API Q1 and ISO/TS 29001 A Case Study in Successful Collaboration

1. API Q1 and ISO/TS 29001 A Case Study in Successful Collaboration Stacey Hagen, Drilling Materials Sr. QA Advisor – OCTG Lead Chair, API Subcommittee on Quality

2. Overview • ExxonMobil Background • ExxonMobil’s standards strategy • API Q1/ISO 29001 Case Study • Conclusions

3. Company Background • Formed in 2000 as the result of the merger of Exxon and Mobil corporations • Now the world’s largest publicly owned oil company • 2006 net income of $39 billion US: • Total liquid and gas production available for sale was 4.2 million oil-equivalent barrels per day • Refinery throughput of 5.6 million barrels per day • On March 30, 2007 announced participation in China’s first fully integrated refining, petrochemical and fuels marketing joint venture with foreign participation • Agreement between Sinopec, Fuijan Province, ExxonMobil and Saudi Aramco

4. Standards Strategy • ExxonMobil has long been active in national and international standardization • Member of the American Petroleum Institute (API), the leading oil industry standards developing organization since 1919 • Chairman and CEO Rex Tillerson currently serves as Chairman of the API Board • Involvement in ISO activities since 1947, providing the chair of TC28, “Petroleum Products and Lubricants” since its inception and holding a variety of other positions in TC28 as well as TC67, “Oilfield Equipment, Materials, and Offshore Structures” and TC193, “Natural Gas”

5. Standards Strategy • Participation is based on business / industry need • Resource cost assessed against standards added value • Standards value – combination of business benefits, priority, and spend • Provide leadership where ExxonMobil has resources and expertise • Standardization – vehicle to improved performance • Improved safety • Improved reliability • Reduce costs and enhanced supplier base

6. Standards Strategy • ExxonMobil participation in Upstream oil & gas • 50 technical professionals actively participate on API/ISO committees • Annual prioritization of standards activities and proposals • Steering team reviews accomplishments and forward plans

7. Steering Team Drilling Pipelines Floating Structures Completion Equipment Cementing Subsea & Flexibles Quality Drlg Equipment & Riser Coiled Tubing Drilling Fluids Subsea - Wellheads Civil / LNG Fixed Structures Well Control Derricks, Wind Loads OCTG & Line Pipe Drilling & Servicing Equipment Materials Metering Germany ISO Coordination Field Bus Design (Process Instruments) Fire & Blast & Platform Reassessment

8. API Q1/ISO TS 29001 Case Study • API has been developing standards since 1923 and is recognized as “de facto” international standards1 • Industry undergoes tremendous transformation and growth: • 1970’s North Sea Discoveries, 1980’s frontier areas including China, Africa, Middle East • TC 67 reactivated in 1989, API assumes secretariat on behalf of ANSI in 1995 1“Standards & Competitiveness: Coordination for Results removing Standards-Related Trade Barriers Through Effective Collaboration”, US DOC report, May 2004.

9. API Q1/ISO TS 29001 Case Study • API Q1, “Specifications for Quality Systems” first published in 1985, two years prior to initial publication of ISO 9000 series • API Q1 and API product specifications form the basis of API’s Monogram Program • API Monogram Program is the leading industry conformity assessment program, with 2120 licensed facilities worldwide • China has largest number of licenses issued to date, 560

10. API Q1/ISO TS 29001 Case Study • Why does oil and gas industry need more than ISO 9001:2000? • Failure of goods and services can have severe consequences • Need for consistency in manufacturing • API Q1 contains 9001 text in its entirety and 45 additional requirements • Control Features • Independent Design Review • Final Acceptance Inspection

11. API Q1/ISO TS 29001 Case Study • Oil industry determined need for a sector-specific solution similar to automotive • Standard to be developed in liaison with the TC 176 to ensure harmonization • Q1 was recognized as model for an international sector-specific document so that final API and ISO standards would be identical

12. API Q1/ISO TS 29001 Case Study • How best to align API Q1 and ISO as a sector specific quality standard? • API’s Subcommittee on Quality proposed a NWI to align a revision of API Q1 and the development of sector specific quality requirements in March, 2002 • Draft Technical Specification January 2003 • Publication June 2003

13. API Q1/ISO TS 29001 Case Study • One standard accepted globally • One assessment / certification body accepted globally • Ensures consistency in audits • Eliminates variances in interpretations • Prerequisite for doing business

14. API Q1/ISO TS 29001 Case Study • Conclusions: • API and ISO can work together successfully if the vision and commitment is agreed at the project’s onset • ExxonMobil and the international Oil and Gas industry will continue to push frontier boundaries in the search for oil and gas, requiring more stringent quality assurance requirements • API Q1/ISO TS 29001 will continue to help the oil and gas industry ensure consistency in manufacturing and reliability of products.

15. Xie Xie (Thank you) Contact Information: Stacey Hagen Drilling Materials Sr. QA Advisor – OCTG Lead ExxonMobil Global Service Company 16945 Northchase Dr Houston, TX 77060 stacey.w.hagen@exxonmobil.com API – www.api.org, standards@api.org ISO – www.iso.org, central@iso.org

16. Back-Up Slide Definitions: API Spec Q1 Specification for Quality Programs for the Petroleum, Petrochemical and Natural Gas Industry ISO TS29001 Petroleum, Petrochemical and Natural Gas Industries – Sector Specific Quality Management Systems – Requirements for Product and Service Supply Organizations NWI New Work Item TC Technical Committee

17. Back-Up Slide Example clause – ensures that documented methods are available for audit

18. Back-Up Slide Example clause – ensures independent review of designs

19. Back-Up Slide Example clause – ensures final acceptance inspection of product