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Environmental and Social Monitoring Report

This report has been submitted to ADB by BP Berau Limited and is made publicly available in accordance with ADB’s public communications policy (2005). It does not necessarily reflect the views of ADB.

Project Number: 38919 October 2008 – April 2009

INDONESIA: Tangguh Liquefied Natural Gas Project Operator’s Environmental, Health and Safety Report

Prepared by BP Berau Limited Tangguh LNG Project Operator

Operator’s Environmental, Health and Safety Report Tangguh LNG Project

October 2008 – April 2009

Environmental Health and Safety Report Tangguh LNG Project October 2008 – April 2009

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TABLE OF CONTENTS

ENVIRONMENTAL AND HEALTH SAFETY REPORT TANGGUH LNG PROJECT

TABLE OF CONTENTS..................................................................................................... i

EXECUTIVE SUMMARY ................................................................................................ 1

1. Tangguh E&S Project Implementation of the Environmental and Health and Safety

Aspects of the E&S Requirement ................................................................................. 2

1.1. Update on the Status of the Construction Activities of Tangguh E&S Project ...... 2

1.1.1. Gas Production Facilities – Platforms:..................................................... 2

1.1.2. Gas Transmission – Pipelines .................................................................. 2

1.1.3. Drilling ..................................................................................................... 3

1.1.4. Tangguh LNG Plant and its Associated Facilities ................................... 4

1.1.5. Marine Facilities ...................................................................................... 6

1.1.6. Resettlement-Related Construction Activities ......................................... 6

1.1.7. Tangguh Plant Property Perimeter Fence ................................................ 6

1.1.8. Seismic Activities .................................................................................... 7

1.1.9. Status of Key Permits............................................................................... 7

1.2. Progress on the Implementation or Fulfilment of the AMDAL Commitments ...... 8

1.2.1. Gas Production Facilities - Platforms ...................................................... 8

1.2.2. Gas Transmission - Pipelines ................................................................... 8

1.2.3. Drilling ..................................................................................................... 8

1.2.4. Tangguh LNG Plant ............................................................................... 10

1.2.5. Marine Facilities .................................................................................... 17

1.2.6. Seismic Activities .................................................................................. 18

1.2.7. Operations .............................................................................................. 18

1.3. Tangguh E&S Project’s Performance on the Environmental and Health and Safety

Aspects of the E&S Requirement ......................................................................... 19

1.3.1. Environmental Performance .................................................................. 19

1.3.2. Health and Safety Performance.............................................................. 20

1.3.3. Environmental Management System ..................................................... 21

1.4. Summary of New Major Environmental Regulations during the Reporting Period

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1.5. Summary of Corrective Action Plans Closed Out during the Reporting Period... 22

1.6. Summary of Progress on the Implementation of Outstanding Recommendations

made by the External Panel................................................................................... 22

1.7. Other Relevant Information .................................................................................. 23

2. Level 2 Non Compliance Matrix ................................................................................ 23


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EXECUTIVE SUMMARY

Construction and commissioning activities continued throughout the period both onshore and offshore with good progress achieved on all fronts.

The Project’s safety recorded cumulative Project-to-date man-hours almost 90 million, and a Days Away From Work Case (“DAFWC”) rate of 0.02 from early 2008 until end of April 2009. There is no DAFWC during this reporting period.

As of end of March 2009, the overall LNG project progress stands at about 98.5% complete with construction workforce numbers at about 3000. The workforce continues to decrease throughout 2009 as construction approaches completion. At the same time, approximately 1000 operations personnel are accommodated at the dormitory A and B and Step 3 camp.

Drilling activities at both VRA and VRB have been completed. The drilling rig Ensco 104 has been demobilized on 18th March 2009 from site, while drilling rig Ensco 108 demobilized on 18th April 2009. Tangguh’s Contractor ENC (Eka Nuri Consortium) has commenced demobilization phase as the drilling program reached completion. The majority of the piping works have been completed with a few remaining works including painting and insulation. Currently major testing and commissioning of facilities are ongoing on the Train 1 and Train 2 processing facilities. Tangguh has began the start up process of LNG Train 1 by the end of January 2009. Condensate is started to be produced. Start up process of Train 2 will be started following completion of the commissioning phase which is currently in progress. The offshore facilities installed by Saipem are complete including the repair work for a leak on VR-A pipeline which was completed in December 2008. On 25th April 2008 the Project issued the AMDAL Compliance report for the period of October 2008 to April 2009) to MOE and related government institutions including the local Government of Bintuni, MIGAS and BPMIGAS. This report is developed from the AMDAL report. The environmental management and monitoring programmes continue to be implemented in line with the approved AMDAL. The revegetation and slope protection programme are well progressing well.


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1. Tangguh E&S Project Implementation of the Environmental and Health and Safety Aspects of the E&S Requirement

This six-monthly report covers the period of October 2008 – April 2009 which is consistent with the Project AMDAL reporting period to the Indonesian Ministry of Environment. This report has been prepared to fulfil the Borrowers’ obligations under: Section 1.12 (Certain Environmental, Involuntary Resettlement and Indigenous Peoples Matters), Paragraph (B) (Regular Reports), sub-paragraph (a)(Environmental and Health and Safety Report) of the ADB Tranche PSC Parties Agreement dated as of 31 July 2006 and Section 1.18 (Certain Environmental, Involuntary Resettlement and Indigenous Peoples Matters), Paragraph (B) (Regular Reports), sub-paragraph (a) (Environmental and Health and Safety Report) of the Japanese Tranche PSC Parties Agreement" dated as of 31 July 2006. The Social Report, consisting of two sections; (a) Land Acquisition Resettlement Action Plan (“LARAP”) and (b) Social Report on the integrated social programme (“ISP”) required under Environmental and Social Requirement Section 1.12 on ADB Tranche (or Section 1.18 on Japanese Tranche), point (B) Regular Report, items (b) and (c) will be submitted separately. The report format follows the agreed template outlined in the PSC Parties Agreement. 1.1. Update on the Status of the Construction Activities of Tangguh E&S Project Tangguh E&S project construction activities during the 6 month period from October 2008 – April 2009 include the following:

