Incident Investigation Report. Shelburne Basin Venture Cheshire L-97. LMRP & Riser Loss to Seabed. Report version 4.0. Restricted August 9, 2016

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Incident Investigation Report Shelburne Basin Venture Cheshire L-97 LMRP & Riser Loss to Seabed Report version 4.0 August 9, 2016 Reques 10,555.192 4.0 version Riser Incident Page 1 of 115

CONTENTSDIAGRAMS... 1 ACRONYMS USED IN THIS REPORT... 3 SUMMARY OF THE INCIDENT... 4 WHEN IT HAPPENED... 4 WHERE IT HAPPENED... 4 DESCRIPTION OF THE INCIDENT... 4 WHY IT HAPPENED (ROOT CAUSE)... 7 CONSEQUENCES... 7 BARRIER SYSTEMS AND LATENT FACTORS RELEVANT TO THIS INCIDENT... 8 INTRODUCTION TO TRIPOD BETA ANALYSIS... 10 DETAILED FINDINGS OF THE INVESTIGATION... 11 EVENT 1 - RISER TENSIONER SHACKLES PERIODICALLY WENT SLACK, AND THE SLIP JOINT LOAD PROFILE LIFTED SLIGHTLY OFF THE SPLIT TENSION RING... 11 EVENT 2 - THE RISER SLIP JOINT LOAD PROFILE DISENGAGED FROM AND ROSE ABOVE THE SPLIT TENSION RING PROFILE BY ~ 0.5 M... 32 EVENT 3 - THE SPLIT TENSION RING WAS ASYMMETRICALLY LOADED BY LARGE DYNAMIC FORCES THAT FORCED THE RING APART, THUS RELEASING THE RISER AND LMRP TO FALL TO THE SEA BED... 37 EVENT 4 - POTENTIAL DAMAGE TO THE BOP FROM THE LMRP WHICH LANDED ABOUT ~22 M. AWAY FROM THE BOP. 40 EVENT 5 - POTENTIAL HARM TO PERSONNEL FROM HOSES, CABLES, AND EQUIPMENT THAT PARTED FORCEFULLY AS THE RISER FELL... 42 EVENT 6 - POTENTIAL RELEASE OF WELL BORE FLUIDS AND CONTAMINATION OF THE ENVIRONMENT... 44 REMEDIAL ACTIONS FOR IMPROVEMENT... 46 APPENDIX A - LIST OF PERSONS INTERVIEWED... 50 APPENDIX B - LIST OF DOCUMENTS REVIEWED... 51 APPENDIX C - POST-INCIDENT RISER ANALYSIS STUDIES REPORT... 52 APPENDIX D - REVIEW OF SIGNIFICANT WEATHER EVENTS AND FORECASTS... 92 APPENDIX E - SLIP JOINT AND RISER TENSIONER SPACE-OUT ANALYSIS... 97 APPENDIX F - ASSESSMENT OF POSSIBLE SPLIT TENSION RING MODIFICATIONS... 1 0 0 APPENDIX G - RISER DEBRIS FIELD DIAGRAM... 105 APPENDIX H - ICEMAX OPERATING LIMITS CHART... 1 0 6 APPENDIX I - POSITION MAP OF PERSONNEL AT THE TIME OF THE INCIDENT... 1 0 7 APPENDIX J - TIME LINE OF EVENTS AND CONDITIONS... 1 0 8 APPENDIX J - TIME LINE OF EVENTS AND CONDITIONS... 1 0 9 APPENDIX J - TIME LINE OF EVENTS AND CONDITIONS... 1 1 0 APPENDIX J - TIME LINE OF EVENTS AND CONDITIONS... 1 1 1 APPENDIX J - TIME LINE OF EVENTS AND CONDITIONS... 1 1 2 APPENDIX K - FULL TRIPOD BETA ANALYSIS DIAGRAM... 1 1 3 Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed i Reques Report 10,555.192 version 4.0 4.0 version Riser Incident Page 2 of 115

