1. Oil Search Limited
Incorporated in Papua New Guinea
ARBN 055 079 868
Demonstrating a basis for safe
operations with no regulatory driver –
why bother?
Institute of Chemical Engineers - Hazards Australia
Brisbane, 26-27 May 2015
Introduction
“….a Process Safety Framework capable of providing assurance that major hazards that exist within
Oil Search’s facilities are understood, documented, risk assessed and controlled to a level that is
tolerable”. -Preamble of PSIP
Unfortunately, the Oil and Gas Industry has too many examples of catastrophes, or Major Accident Events
(MAEs). MAEs destroy assets, companies and lives. Again and again, post-MAE investigations find that the
accidents were preventable.
In 2003, Oil Search was appointed the Operator of all PNG’s producing oil fields. Production from these oil
fields had been in decline for several years, as the production volumes weren’t material to the previous
Operator. Oil Search progressively optimised the production facilities and wells to extend their life and
mitigate the production decline. In recent years, the Company has made further material investments in the
assets, which represent a central part of our contribution to the PNG LNG Project, which came on stream in
2014.
A key area of focus has included taking a good, hard look at the effectiveness of the process safety
management systems. An independent review was conducted in 2013 of the process safety culture and
performance at Oil Search’s production operations. The findings of this review, in conjunction with our own
internal review of incident causes and trends, led to the development of a Process Safety Improvement Plan
(PSIP). The PSIP is the first phase in a longer term program designed to create sustainable changes within
our PNG operating environment.

2. Footer - 8 April 2015 2
Major Accident Events
Two of the oil and gas industry’s most disastrous Major Accident Events (or MAEs), recently had
anniversaries.
Ten years ago, on 23 March, 2005, a hydrocarbon vapour cloud exploded at the ISOM isomerization process
unit at BP's Texas City refinery in Texas City, Texas, killing 15 workers and injuring more than 170 others.
The Texas City Refinery was the second-largest oil refinery in the state, and the third-largest in the United
States with an input capacity of 437,000 barrels per day as of January 1, 2000.
BP's own accident investigation report stated that the direct cause of the accident was “[…]heavier–than-air
hydrocarbon vapors combusting after coming into contact with an ignition source, probably a running vehicle
engine’. Both the BP and the Chemical Safety and Hazard Investigation Board reports identified numerous
technical and organisational failings at the refinery and within corporate BP.
BP was charged with criminal violations of federal environmental laws, and has been named in lawsuits from
the victims' families. So far, BP has said it has paid more than US$1.6 billion to compensate victims.
Five years ago, on 20th
April 2010, a blowout in BP’s Macondo Project caused an explosion on the
Deepwater Horizon offshore oil rig, killing 11 crewmen and releasing 3.19 million barrels of oil into the Gulf of
Mexico.
BP has already paid more than US$28 billion in damages and costs related to the Deepwater Horizon
tragedy. The company faces additional penalties that could range from US$5 billion to US$20 billion. On 4
September 2014, a U.S. District Judge ruled BP was guilty of gross negligence and wilful misconduct
under the Clean Water Act (CWA). He described BP's actions as "reckless".
Interestingly, in 2011, BP announced that it was selling the Texas City refinery as part of its ongoing
divestment plan to pay for ongoing compensation claims and remedial activities following the Deepwater
Horizon disaster in 2010. The sale of the refinery was completed at the start of 2013 to Marathon Petroleum
Corporation for US$2.5 billion.
Again and again, post-MAE investigations find that the accidents were preventable. In “What went wrong”
2009 Trevor Kletz wrote “Accidents are not due to lack of knowledge, but failure to use the knowledge
we have.”
The oil and gas industry has directed significant effort into preventing and controlling these types of events.
Effective, efficient facilities and process safety management plans, including assurance are critical
components in preventing major incidents. MAEs destroy lives, assets, the environment, impact host
communities and companies. This is why we bother.

