the middle of the season. Or worse, telling Coach Saben the season was suspended by the government immediately after the first LSU-Alabama game in November. Look at the effect the NFL and NBA lockouts had on its players and fans. Imagine if the lockout happened in the middle of the NFL season. That was the effect that the Moratorium had on Maersk Drilling and fellow drilling contractors. In the book “Incidents That Define Process Safety” by John Atherton and Frederic Gil, there are 13 chapters that cover incidents from around the world ranging from the Boeing 747 crash in Tenerife on March 1977 to the Exxon Valdez grounding on Bligh Reef in 1989. The book examines common factors in the incidents provided with process safety.

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Back in the fall of 2010, a colleague who manages our reporting system database, Synergi, asked an interesting question: Do you have any ‘feeling’ on something has improved or is going to the wrong direction, in terms of HSE events during day to day operations for the last 12 months or half a year? I will tell you how I answered this great question but first a little background. I am the Health, Safety and Environment Director at Maersk Drilling USA. Many of you may have seen trucks on the highway with Maersk containers on the trailer. Maersk Drilling is part of the AP Moller-Maersk Group headquartered in Copenhagen, Denmark. We operate one drilling rig in the Gulf of Mexico, the Maersk Developer. This is Maersk Drilling’s first venture in the Gulf of Mexico and commenced drilling in September 2009 for our client: Statoil. From September 2009 to April 2010, we drilled for Statoil. Then Macondo happened. We continued with the well until completion or June 2010 as permitted by the NTL. As you all know, the government imposed a Moratorium on drilling in the Gulf in May, 2009. From June, when we finished our first well, to March 2011, we did not drill. Imagine telling Nick Saben, Head Coach of the Alabama Crimson Tide the 2012 season was cancelled in the middle of the season. Or worse, telling Coach Saben the season was suspended by the government immediately after the first LSU-Alabama game in November. Look at the effect the NFL and NBA lockouts had on its players and fans. Imagine if the lockout happened in the middle of the NFL season. That was the effect that the Moratorium had on Maersk Drilling and fellow drilling contractors. In the book “Incidents That Define Process Safety” by John Atherton and Frederic Gil, there are 13 chapters that cover incidents from around the world ranging from the Boeing 747 crash in Tenerife on March 1977 to the Exxon Valdez grounding on Bligh Reef in 1989. The book examines common factors in the incidents provided with process safety. Chapter 10 of Atherton and Gil’s book deals with operating practices, specifically the British Airship disaster in 1930, and the hydrocracker effluent pipe rupture at the Avon, California refinery in 1997 and the BP Texas City explosion in March 2005. It is not my purpose to review these incidents, you can read the book. I would like to review the common factors used by the authors as a comparison to the Maersk Developer before, during and after the Moratorium in 2010. Within this context, the author’s listed eight common factors: Hazard Evaluation and Management, Major Accident Potential, Management of Change, Engineering Authorities, Plant Integrity, Competent Personnel and Procedures, Incident Investigation and Performance Management. As the audience, your task is to see how Maersk employed these factors during the Moratorium to ensure we would have no incidents to make a chapter in a new book by Atherton and Gil. This is an exercise in preventing incidents through proper process safety. The strange thing is most of the crew didn’t know they were working under process safety principles. From June 2010 to March 2011, there was no drilling on the Maersk Developer or any other deep water drilling rig in the Gulf of Mexico. How did this affect the rig team and impact safety during and after the Moratorium? What could we expect after sitting idle for nine months? This was Management of Change at the extreme. Our shore base staff and rig management team didn’t know how long the Moratorium would last, but we put together a plan for maintenance and training to ensure when Developer came out the Moratorium. No matter when the Moratorium would end, the Developer would be ready to drill again. Back to the question on what was improved: The short answer to my colleague was nothing stood out. While I could not put my finger on any improvement or decline in safety, after reflection, there were two areas we and the crew of Developer went through for those nine months.