DIAGRAMS Telescopic Joint (Cameron Load King 3.5k) Tension Ring Latch Split Tension Ring (Cameron Design) Mating Profile (TJ Load Bearing and Split Tension Ring Inner Profile) Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 1 Reques Report 10,555.192 version 4.0 4.0 version Riser Incident Page 3 of 115

Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 2 Report version 4.0 Reques 10,555.192 4.0 version Riser Incident Page 4 of 115

ACRONYMS USED IN THIS REPORT Acronym APV BOP BSR EDS CNSOPB Deg. DPO Ft ICS H S JRCC kip LMRP M MW m/s NOV OIM PLC PSI RARS RAO ROV RSWM RT RTTS SBM SDSV SSE SSSE STP T-time WSOG V Expanded meaning Air pressure vessel Blow out preventer Blind shear ram Emergency disconnect sequence Canada-Nova Scotia Offshore Petroleum Board Degree Dynamic Positioning Operator Feet Incident command system Significant wave height Joint Rescue Coordination Centre 1000 pounds-force Lower marine riser package Metres Microwave Metres per second National Oilwell Varco Offshore installation manager Programmable logic controller Pressure per square inch Riser anti-recoil system Response Amplitude Operator Remotely Operated Vehicle Rig specific work methods Riser tensioners Retrievable Test, Treat, and Squeeze (Packer) Synthetic oil based drilling mud Shell Drilling Supervisor Subsea Engineer Senior Subsea Engineer Senior Toolpusher Estimated time to perform the necessary actions to potentially disconnect LMRP from BOP Well specific operating guidelines Volts Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 3 Reques Report 10,555.192 version 4.0 4.0 version Riser Incident Page 5 of 115

SUMMARY OF THE INCIDENT When it Happened Saturday, March 5, 2016 at 15:21:37 Note: There is a time difference throughout the document. Technical charts and plots are based on NOV (riser tensioner system) and DP system recording devices, which are calibrated to GPS time. Summaries for the event, pictures, and the tripod report are based on the CCTV clock mounted in the moon pool, bridge log and witness statements. CCTV time differs by ~2hrs 58 minutes. Where it Happened Stena IceMax - Cheshire L-97 Well - Shelburne Basin Venture. Nova Scotia EL2425, 2141m water depth. Description of the Incident During the evening of March 3 and into the morning of March 4, the IceMax crew were preparing the vessel and well for a significant weather event. The forecast provided on these days indicated that the worst sea conditions would occur during the afternoon of March 5 with maximum vessel heaves exceeding 10 m. In preparation for potential planned unlatching of the Lower Marine Riser Package (LMRP) from the Blow Out Preventer (BOP), and to prevent discharge of well fluids and/or synthetic oil based drilling mud (SBM) to the sea, the well was secured by: installing and testing a downhole RTTS (Retrievable Test, Treat, and Squeeze) packer, closing the two blind shear rams on the BOP, and displacing the riser to sea water. During the morning of March 5, the weather forecast indicated that the maximum vessel heaves would be lower than were predicted the day before. The last forecast provided before the incident indicated that the maximum vessel heaves could approach, and perhaps exceed 8 metres. Actual vessel heave of 8.0 m. is one of the planned environmental limits that would trigger unlatching from the BOP, and it is important to note that the IceMax actual vessel heave was normally lower than the forecasted maximum heaves. Whilst waiting for the storm to pass during the early afternoon of March 5 th, the crew of the IceMax were fully prepared to unlatch if needed but expected that the actual vessel heaves would not reach the trigger criteria of 8.0 m., and therefore they were expecting to ride out the storm while being connected to the well. Then at approximately 15:02 hrs, the vessel experienced an actual heave of 9.25 m. (recorded by the tensioner position indicators). Therefore, in response at approximately 15:07 hrs, the first attempt was made to unlatch the LMRP using the Blue BOP control pod. After about one minute the expected riser lift-off had still not been observed. A second attempt to unlatch, using the alternate Yellow BOP control pod, did successfully unlatch the LMRP at 15:15:17 hrs. The investigation team do not feel this failure to unlatch the LMRP on the first attempt using the Blue pod had any material significance in this incident. Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 4 Reques Report 10,555.192 version 4.0 4.0 version Riser Incident Page 6 of 115