3. Footer - 8 April 2015 3
About Oil Search
Oil Search was established in Papua New Guinea in 1929. More than 95% of the Company’s assets are in
PNG, where it operates all of the country’s producing oil fields, holds an extensive exploration and appraisal
portfolio and has a 29% interest in the US$19 billion PNG LNG Project. This world‑class liquefied natural
gas (LNG) development, which shipped its first LNG cargo in May 2014, has added materially to Oil Search’s
production base, transforming the Company into a regionally significant oil and gas producer with a long‑
term revenue stream from LNG.
Oil Search has a comprehensive exploration and appraisal programme to underpin LNG expansion in PNG
and also has exploration interests in the Middle East and North Africa.
It is listed on the Australian and Port Moresby stock exchanges (OSH) and its American Depository Receipts
trade on the US over the counter market (OISHY).
Our vision is to generate top-quartile returns for shareholders through excellence in socially responsible oil
and gas exploration and production and we have a record of having delivered on it over the last decade.
Situation
In 2003, Oil Search was appointed Operator of PNG’s oil producing assets after it acquired the Papua New
Guinea assets of Chevron, becoming the major equity holder. The assets and production volumes were in
decline. As operator Oil Search significantly increased investment in near and in-field development drilling
and was able to both halt the decline in production and also increase production levels through the 2000s.
Through this period there were intense efforts to commercialise gas, initially through the proposed sale of
pipeline gas to Australia. Like many major pipeline projects, the commercial arrangements were complex and
frustratingly difficult to close out. In 2007, the focus switched from pipeline gas to potential LNG
development. The LNG route was of course successful, but the efforts leading up to a final investment
decision in 2009 were impacted by the global financial crisis. Until the marketing and financing arrangements
were concluded, our assets in Papua New Guinea faced an uncertain long term future.
Consequently, from 2003 to 2009 Oil Search was operating aging, “end-of-life” assets. Discretionary spend
was tightly controlled and facilities were typically run in a breakdown mode, typical of end of life assets.
There is no point in having a 10 year plan if your assets have only 5 years life in front of them. Procedures
and systems of work that had been put in place during transition of operatorship were not updated as
process conditions changed. Process safety through this period was driven by pockets of expert individuals,
and for a period was more typically reactive than proactive. Nevertheless, during this period some process
safety monitoring was introduced. Following the Texas City Refinery disaster, Oil Search started actively

4. Footer - 8 April 2015 4
monitoring hydrocarbon releases and in subsequent years introduced a range of lead indicators to monitor
the effectiveness of critical maintenance and testing programmes. The effectiveness of the metrics relied on
individuals filing reports, rather than systemic extraction of data from control systems.
In 2009, the PNG LNG Project was sanctioned, having signed four major offtake agreements and secured
project financing (Final agreements in 2010). As you will know, PNG LNG is now on-stream, having started
production in the middle of 2014, some three months ahead of the original schedule.
Reaching FID for PNG LNG changed the landscape for Oil Search, effectively extending the life of many of
our existing assets for another 30 plus years. It also meant we were now part of something much bigger than
our own operations and the importance of our assets and production reliability has taken on new meaning.
A critical element of the PNG LNG system is the export of condensates produced at the Hides field in the
southern highlands of PNG. Oil Search already operated a crude export system from its processing facilities
at Kutubu via a pipeline to an export loading facility located some 50 kilometres off the south coast of PNG. It
was decided that Hides condensate, produced as part of PNG LNG, would be transported via a new build
pipeline to our Kutubu processing facility where it would be blended for export via our operated crude export
facility.
The reliable operation of the liquids export system is obviously central to the success of PNG LNG. Oil
Search worked closely with PNG LNG operator, ExxonMobil PNG Ltd, to identify areas of key risk in the
system. We then addressed these through a Life Extension programme which included changes to the
offshore platform, a new tanker loading line and mooring buoy, and a variety of operating enhancements.
The risk assessment undertaken with ExxonMobil utilised well-established management frameworks used by
ExxonMobil. The frameworks have helped shape how we are approaching our work on process safety.
What was resolved?
During 2013, Oil Search reviewed the effectiveness of its process safety management systems. This
independent review was focused on the process safety culture and performance at Oil Search’s production
operations.
Solution: PSIP
The findings of this review, in conjunction with our own internal review of incident causes and trends, led to
the development of a Process Safety Improvement Plan (PSIP). The PSIP is the first phase in a longer term
program designed to create sustainable changes within our PNG operating environment.

