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

Business reviewWe have estimated and communicated delivery timelines for each of therecommendations and will continue to provide periodic updates of ourprogress. These timelines are based on existing facts and circumstancesand can shift due to complexity, resource availability and evolvingregulatory requirements.The BP board has identified an independent expert to providefurther oversight and assurance regarding the implementation of theBly Report recommendations. The independent expert’s engagement isexpected to commence in the latter half of May 2012.Progress updateAt the end of 2011, four of the Bly Report recommendations have beencompleted. These were:• Recommendation 6: to propose a recommended practice for foamcementing to the American Petroleum Institute.• Recommendation 8: to strengthen the technical authority’s role incementing and zonal isolation.• Recommendation 13: to strengthen our rig audit process to improveclosure and verification of audit findings across the rigs we own andcontract.• Recommendation 14: to establish key performance indicators for wellintegrity, well control, and rig safety-critical equipment.We continue to make progress on all of the remaining recommendationslargely in line with our planned schedule, with a further 12recommendations expected to be completed in 2012. Progress is trackedin the quarterly HSE and operations integrity report supplied to theexecutive team. See bp.com/internalinvestigation for the full report andquarterly updates on progress.External investigationsIn addition, there have been a number of external investigations, includingthose of the National Commission on the BP Deepwater Horizon Oil Spilland Offshore Drilling (oilspillcommission.gov) and the Joint InvestigationTeam of the Bureau of Ocean Energy Management, Regulation andEnforcement and the United States Coast Guard(boemre.gov/ooc/press/2011/press0914.htm). These reports wereconsistent in their conclusions that the accident resulted from multiplecauses and was due to the actions of multiple parties. We are committedto understanding the causes, impacts and implications of the DeepwaterHorizon incident and to learn and act on lessons from it. As part of thiscommitment, BP is reviewing the recommendations from government andindustry reports.Capping and containmentWe have developed a mobile deepwater well capping package thatincludes about 250 pieces of speciality equipment. Maintained in aconstant state of readiness in Houston, it is designed to be deployed byair freight and arrive wherever it is needed in just a few days.We also share capping and containment equipment with otheroperators in the Gulf of Mexico, through the Marine Well ContainmentCompany, as well as with operators in the UK North Sea. Further, BPprovided project management for the Oil and Gas UK Oil Spill Preventionand Response Advisory Group to develop a next generation well cappingsystem, now available in Europe, and is one of nine companies working inthe Subsea Well Response Project to enhance the industry’s capability torespond globally to subsea well control events.Relief wellsIn responding to the Gulf of Mexico oil spill, we drilled two relief wells.Prior to drilling a deepwater well, BP operations now have relief well plansin place with equipment identified that can be moved to the site if needed.This is of particular benefit in areas that do not have the same infrastructureand support as more active basins such as the Gulf of Mexico.Oil spill preparednessWe continue to develop and assimilate lessons from the response to theGulf of Mexico oil spill. In 2011, as a priority we incorporated many ofthese lessons into new technical requirements for BP operations that drillin deepwater. Conformance with these requirements is mandatory for alloperations drilling in water deeper than 1,000 feet and is subject to a formalassessment and sign-off by technical experts, S&OR and senior leaders.During 2011, we began implementing these requirements in Angola, theNorth Sea, Brazil, the US and Egypt, where we have deepwater drillingactive or planned for 2012.Crisis managementCrisis management planning is essential to respond effectively toemergencies and to avoid a potentially severe disruption in our businessand operations. The intention is to build on interim requirements introducedin 2011 for deepwater drilling to put in place group-wide practices for bothoil spill preparedness and response and crisis management.During the response, we updated our incident action plan – anoperational crisis planning tool – every 12-24 hours, which allowed us tohave recent information to aid decision making. This was made possible bydeveloping a common operating picture (COP) which helped us collect andpresent information in a way that enabled faster, better-informed decisions.The COP created an integrated view across more than 200 different datatypes. It provided an instant, interactive picture of the spill status and theactivities of all responders.See Environmental and social responsibility on pages 69-73 forfurther information on BP’s approach to oil spill contingency planning andresponse.Safer refiningWe have been working hard to apply the lessons learned from thetragic accident in our Texas City refinery in 2005 and are committed toimplementing the recommendations of the BP US Refineries IndependentSafety Review Panel.Systematic managementThe core business of our refineries is the safe storage, handling andprocessing of hydrocarbons which involves systematic management of theassociated operating risks. In seeking to manage these risks, measures aretaken by our refineries to:• Prevent loss of hydrocarbon containment, such as oil spills, throughwell‐designed, maintained and operated equipment.• Reduce the likelihood of ignition of any hydrocarbon releases which mayoccur through controlling ignition sources.• Provide safe locations, emergency procedures and other mitigationmeasures in the event of a fire or explosion occurring.For example, across our refining business we are spending more than$700 million to install safety shelters for individuals, move people furtheraway from hydrocarbon containing equipment and reduce the number ofvehicles in our sites.In 2011, we enhanced and standardized a number of technicalpractices that we intend to implement across our refining business in 2012and 2013, including practices pertaining to:• Control of work practices including rules for what work is done, who it isdone by, where it is done, when it is done and how it is done.• Isolation of equipment from hydrocarbon and other energy sources tosafely allow maintenance.• Design, operation, maintenance for instrumented systems throughouttheir lifecycle to reliably achieve or maintain a safe operating state ifunacceptable or dangerous process conditions are detected.• Procedures and equipment requirements to assure safe handling ofhydrogen sulphide containing streams.• Design and operation of existing fired heaters.• Identifying operating limits for our processes and equipment.Risk assessment, prioritization and managementIn 2011, all refineries used a consistent methodology to identify risks andprioritize mitigation actions, including addressing low probability, highconsequence scenarios. Action plans have been developed for each riskand reviewed by authorized line and S&OR leaders. A multi-year risk profilereduction plan has been approved for each refinery and, learning fromBusiness review: BP in more depthBP Annual Report and Form 20-F 2011 67