Figure 1: LMRP disconnected, Tensioners Retracting Immediately after unlatching the LMRP (Fig. 1), the vessel began moving at.25 m/s astern (initial movement was planned to be about 50 m.), away from the well location to establish separation from the BOP while waiting for the sea conditions to subside. During this time shortly after unlatching, air was intentionally added to fully retract the tensioners in order to maximize the clearance between the LMRP and the BOP mandrel. Figure 2: Air added to Tensioner system to ensure Full Tensioner Retraction With the tensioners fully retracted (Fig. 2), they could no longer compensate for the relative movements of the vessel and the riser. With the tensioners in such a rigidized condition, the riser had to rise and fall along with the phase and amplitude of the vessel s heave. In heavy seas, the phase of the cyclical vertical movements of the riser began to lag behind the vessel s movements. Approximately 90 seconds prior to the loss of the riser, the Riser Anti-Recoil System (RARS) was also reset, further reducing the tensioner system s ability to compensate for the heave. Eventually the vessel began to accelerate downward sooner than the riser did, and this phase difference in movements began to unload the net weight of the riser from the split tension ring. The split tension ring provided the vertical force necessary to lift the riser along with the vessel as it heaved upward; however, there was no such force to push the riser down with the vessel as it heaved downward. Over a series of vessel heaves of about 6 m. in amplitude, the load (i.e. net weight) of the riser supported by the split tension ring decreased to the point that the tensioner shackles first became slack and then the slip joint (outer barrel) load profile lifted up and out of the mating groove in the split tension ring. In addition, there was some lateral movement of the slip joint relative to the split tension ring. Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 5 Reques Report 10,555.192 version 4.0 4.0 version Riser Incident Page 7 of 115

Figure 3: Riser Weight off of Tensioner Load Ring The cylindrical slip joint load profile is designed to engage with the split tension ring profile to provide the mechanical radial support necessary when under load to hold the split tension ring together. With these two load profiles disengaged from each other (Fig. 3), the split tension ring had very little mechanical radial strength holding it together, and was allowed to sag across its diameter because the tensioners were applying upward force on its circumference. Subsequently, when the riser slip joint load profile came down forcefully onto the tension ring it contacted the ring asymmetrically causing it to part into its two halves. Figure 4: Load Ring separates, Marine Riser is unsecured and decends to the Sea Floor At 15:21:37 hrs. (Fig. 4), the riser telescopic joint outer barrel slid off from its inner barrel, and the riser and LMRP dropped to the sea floor. The LMRP landed approximately 22 m. from the BOP, and the riser randomly coiled creating a debris field around the BOP with the closest joint being 12 metres out extending to a maximum distance of about 250 metres. The moon pool area was immediately placed off limits to personnel and access barriers erected. Personnel were instructed to remain in the accommodations. A damage assessment was performed in the affected moon pool location, and the area was safeguarded from potential dropped objects. The Local Incident Command System on the rig and in the Shell Halifax office was initiated. Regulatory Authorities, and the Joint Rescue Coordination Centre (JRCC)/Coast Guard were informed of the incident Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 6 Reques Report 10,555.192 version 4.0 4.0 version Riser Incident Page 8 of 115

