AD-7: Quarterly Environmental Monitoring Report Date: August March 2017 2012 Status: Final Draft Page 1 of 9
TABLE OF CONTENTS 1. INTRODUCTION... 3 2. DESCRIPTION OF THE ACTIVITY... 3 3. ENVIRONMENTAL MONITORING... 3 3.1 Implementation of Environmental Management Plan... 3 3.2 Implementation of Approval Conditions... 4 3.3 Additional data collection and sediment quality assessment... 8 Video Transect Surveys... 8 Sediment Monitoring... 8 4. REPORTING ENVIRONMENTAL BREACHES... 9 Page 2 of 9
1. INTRODUCTION In 2013, Woodside Energy (Myanmar) Pte Ltd (Woodside) entered a farm-in agreement with Daewoo International Corporation (Daewoo) with respect to Block AD-7 (AD-7). Woodside and Daewoo hold 40% and 60% interests in AD-7 respectively. Woodside is the operator for deepwater drilling activities and Daewoo is the operator for all other operations and activities with respect to AD-7. Woodside submitted an Environmental Impact Assessment (EIA) for the drilling program within AD- 7 to the Myanma Oil and Gas Enterprise (MOGE) and Ministry of Natural Resources and Environmental Conservation (MONREC) on 15 September 2016. Approval of the EIA including an Environmental Management Plan (EMP) was received from the MONREC Environment Conservation Department (ECD) via MOGE on 16 February 2017. Woodside has prepared this Environmental Monitoring Report for submission to MOGE and MONREC in accordance with the Environment Management Plan (EMP) and MONREC requirements. This quarterly report covers the reporting period of 12 May to 12 August 2017. 2. DESCRIPTION OF THE ACTIVITY Drilling operations in AD-7 commenced on 26 February 2017 from the Dhirubhai Deepwater KG2 (DDKG2) drillship in accordance with the Project Description provided in the EIA. Operations included a number of support vessels operating primarily out of Yangon (Myanmar) and Ranong (Thailand). Woodside undertook the drilling activities in AD-7 as operator on behalf of the AD-7 Joint Venture. To date, the drilling program activities within AD-7 have included the re-entry to Thalin 1B and associated testing, and Thalin 2 drilling. Thalin 2 drilling activities commenced on 10 May 2017 and this operation continued during this quarterly reporting period until 6 June 2017. On the 6 June 2017, the DDKG2 transited out of AD-7 to commence drilling in another Block. 3. ENVIRONMENTAL MONITORING 3.1 Implementation of Environmental Management Plan The Environment Management Plan (EMP), was successfully implemented throughout the duration of the activity. Routine monitoring of environmental performance during the activity was conducted in accordance with the EMP. To date, the monitoring program has confirmed all environmental parameters were within the limits described in the EMP for the reporting period. Page 3 of 9
3.2 Implementation of Approval Conditions In accordance with the AD-7 approval, the following conditions are being reported: Condition (a) To comply with the environmental, social and health programs and monitoring programs as mentioned in the Report in implementing the project; (b) To comply fully with the commitments mentioned in the Report; (c) To comply with the prescribed norms and standards mentioned in the EIA Report for disposal of drilling fluids, drill cuttings, hazardous waste (liquid, solid) including chemicals, and nonhazardous waste; (d) To submit to ECD the location of appraisal wells 30 days prior to the commencement of project; (e) In case that appraisal wells will be drilled in 2018 and 2019, to submit Environmental Management Plan EMP for those wells to ECD for approval; (f) In drilling appraisal well, if it produces not only Dry Gas but Hydrocarbon Fluid more than expected, to stop the drilling and inform ECD immediately, to conduct Oil Spill Modelling if required, to conduct Impact Assessment of Oil Spill and to prepare Management Plan and to submit the Impact Assessment and Management Plan to ECD for approval. (g) To conduct regular monitoring on the oil content in drilling fluid from Mud Pit cleaning; Status The commitments in the EIA are being implemented. All conditions within the AD-7 EMP have been complied with for the reporting period, with the exception of two technical non-conformances reported to ECD on the 19 May and 25 May 2017. Both technical non-conformances were associated with discharge of drilling cuttings above the waterline, as a result of temporary equipment failure and are detailed further within Section 4. The disposal of drilling fluid, hazardous wastes, chemicals and non-hazardous wastes has been undertaken in accordance with the requirements of the AD-7 EMP and Waste Management Plan. No new wells were drilled during this reporting period. Woodside has notified ECD of the location of two new wells (one firm and one contingent) proposed in AD-7 on 1 August 2017. Recommencement of drilling within AD-7 is expected to commence upon completion of drilling activities in another Block. In the event appraisal wells are proposed to be drilled in 2018/2019, a revised Environmental Management Plan will be submitted in to ECD. Thalin 1 re-entry and Thalin 2 confirmed the biogenic dry gas petroleum system as per expectations outlined in the EIA. Mud pit oil content is monitored in accordance with EMP condition to ensure discharge does not exceed Page 4 of 9