1.1.1. Gas Production Facilities – Platforms:

Drilling activities at both VRA and VRB have been completed. The drilling rigs Ensco 104 and Ensco 108 demobilized from site on 18th March 2009 and 18th April 2009, respectively. 1.1.2. Gas Transmission – Pipelines Two offshore subsea pipelines, one from each platform, have been installed to transport the multiphase flow from the VR-A and VR-B to the LNG plant onshore. This will ensure reliability of supply, which is a critical consideration for the Project and its customers. Both gas transmission pipelines have been installed and are in service. The repair of the VRA riser leak was completed in December 2008 and the pipeline was successfully dewatered in February 2009.


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VR-B Platform

VR-A Platform

1.1.3. Drilling a) VRB Platform: The ENSCO-108 drilling rig drilled and completed eight gas production wells. These wells are available to supply gas for Train 1 production operations. A total of nine wells was planned to be drilled from the VRB platform but only eight got to the production zone. VRBO7 was temporarily abandoned for technical reasons. b) VRA Platform: The ENSCO-104 drilling rig completed the drilling on VRA platforms. Six wells have been completed as planned and are ready to supply gas for Train 1. A key area of delivery of AMDAL commitments for the drilling program is the management of drilling mud wastes and cuttings. Drill Cuttings Re-Injection (“DCRI”) was the option recommended and approved in the AMDAL for use at Tangguh. The DCRI permit was obtained in January 2008 through Minister of Environment Decree no. 17 year 2008. The drilling mud and cuttings were reinjected into the annulus of the reinjection well, with efforts to minimize overboard discharge to the extent possible. The VRA-01 and VRA-05


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were used as the reinjection wells on the VRA platform, while VRB-01, VRB-02, VRB-05, VRB-06, and VRB-09 were used on the VRB platform. The DCRI program for both platforms has been completed in line with the permit requirements.

1.1.4. Tangguh LNG Plant and its Associated Facilities

The EPC contractor for the engineering, procurement and construction of the Tangguh LNG Plant and its supporting facilities is a consortium of Kellogg Brown Root (KBR), Japan Gas Corporation (JGC), and PT Pertafinikki. The consortium is referred to as “KJP”. The facilities being built by KJP include:

• LNG processing plant and storage;

• Marine facilities (Temporary Construction Jetty, Combo Dock and LNG Jetty);

• Living accommodation;

• Administration offices,

• Shore Base for drilling and LNG production operations

• Supporting facilities such as roads, communications, power generation, and waste management facilities.

The Project’s safety recorded cumulative Project-to-date man-hours almost 90 million, and a Days Away From Work Case (“DAFWC”) rate of 0.02 from early 2008 until end of April 2009. There is no DAFWC during this reporting period.

Tangguh LNG Facilities Overview

As of end of March 2009, the overall LNG project progress stands at about 98.5% complete with construction workforce numbers at about 3000. The workforce continues to decrease throughout 2009 as construction approaches completion. At the same time,

Trains Utility & ORF

LNG Jetty

Combo Dock Shore Base & Dormitory


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approximately 1000 operations personnel are accommodated at the dormitory A and B and Step 3 camp. Most of the supporting facilities have been completed and handed over to BP.

Shorebase and Office/Dormitory Complex

The majority of the piping works have been completed with a few remaining works, including painting and insulation. Currently major testing, commissioning and start up of facilities are ongoing in the Train 1 and Train 2 processing facilities. The start up process of Train 1 has been initiated by the end of January 2009. Condensate production commenced. Start up of Train 2 will follow completion of the commissioning phase which is currently in progress.

As part of the start-up process, some gas has to be flared. The latest calculations are higher than previously estimated during the AMDAL study, due to unexpected longer start up period. BP has formally informed this to the Ministry of Environment (MoE) and the MoE has provided a formal reply stating their understanding of the circumstances. BP is committed to implement efforts to ensure that flaring activities are done in an efficient manner; and volume of gas flared and air ambient quality will be monitored. During the start-up period, hydrocarbon and emulsion carried in the produced water were found, resulting in a higher hydrocarbon concentration than the permitting requirements. Phenol and COD concentrations were also found to be higher than those expected during design phase. Tangguh is currently preparing a short term solution with a temporary treatment unit, while reviewing the long term solution. Close coordination with Ministry of Environment is maintained. The produced water will only be discharged to the environment after the quality is confirmed to be within the permitting requirements.

Dormitory�A�

Central�

Building�

Dormitory�B�

Mosque�

Admin�

Building�

Custom�

Building�

Shorebase�


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Site activities for the next several months will focus on:

• Hand over of Train 1

• Completion and start of production of Train 2 1.1.5. Marine Facilities The Combo Dock is fully operational allowing access to LNG site for loading and unloading equipment and material. The helideck, which is attached to the Combo Dock trestle, is complete and has been certified by DGAC (Directorate General of Air Communication), Transportation Department in March 2008. The helideck will be utilized for emergency purposes only. For non emergency use, the current onshore based helipad will still be used for air transport using the helicopter. Based on site survey on Combo and LNG docks prior to operation phase, it was envisaged that the depth of water around the docks is getting shallower, therefore dredging is required to ensure that the water depth of the docks is sufficient for vessel to berth. Dredging program for the marine water around LNG and Combo docks was started in March 2009 and was completed in May 2009. The permit for dredging activities has been issued by Minister of Transportation through decree No. 65 year 2009.