No personnel were injured during this event although four individuals were monitoring the unlatching from beside the moon pool, and potentially could have been exposed to hazards associated with the equipment coming apart as the riser fell. No drilling mud or hydrocarbons were released; however there was a release of BOP control fluid to the environment. Vessel integrity was also not impacted. When weather permitted, the Remotely Operated Vehicle (ROV) inspected the BOP (that remained securely connected to the wellhead), and reported no damage or integrity issues with the BOP. This incident led to harm to: business performance, property and equipment. This incident is reportable under relevant legislation. In the subsequent days a joint investigation team comprising Shell, Stena & Independent Investigators were assembled and mobilized to the IceMax. This report documents their findings. Why it Happened (Root Cause) There are two root causes to this incident with several contributing Latent Factors that support each. The following root causes are the main failed barriers that the investigation team found during their investigation of the incident. 1) Air pressure was added to the tensioner system to fully retract them thus making them less effective in compensating for vessel heave. 2) The Riser Anti-Recoil System (RARS) was reset while the tensioners were fully retracted further reducing the tensioner s ability to compensate. The following are the Latent Factors that led to the root causes above: Riser Analysis is based on studies that do not identify failure mode scenarios for the transition phase after disconnecting in a harsh environment; The Riser Analysis does not model the effects of damping and RARS influence on riser dynamics in soft hang-off mode; Disconnect procedures describing LMRP unlatching do not describe the post unlatching sequences of optimum tensioner and RARS configurations; Offsetting the rig during unlatching operations is neither currently required nor documented in any procedure; Competence Assurance Profiles and current training requirements do not identify tensioner operation during unlatching (e.g. during EDS), the relevant training, and necessary verification. Consequences Actual consequences comprised the loss of the riser and LMRP to the sea floor, and damage to high pressure piping (choke, kill, boost and various conduit lines), cabling, and instrument components that were connected to the riser system. During the incident there was an unauthorized discharge of BOP control fluid to the sea however there is no evidence of environmental impact from this release. There was also the potential for: damage to the BOP, harm to the local environment, and harm to personnel. Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 7 Reques Report 10,555.192 version 4.0 4.0 version Riser Incident Page 9 of 115

Barrier Systems and Latent Factors relevant to this incident The investigation revealed that each of the following Barriers could have reduced risk and/or prevented the sequential progression of the incident loss of control events discussed in this report. The order below is according to first appearance in this report. Failed Barriers: Tripod methodology analyses Barriers in detail which are considered the root causes of an incident. Had these barriers been in place and effective, the analyzed events would not have occurred. These barriers are described as they would look if they were effective. 1 2 RARS remains active until the tensioners are set to mid-stroke operation to optimize and maintain tensioner compensation Tensioners compensate for vessel heave, and maintain concentric support of the riser string on the split tension ring Potential Barriers (Opportunities): This report also considers areas of potential opportunity in risk reduction which are modelled as Potential Barriers meaning, had these barriers been established in place and effective, these events may not have occurred or at least the associated risks may have been reduced. These barriers did not exist, but may have prevented the incident if they had been available. 1 2 3 Extreme in/out tensioner position alarm warns driller of an abnormal position, and driller optimizes the tensioner stroke (note this would be a significant design change) Automatic fail safe instrumented protective barrier system restores tensioner functionality and optimizes stroke (note this would be a significant design change) Slip joint load profile re-engages with the split tension ring profile to center and symmetrically distribute the large dynamic forces (note this would be a significant design change) 4 Vessel positioned with adequate offset from the BOP when unlatching reduces risk of clashing Effective Barriers: The investigation also revealed that each of the following Barriers were indeed established and did function effectively to reduce risk and/or prevent the sequential progression of the potential events discussed in this report. These barriers existed and worked. The order below is according to first appearance in this report. 1 Use of BOP control fluid that has low aquatic toxicity and has been assessed and ranked as approved for discharge as per the Offshore Chemical Selection Guidelines, so as to minimize environmental impact. 2 LMRP effectively pulled away from the BOP by the vessel in this incident 3 All personnel cleared from the moon pool area are separated from any associated hazards 4 RTTS packer installed prevents any potential well bore fluids from reaching the BOP and entering the environment Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 8 Reques Report 10,555.192 version 4.0 4.0 version Riser Incident Page 10 of 115