(h) To comply with IFC guidelines for mercury and cadmium content in stock barite; (i) To collect additional primary baseline data during exploration and appraisal drilling operations (j) To submit oil spill contingency plan, Waste Management Plan, Emergency Response Plan and the class certificate of DDKG2 to ECD prior to commencement of Operations; (k) Prior to the commencement of the project, to submit the DDKG2 ERP and ERP bridging documents which are under preparation, as mentioned in Clause 8.10.2 of EIA Report and those documents should basically, at least, cover the following points:- - Medical emergencies including medivac procedures; - Search and rescue includes man-overboard procedures and helicopter ditching; 1% oil content. Discharges have not exceeded 1% during the reporting period. Stock barite was tested prior to drilling program. Measured cadmium levels were less than 0.5 mg/kg and mercury levels less than 1 mg/kg, which are below the prescribed IFC limits of 3 mg/kg cadmium and 1 mg/kg mercury. As outlined in Section 3.3, baseline data collection has commenced during exploration and appraisal drilling operations. Oil spill contingency plan, waste management plan, class certificate of the DDKG2 was submitted to ECD on 8 February 2017, prior to commencement of Operations. The DDKG2 ERP and ERP bridging documents were submitted to ECD on 8 February 2017 and include: Medical emergencies, including medivac procedures; Marine search and rescue (man overboard and helicopter ditching); Cyclone preparedness and response; and Hydrocarbon/ chemical spills to the marine environment. Loss of well control - Heavy weather/cyclone; - Hazardous material spill response; - A MODU incident such as a loss of well control; and hydrocarbon release including blow out. (l) In case of any changes in project design and operation related to the project, Woodside Energy (Myanmar) Pte. Ltd. to inform ECD on behalf of its Joint Venture Partners; Changes to project design are managed in accordance with Section 8.8.2 Management of Change of the AD-7 EIA. In accordance with Section 8.8 of the AD-7 EIA and Condition (l), any significant change in risk requiring modification of the EMP will be submitted to MOGE, MONREC and relevant authorities. No changes were required to be reported during this reporting period. Page 5 of 9
(m) As per Stakeholder Engagement Plan (Table 9.2), to continuously consult with local communities and to consider and incorporate their suggestions and wants; (n) The ongoing EIA process (e.g. primary data collection, information and reports submission and submission of Management Plans, etc.) to be provided collectively as EIA follow-up report; (o) Not to conduct NADF Mixing business in Myanmar; (p) If Biocide is used as drilling fluid, to choose non-organohalogen type; (q) To use less toxic group (III) synthetic organic based fluids; (r) To use low sulphur marine fuel with sulphur content of 0.05%; (s) During 2017 Drilling Program to collect additional data including ROV Footage of benthic habitat, local bathymetry and seabed features, temperature, salinity and water depth data and to submit the result to ECD; (t) All the contracted vessels must (1) comply with IMO ballast water requirement (2) record taken up and discharge of ballast Water (3) submit to ECD together with the monitoring report as per prescribed timeline (u) At the place near the appraisal well drilling, to conduct assessment and regular monitoring of sediment and to conduct impact assessment in case of abnormal sediment changes in quality, to implement Management Plan and to submit it to ECD for approval The stakeholder engagement plan has been implemented throughout the drilling program. As part of stakeholder engagement for proposed drilling in AD-8 and AD-1 in June 2017, an update on AD-7 drilling was provided to the Rakhine Chief Minister and relevant stakeholders in Sittwe and Kyaukphyu. Updated EIA follow-up reporting information such as baseline and sediment monitoring reports and updated EMP and will be provided in accordance with Conditions (E) and (V). No non-aqueous drilling fluid (NADF) has been mixed in onshore Myanmar. NADF is mixed on board the DDKG2 as part of the drilling program. No biocides containing organohalogens have been used. The base oil used during the drilling program is a Group III category fluid. Marine fuel used for the DDKG2 is primarily sourced from Yangon Puma Facility, Myanmar, and fuel bunker delivery notes confirm the sulphur content is less than 0.05% sulphur. Refer to section 3.3 below for details on Baseline and Sediment Monitoring Program. Results of the Baseline and Sediment Monitoring Program will be provided to ECD when finalised. In accordance with IMO requirements, all project vessels record locations, volume and time of all ballast water uptake or discharges. Ballast water reports will be sent to ECD in Q4 2017 along with the results of the AD-7 Sediment Monitoring Program. Refer to section 3.3 below for details on the Baseline and Sediment Monitoring Program. Page 6 of 9
