2008 OSHA Oil & Gas Safety Conference

Development and Implementation of an A&OI Program

Mark Leigh Functional Excellence Team Leader Asset & Operating Integrity December 3, 2008

CAUTIONARY STATEMENT
FOR THE PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The following presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. You can identify our forward-looking statements by words such as anticipates, expects, intends, plans, projects, believes, estimates, and similar expressions. Forward-looking statements relating to ConocoPhillips operations are based on managements expectations, estimates and projections about ConocoPhillips and the petroleum industry in general on the date these presentations were given. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially include, but are not limited to, crude oil and natural gas prices; refining and marketing margins; potential failure to achieve, and potential delays in achieving expected reserves or production levels from existing and future oil and gas development projects due to operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas; unsuccessful exploratory drilling activities; lack of exploration success; potential disruption or unexpected technical difficulties in developing new products and manufacturing processes; potential failure of new products to achieve acceptance in the market; unexpected cost increases or technical difficulties in constructing or modifying company manufacturing or refining facilities; unexpected difficulties in manufacturing, transporting or refining synthetic crude oil; international monetary conditions and exchange controls; potential liability for remedial actions under existing or future environmental regulations; potential liability resulting from pending or future litigation; general domestic and international economic and political conditions, as well as changes in tax and other laws applicable to ConocoPhillips business. Other factors that could cause actual results to differ materially from those described in the forward-looking statements include other economic, business, competitive and/or regulatory factors affecting ConocoPhillips business generally as set forth in ConocoPhillips filings with the Securities and Exchange Commission (SEC), including our Form 10-K for the year ending December 31, 2007, as updated by our quarterly and current reports on Forms 10-Q and 8-K, respectively. ConocoPhillips is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Agenda

Business Case for A&OI Operations Excellence What does good look like? A&OI Program elements Assessment program Examples of Strategic Improvement Plans Summary

ConocoPhillips - Company Overview

E&P Employees . . . . . . . . . . . . . . . . . . . 11,859 Total World Production . . . . . . . . 1.880 MMBOED

Upstream Portfolio
Diverse Asset Base

Likelihood

Consequence

Risk is assessed using a risk matrix Losses of containment have different risk exposures Risk is lowered by decreasing the likelihood and/or consequence of an event

Challenges
Offshore ..

High equipment density People live on site Problematic Escape Evacuation and Rescue Loss of containment impacts

Onshore ..

Large number of remote facilities Low manning levels Some limited communications and automation Most gathering systems and pipelines cannot be pigged. High water cut and aging facilities
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Some definitions
An asset has integrity when it performs as intended and is operated and maintained within its design parameters at an acceptable risk over its entire service life.

Asset Integrity

Capability of an asset to contain its contents. Ability and competency of the workforce to safely operate and maintain an asset.

Operating Integrity

A&OI is key to managing risk. One of the 15 elements of the HSE Management System
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Business Case for Asset & Operating Integrity

Eugene Island Gulf of Mexico March 2001

Texas City Refinery March 2005

Safe Operation for our employees,

the public, and contractors;

Environmentally Responsible
performance;

Confidence that asset liabilities are

managed and the company reputation will go uncompromised;

Assurance to Senior Management

that business is managed through audit results and compliance exception reporting;

Transco Pipeline September 2008

Humber Refinery April 2001

Managed Business Value (costs

and benefits) throughout the lifecycle of our assets.

System Relationships

All hazards & risks are managed under the HSE MS Standard
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Operating Expectations OE Framework

A&OI M&R P&S PS&O

OE Framework
1. Defines Excellence in Operations. 2. Tools to measure & improve operations performance. 3. Monitors asset metrics & provide objective analysis. 4. Assess technologies for their application. 5. Create environment that values knowledge sharing.

Leadership & Management

Health, Safety & Environment

Human Performance Integrated Integrated Operations Operations

Containment Equipment Integrated risks performance Planning

Maximising production

Each of the 8 OE Systems are dependent and supportive of one another

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Operating Expectations What Good looks like

The OE Toolkit consists of guidance documents and assessment guides these are used as the inputs to set operating goals and assess and develop SIPs.

Guidance documents:Standards Recommended Practices Guidelines etc Assessment guides are part of guidance documents Method to evaluate each functional area May drill down to the process/practice level. Provide insight for setting goals and developing plans

Essential Elements of Recommended Practice

Processes
1.0 Planning
1.1 1.2 1.3 1.4 Policy & Leadership Risk Assessment and Management Legal Requirements & Standards of Operation Strategic Planning, Goals & Objectives

Practices

Core Elements
HSE Policy A&OI Philosophy Objective Performance & Condition Targets Plans (Strategic and Annual)

2.0 Implementation

2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8

Structure & Responsibility Programs & Procedures Inspection, Testing and Maintenance Implementation/Operation Emergency Preparedness Awareness, Training and Competency Non Conformance, Investigation and Corrective Action Communications Document Control and Records

3.0 Assessment & Verification

3.1 Measuring and Monitoring 3.2 Audits Check Correct Review

4.0 Review & Adjust

4.1 Review

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Scoring Methodology
Processes
1.0 Planning
1.1 Policy & Leadership 1.2 Risk Assessment and Management 1.3 Legal Requirements & Standards of Operation

Practices

Statement from governing Document or Standard

The system shall provide for communicating the policies and demonstrating managements commitment to an HSE culture that drives towards zero accidents and incidents
Detailed line items
1 Each BU should establish and maintain a documented A&OI Philosophy. 2 BU Management shall demonstrate visible and active leadership.. 3 Each BU or Asset/Operating Unit shall maintain a documented A&OI Program 4 Means for ensuring that .A&OI requirements are effectively communicated to contractors and vendors 5 The A&OI Program shall address the management of change (MOC). 6 BU leadership shall review and assess compliance..

Each numbered item scored 0 to 4 13

Displaying the results

4 Optimising

3 Managed

Asset has achieved desired level In these elements

Desired level
2 Implementing Asset continues to implement Programs this year?

1 Program Development 0 Awareness Building

Early SIP* focus areas Multi-year time frame?

* Strategic Improvement Plan

95 individual sub-elements scored 14

Systematic Effort to Improve A&OI Programs

A&OI assessments conducted

on all operated assets

Self assessments against the A&OI recommended practice

A&OI gaps identified

Improvement plans validated

and in place to close gaps

We have improved our understanding and are working to reduce our risk
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Strategic Improvement Plan Examples

Belanak (Offshore Indonesia)
Improve valve and heat exchanger programs Improve Safety Critical Equipment program Enhance management of change process Develop well integrity program

UK Southern Gas Basin

Improve inspection programs Conduct more risk assessments Develop performance standards for critical equipment Enhance engineering standards and document control practices
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Further implementation issues

Develop a view of a desired future state Understand the different time required to achieve this

Same approach may result in different detail

plans Risk Based and Fit for Purpose system

Decide when to move from Self Assessment to Audit approach Have a plan !

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In Summary
Poor Asset integrity is a threat to
corporate reputation if not properly managed

Set expectations and drive improvement:

Common management program Systematic assessment process Improve understanding of asset condition

Our aim is to reduce the risk of significant

failure

Asset and Operating Integrity is a key component of HSE Management and ConocoPhillips Operations
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