Safety

Driving Continuous Improvement

Our Approach

Keeping our people safe is a company-wide effort, and one to which all Talisman employees are dedicated. Our objective is to become a consistent top-quartile safety performer. We strive for high levels of safety vigilance through safe work practices, site visits, reporting, education and training, as well as the commitment of our people. We are not satisfied with the status quo and have set key indicators for improved performance. We continually learn from both our incidents and successes. We set clear expectations through our global standards and follow up to provide assurance, thorough tracking and reporting.

Our Performance

One of the key safety measures we track is the rate of lost time due to workplace injuries. Our lost-time injury frequency (LTIF) was down 18% from 2009. Although this was still a significant achievement, it fell short of our 30% improvement target. More work is required to achieve our goal of zero safety incidents in our workplace. Our 2011 target is to further reduce LTIF by 20%, compared to 2010.

In addition to tracking key performance indicators, we have been focusing our attention on incidents and potential incidents. We have learned a significant amount about where we need to advance our safety performance. Contractor management will be a main area of improvement for 2011. Site supervision for drilling and completions in North America will become more rigorous. Control of the work on our sites will be enhanced. As well, we will manage our onshore operations with very clear accountabilities between Talisman and our contractors. We will become more structured in our standards upon entry into new areas and how we start new projects.

Fatality in Peru

Although we make concerted efforts to keep all workers safe at all times, tragically, we experienced a fatality in 2010 on the Pastaza River in northern Peru. On April 27, contractor Evaristo Chimpa died from injuries sustained after the guide boat he was travelling on suddenly lost power and was struck by the contractor-operated barge it was supporting. Immediately, we ceased all river operations in the region. Through a detailed and comprehensive investigation, we adapted our processes and, subsequently, we identified opportunities to improve certain procedures and controls, particularly in the area of operator training and vessel inspection. We have since used the findings to enhance the safety of river barge operations in Peru and to make improvements in Colombia and PNG, where we also rely on barges to supply exploration activities.

Communicating 10 Golden Rules For Safe Operations

Crucial to managing personal safety is building an entrenched safety culture where clear rules and procedures are consistently followed to prevent personal injuries. To reinforce our commitment to safety, we have established our 10 Golden Rules for Safe Operations. These rules form part of our global safety culture standard. Compliance with these rules is a condition of working at any Talisman site. In 2010, we rolled out the rules to our global workforce. They were published in nine languages and were supported by a communications campaign of posters, DVDs, booklets, online guidelines for supervisors and face-toface conversations.

Reinforcing Safe Behaviours On The Worksite

Across all our operations, we place a strong emphasis on peer-to-peer observations and supervisor mentoring to raise awareness of job hazards and correct safety behaviours. In 2010, we renewed these programs in our North America and UK operations. In North America, we provided additional training on behaviour-based safety for new and existing workers, and we introduced safety observation training for leaders. In the UK, we used a program that promoted peerto- peer behaviour-based safety among workers. Through this continuing program, employees are trained in effective techniques for carrying out safety conversations in order to coach and encourage co-workers to follow safe work practices.

Improving Contractor Management

Our company works with thousands of contractors worldwide who provide diverse services to our operations. In some areas, they represent a significant portion of the local workforce. Contractors are expected to follow the same safety standards as our employees. In 2010, to bring more consistency to contractor performance, we implemented a global contractor health, safety and environment (HSE) management standard. The standard provides a common system for evaluating and selecting contractors and working with them to enhance safety practices. As a first step, we categorized contractor jobs based on the level of hazardous work. For tier-one contractors involved in the most hazardous work, we now consider their previous safety performance as a prequalification for employment and we require regular safety meetings between Talisman safety managers and the contractor. Looking forward, our goal is to have all tier-one contractors operating to this new standard by the end of 2011.

Reducing The Risk Of Critical Incidents In Our Facilities

Process safety involves plant equipment, processes used to operate a plant, and people who use the processes. By encouraging people to follow the proper operating procedures in our facilities, we can prevent major incidents, such as fatalities, spills and fires. For the past year, we achieved a zero backlog of repair orders for safety-critical equipment. In other words, if this equipment needed to be repaired, we fixed it immediately and reported these corrective actions to management.

Global Review Of Process Safety After BP Incident

On April 20, 2010, an explosion on BP’s Deepwater Horizon drilling rig in the Gulf of Mexico resulted in a fire that sank the rig, causing 11 fatalities, multiple serious injuries and the largest oil spill in history. In response to this devastating incident, we conducted a thorough review of all aspects of our global drilling operations, including well design, procedures, training and equipment. This company-wide investigation reaffirmed that Talisman has appropriate measures and barriers in place to maintain high levels of safety. While this gave us confidence in the processes and procedures we have in place, we recognize that there are inherent risks associated with any kind of complex operation. While removing risk entirely is unlikely, we were able to use our findings to apply additional rigour to our designs, procedures and safety processes.

At the same time, the review also identified the opportunity to develop a more robust incident response plan. For example, as Talisman expands our operations and enters new regions, a commitment to consistent standards is increasingly important. Immediately after our review in 2010, we shared the company’s expectations for well operations and process safety with all site supervisors throughout our global drilling and completions business. We are also developing a global standard on well control, which will set out clear expectations for onshore and offshore operations. This standard will be introduced in 2011. We plan to drill our first deepwater well in the Indonesian Makassar Strait later this year.