5 6 7 Blind shear rams closed within the BOP prevent any potential well bore fluids from entering the environment Riser displaced to sea water eliminates the potential for environmental contamination from drilling fluids Effective application of the incident command structure facilitated good communications and mitigated negative impacts to reputation Latent Factors influential in the above Failed and Potential Barriers: The investigation concluded that each of the following Latent Factors significantly influenced the human actions or inactions, and therefore the effectiveness of the relevant Barrier Systems discussed in this report. The order is according to first appearance in this report. 1 2 3 4 5 6 7 8 9 Riser Analysis is based on riser studies that do not identify failure mode scenarios for the transition phase after unlatching in a harsh environment Disconnect procedures describing LMRP unlatching do not describe the post unlatching sequences of optimum tensioner and RARS configurations The Riser Analysis does not model the effects of damping and RARS influence on riser dynamics in soft hang-off mode; Competence Assurance Profiles do not identify tensioner operation during unlatching (e.g. during EDS), the relevant training, and necessary verification There is no real-time indicator or robust model for the relative positions of the LMRP to the BOP during the transition to soft hang-off Weather systems and the ship s response to them are highly variable and require experienced and qualified personnel able to interpret data from multiple sources Limit alarms and/or an automatic control function that prevent extreme tensioner positions are not included in the tensioner system design The split tension ring is not designed to tolerate relative upward movement of the slip joint outer barrel Offsetting the rig during unlatching operations is neither currently required nor documented in any procedure Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 9 Reques Report 10,555.192 version 4.0 4.0 version Riser Incident Page 11 of 115

INTRODUCTION TO TRIPOD BETA ANALYSIS The information presented in this report is structured to align with the Tripod Beta incident model developed during this incident analysis. This introduction is intended to provide a basic understanding of how the different analytical components comprising this model inter-relate to provide a detailed and comprehensive description of this incident - what, how and why it happened. The resident pathogen model of incident causation, popularized as the Swiss cheese and Tripod models, teaches us that incidents occur when Barrier Systems fail, when they are inadequate, or when they did not exist at all. To reduce risk within an organization, Barriers are established and maintained as part of a management system, and these span strategic, tactical, and operational areas. Barriers are practical functions, usually required by policies and standards, and implemented using procedures and resources. Barriers are established, operated, and maintained by people with the competence to do so, according to the standards, specifications, procedures and good practices. Holes appear in barriers when individuals fail to establish or keep barriers functional, e.g. by doing a critical task incorrectly or by not doing one at all. These human performance weaknesses can, in turn, be traced back to influential situational perceptions, beliefs, and context, called Preconditions, and ultimately to the associated systemic organizational weaknesses that created these. The Tripod incident model sequentially describes the reasons for the relevant human behaviours in terms of Immediate Causes, Preconditions, and Latent Factors. Immediate Causes are the sub-standard acts of persons that led directly to a Barrier not being effective when needed. Preconditions are the adverse probabilistic influences that made the relevant sub-standard behaviour more likely. Latent Factors are hidden, lying dormant at the system-level within an organization, creating the Preconditions or allowing them to persist without correction. In the Tripod Beta methodology, business disruptions are modelled using Trios (describing what happened), the possible but ineffective Barriers (how it happened), and the failure causation paths (why it happened). Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 10 Reques Report 10,555.192 version 4.0 4.0 version Riser Incident Page 12 of 115

DETAILED FINDINGS OF THE INVESTIGATION Event 1 - Riser tensioner shackles periodically went slack, and the slip joint load profile lifted slightly off the split tension ring The design configuration of the riser string, provided by the third party riser analysis company, requires that the riser tensioner shackles always be in tension for all operating conditions (in the connected state), and that no riser section should ever go into compression. After unlatching the LMRP in heavy seas, the riser (outer barrel) slip joint load profile disengaged from, and began lifting off of the split tension ring profile partly because the tensioners were fully retracted at the time. Air was added to the tensioner system several times after unlatching to maintain the tensioners fully retracted. Whilst this increased the clearance between the LMRP and the BOP mandrel, this also had the undesired effect of forcing the riser to be driven vertically through the water column with the same heave amplitude as the vessel. This means the riser was subjected to much higher acceleration forces than if the tensioners were compensating for the relative movements. This acceleration resulted in higher riser velocities which generated higher vertical momentums which in turn led to the riser movements lagging behind the vessel movements (i.e. the vessel and riser movements got slightly out of phase). Ultimately, as the rig passed over the crest of a wave onto a downward heave, the riser s upward momentum resulted in the riser continuing to travel in the upward direction at the moment the vessel began dropping. As these vessel and riser heave cycles continued, the amount of net riser weight being supported by the split tension ring also cycled - to critically low levels. Since the rigidized tensioner configuration could not provide enough relative motion compensation, the rig's relative downward acceleration ultimately reached a level quick enough to effectively fully unload the weight of the riser from the split tension ring. This led to the shackles periodically becoming slack, and a short time later the riser slip joint load profile disengaging from, and slightly lifting off of, the split tension ring profile. The split tension ring was still intact at this point in time. Date / Time 3/5/2016 15:21:24 Time before incident 13 seconds before incident Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 11 Report version 4.0 Reques 10,555.192 4.0 version Riser Incident Page 13 of 115