LNG Jetty Combo Dock 1.1.6. Resettlement-Related Construction Activities There was no new construction activity in Tanah Merah and Saengga. Construction of additional public facilities in Onar Baru is ongoing – see parallel Operator’s LARAP Report for details.

1.1.7. Tangguh Plant Property Perimeter Fence Construction of the 24 km long Tangguh LNG Plant property perimeter fence was completed in May 2006. Security patrols are conducted on regular basis using the local guard force employed by KJP. Some parts of the perimeter fence are currently inaccessible and need to be maintained.


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1.1.8. Seismic Activities A seismic program has been started on 8th December 2008 for Western Berau at West of Bintuni Bay area in the Fakfak Region, West Papua. The UKL/UPL for the program has been approved by MIGAS in December 2007. The seismic survey is done based on Ocean Bottom Survey (OBS) technology, where sensor cables were laid on the seabed. The energy source of the seismic wave is resulted from airgun. JNCC (Joint Nature Conservation Committee) guideline is also implemented to minimize acoustic impact to marine mammals. 1.1.9. Status of Key Permits LNG Plant and Its Supporting Facilities During this reporting period, BP has secured three major permits as follows:

• Permit for temporary hazardous waste storage for operation phase under the permit number 858 of 2008 dated 4 November 2008.

• Safety Exclusion Zone (SEZ) permit through a letter no. 23102/18.03/DMT/2008 dated 24 December 2008 from MIGAS.

• Permit No. 65 year 2009 regarding dredging activity to deepen the LNG Tangguh special port area from Minister of Transportation, valid for one year.

Gas Production Facilities and Gas Transmission Pipelines All of the environmental related permits have been approved by MoE, and reported in previous periods.

Drilling Drilling program both on VRA and VRB has been completed. The permit that was obtained during this reporting period was the permit for wastewater discharge from drilling activities was issued by Ministry of Environment through Decree no 822 of 2008 dated 22 October 2008 and valid for 2 years. The permit included all supporting facilites of drilling rig ENSCO-108, ENSCO-104, and LCT SMS 152. Those facilities produced domestic wastewater, brine reject water, and cooling water. Other required environmental related permits have been approved by MoE, and reported in previous periods.


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1.2. Progress on the Implementation or Fulfilment of the AMDAL Commitments

The main environmental programmes for Tangguh at this stage of project development focus on providing day-to-day assurance on AMDAL and environmental compliance for all construction activities at site as well as the preparation of the Operations phase. Environmental training and socialisation continued for contractor personnel to improve the working level awareness on environmental commitments for the Project. Environmental induction is included as part of the Contractors’ kick off meeting prior to mobilisation to site. Below is summary result of the environmental management and monitoring programmes for each of the Tangguh Project E&S activities. 1.2.1. Gas Production Facilities - Platforms

Environmental management from platforms VR-A and VR-B is mainly conducted as part of the Drilling programs and will be discussed in Section 1.2.3 below. 1.2.2. Gas Transmission - Pipelines The onshore GPF activities are complete. Few activities on waste management and fuel storage and handling are continuing until full completion of the GPF work. A small quantity of waste generated from their activities is disposed to KJP’s waste facility. The VRA pipeline repair has been completed in December 2008 and the pipeline dewatering was done in February 2009, in line with the permit no 222/2008 requirements. 1.2.3. Drilling

The main focus for environmental management covers both the onshore shore base facility and the offshore drilling activity which started in May 2007. As approved in the AMDAL and permitted through MOE no objection letter no B3381/Dep.IV/05/2007 and Minister of Environment Decree no 17 of 2008, the drilling mud and cutting were reinjected into the Faumai formation, except for the first well drilled in each platform and the top hole sections of the subsequent wells. To ensure its low toxicity, the mud has been LC50 tested prior to the use in the drilling programs. Cutting samples have been LC50 tested and result indicated low toxicity. A drilling mud and cutting waste management procedure has been developed and implemented. Overboard discharge has been minimised to the extend possible and strict rule has been applied that only water based mud and cuttings that passed the toxicity test can be discharged overboard after demonstrating effort to reinject or temporary store it is technically not feasible. The total volume of mud and cuttings reinjected and discharged is presented in Table 1. As required by the permit, DCRI implementation is reported to MoE quarterly.


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Table 1 DCRI Implementation (as of 31 March 2008)

Description VRB VRA Total volume of slurrified cuttings, Sea water (SW) and other fluids injected

435,617 bbls 195,518 bbls

Water based mud, cuttings, brine and seawater discharged overboard (First Well)

23,448 bbls 9,629 bbls

Water based mud, cuttings, brine and seawater discharged overboard (Top hole section)

51,575 bbls 43,720 bbls

Water based mud, cuttings, brine and seawater discharged overboard (Others)

50,841bbls 17,212 bbls

Note: Other fluids could includes cement slurry, mud contaminated cement, cement spacer, pit cleaning or tank dirt, rain water run off through oil separator, and cement unit cleaning water.