• There was a more cumulative sense of purpose during the Moratorium and to prove we could drill effectively and efficiently while maintaining a safe operation.

• Building a safety culture by building on what we learned from the previous well. Like other drilling contractors and operators, we were directly affected by the Macondo disaster and did not know when we would be drilling again. On a personal note, many of our crew knew members of the Deepwater Horizon crew. So it affected us all. Some of us had taken for granted working in the Gulf of Mexico. People were genuinely concerned for their livelihood in jeopardy. Would our rig get sent to another part of the world to drill for another operator? Would we layoff the crew? How am I going to plan for this year and the next? Should I start looking for a new job? When is this Moratorium going to end? Not laying of the crew was one of the biggest concerns of the crew and shore base. As stated previously, this was the Mother of all Management of Change. Fortunately, Maersk does no traditionally lay off rig personnel during down turns. By not laying off crew, we received loyalty. Instead, we did not refill non-statutory positions when vacated. In some ways, this

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created a sense of teamwork as in “us against the world” attitude. As employees were leaving the rig for other positions and the majority of the leadership team on the rig remained, a realization that to succeed whenever the Moratorium was lifted, they must be ready. The effects of not laying off the crew are still being felt on board Developer today. We had at once a sense of urgency (to operate) and maintain our safety consciousness during the Moratorium. It’s like an active young boy or girl kept in the house during inclement weather; they are chomping at the bit to get outside and run around when the weather allows. We knew we were being watched by those who wanted us as an industry to fail but we knew we wouldn’t. Like the operators we work for, we too were wondering what the new rules would like once (IF?) drilling would commence again. How much would we have to change our management system to accommodate the new rules? We all followed the political and legal machinations that were going on during the Moratorium. All of us were looking for some glimpse of hope when we would start drilling again. What could we do to ensure our rig would be picked up by an operator if not our primary contract holder? We all realized under contract that they could declare force majeure and it would be only a few months before the money would stop flowing. We have a state of the art drilling rig. It is a Generation 6 semi-submersible, automated and capable of drilling in very deep water at great depths. We had just gotten through our freshman season and were ready to show our capabilities when the Moratorium hit all of us. The Moratorium came at the worst possible time and at the best possible time. We had come to the Gulf of Mexico as a brand new drilling rig, with a new crew, new client and plan to drill a very difficult well. The Developer and its crew had never been tested. Before the well campaign commenced in September 2009, we were a group of individuals from 25 nations, little knowledge of the safety management system since most were new to Maersk, no real experience with the drilling equipment and working with a client on their first well in the Gulf of Mexico. All the training in the world cannot replicate real world drilling. While we suffered no Lost Time Incidents during our first several months, we recorded one recordable injury in September 2009 and six dropped objects over the course of the first drilling campaign. Maersk considers any dropped object over 40 Joules to be a high potential incident and is investigated as such. In our first month of operation in September 2009, we had one Restricted Work Case and 11 First Aid Cases. Our Total Recordable Case Frequency was 26.30. There were few incidents that required investigation but the minor incidents were investigated and lessons learned. This was critical to our self-image as we had several high-potential dropped objects during the previous drilling campaign. While we were not drilling we maintained our edge by constant attention to potential dropped objects. On the Maersk Developer, we had 25 nationalities represented during the first drilling campaign. This does not include rig hands from Alabama, Louisiana, Mississippi and Texas. By the time our rig team completed its freshman season which means we completed our first well in June 2010, our Total Recordable Case Frequency was down to 2.10. The last two drops over 40 Joules of the six were third party equipment. In other words, we were starting to get our MOJO; we were starting to click as a team. More importantly, our crew was becoming a team and was working towards one purpose: safe and efficient drilling. The Moratorium created a sense of purpose for the crew to show the world we could drill without incidents. When you ask a golfer why he or she keeps coming back to the course after horrible rounds, they will tell you of the one or two shots they made that make them want to come back. They don’t mention the double and triple bogeys, just the good shots. After our freshman season in the Gulf of Mexico, we got a taste of what it was like to perform at a high level at the end of the well which only made us want to drill as soon as we could. The Moratorium also came at a good time so we could properly perform overdue maintenance and put the rig back to good order. What does a crew do when no drilling? Maintenance for one. Plant integrity is integral to any successful drilling operation. Without the engineering plant running on all cylinders as it were, there would be no drilling. The rig’s maintenance that had been put off for several months due to the last drilling campaign was addressed by the crew. This also brought the crew closer together as a team. When you don’t have the fear of losing your job, you can focus on your job. Where a fully manned and working rig is a 24/7 operation, the crew count dwindled so only a few crew were on duty at night. During this time, Coast Guard inspectors visited the rig for orientation and training on the engineering suite. As stated, the Developer is very advanced and essentially everything is connected via software. Drilling crews began to hold courses on drilling to those not connected to this work. Not everyone on a drilling rig knows about directional drilling or BOPs. The drill crew held classes with other departments on drilling so everyone got a sense of what it took to drill holes in the sea bed and do it safely. This action kept the crew engaged and competent.

