Rig move Code of Practice (COP) and Scope of Work (SOW)

INSURANCE GROUP Rig move Code of Practice (COP) and Scope of Work (SOW) - Presented on behalf of the Joint Rig Committee October 2011 www.lancashiregroup.com 1

Purpose Outline Criteria for Rig Move surveying activities, including Jacking Up / Down Operations. Clarify the roles of the Marine Warranty Surveyor, the Assured & the Underwriter. Define the function of the respective Scope(s) of Work. Establish guidelines for communication between the parties. 2

Rig Move Warranty Survey. Outline criteria Defined Jack-Up Rig Activities. Wet tows exceeding 24 hours duration. Dry tow / HLV Transportation. Transits under own power. Activity Criteria Marine Warranty Surveyor Work scope Jack-Up Rig Activities Established Oil and Gas Field Area where Operator and/or SOW 1 Marine Warranty Survey Company is aware of any of the following: - previous incidence of punch-through within the field - existing jack-up footprint with different rig - Where there have been known problems (leg splaying etc.) - Or if Assured has reason to believe that a punch- through risk and/ or shallow gas risk might exist - Or if in a field or area with no previous Jack-Up activity Wet Tows of Jack-Up Rigs/Lift Barges/Semi-Submersible and Submersible MODUs/Drill Ship Dry Tows / HLV Transportation of Jack-Up Rigs/Lift Barges/Semi-Submersible and Submersible MODUs Transits of Lift Barges / Semi- Submersible and Submersible MODUs and tender rigs under their own power Tows exceeding 24 hrs duration SOW 2 All activities SOW 3 Exceeding 72 hrs duration To be recommended by Marine Warranty Surveyor on a risk assessed basis and agreed by Contract Leader(s) 3

Rig Move Warranty Survey outline criteria (cont d) Criteria met, coverage is conditional upon: (a) MWS appointment by the Assured from an agreed panel, (b) Application of the specific SOW (c) Issuance of a Certificate of Approval Duty of the Assured to ensure compliance with all recommendations. MWS survey to be conducted in accordance with COP & SOW. Cost of the MWS to be borne by the Assured (Survey Allowance still available). MWS shall be free to consult with the Underwriters. 7

Code of Practice Clarifies the roles of the Parties. Establishes minimum standards for MWS performance. Defines lines of communication between the parties. 8

Role of the Marine Warranty Surveyor Make reasonable endeavours to ensure risks are reduced to an acceptable level. Only appoint personnel who are demonstrably competent. Specify the recommendations to be met in order to minimise risk. Ensure operations are conducted in accordance with recognised design & industry practice, Units operating manual, & MWS relevant guidelines & carry out suitability surveys of vessels, structures & equipment. Upon being satisfied that objectives are met, issue a COA, identifying recommendations to be satisfied. The MWS shall not provide any other services that may present a conflict of interest or interfere with the work of the MWS. Advise the Contract leader (i) If any COA is withheld, (ii) Non compliance with any Recommendations, (iii) changes to MWS key personnel. 9

Role of the Assured Once appointed, MWS not to be changed without Contract Leaders agreement. Provide Marine Warranty Surveyor with a point of contact within the assureds' organisation, and a point of contact for the Contract leader. Provide the Contract Leader with MWS contact details. Provide the MWS with Contract leader details. Ensure Marine Warranty Surveyor participation at all relevant project management meetings. 10

Role of the Underwriters Agree panel of Marine Warranty Surveyors. At request of Marine Warranty Surveyor, make available: - Relevant policy terms, conditions, and Warranty provisions - Contact details of Contract leaders. 11

Scope of Work Sets out in detail, required MWS activities to reduce risk to an acceptable level. Tabular format, with requirements for (i) Review & approve procedures (ii) Attendance (iii) Issue COA. Activity Review & Approve Procedures/Dwgs. /Design Calcs. Attend Issue Certificate of Approval 12

SOW 1. Jack Up Rig Operations: Activity Review & Approve Procedures/Dwgs. /Design Calcs. Attend Issue Certificate of Approval (A) Location Approval X X (B) Going On Location / Jacking Up Operations (from entering the 500m zone at the location until at final elevated air gap) X X X (C) Operating X (D) Jacking Down Operations / Coming Off Location (from commencing jacking down to disengaging legs from the seabed and moving off under tow until outside the 500m zone) X X X 13

SOW 2. Wet tow of MODU s Activity (A) General Meteorological / Weather forecasting / Tow route Review & Approve Procedures/Dwgs. /Design Calcs. Attend Issue Certificate of Approval (B) Tug Suitability Survey X X X (to form part of the commence tow certificate of approval) X (C) Voyage Manual / Towmaster Instructions X (D) Contingency Planning for Emergencies X (E) Tow Operations X X X Issue C of A for tow commencement 14

SOW 3. Dry Tows/HLV Transportation of MODU s Activity (A) General Meteorological / Weather forecasting / Tow route Review & Approve Procedures/Dwgs. /Design Calcs. Attend Issue Certificate of Approval (B) Tug Suitability Survey X X X (to form part of the commence operations certificate of approval) X (C) Transportation Vessel/ Loading & Unloading Equipment X X X (D) Loading and Unloading Operations X X X (for both loading and unloading operations) (E) Voyage Manual / Towmaster Instructions X (F) Contingency Planning for Emergencies X (G) Voyage Commencement X X X Issue C of A for tow commencement 15

SOW 4. Transits under own Power SOW to be recommended by Marine Warranty Surveyor on a case/case risk assessed basis, and agreed by Contract Leader(s). 16

Broker responses / comments U/W's should pay for MWS - No change expected, of the common practice of underwriters allowing cost returns. (Survey allowance). Why is duration criteria now Hours vs mileage? - Reliability of Weather forecasting arrangements. U/W s free to agree changes to duration criteria. U/W's/ MWS communication should be via Insured &/or Broker, not solely U/W s/mws. - Can be if so agreed/clear communication/speed of response/as existing CAR COP. Insured to select from agreed MWS Panel. - U/W's agree panel. Insured free to select from the panel. Any changes TBA by U/W s. Role of Insured - too many tasks. - U/W's will consider particular circumstances. Broker to provide policy etc. details to MWS - not U/W's. - Only at MWS request to U/W's. No bar on Brokers providing such information. As existing CAR/COP. High level of detail. Should be a generic structure, capable of variation to suit particular risks. - That is the intention. Variations can be agreed between the parties. Expectation that established procedures should govern the relationship. - Not looking to "re invent", but introduce standard and consistent procedures, which are largely in place now. We like the SOW Tables. Would be great if MWS adopted these! / All this looks sensible! Other comments will be responded to / discussed with applicable Contract Leader. 17

Sum Up Why required - Past Rig losses & near misses. Standard MWS Rig COP/SOW designed to clarify roles/responsibilities of the parties, and reduce risk to an acceptable level. Benefits: Clarity of role(s), Clear, standard SOW, addressing the root causes of past losses/near misses. New Rig scope similar in concept to CAR MWS COP/SOW, which widely adopted. COP requirements make sense in defining roles & obligations of the parties. SOW requirements follow present good industry practice. (MWS confirm these practices presently adopted). The Criteria in the Rig Move Warranty, and SOW itself, provides a consistent generic framework that can be tailored to suit the particular risk. What Next? Rig move COP/SOW now ready for release to the market 18

Questions QUESTIONS? 19