BP 2012 Annual Report Download - page 125

Corporate governance
Corporate governance
BP Annual Report and Form 20-F 2012
123
Committee members
Paul Anderson – committee chair
Admiral Frank Bowman
Antony Burgmans
Cynthia Carroll
Sir William Castell (retired from the committee 12 April 2012)
Professor Dame Ann Dowling (joined the committee 3 February 2012)
Committee role and structure
The role of the SEEAC is to look at the processes adopted by BP’s
executive management to identify and mitigate significant non-financial
risk, including monitoring process safety management, and receive
assurance that they are appropriate in design and effective in
implementation.
The committee met six times in 2012 including three joint meetings with
the audit committee, at one of which the general auditor’s report on
internal control and risk management systems for the year was reviewed
in preparation for the board’s report to shareholders in the annual report.
In that joint meeting the committees reviewed the internal audit
programme for the year ahead to ensure both committees endorsed the
coverage. The SEEAC and audit committee worked together, through
their 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, SEEAC meetings were
attended by the group chief executive, the executive vice president for
safety and operational risk (S&OR) and the representatives from internal
audit. The external auditor also attended some of the meetings (and was
briefed on the other meetings by the chair and secretary to the
committee). The group general counsel also attended meetings. The
committee scheduled private sessions for members only (without the
presence of executive management) at the conclusion of each meeting to
discuss any issues arising and the quality of the meeting.
Committee 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. The
SEEAC can access any other independent advice and counsel if it
requires, on an unrestricted basis.
Field trips 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 Admiral Bowman addressing a meeting of the
leadership of the global wells organization (GWO) in Florida in July and the
committee chairman addressing senior leadership at the BP Academy at
MIT (where Admiral Bowman also presented later in the year).
Upstream visits
In January the chairman and other members visited Houston to examine
how GWO was monitoring and assuring the safety of drilling operations in
the Gulf of Mexico. In May a committee member travelled offshore to the
Thunder Horse platform in the Gulf of Mexico while other committee
members visited drilling and ‘fracking’ operations in East Texas. In August
a committee member travelled to Angola and met with leadership there to
receive briefings on implementation of OMS and other safety-related
issues.
Downstream visits
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 January members of the committee
visited the Texas City refinery, accompanied by Duane Wilson, to review
progress in risk management systems and OMS implementation. During
this visit, committee members also visited the nearby petrochemicals
facility to observe the extent to which the BP US Refineries Independent
Safety Review Panel recommendations had been implemented in the
petrochemicals context. In December all members of the committee
visited the Buncefield terminal in the UK and received briefings on OMS
implementation as well as other safety-related improvements that had
been made following the explosion at the neighbouring terminal in 2005.
2012 committee activities
Safety, operations and environment
The committee received 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 included 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. The S&OR function has intervention rights in all
aspects of the group’s technical and operational activities, 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.
During the year the committee received specific reports on the
company’s management of risks in shipping, wells, pipelines facilities,
contractor management and non-operated joint ventures and also
reviewed fire and explosion risk at facilities. The committee reviewed
these risks, and risk management and mitigation, in depth with the
relevant executive management.
When a fatality in the workforce occurs the committee reviews the
incident in depth before reporting back to the board. The committee also
reviewed 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.
Upstream – independent perspective
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. The BP board
identified and engaged Carl Sandlin to provide further oversight and
assurance regarding the implementation of the Bly Report
recommendations. He will track BP’s progress in implementing the 26
recommendations from the company’s internal investigation of the
Deepwater Horizon accident and will independently assess the safety,
health and environmental work of global drilling operations. As
appropriate, Carl Sandlin will share his observations of BP’s upstream
process safety culture. He will give regular updates directly to the SEEAC
and presented his initial work plan to SEEAC in October. He will meet with
the committee at least twice a year.
Downstream – independent perspective
Since Duane Wilson’s appointment by the board in 2007 as an
independent expert, he has provided an objective assessment of BP’s
progress in implementing the recommendations of the BP US Refineries
Independent Review Panel and assisted the company in improving
process safety performance at BP’s five US refineries. In his final report in
May, Duane Wilson advised that he had observed continued progress in
process safety performance at each visit he has made to the five
refineries. At the same time, he also discussed work remaining to be
completed and areas requiring special emphasis and 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
toward process safety leadership.
We were pleased to engage him beginning in May, to work with
management on a worldwide basis to continue to embed process safety
culture and learnings across the segment. In this new role he will meet
with the committee at least twice a year.
TNK-BP
Each year the committee receives a report on the progress made in HSE
and process safety at TNK-BP, noting however that formal oversight of
their 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 continued to make progress in addressing the
main safety, ethical and environmental challenges confronting it since it
was formed in 2003. The committee will continue to monitor progress
regularly until such time as the company completes its exit from TNK-BP.