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As the Moratorium dragged on, the team solidified and became a team much more than it was during the previous (and difficult) drilling campaign. This means a safety culture that existed before was going through a massive change. We kept the crew engaged in our procedures by ensuring every job had a printed copy of the applicable process. This made those involved in the work used to looking up and printing procedures and, by extension, they got to know our management system better. Our safety culture, heretofore ok was starting to develop. So what is a positive safety culture? Before we can encourage a positive safety culture, we must first understand what a culture is, what makes up a safety culture is and what a safety culture is not. Then we can discuss continual work on encouraging and measuring safety culture. Safety Culture is part of the final trifecta and you will notice Leadership is the overriding factor. A safety culture is a product of individual and group values, much like your family is a culture. There are perceptions, attitudes, values, competencies and patterns of behavior that determine the commitment to (or lack thereof) an organization’s health and safety management. TRANSLATION: THE HEALTH AND SAFETY MANAGEMENT IS A REFLECTION OF THE PEOPLE AND VICE VERSA. ALTERNATIVELY, EVERYONE TALKS THE TALK AND WALKS THE WALK. Organizations with a positive safety culture are characterized by communications founded on mutual trust, by shared perceptions of the importance of safety and confidence in the efficacy of preventive measures. TRANSLATION: INSIDERS WILL FIND UNSAFE ACTS AND BEHAVIORS OFFENSIVE AND UNACCEPTABLE. AN OUTSIDER WILL SENSE THIS ATTITUDE. IF NOT, THE WORK GROUPS WILL FIND THEIR OWN BALANCE. What is the definition of a safety culture? The best I can come with is a safety culture is a collection of behavior patterns and beliefs that constitutes: •standards for deciding what is; •standards for deciding how one feels about it; •standards for deciding what to do about it; •standards for deciding how to go about doing it. Note: there were 45,500,000 hits for “safety culture” on Google. What does Safety Culture mean?

• Safety Culture starts at the top and works its way to the deck plates. • Safety Culture means an acceptance of high standards for health and safety. Is there any good at being half-safe, or

three-quarter safe? • Safety Culture means a detailed assessment of health and safety risks including controls for mitigating risks and

monitoring systems. • A Safety Culture has a statement usually in the form of a policy which outlines the short and long term goals as

well as a plan to achieve these goals. • Safety Culture means consultation, not direct communication, with employees. For example, safety committees

should be an integral part of risk assessments, hazard identification, investigations and management reviews. • A Safety Culture has systems in place to monitor equipment, processes and procedures with the means of correcting

deficiencies. • Safety Culture means prompt and effective investigations of incidents and remedial actions with management

support. One of my fears from the Moratorium was how the crew would work after it was over. Would they be in more danger as many new hands would have to be hired? The Developer crew went through this process before we started drilling during our first campaign, now they would have to do it again. There is one exception, bringing a rig out of the shipyard and out of a five month Moratorium are very different. Another factor I did not consider was the core leadership team remained on the rig throughout the Moratorium. Some senior members left temporarily to assist other Maersk rigs, but the core team remained and provided the standards for what the Maersk Developer’s safety culture would look like when the Moratorium ended. Essentially, the senior leadership and many of the crew who remained realized they were given and opportunity to fix the mistakes of the past and get it right.