Agent - Sea state deteriorating during a storm resulting in one vessel heave of ~9.25 m. which triggered the unlatching Earlier in the week of the incident, a storm was forecasted that would affect the Stena IceMax. The decision was made by the team on board that they should pull out of the hole in preparation for this heavy weather event. Over the two days prior to the incident, each subsequent short term forecast (provided every six hours) predicted slightly smaller maximum vessel heaves 1. From 18:30 hrs. on March 3 rd and through March 5 th prior to this incident, the seven Amec weather forecasts predicted decreasing trend of maximum vessel heaves of approximately: 12 m., 10 m., 9.25 m., 8.5 m., 8.5 m., 8.8 m., and 8.0 m. respectively. It is important to note that the actual heaves experienced by the IceMax on this well were typically below the Maximum Heave 2 predictions and above the Significant Heave 3 predictions. The vessel status changed to Amber from Advisory on March 5th at 05:45 hrs. in conformance with the Well Specific Operating Guidelines (WSOG) due to significant wave height (Hs 4 ) of greater than 7 m. Although the sea state and vessel heave conditions were still deteriorating, at approximately 12:00 hrs. the barometric pressure began increasing from 987 mbar leading the rig team to believe that the weather would start improving. This was also confirmed by the Bargemaster (he thought the worse was over ). The OIM and STP were on the bridge constantly during the day of the event monitoring the weather and the forecasts. Based on interviews with them, they were confident that the vessel could remain attached during this period of bad weather, and that they would be able to ride out the storm with the LMRP connected. During the afternoon, up to about 14:30 hrs. on the day of the event, the maximum heaves increased from 5.6 to 7.4 m. (all still below the operating limit requiring disconnection). Then at approximately 15:02 hrs, a vessel heave of ~ 9.25 m. was experienced. This heave was significantly greater than the predetermined operating limit heave of 8.0 m., and this triggered the decision to unlatch the LMRP from the BOP. Date / Time 3/5/2016 15:02:00 Time before incident 19 minutes before incident Ref. Amec Foster Wheeler Marine Forecast Interpretation Guide (MAN-AIM-20-01, 4-Sept-2015) 1 Heave is defined as the vertical motion of the vessel. 2 Maximum Heave is the maximum vertical motion of the vessel that is to be expected due to the maximum wave height that may be experienced during a time period. 3 Significant Heave is the vertical motion of the vessel that is to be expected due to the significant wave height that may be experienced during a time period. 4 Hs is defined as significant wave height (traditionally the mean wave height (trough to crest) of the highest third of the waves (H 1/3). Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 12 Report version 4.0 Reques 10,555.192 4.0 version Riser Incident Page 14 of 115

