BP Annual Report and Form 20-F 2011 - Company Reporting

Business reviewSafetyOver the past year, we have been developing and implementing a widerangingprogramme to further enhance safety, risk management andcompliance across BP. This programme was initiated in response to theDeepwater Horizon incident in the Gulf of Mexico in April 2010.The programme emphasizes the continuing importance of personaland process safety within BP. Process safety involves applying good designprinciples, along with robust engineering, operating and maintenancepractices, to managing operations safely. For BP, this means the plantis designed, maintained and operated properly to avoid failures such asspills or explosions that can result in injuries to people and impacts tothe environment. It also means that employees and contractors have theappropriate training and competencies to carry out work, as well as observingapplicable procedures and policies that help to prevent personal injury.In 2011, BP reported two workforce fatalities, and we regret theloss of these lives. One was a rail-related fatality in the US, the other diedas a result of an unauthorized transfer of fuel in South Africa.Safety and operational riskSafety managementOur safety and risk management approach is built on deep experience inthe oil and gas industry. This includes learning from the recommendationsof investigations into the Deepwater Horizon oil spill in 2010 and the TexasCity refinery explosion in 2005, as well as operations audits, annual riskreviews, other incident investigations and from industry practice of sharingexperience.There are three key principles which we intend to be at the heart ofour approach:• Leadership fostering a culture where everyone is focused on safety, onmanaging and reducing risk and on safe, reliable and compliantoperations.• Our operating management system (OMS) being the way BP seeks tooperate.• Effective checks and balances independent of the business line and selfverificationbeing carried out at all levels of the organization.While we maintain our focus on processes, practices and protocols, wealso place great emphasis on how our workforce applies them, therebyworking to strengthen safety culture and workforce capability.A dedicated functionWe established the safety and operational risk (S&OR) function in early2011. S&OR supports the business line in delivering safe, reliable andcompliant operations across the group’s operated businesses. It does thisin four ways:• It sets and updates the requirements, including those in OMS, that areused across the business for safety and operational risk management.• It provides expert scrutiny of safety and operational risk, independent ofline managers – advising, examining and providing assurance about whatour operations do.• It provides deep technical expertise to the operations.• It has the authority to intervene and escalate issues to cause correctiveaction to be taken.S&OR, as of the end of 2011, was made up of a central team of around300, as well as nearly 300 more who are deployed in BP’s businesses,providing guidance and scrutiny and examining how safety and operatingrisks are being assessed and managed on oil and gas production anddrilling rigs, at refineries and across all our operations. The head of S&ORreports directly to the group chief executive.The central team serves as the custodian of group requirements,runs safety and operational risk audit and capability programmes andendorses the appointment of individuals for designated safety-criticalroles. The central team includes some of BP’s top engineers and safetyspecialists, several of whom have experience of other industries wheremajor hazards have to be managed, including the military, nuclear energyand space exploration.Our deployed S&OR teams work with our operating businesses – rangingfrom upstream oil and gas development and production to refineries,petrochemicals plants and retail networks. They help the businesses applyour standards to their operations and they help provide assurance to thegroup on how operational risks are being managed, business by business.Operating businesses remain accountable for delivering safe,reliable and compliant operations. They have the responsibility of managingrisks and bringing together people with the right skills and competencies.Working in collaboration with deployed S&OR subject specialists forguidance, they are subject to new levels of independent scrutiny andassurance.GovernanceBP reviews risks at all levels of the organization, with our S&OR functionproviding an independent view of safety and operational risk. While linemanagers are responsible for identifying and managing risks, we placestrong emphasis on checks and balances, including both enhanced selfverificationby individual BP operations – such as drilling rigs or refineries– and independent assurance by the S&OR function.The board’s safety, ethics and environment assurance committee(SEEAC) receives updates from the group chief executive and the headof S&OR on the work of the group operations risk committee (GORC), onBP’s performance in process and personal safety, and our monitoring ofmajor incidents and near misses across the group. Where appropriate othersenior managers will attend to provide briefings on safety, environmentaland operational integrity in their areas of responsibility. SEEAC alsoreceives information from the Independent Expert appointed to monitorthe implementation of recommendations made by the BP US RefineriesIndependent Safety Review Panel following the 2005 explosion at ourTexas City refinery. See Board performance report on pages 120-133 forfurther information on the activities of the board’s committees, includingSEEAC and the Gulf of Mexico committee.Lessons learned from major incidents are being incorporatedinto our operating management system and capability developmentprogrammes.Operating management systemLaunched in 2008, our operating management system (OMS) serves asour group-wide framework designed to drive a rigorous and systematicapproach to safety, risk management, and operational integrity across thegroup. OMS integrates requirements regarding health, safety, security,environment, social responsibility and operational reliability, as wellas related issues such as maintenance, contractor management andorganizational learning, into a common system.The principles and standards of OMS are supported by detailedgroup-wide practices, as well as other technical guidance materials.The goal of OMS is to apply certain standards, group-defined practicesand group engineering technical practices on a group-wide basis in ouroperations; these include, among others, the practices on assessment,prioritization and management of risk; incident investigation; integritymanagement; and environmental and social requirements for majornew projects.Following the principle of continuous improvement, our OMSevolves over time, for example to reflect implementation experience aswell as learnings from incident investigations, audits and risk assessments,and by strengthening mandatory practices.Transitioning to OMSThe transition to OMS requires operations to develop a local OMS thatdescribes how the operation addresses site-specific local operating risks,applies group standards and practices and manages compliance withapplicable health, safety, security and environment legal requirements.As part of the transition, operations conduct a gap assessment againstdefined aspects of OMS and their local processes and procedures, andthen develop a prioritized gap-closure plan. To formally transition to thesystem, operations issue a local OMS handbook for the workforce tofollow, and complete a management-of-change document that detailsthe changes involved.Business review: BP in more depthBP Annual Report and Form 20-F 2011 65