BP 2011 Annual Report Download - page 131

BP Annual Report and Form 20-F 2011 129
Corporate governance
Corporate governance
chairs and secretaries, to ensure that the agendas did not overlap or omit
coverage of any key risks during the year.
In addition to the committee membership, each SEEAC meeting
was attended by the group chief executive, the executive vice president
for safety and operational risk, the general auditor and the external auditors.
The general counsel also attended most meetings. The committee held
private sessions for the committee members only (without the presence
of executive management) at the conclusion of its meetings to discuss
any issues arising and the quality of the meeting. Between meetings,
committee members took opportunities to visit company sites and
received informal briefings through the committee chair, the secretary,
the external auditor’s lead partner, the general auditor and executive
management.
SEEAC processes
Information and advice
The committee receives specific reports from the business segments
but also receives cross-business information from the functions. These
include but are not limited to the safety and operational risk function,
internal audit, group ethics and compliance and group security. During the
year, the main external input into the committee has been from L. Duane
Wilson, the independent expert (for further information, see the section
on independent expert below). As for the board and other committees,
SEEAC can access any other independent advice and counsel if it requires,
on an unrestricted basis.
Training and visits
The committee extended its coverage and number of visits this year by
encouraging members to participate individually, or in groups, and report
back to the next full meeting. Members have also presented at staff
training events, such as the operations academy at MIT in Boston. A key
area of focus has been following up on the implementation of the Bly
Report’s 26 recommendations and on the progress of the new S&OR
function. In March the chairman and secretary visited Houston to discuss
how S&OR management was being embedded in the upstream production
and development divisions and committee members made a further
visit to Houston in January 2012. In 2011, a committee member also
participated in an S&OR leadership event in London. Another committee
member accompanied the executive vice president for developments on
two inspection visits to oil and gas wells leadership teams. In May the
committee travelled offshore to the Atlantis platform in the deepwater Gulf
of Mexico, and also visited the upstream learning centre in Houston to see
the capability development activity being undertaken and its global reach.
Considerable focus also continues to be placed on the downstream
and on the company’s response to the BP US Refineries Independent
Safety Review Panel recommendations. In March two members of the
committee visited the Whiting refinery, accompanied by the independent
expert, Mr Wilson, to review progress in risk management systems
and OMS implementation. In January 2012 members of the committee
revisited Texas City refinery, again accompanied by Mr Wilson. This
followed previous committee visits in March 2010, April 2008 and
September 2007. During this visit, committee members also visited
the nearby petrochemicals facility to follow up on presentations it had
received in May and October and to gain plant level experience, as well
as to observe the extent to which the BP US Refineries Independent
Safety Review Panel recommendations had been implemented in the
petrochemicals context.
In addition to the extensive learning experiences provided by these
visits and meetings with executive management, induction programmes
are organized for new members of SEEAC. Frank Bowman, who joined
the committee in November 2010, completed his induction programme
in 2011.
2011 SEEAC activities
Safety, operations and environment
The committee receives regular reports from the S&OR function, including
quarterly reports prepared for executive management on the group’s
health, safety and environmental performance and operational integrity.
These include quarter-by-quarter measures of personal and process safety,
environmental and regulatory compliance and audit findings. Operational
risk and performance forms a large part of the committee’s agenda.
In 2011, the committee put particular focus on gaining assurance that
the new S&OR organization was developing as envisaged. The S&OR
function has intervention rights in all aspects of the group’s technical
and operational activities, including key investment decisions and the
committee sought evidence that this was working in practice. The
committee’s visits, as mentioned above, provided opportunities to discuss
with local staff the interaction between line managers and embedded
S&OR staff, and where change had occurred as a result. The committee
was satisfied with the progress being made but will continue to monitor
this in 2012 along with the enhancement of standard practices and
processes within OMS.
Monitoring the company’s progress in implementing the 26
recommendations in the Bly Report is a key task for the committee
and it received regular updates, including written reports from the
executive vice president for developments, at five of its 2011 meetings.
The BP board has identified an independent expert to provide further
oversight and assurance regarding the implementation of the Bly Report
recommendations. The engagement of the independent expert is expected
to commence in the latter half of May 2012. The independent expert will
report directly to the board. He will track BP’s progress in implementing
the 26 recommendations from the company’s internal investigation of the
Deepwater Horizon oil spill and will independently assess the safety, health
and environmental work of global drilling operations. He will give regular
updates directly to the SEEAC.
During the year the committee received specific reports on the
company’s management of risks in shipping, wells and pipelines. The
potential environmental consequences of loss of containment in these
activities gave particular focus to the approaches to risk management
employed. These included design, such as double bottomed hulls
in tankers, and training, such as drilling simulators and naval cadet
training programmes. The committee noted that all new projects in
environmentally sensitive areas are submitted to the requirements of the
company’s environmental and social review process.
When a fatality in the workforce occurs the committee reviews the
incident in depth before reporting back to the board. The committee also
reviews specific incidents to understand root causes and actions being
taken to prevent recurrence. There has been a particular focus on ensuring
lessons learned are communicated widely across the company and not just
within the business segment in which the incident occurred.
Independent expert
Since L. Duane Wilson’s appointment by the board in 2007 as an
independent expert to provide an objective assessment of BP’s progress in
implementing the recommendations of the BP US Refineries Independent
Review Panel, he has presented to the committee at least four times
a year in person. His role has been to assist the company in improving
process safety performance at BP’s five US refineries. Annually the
committee approves his work plan for the year ahead and receives a full
written report which is made public on the company’s website. In his last
verbal report Mr Wilson advised that he had observed continued progress
in process safety performance at each visit he has made to the five
refineries. He also discussed work remaining to be completed and areas
requiring special emphasis. As process safety performance has reached
higher levels in recent years, he noted that the rate of change has naturally
slowed, but site metrics continued to demonstrate improvements.
Mr Wilson also noted that some aspects of implementing the Panel’s
10 recommendations require ongoing activity and hence could never be
complete, but he considers the company to have appropriate systems
and processes to continue its work towards process safety leadership.
Mr Wilson’s reports are published in full and available on our website at
bp.com/independentexpert.
Regional and functional reports
Each year the committee receives a report on the progress made in HSE
at TNK-BP, noting however that formal oversight of HSE performance and
policies is exercised by TNK-BP’s own HSE committee. It was reported
that, whilst significant areas for improvement remained, TNK-BP had