1. Lessons Learned from the Application of Risk Management in the Shipment of LNG

2. Outline of Presentation Introduction / History of LNG shipping Regulatory Regime Overview of Risks of LNG Shipping Current LNG Risk Management Practice Assessment of the Impact Understanding Reality / Communications

3. Introduction / History 30 + yrs experience with LNG marine transport Physical properties and behavior of LNG remains constant Significant research work on LNG spills on water and land by some of the major producers No historic major failures in the shipping of LNG Results of research work has been incorporated into industry guidance notes.

4. Ship considered as the containment system System contains the cargo and provides protection to the ship hull from the extremely cold temperatures of the cryogenic cargo. Membrane type LNG tanker does not restrict the view from the bridge. Independent tank is self-supporting Introduction / History

5. Membrane Primary Barrier Membrane Secondary Barrier Primary Insulation Secondary Insulation

6. Introduction / History Spherical Type B Tank Dome Pipe Tower Skirt Insulation

7. Introduction / History Insulation Chocks Prismatic Type B Aluminum Cargo Tank

8. Regulatory Regime IMO (IGC) / SOLAS / ISPS / SIGTTO / Local rules and regulations have provided guidance during design and operations Hazard and Risk Management work has been focused on design accidental events – hazards have been managed by industry Consistency in the management of the LNG hazards for all operator Security and Vulnerability scenarios are newest addition

9. Authorities DomainEngineering Domain Hazard Identification? Declaration of Goals and Objectives? Hazard Assessment? Hazard Evaluation? Formulation of Acceptance Criteria? Hazard Treatment – Prescriptive Requirements? Approval Monitoring Hazard Treatment – Prescriptive Solution Conventional Hazard Management Process

10. Authorities DomainEngineering Domain Hazard Identification? Declaration of Goals and Objectives? Hazard Assessment? Risk Evaluation? Formulation of Acceptance Criteria (Life Safety & Third Party) Risk Treatment – Performance Based Options Approval Monitoring Risk Treatment – Performance Based Solution PERFORMANCE BASED HAZARD MANAGEMENT PROCESS Performance Based Hazard Management Process

11. Overview of Risks of LNG Shipping Incident Scenario dealing with grounding, collision and fire Focused on spills on water during grounding/collision, leaks during transfer operations and fire and explosion on ship or at the port Newest scenario after 9/11 is terrorism and sabotage. Scenario development and credibility approach. Security concerns now have to be addressed as part of the risk management picture Using risk management strategy to address identified undesirable events.

12. Current LNG Risk Management Practice Formal risk management technique in the identification and management of health, safety, environmental and security concerns. Risk management process is supported by the ISM, ISPS and federal/country codes governing LNG shipping throughout the world The success of this risk assessment process is the correct identification of the undesirable events The difficulty with the currently adopted risk management process is the development of acceptable criteria that satisfies both the public perception and regulatory body needs; these criteria will be the measurement of satisfaction from the public

13. Reasons for Risk Management Option Industry trends to Risk-based design Industry trends to Risk-based management of integrity in service Enables approval of novel arrangements Effort focused proportionately on critical areas Better fit with requirements of Safety Case / Formal Safety Assessment Resolves conflicts between marine practice and petrochemical codes Perceived Industry preference

14. Elements of Risk Management Identify Assess Define means to reduce risk Establish priorities Allocate resources Communicate Monitor

15. Assessment of the Impact No significant loss of LNG tank cargo during 80,000+ loaded transits since 1950s Understanding of chemical and physical properties of LNG Heavily regulated industry Multiple barriers of protection or safeguards makes any accidental event difficult Deliberate attacks are the new accident scenarios to be addressed; not much experience in this so credibility has to be taken into consideration Location of vessels in transit makes it an unfavorable target

16. Understanding Reality / Communications Current risk based approach have identified more undesirable events and hazard mechanisms that have to be studied Hazard and Risk Management work has been focused on design accidental events – hazards have been managed by industry Safety management system of operators have focused on accurate risk identification for continuous improvement Approach has either been consequence or likelihood reducing risk management strategy to address identified undesirable events. Security concerns now have to be addressed as part of the risk management picture

17. Understanding Reality / Communications Good industry record with regards to HSE Security & Vulnerability assessments make the industry less vulnerable to an accidental event Still some uncertainties in the modeling of the spill scenario (dispersion and subsequent fire) and the causes of the leaks on the vessels Difficulty in communications of the effectiveness of the barriers of protection or safeguards that will make the potential accidental events unlikely to occur Success dependent on communication and acceptance by public

18. Understanding Reality / Communications Catastrophic Event e.g. Gas Leak Fault TreeEvent Tree Cause s Consequences Inductive Reasoning Deductive Reasoning Pump Failure Equipment Failure Operator Error Process Failure Environmental Extreme Conditions Control Valve Failure Instrument Air Failure Gas Cloud Pool Fire Gas Explosion Jet Fire Fire Ball

19. Way Forward More focus on the modeling of accidental events Better understanding of different failure mechanisms Improve sharing of information to improve risk management (communications to public critical) Development of performance goals that could improve profitability and safety of facilities