Object - The LMRP was unlatched using the EDS, and then the rig began slowly moving away from directly over the BOP location On March 4 (the day before this incident) at approximately 23:00 hrs., in preparation for the storm described above, a Retrievable Test-Treat-Squeeze Packer (RTTS Packer) was run and set at 2,618 m., and then pressure tested to 6,895 kpa. (1,000 psi.) from the topside with no leaks observed or recorded. The drill string that ran the RTTS Packer assembly was out of the hole at approximately 08:00 hrs. In addition to the RTTS packer set in the well, the blind shear rams (BSRs) were closed in the BOP, thus giving the Cheshire well the required double barrier protection, as required by the Canada-Nova Scotia Offshore Petroleum Board (CNSOPB) regulations for temporary abandonment, controlling well bore fluids from being exposed to the environment. The riser was then displaced to seawater, and this operation was completed at approximately 03:30 hrs. on March 5 (the day of the incident). Although, the senior rig crew did not think they would have to unlatch, as soon as actual conditions on the IceMax exceeded the predetermined unlatching criteria, the crew began the final sequence of unlatching tasks. The vessel was prepared to move astern about 50 m. at a heading of 165 Deg. (wind direction was 351 degrees) along the planned escape route, and at a speed of 0.25 m/s following the unlatching. (Note: The water depth was increasing by 4 metres for every 100 metres moved by the vessel in this direction.) Stena s disconnect criteria (used globally) are derived from their level 2 document 5 Environmental Effects and Operational Limits Drillmax and Icemax class vessels (L2-DOC-OPS-4834). This procedure applies to all the sister vessels of the IceMax. Locally on each unit, a detailed unlatching procedure is also in place. For the Stena IceMax, and other sister vessels, the current Level 5 procedures 6 are adopted from the Stena Carron where the procedures were originally developed, and successfully utilized in other North Atlantic drilling campaigns. The investigation team believes that the Senior Toolpusher (STP) made the correct decision in this case to disconnect in conformance with Stena Procedures, the WSOG, and the Operating Limits Summary Sheet. An over pull of 135 Kips (+5% wet weight of the suspended system) at the LMRP was applied prior to unlatching, and all 24 air pressure vessels (APVs) (4 per tensioner) were in operation. The STP verified the sea conditions, and waited for a period of relatively calm seas with a vessel heave at that time of ~ 3 m. Then, with the agreement of the Offshore Installation Manager (OIM), the STP instructed the Sr. Subsea Engineer (SSSE) who then instructed the Subsea Engineer (SSE) to disconnect from the BOP using the Emergency Disconnect System (EDS) from the Driller's Console Panel (DCP) at ~ 15:07 hrs. At 15:07:50 hrs, the active "Blue" BOP control pod pressures showed the correct expected values; however, only 22 litres of flow was observed on the flow meter instead of the expected 70 to 80 litres. 5 Level 2 documents are defined by Stena as specific support processes that provide information to organizational departments and apply to worldwide operations. 6 Level 5 documents are defined by Stena as Rig Specific Work Methods that are created at the rig level for a specific operation or task for that vessel. Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 13 Report version 4.0 Reques 10,555.192 4.0 version Riser Incident Page 15 of 115

Also, no riser lift-off was observed. It appeared that the Blue control pod had fired but the riser did not unlatch. The reason for this is not known. The STP and SSSE left the bridge to observe the BOP panel in the STP's office. At 15:13 hrs, the riser connector unlatch button in the STP's BOP control panel was pressed, again with no lift-off observed. At 15:14 hrs, the vessel experienced a pitch of ~5.9 with an excursion of 10 metres astern. At this point the STP, SSSE, and the Sr. Drilling Supervisor (SDSV) decided to unlatch using the alternate "Yellow" control pod. At 15:15:17 hrs, the LMRP unlatching operation was confirmed successful with a reading of 67 litres on the flow meter, and the tensioners visibly retracting. After successfully unlatching, the tensioners retracted (i.e. stroked in) to a position with approximately 1.25 m. of rod exposed, and the Riser Anti-Recoil System (RARS) functioned as designed to prevent the tensioners from rapidly and fully retracting during the riser lift off. This is the expected and desired behaviour of the tensioner system after unlatching. It is worth noting that the NOV N-Line Riser Tensioner Operating Instructions V6032-Z-MA-007 on page 51 section 1.7.7 states, that the RT cylinders are thereby automatically stroked in fully at controlled speed. This document also erroneously states in this same section 1.7.7 that the tensioners will be hydraulically locked in their fully retracted position by the anti-recoil valves. At approximately 15:15 hrs, the STP instructed the Driller to add air to the tensioner system to retract the tensioners, and to maintain them retracted until the vessel was clear of the BOP. The STP was asked by the Driller if he should reset the RARS, to which the STP responded to wait until the LMRP was positively clear of the BOP. About 15:17, the OIM gave the Dynamic Position Operator (DPO) the command to move the vessel astern along the pre-determined escape route bearing 165 Deg. at a speed of 0.25 m/s. At about 90 seconds prior to loss of the riser, the Driller once again asked the STP if the RARs can be reset, to which he agreed this time. It is important to note that air was added to the tensioner system several times to maintain the tensioners fully retracted. Subsequent analysis has shown that the best approach after lift-off would have been to not change the air pressure in the APVs during the transition phase moving towards soft hang-off. It is important to understand that the crew made the decision to add air based upon the best information and knowledge that they had in an effort to maximize LMRP and BOP clearance. Date / Time 3/5/2016 15:15:17 Time before incident 6 minutes before incident Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 14 Report version 4.0 Reques 10,555.192 4.0 version Riser Incident Page 16 of 115