During drilling operations, there are drilling cuttings which are not suitable to be injected into the formation due to their physical properties. These cuttings were temporarily stored in the Shore Base warehouse. The cuttings have been tested for toxicity and the results shows that the cuttings are not hazardous. Close to the end of drilling campaign, these cuttings were sent back to the drilling rig, and have been successfully reinjected. The overall DCRI has been successfully implemented in line with the permit requirements. Discharge into Bintuni Bay water has been significantly reduced mainly to the first well and top-hole sections of subsequent wells where water-based mud is used. Another focus area for environmental management during the reporting period was waste management at the Tangguh Shore Base operated by ENC on behalf of the Project and rigs operated by ENSCO. ENSCO sent the segregated waste to shorebase. Domestic wastewater from the rigs was treated in the Sanitary Treatment Plant on board. The sewage was monitored weekly by internal laboratory and monthly by accredited laboratory. This has ended with the demobilization of the ENSCO 108 drilling rig in March 2009 and ENSCO 104 in April 2009. ENC manages the hazardous and non hazardous waste generated from their activities and from ENSCO at the Shore Base facilities and KJP removes this for disposal to either their waste facilities or for transfer to an off-site waste collector. Sewage at the Shore Base is collected in a holding tank which is regularly emptied by a KJP vacuum truck. The regular removal of waste from the Shore Base by KJP is improving and is expected to continue. Fuel storage and handling are being managed to the required standards. Regular training sessions are conducted to raise awareness and improve work practices related to environmental protection. The shorebase is currently under handover process from drilling to operations team.


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1.2.4. Tangguh LNG Plant The environmental management efforts continued on slope stabilization and re-vegetation, waste management, water supply, management of surface water run off, fuel and chemical storage and handling, and emission and ambient air monitoring. A. Slope Stabilization and Re-vegetation Construction of permanent drainage systems is almost complete. The drainage is required to direct the storm water to its natural path. Regular cleaning of temporary drainage is also performed to ensure that storm water can flow to its natural path without causing erosion. Slope stabilization is well progressing.

Overall slope stabilization well progressing Approximately 365 hectares of the 3,266 hectares set aside for Tangguh LNG Project in West Papua Province, Indonesia, were cleared for development of Tangguh LNG facilities and construction access. The rest of the area is being maintained as a buffer zone. As required by AMDAL, areas cleared for construction access or temporary facilities but not used for permanent project facilities must be re-vegetated using native species. Some of the temporary facilities have to be retained to support the early phase of the operation stage. Latest estimate on the total area to be re-vegetated is about 140 hectares. The site work for revegetation has been started in May 2008. A KJP subcontractor is performing the work including the establishment of a nursery to produce and maintain seedlings. The planting work is currently well in progress and as of early April 2009, about 61 ha of bare land has been planted with 150,000 tress. The whole revegetation program is expected to complete in 4Q 2009.


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Nursery Revegetation Activities

B. Waste Management

The waste management program at the LNG Plant site continues to improve. The program covers the organic and inorganic waste as well as hazardous waste, such as, used oil, used batteries, etc. In addition to waste generated from LNG construction activities, KJP is also responsible for the disposal management of the waste generated from the Shore Base activities and the non hazardous waste generated from the completed Dormitory A and B, Administration and Central building activities, while the collection of the waste as well as transportation to KJP waste management facility is managed by BP operation. Inventory of all types of waste generated during this reporting period and its treatment or disposal routes is attached. The waste segregation criteria and the waste disposal routes are explained below:

1. Hazardous waste (used oil, oil filters, paint cans, batteries, oily rags, aerosol cans, contaminated soil/materials, etc) is delivered to Central Waste Accumulation Area #1 (CWAA) in the Step 1 area and stored in the temporary hazardous waste storage prior shipment to licensed hazardous waste collector (PPLI) in Bogor. PPLI is also providing onsite assistance in the packaging and labelling of the hazardous waste prior to transportation to Bogor. The burnable hazardous waste such as oil rags and some used oil is delivered to the MoE permitted hazardous waste incinerator located at the site.

2. Landfill waste which includes damaged cement bags, rock wool, Styrofoam

boards, small scrap metal & cables, asphalt drums, HDPE-sheets is disposed into onsite non hazardous landfill. The current landfill is already full and new non hazardous landfill has been constructed to accommodate the waste from remaining construction activities. However, based on recent investigation and input from PPLI, the landfill is being reconstructed to ensure its integrity against the standard. The re-construction of new embankment and the installation of HDPE sheets have been completed.

3. Reusable waste, such as, used tires, large scrap metal-spools, pipe cut-offs,

cable, timber is transported to Central Waste Accumulation Area (CWAA) 2 located next to non hazardous waste incinerator. This waste is available to any subcontractor that may wish to use it.


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4. Re-cycleable waste, such as, food/drink cans, plastic bottles, glass bottles

cardboard/cartons are stored in a container next to construction jetty for regular shipment to the non-hazardous waste collector in Sorong.

5. Timber waste. An intensive program has been implemented to manage timber

waste generated from construction activities mainly from equipment packaging. A wood chipper machine is used to chip the timber waste. The wood chip is utilized for covering the organic waste pit and for later composting and re-vegetation program. KJP provides a dedicated team to operate and segregate the timber waste for chipping.

6. Food waste. Majority of food waste is processed in the onsite composter

however some amount is still disposed into waste pits. Per the input from PPLI KJP has planned to improve the pits including the closing of the existing waste pits and constructing a new sanitary landfill per the industrial standard. KJP has performed site survey in September 2008 to February 2009 to investigate the existing condition within the waste pit and surrounding area. The survey covers topographical and soil investigation to identify the existing site condition as well as any potential impact to the surrounding environmental particularly to the ground water. Due to health risk associated with construction of the designed landfill in current organic waste pits location, a new landfill location is proposed not far from the current organic waste pits. Investigation of the soil condition is currently ongoing including the ground water level and permeability test of the location. 7 boreholes for water level and permeability test have been completed. KJP has committed to finalize the organic waste pits issue by Q4 2009. The composter is in service to compost food and organic waste generated from construction as well as from the dormitories and office complex operated by BP operation. The composter produces about 15,000 kg/month of compost to be used for re-vegetation program as planting media and fertilizer.