5. Footer - 8 April 2015 5
"We need our operating facilities to be safe and we need to be able to prove it through regular monitoring
and independent review," said Paul Cholakos, Executive General Manager PNG Oil Operations, on the need
for improvements. "The PSIP will bring our process safety performance in line with our expectations of safe
and reliable operations."
The delivery of this plan is a fundamental first step in the Company’s increased awareness, knowledge and
focus on the prevention of Major Accident Events (MAEs).
In recognition of the importance of the PSIP in driving sustainable change, a Process Safety Steering Group
(PSSG), headed up by Managing Director, Peter Botten, oversees the implementation of the plan. The
PSSG plots a course for the development of a longer term agenda and framework which embeds process
safety management as a core element of Oil Search’s operating philosophy.
The PSSG oversees the work of the Process Safety Operating Committee (PSOC), which consists of a
working level group of stakeholder managers accountable for implementing the PSIP.
The diversity and experience of the Committee, combined with their organisational roles and responsibilities,
enables them to think collectively and broadly about the strategic direction of process safety management in
Oil Search.
The PSIP has six elements:
1. Management Systems
2. Risk Management
3. Documentation/Information
4. Personnel, Training and Competency
5. Operations and Maintenance
6. Emergency Preparedness.
What is being done?
The PSOC, operations staff and external consultants undertook a significant amount of work in 2014,
including a thorough inspection of two production facilities, the Central Processing Facility (CPF) and Gobe
Production Facility (GPF). A thorough analysis of the hazards that exist in those facilities and what could go
wrong was performed, along with what prevention and mitigation barriers are in place or can be established
to control those hazards.

6. Footer - 8 April 2015 6
The analysis provides the knowledge on where and how, we are able to test the effectiveness of barriers to
understand the health of our controls.
The work performed at the CPF and GPF is being repeated for Oil Search’s other facilities, including the
Kumul Marine Terminal (KMT), Hides Gas Plant (HGP) and Agogo Production Facility (APF).
The PSIP is a real, formal plan that is being actively tracked and managed as a project. There is a multi-
level schedule, typical project support staff – project engineers and project controls, contracts specialist in
particular – to help keep delivery of the plan on track.
We are conscious that projects must to come to an end and that transitioning PSIP to business as usual, ie
not letting the good work gather dust and lose relevance over time, will be critical. We’ve made substantial
progress on many elements and I’ll talk now about some of the key ones. I’ll also talk about the governance
approach which is key as it demonstrates the importance of this work to the organisation and will help keep
the work “live”.
The PSIP is the first step in improving our knowledge and demonstrating Oil Search assets are safe.
There is still plenty to do, but already Oil Search has a clearer view of our higher risk areas and our
workplaces are becoming safer.
Why this has value
Process safety is clearly about managing risk. But it is also about protecting value as the Texas Oil refinery
explosion and Deepwater Horizon explosion examples demonstrate all too well. Demonstrating a business
case for Process Safety is not new, examples are available from Scottish Power1
and CCPS2
, but the case
means more when it is made using your own data, see Figure 1 below.
Figure 1 – Tier 3 events in 2014
1
http://www.hse.gov.uk/comah/case-studies/case-study-scottish-power.pdf Accessed 12 February 2014
2
The Business Case for Process Safety, SPE 157592, Scott Berger, Center for Chemical Process Safety,
01234567891011121314151617
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
NumberofEvents
Tier 3 PSE Type per month - 2014
PRD
ESD

