The recent trend in the United States and Shell Oil Company E&P has been to increase use of contractors to do specialized work. Many companies now use contractors almost exclusively for operations such as drilling, well workovers, construction, and many speciality and routine maintenance tasks. Today, approximately 75% of Shell Oil Company’s actual operating work force in E&P is contract.

Several recent industry catastrophes have pointed to inadequately trained contract workers as a primary cause. Industry is accused of using contractors to reduce operating costs and contractor safety is an issue in many regulatory initiatives in the United States. Contractor safety performance must be brought up to the same standards as company performance.

The E&P industry has had a long standing practice of using competitive bids based on rigid specifications as our primary method of contractor selection. Historically, the competitive bidding process has been primarily to select qualified contractors who provided the best value for the money. The management of safety has been the contractor’s responsibility with little effort historically to evaluate the contractor’s ability to carry out that responsibility.

Clearly, HS&E considerations must become an increasingly important part of the contractor selection process. In Shell Oil Company E&P we are evolving from a bidder selection process to a program of "Matching Owner and Contractor." We have begun to expand our efforts to make better assessments of contractor’s HS&E capabilities and values in pre-bid considerations. We are focusing our pre-bid evaluations to select contractors that have strong HS&E commitments and values similar to ours. We are looking for contractors who have management processes and structures in place to insure their HS&E performance is consistent with our requirements.

Contractor safety performance in our industry must be brought up to the same standards as operating companies. In Shell Oil E&P we will only use those contractors who can and are willing to do that.

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