7. Combustible waste (paper, carton, wood chips etc) is transported to non

hazardous waste incinerator for burning.

8. Medical waste Medical waste is now transported regularly to Fatmawati Hospital at Jakarta via PPLI. During this reporting period about 300 kg of medical waste (comprising infusion bottles, soiled cotton wool, gloves bandages, sharps, catheter set, etc) were sent to the hospital for incineration.

Each of KJP’s subcontractors is responsible to collect and transport all wastes arising from their activities to the designated disposal or waste laydown areas (CWAA 1 and 2, landfill, waste pit, etc). Currently there are 20 subcontractors and each has an Environmental Representative that oversees the implementation of Environmental requirements for their activities. Overall, solid waste management continues to improve, however, further action is still required to manage the organic waste pits and work is in progress to correct the deficiencies.


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Regular monitoring is conducted at the waste collection and storage points and documentation for waste transfer, including the manifest, when the waste is transported offsite and received by the collector is reviewed as part of the monitoring process. Regular inspections are also conducted on CWAA, landfill and incinerator. Most waste is segregated at source and the balance is segregated at the incinerator area. The operator skill levels have improved; however, regular reminders and monitoring are still required to ensure that operators follow the operating procedure. Liquid Waste Liquid waste generated from the construction activities consists of domestic sewage from camps/field toilets, brine water reject from the Reverse Osmosis (RO-desalination) units, waste water from pre-commissioning and commissioning activities as well as brine water from the permanent desalination facility for operation phase that has been operating since December 2007. The permanent desalination facility supplies water for construction purposes and for support of personnel in the camps and permanent accommodation and office facilities. Sewage is treated with 4 Sewage Treatment Plants (STP). The Step 2 camp STP was de-activated at the end of March 2008 as previously reported. A list of the active STPs is outlined in the following table:

Table 2. List of STP, its location and capacity

STP Location Capacity

Step 1 Step 1 area 200 m3 Zone A Step 3 camp 350 m3 Zone B Step 3 camp 1000 m3

Zone C Step 3 camp 625 m3 Currently number of field toilet is decreasing toward the completion of the project. Only 30 field toilets with holding tanks which are currently in operation. The holding tanks are emptied regularly and sewage is discharged to the step 3 camp STP facility using vacuum trucks. In addition to the field toilets, sewage from shore base are also removed using vacuum trucks to step 3 camp STP. Sewage from dormitory A and B as well as office complex was processed in the permanent STP which is currently being commissioned and soon will be in full operation. The treated waste water has been discharged to -13m LAT outfall line at the LNG jetty. Since last reporting period the BOD levels of treated sewage effluent from the accommodation camps has been continuously maintained within the standard of 100mg/l consent level as required by the MoE regulation no 112 Year 2003. The treated effluents from the various STPs are continuously being discharged through one outfall line to the -13m LAT at the LNG jetty as required in the AMDAL.


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Pre-commissioning/Commissioning and Start Up Waste Water As part of commissioning work, KJP has to perform several tests on the equipment installed in the plant. The tests include flushing and chemical cleaning. These activities generate some amount of waste water that will be disposed to environment. The wastewater has been treated properly to meet the effluent standards required under the AMDAL and pre-commissioning and commissioning wastewater discharge permit no. 490/2007 prior to disposal. The treatment of the waste includes settling and neutralization of chemically contaminated waste water. As per AMDAL and wastewater discharge permit no. 490/2007, the chemically contaminated water is treated in the permanent neutralization pit in the utilities area and discharged to -13 m LAT at the LNG jetty. However, due to technical issue related to pumping unit, the neutralization process at the pit can not be performed hence temporary neutralization pits were constructed to treat all the waste water from commissioning. The treated waste water was then disposed to the -13m LAT discharge line after complying with the standard stipulated in the permit 490/2007. Train 2 pre-commissioning and commissioning, as well as the start up of both trains are governed by the wastewater discharge permit no 222/2008. As was done for the train 1, wastewater from precommissioning and commissioning of the train 2 was also treated and tested prior to discharge. Regular reporting to MoE as required by the permits has been maintained. During the start-up period, hydrocarbon and emulsion carried in the produced water were found, resulting in a higher hydrocarbon concentration than the permitting requirements. Phenol and COD concentrations were also found higher than expected during design phase. For the long term, the hydrocarbon is expected to be managed by existing equipment (including hydrocyclone) as soon as the plant starting operations in design rate, and emulsion is expected to be controlled by chemical addition. However, current design does not include equipment to treat phenol and COD to be in line with requirements. Tangguh is currently preparing the short term solution with temporary treatment unit, while reviewing the long term solution. The short term solution currently includes provision of filtration/adsorption. Additional processes using chemical injection, aeration and biological treatment are being tested as well to obtain optimum solution for the long term. Close coordination with Ministry of Environment is maintained. The produced water will only be discharged to the environment after the quality is confirmed to be within the permitting requirements. Dredging Based on site survey on Combo and LNG docks prior to operation phase, it was envisaged that the depth of water around the docks is getting shallower, therefore dredging is required to ensure that the water depth of the docks is sufficient for vessel to berth. Dredging program for the marine water around LNG and Combo docks has been commenced in March 2009. The dredging was performed as per the requirement stipulated under the AMDAL and Ministry of Transportation permit including the disposal of the dredged material which is to the disposal point as outlined in the AMDAL. Total volume to be dredged is about 145,000 m3 (Combo Dock 144,000 m3, LNG 1000m3).