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These are all integral parts to process safety. We had the right tools (engineering), right processes and procedures (SIRIUS safety management system) and now the right culture. If the above definitions are for a healthy safety culture, what does an unhealthy safety culture look like?

• High sickness rate and absenteeism • Perception of blame culture (this does not mean people are absolved of responsibility for making mistakes). • High turnover rate on the rig; poor exit interview findings. • Lack of resources. • Lack of compliance with relevant health and safety laws. • Poor selection of procedures and management of contractors. • Lack of poor levels of Health and Safety competence. • High insurance premiums

Did the Developer have a high turnover rate? Yes. As stated previously, people were leaving but not being replaced except in critical (safe manning document and emergency) positions. No other symptom applied as the leadership team kept the boys focused and engaged. Over the next few months we hired crew to fill vacant positions (roughly 70 jobs) opened during the Moratorium. We were very selective about whom we hired as we learned our lessons from before. On average, we selected one in ten applicants for employment. Many of the new hires were known by our crew and highly recommended by a Maersk crew member. Further, our hiring manager cultivated relationships with potential employees during the Moratorium. From the deck plates on the rig to the management team ashore, the focus was on the rig team and ensuring they had all the tools necessary to get ready when the Moratorium was lifted and the rig was drilling again. Performance management was integral in our success in the subsequent well or our sophomore season. After the Moratorium was finally lifted in September, our primary contract holder was working with other oil major for our rig’s employment. In October, near the very end of our force majeure window, a super major contracted with our rig to commence drilling as soon as the permit was approved by BOEMRE. This was obviously very welcome news to our crew. One floor hand told me it will be nice not to be working on Hotel Developer any longer. He apparently missed drilling. In September 2010 we recorded our lowest man hours for exposure: 34,385. Our highest exposure man hour month was the October 2009: 53,469. The peak during the first drilling campaign after the Moratorium was 51,259 man hours. During the turnover from our primary contractor/operator to the new operator, we held an all hands meeting on the Developer. The senior man from the new operator stood up and said “The world is watching us; we cannot fail in this drilling campaign. We haven’t worked together prior to this well and we have to become a team…now!” That set the tone for the new drilling campaign. And while it took a bit longer than expected to obtain a permit, the Developer commenced drilling in March 2011. From June 2010 to March 2011 there were no IADC recordable personnel incidents; there were 21 first aid cases, our Total Recordable Case Frequency dropped from 2.10 to 1.19 and the last 12 month TRCF zeroed out. That was for the duration of the Moratorium. During the drilling campaign that lasted from March to August 2010, there were no recordable incidents, One First Aid Case and the TRCF dropped to .93. As of January 1, 2012, our Total Recordable Case Frequency was .80. In conclusion, it took great leadership in the Developer to maintain focus, keep the crew engaged, trained, active and ready for operations. Process safety was part of this process and led to a successful restart of operations. When the day came, we were ready and did so without the same start up difficulties we had on the first drilling campaign. To be sure, it was a very tense five months in 2010 during the Moratorium for the Developer rig team and the drilling industry at large. Our experience during and after the Moratorium proves the needs for process safety in drilling no matter the circumstance or difficulties provided by external events. The biggest reward I can share is no one on the Maersk Developer has been seriously hurt before the Moratorium, during the Moratorium or after the Moratorium.

Thank you for your attention.