Failed Barrier - RARS remains active until the tensioners are set to mid-stroke operation to optimize and maintain tensioner compensation Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 15 Report version 4.0 Reques 10,555.192 4.0 version Riser Incident Page 17 of 115

Riser Analysis for Cheshire L-97 The existing Riser Analysis was performed by Wood Group Kenny. The input parameters for the study were summarised in the study premise. In the first revisions of the analysis (Rev B Jan 15), seven bare joints were included in the riser string and this resulted in potential compression loads in the riser in a disconnect scenario. In order to eliminate potential compression loads a total of 17 slick joints were included in the string to minimise the likelihood of compression (Rev 3 Aug 15). The number of slick joints included was based on the number available on the drilling unit. There were 18 riser slick joints in the IceMax inventory. (One is kept for spare.) Comparing the actual riser tally against that in the prescribed running list in the Riser Analysis there were two changes made during deployment: a) One buoyant joint was removed and replaced with one bare joint in order to affix a beacon for the riser management system. b) 13.7 m. of pups were run instead of a 16.8 m. pup included in the riser analysis. Both of these changes were not communicated back to shore but both of these changes actually would improve the riser dynamics because of more weight and a lower tensioner neutral point. Original predicted loads and tensioner behaviour during disconnect The original riser analysis predicts that during a disconnect in seawater with a top tension of 1101 kips (1 kip = 1000 pounds-force), the minimum riser tension along the full length of the riser would be 138 kips, and the minimum riser tensioner ring load would be 373 kips. This assumes a sea state with a Significant Wave Height (Hs) of 9 m. Note that the static weight of the riser and LMRP in water was modelled to be 1064 kips. In a normal disconnect in seawater the tensioners were predicted to retract by 4.4 m. (14.4 ft.) leaving 1.5 m. (5 ft.) remaining before the tensioners were fully retracted. The original riser analysis covered all the conventional riser design aspects, and these have been shown to be accurate. A review of the riser anti-recoil system (RARS) data has shown that the system behaved exactly as designed. The data from all six tensioners is very similar with small differences of a few bar in APV pressure. The original riser analysis did not study the effect of fully retracting the tensioners, nor did it look at the effect of resetting the RARS with the tensioners in their fully retracted positions. These are the two main Barrier failures that led to this incident and described in this investigation report. Following this incident, the investigation team commissioned additional riser analysis work to be completed to verify the cause of the incident and to clarify the maximum operating heave states for the various phases of the operation when disconnecting the LMRP to wait on weather. Additional riser analysis work was performed through the Stena contracted original riser analysis provider Wood Group Kenny, and Shell also commissioned Stress Engineering to provide an independent set of riser analysis results. Shelburne Basin Venture Cheshire L-97 - LMRP & Riser Loss to Seabed 16 Report version 4.0 Reques 10,555.192 4.0 version Riser Incident Page 18 of 115