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The dredging activities have been completed in May 2009. Sea water sampling around the docks as well as around the disposal point have been taken and currently is being analysed. C. Water Supply Fresh water supplies required for project activities are secured from several sources including bottled water, temporary RO facility and the permanent desalination facility. The average water production from the RO is 1000 m3/day while the permanent desalination facility is 750 m3/day which gives the total production of 1750 m3/day. Monitoring was conducted on the intake and discharge point of the RO facility and the results indicate that the discharge brine water meets the requirements of maximum 5% above the average ambient seawater salinity. The ambient salinity measured is in the range of 26-29 ppt and the salinity within compliance point (30 m radius from discharge point) is less than 5% above the ambient salinity. Drinking water is treated by a filtration system of sand and sometimes carbon filters and chlorination. Treated sewage effluent from the STP’s is used for dust suppression.

D. Management of Surface Water Run off Acid Soil Sulphate Material (ASSM) continues to be managed effectively in line with the completion of major earthwork activities and the improvement in slope coverage with vegetation, hence reducing the exposure of acid soil to air. Monitoring is continuing at the Shorebase drainage outlet. Sampling at this point shows pH values are improving to its baseline of 5-9. Monitoring and liming is ongoing to ensure that the pH of the surface water from the area continuously meets the baseline. Improvement was also observed in the turbidity sampling results. Turbidity levels decreased significantly which is in line with the completion of earthwork activities and permanent drainage facilities which reduce the sediment/erosion flows into the nearby water stream. E. Fuel and Chemical Storage and Handling The project’s policy is to confine all fuel and liquid chemical storage in retention berms/secondary containment to prevent against the risk of spill contamination to the soil. The standards for the containment are being monitored periodically for compliance through internal audits and inspections. Drip trays are used during maintenance and refuelling and personnel involved in these activities have been properly trained. Posters are strategically placed to maintain awareness on proper re-fuelling and maintenance procedures. Full and detailed records are maintained of any spills, however minor. The frequency and volume of spills due to fuel handling and storage activities has decreased and any occurrences are immediately cleaned up and recorded. All oil spill incidents, despite of the volume, is reported


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monthly to the Directorate General for Oil and Gas (MIGAS) under the KKP-3 reporting mechanism. During the period of reporting, there were two spill incidents, both happened in March 2009. The volumes of unrecovered condensate spill in the first incident was 12.4 bbls and 5.6 bbls in the second incident, both categorized as operational hydrocarbon spills. Immediate actions have been taken by isolating the source of spill and recovering the spill including removing contaminated soil/gravel for disposal to PPLI. Analysis was also done to understand the root cause of the spills and recommendations were provided to prevent future spill. The first spill occurred when the oil processing unit (CPI-Corrugated Plate Interceptor) experienced an upset condition hence resulting in the overflow of oily water from the unit. The unit was then isolated to stop oily water flow into the unit. It is estimated that approximately 440 barrels of clean produced water overflowed the CPI, washed onto the ground and partly flowed into the concrete storm water ditch and into the creek. Roughly 1,700 bbls clean produced water flowed to the sea. There was approximately 8 bbls of unrecovered condensate spilled to the sea and 4.4 bbls into the creek. Immediate actions were conducted to stop, contain and recover the spill, which include stopping the feed to CPI immediately after the overflow was found (at 5:30 am of 11 March 2009), installation of mini oil booms, deployment of oil absorbent socks, recovering the spill, first manually by bucket, then by vacuum truck. The recovered spill was placed in drums, to be handled as hazardous waste. The impacted soil and gravel adjacent to CPI was cleaned by using biodegradable detergent with water to wash the gravel until the gravel and soil is declared free of condensate. Part of gravel and soil that could not be cleaned were removed and disposed of as hazardous waste.

The main corrective actions to prevent further incidents have also been completed, such as Return of condensate recovery system from the CPI to its design intent. Temporary hose from the discharge of the pump has been removed. The overflow was not detected for around 5 hours because the unit was not visited for an extended period due to heavy rain, hence, routine plant checks are re-emphasized to all related personnel throughout the shift –regardless of weather. Timely and comprehensive communication between shifts has also been reinforced. Some actions are still ongoing, including reviewing the entire produced water system to determine actions required to reduce the condensate in water levels from the ORF. This is part of the overall produced water issue currently being addressed.

The second spill was actually related to the first spill. Due to isolation of the CPI unit, the oily water can not flow into the CPI. Hence oily water sump located nearby BP warehouse was overfilled resulting in an uncontrolled release of condensate rich oily water discharged to the surrounding grade, then flowing into concrete storm drain adjacent to the sump. Actions to close the recommendations have been completed to prevent further incidents, including review operating procedure and confirm automatic system of the oily water system works. Other important action to provide an interim SOP/ guideline to be used by Shift Operations team, during the current abnormal operating condition on the oily water system has also been completed.


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F. Emission and Ambient Air Monitoring Air monitoring program has been performed as per the AMDAL requirement:. Sampling of emissions and ambient air was conducted by the external accredited laboratory, Sucofindo. Samples for air emission were taken from the electric diesel generators, hazardous waste and non hazardous waste incinerators, and boiler. For ambient air, samples were taken from several locations within the site such as step 3 Camp, utility, flare and hazardous waste areas. The report indicates that all parameters were in compliance with the applicable Indonesian regulations (Kep-13/MENLH/3/1995 for emission air and PP 41/199 for ambient air) as well as the Tangguh LNG Project Standards as stipulated in the AMDAL.