7. Footer - 8 April 2015 7
The year started as predicted, with an increase in the reporting of Tier three events. This was expected as
we had significantly raised the awareness of the relevance of reporting challenges to process safety
systems. We can also see a downward trend in Tier 3 events starting in the second quarter of the year. We
believe this reflects progress on the various elements of the process safety improvement plan. We still have
a lot more to do and will be happier to speak about this when we have demonstrated consistent performance
over an extended period. We also are working to automate reporting for these events and are realistic that
we will likely see another uptick in reported events when we implement that. We take the view that knowing
about these challenges to safety systems gives us an opportunity to do something about them. Bad news
does not get better with time – the sooner we know about a problem, the sooner we can do something about
it. We want to learn from the Platform Manager on Piper Alpha, who said when questioned about the
effectiveness of the platform’s permit-to-work system. “I knew things were going right, because I had no
reports of things going wrong.”
Figure 2 below is a measure of production performance over the same time period. The various down dips
correlate to process safety events. You can also see that the production performance in the right hand side
of that chart is very strong. Again, this correlates to the lower trend in Tier 3 events. This is a demonstration
that process safety events hurt businesses, and of the link between good process safety performance and
good business outcomes. This is why we bother.
Figure 2 – Production Cumulative Volumes against forecast 2014
Quick wins
The quick wins – the immediate change that demonstrates that process safety is making a difference in a
Company’s operations, will help build workforce engagement, company momentum and support for
additional process safety resources.

8. Footer - 8 April 2015 8
Oil Search had many of these quick wins. For instance, alarm rationalisation has commenced at CPF and
GPF, with significant reduction in alarm frequency in 2014. Good news spreads fast, and by November the
other facilities had heard about the reduced panel operator work load and wanted the same process to start
at their facilities.
To support retrospective Hazops and other studies supporting the Basis for Safe Operations, more than
2000 safety critical documents were updated during 2014 to reflect the current plant status. These
documents also provide a more robust basis for planning operational activities such as plant isolations.
The work on developing bow ties to represent Major Accident Events highlighted several higher risk areas
where immediate risk reduction measures could be implemented to reduce the residual risk. The review
workshops create workforce engagement and awareness. The process of developing a Basis for Safe
operations has value in its own right. This is why we bother.
What’s next
The PSIP will continue to be actively tracked and managed as a project. We have the project controls to
help keep delivery of the Plan on track.
A substantial amount of the 2014 deliverables were engineering related. However, our program also
includes significant elements covering management systems, operations and maintenance. The foundations
for an improved Oil Search Enterprise Management System (EMS) have been established in 2014, and
requirements for Process Safety Management are integrated. The implementation aspects of the EMS are
in development for roll out in 2015.
In the operations area consistent requirements for Process Isolation are important for process safety, these
were developed in 2014 and during 2015 a pilot program will test their suitability in the field prior to
finalisation.
In the maintenance area we are undertaking a strategic review and adjusting our systems to enable linkage
from safety critical element performance requirements, derived from the Basis for Safe Operations, to
functional assurance integrated into our computerised maintenance management system.
The review that supported the establishment of PSIP took an in depth look at Process Safety culture - we
recognise this as an important factor to address. The PSIP elements covering Management Systems,
Personnel, Training and Competency are addressing this area. A communications program to raise
awareness on Process Safety is also in place. In 2015, the OSL Leadership Framework also provides an
avenue to embed Process Safety culture at all levels in the company.
You can’t however, do everything at once. CPF and GPF are now delivering gas as part of the PNG LNG
Project and the PSIP prioritised work in those two plants. We are now well advanced in the work in those two
plants, as well as some of the broader organisational impacts. Over the next several years, we will establish

9. Footer - 8 April 2015 9
BSOs for our other PNG facilities and continue to drive behavioural and cultural changes through our
operating business, consistent with our goal of safe, reliable and efficient operations.
Conclusion
The delivery of the PSIP is a fundamental first step in the Company’s increased awareness, knowledge and
focus on the prevention of Major Accident Events (MAEs).
The work to date has improved our knowledge of where we are vulnerable to loss of containment of
hydrocarbons with the potential for an MAE. The knowledge improves our ability to prevent or mitigate
MAEs. This is good for employees, shareholders and other stakeholders.
We know that MAEs destroy lives, assets, environment, local communities and companies. This is why we
bother.
Process safety is clearly about managing risk. But it is also about protecting value, as the Texas Oil refinery
explosion and Deepwater Horizon explosion examples demonstrate all too well.
A business must be profitable as well as safe. Beyond the assessment of a risk weighted view of MAE
prevention, there is also a business case for investment in process safety.