As part of start-up process, some gas has to be flared with an estimated maximum of gas burned is 0.7 million tons and 1.9 million tons CO2 will be emitted, due to unexpected longer start up period. The latest estimation is higher than previously estimated during the AMDAL study. In AMDAL, it was estimated 0.2 tons of gas will be flared and 0.5 tons CO2 will be released to the air BP has formally informed this to the Ministry of Environment (MoE) and the MoE has provided a formal reply stating their understanding of the circumstances..BP is committed to implement efforts to ensure that flaring activities are done in an efficient manner; and volume of gas flared and air ambient quality will be monitored.

1.2.5. Marine Facilities

Currently the majority of marine activities are related to the drilling program. These include the environmental management for marine facilities focused on actions to prevent oil spills for all marine construction activities and management of waste disposal from offshore vessel operations. A. Oil Spill Mitigations Regular oil spill drills are conducted to ensure readiness for responding to an oil spill incident. Discussions and assessments were conducted after the completion of each drill to identify lessons learnt for further improvements required to sharpen the skills of the response team. As the project moves from construction to operation phase, the Oil Spill Contingency Plan (OSCP) has to be updated to reflect the needs in the operation phase. The update has been completed in February 2009. Along with this, training for the response personnel has been conducted in November 2008 which was supervised by oil spill consultant OSRL/EARL and post assessment was conducted to ensure continuous improvement of the response. B. Waste Management for Vessels Operations

As explained earlier, vessel activities are to support the drilling program and sea transportation for project personnel from Combo Dock to various ports in Indonesia, Bintuni and to the drilling rigs.


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Waste management for marine vessels is maintained per the plan and continues to improve. The management covers liquid and solid domestic waste as well as hazardous waste, if any. The liquid domestic waste is managed according to the AMDAL and MARPOL requirements. The solid non hazardous waste is transferred to shore for disposal to landfill, incineration or further disposal to offsite waste collector company. The used oil which is considered as hazardous waste is transferred to an onshore hazardous waste temporary storage facility prior to shipment to the certified collector for disposal. 1.2.6. Seismic Activities A seismic program for Western Berau at West of Bintuni Bay area in the Fakfak Region, West Papua has been started on 8th December 2008. The seismic survey is done based on Ocean Bottom Survey (OBS) technology, where sensor cables were laid on the seabed. The energy source of the seismic wave is resulted from airgun. Environmental monitoring and management program is being managed in line with the requirements of UKL/UPL which was approved by MIGAS in December 2007. Waste management refers to the MARPOL guideline. Solid wastes are segregated and brought onshore for further handling. Domestic wastewater is treated on barge prior to discharge in line with MARPOL. As required by UKL/UPK, seawater was monitored before seismic activities to obtain baseline data, and during the seismic period. The results show that the seawater condition during the seismic condition is basically the same with the baseline data. JNCC (Joint Nature Conservation Committee) guideline is also implemented to minimize acoustic impact to marine mammals. Soft start method is applied prior to airgun activities. If during airgun shooting, marine mammals are spotted within 500 m, the shooting should be stopped and continued after the area is clear. During the reporting period, the shooting activities were stopped twice to allow marine mammals to swim away from the seismic area. 1.2.7. Operations As part of preparation for Operations phase, a number of environmental contracts and programs have been awarded, including environmental monitoring, Environmental Management System development and hazardous waste disposal contract. With the completion of construction phase approaching, KJP will continue to hand over more facilities in stages. This will require BP Operations to assume responsibility for the implementation of all day-to-day environmental activities and the BP team has been implementing the required environmental programs to ensure smooth transition prior to KJP demobilization phase in 2009. One of the main focus is hand over of waste management facilities which will commence in 2Q 2009. BP has identified and prepared necessary resources to run the waste management onsite during operation phase.


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1.3. Tangguh E&S Project’s Performance on the Environmental and Health and Safety Aspects of the E&S Requirement

1.3.1. Environmental Performance

The environmental management and monitoring programmes are being implemented in line with the approved AMDAL and Lenders E&S requirements. Improvement in environmental performance is evident in many areas. Internal audits and inspections are regularly performed and findings and actions to close these out are recorded in a tracking system to check compliance to the AMDAL and relevant regulations. Discussions are conducted with contractors on a weekly basis to update them on any issues or concerns and agree the way forward for continuous improvement. Preparations for environmental management and monitoring for the Operations phase are ongoing. This is to ensure smooth transition from construction to the Operations phase and to ensure that the existing best practices implemented during the construction phase are carried forward. The development of the plan also includes identification of potential gaps as early as possible and the implementation of corrective measures. Environmental training and socialisation are conducted for contractors’ as well as BP personnel on a regular basis to improve the working level awareness of the environmental commitments of the Project and get their support for continuous improvement of the Project’s environmental performance.


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1.3.2. Health and Safety Performance Safety Key indicators on safety performance are presented in the table below.

Table 3. Safety Performance Key Indicators

Note:

• HiPO = High Potential

• DAFWF = Day Away from Work Frequency

• RIF = Recordable Injury Frequency

• SOC = Safety Observation & Conversation

The project has recorded almost 90 million work hours from the start of work in March 2005 with the average of 3000 project personnel employed in the field on a monthly basis. There is no DAFWC during this reporting period. On 18 February, there was high potential incident onboard the ENSCO-104 drilling rig. An object was dropped resulting from the catastrophic failure of a big bag during lifting operation. An injured person (IP) was subsequently struck a glancing blow on his right shoulder as the Big Bag landed on the rig floor port side stairway landing. The IP sustained injuries of a minor nature which required First Aid treatment, and he returned to work. The incident was classified as High Potential Incident as it is potential to cause lead to severe injury. The incident investigation team was mobilized to the Ensco Rig 104 to define the causes of incident in order to prevent similar incident in the future.


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On 1st February, a fire occurred within KJP Step-3 staff kitchen about midnight. There were flames in the kitchen area over the deep fryers. The flames already reached the ceiling and were spreading outward across the serving area. The ERT teams arrived and extinguished the fire. There were no injuries during this incident. An incident investigation team was formed to prevent similar incident in the future. Safety Campaigns about fire hazards were conducted with each subcontractor including catering contractor (PBU) workforce. The subcontractor workers and KJP’s staff who completed the construction activities are in the process of demobilization. Therefore, the safety campaign continues with the topic of “Safe To The End”. The content of the safety campaign address potential safety risks during the ending period of Tangguh project where normally workers often face a lack of focus to carry out their jobs safely. Health. Implementation of health program is continuing including the monitoring of related health issues such as noise, heat stress etc on worksite as well as program to ensure the healthiness of the personnel which cover regular medical check up, etc. As the construction phase is in the completion stage. The health team is also focusing on the preparation for operation phase, including provision of health monitoring for baseline data prior to the commencement of operation, updated of relevant health procedures including medical evacuation procedures and mass casualties’ response. Regular drills have been performed as well particularly on medical evacuation and mass casualties’ response.

1.3.3. Environmental Management System

The ISO 14001 EMS development has commenced since August 2008. A series of awareness training have been conducted on site, and more training will be provided to relevant personnel within operation organization. Training for internal auditor candidates has also been conducted once, and will be followed by another session to cover the back to back position. Environmental Management System Manual and required procedures have been developed in line with ISO 14001 requirements. Enviromental aspect and impact identification has also been completed, to be follow by setting up of environmental objective, target and program for all operations departments. As required by the AMDAL, the target for the certification of ISO 14001 is one year after start of operation. 1.4. Summary of New Major Environmental Regulations during the Reporting

Period During the October 2008 - April 2009 period, the Ministry of Environment issued a new Decree no 13 of 2009 regarding Emission Standard for Stationary Source from Oil and Gas Industry. This regulation replaced MoE Decree no 129 of 2003 regarding Emission Standard for Oil and Gas Industry. Tangguh already has air emission measurement program which includes provision of manual and online Continuous Emission Monitoring.


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As Tangguh is still in the start up period, compliance to this regulation is currently under detail review with regards to operations phase. The project is in the process of compiling all Indonesian regulations related to health, safety and environment and assessing the applicability of these regulations against Tangguh LNG operations through BP’s HSSE Regulatory Compliance Framework (“Project Emerald”). Compliance Tasks is developed for the applicable regulations. The implementation of this Emerald Framework is being performed in stages from 2008 to 2010 with focus on the potential high HSE Compliance Risks in 2008. The system for high HSE Compliance Risk has been completed in Q2 2009, and the work is continuing for the remaining of HSE regulations until the end of 2010. This system will provide a rigorous regulatory compliance monitoring tool for Tangguh operations. 1.5. Summary of Corrective Action Plans Closed Out during the Reporting Period Specific corrective action plans will be developed if there is a Level 2 non-compliance incident. There were no Level 2 incidents recorded in this reporting period. As there were no Level 2 incidents in the previous report there are no outstanding actions to be closed.

1.6. Summary of Progress on the Implementation of Outstanding

Recommendations made by the External Panel This section provides a summary of progress made during the reporting period in the implementation of all outstanding recommendations (to the extent related to the environmental, health and safety aspects as described in the Tangguh Environmental Management Plan) made by the External Panel in the context of any review or monitoring conducted by it under the External Panel Terms of Reference. Based on the draft Fifth Compliance Monitoring Report by External Panel which was issued in May 2009, there is one Level 1 Non Compliance which is the organic waste pit(s) operation does not comply with AMDAL requirements and commitments. The corrective actions taken by the Project in response to the above finding are explained below: KJP sought assistance from a recognised waste management consultant (WMI/PPLI) to improve the performance of the organic waste pit and the non-hazardous landfill. Based on the recommendation from PPLI, KJP has planned to improve the pits including the closing of the existing waste pits and constructing a new sanitary landfill per the industrial standard. KJP has performed site survey in September 2008 to February 2009 to investigate the existing condition within the waste pit and surrounding area, covering topographical, soil and groundwater investigation. The design proposed landfill location in the current organic waste pits area, however, due to health risk associated with the construction of the landfill in this area, a new landfill location is proposed not far from the current organic waste pits. Investigation of the soil condition is currently ongoing including the ground water level and permeability test of the location. 7 boreholes for water level and permeability test have been completed. KJP has committed to finalize the organic waste pits issue by Q4 2009.


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1.7. Other Relevant Information

The joint External Panel and Lenders’ consultant jointly visited Tangguh LNG site in the

month of March 2009. The draft report has been issued in May 2009 and based on the

draft report; there is one level 1 Non Compliance, which is regarding the organic waste

pit: The organic waste pit(s) operation does not comply with AMDAL requirements and

commitments. Actions have been taken regarding this issue, as described in previous

section.

2. Level 2 Non Compliance Matrix

There were no environmental incidents categorised as Level 2 Non Compliance during this reporting period.

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