(v) To submit Monitoring Plan with detailed frequency and responsibility (w) To comply with (clause 111 and 112) Chapter (9) Monitoring Plan of Environmental Impact Assessment Procedure and to submit Monitoring Report of (Exploration Drilling) every three months. Refer to section 3.3 below for details on Baseline and Sediment Monitoring Program. This report is the Quarterly Environmental Monitoring Report for the AD-7 Drilling Program. Page 7 of 9
3.3 Additional data collection and sediment quality assessment In accordance with Conditions (s) and (u), Woodside has commenced collecting additional data as well within AD-7 with the intent of assessing abnormal changes in sediment quality and obtaining ROV footage of the benthic habitat, including local bathymetry and seabed features, temperature, and salinity. Details of the completed video transect survey and sediment quality assessment are provided below. Results of the sediment quality assessment are being finalised and will be provided to ECD in Q4 2017. Video Transect Surveys Title ROV Seabed Video Transects Location Representative Location within AD-7 (Thalin 2) Objectives To collect imagery of seabed before and after exploration drilling for analysis and reporting to further document: a. the baseline existing environment of the deep-water exploration well sites and b. document the localised physical footprint of the drill cuttings and drilling fluids seabed deposition. Synopsis of Up to eight transects of approximately 150 m length running out from the well methodology site location on the cardinal and inter-cardinal compass directions will be filmed at a standardised distance above the seabed before and after drilling. Location On the seabed around the well site. Along up to 8 x 150 m radial transects Sediment Monitoring Title Standard Operating Procedure 2: ROV Seabed Sediment Collection Location Representative Location within AD-7 (Thalin 2) Objectives To collect seabed sediment samples to document and report on sediment quality. Synopsis of methodology Drills cuttings dispersion and deposition modelling demonstrated a predominant trajectory to the north/ north east. Based on the modelled predominant area of cuttings deposition, the sediment sampling designed was planned to capture upstream sediment quality (i.e. least probability of sampling where cuttings depositing has occurred) and downstream sediment quality (i.e. maximising where cuttings have been deposited to describe changes in sediment quality). The top 20 cm of each core sample is used for environmental analysis (80mm diameter). Location On the seabed around the well site at up to 12 sites representing predominant upstream and downstream cuttings trajectory. This document is protected by copyright. No part of this document may be reproduced, adapted, transmitted, or stored in any form by Page 8 of 9
4. REPORTING ENVIRONMENTAL BREACHES During the drilling program, control measures were successfully implemented as described in the AD-7 EIA and EMP to reduce environmental impacts to as low as reasonably practicable. There were two technical non-conformances for the quarterly reporting period. Table 4-1: AD-7 Environmental Non-conformances Date Incident Description Remediation 16 May 2017 (Notified ECD on 19 May 2017) While drilling the 12 ¼ hole, the cuttings dryers and associated auger became temporarily inoperable. Cuttings were temporarily diverted to discharge above the water line via the cuttings chute. Discharge ceased following circulation of the cuttings out of the well. To limit environmental exposure from the inoperable solids control system and the above water line cuttings discharge, drilling ceased and repairs were completed to the cuttings dryer and auger system. Drilling resumed when the system was repaired and with cuttings discharge resuming below the water line, as per normal operations. Actions to prevent future occurrences In the event solid control equipment fails (dyer and auger) and to prevent future discharges of cuttings above waterline, a decision was made to modify the contingent cuttings discharge chute so cuttings are always discharged below the water line. This modification was completed in July 2017. 24 May 2017 (Notified ECD on 25 May 2017) While circulating the 8 ½ hole at target depth, the cuttings dryers became temporarily inoperable. Cuttings were temporarily diverted to discharge above the water line via the cuttings chute. Discharge ceased following circulation of the cuttings out of the well. To limited environmental exposure from the inoperable solids control system and the above water line cuttings discharge, circulating rate was reduced and repairs were completed to the cuttings dryer. Circulation continued at a higher rate after the system was repaired and with cuttings discharge resuming below the water line, as per normal operations. Following this event, a modification was made to the auger to divert cuttings from the end of auger to post dryer discharge point (below waterline). This was completed in early June and prevents discharges above the water line in the event the dryer fails. In the event solid control equipment fails (dryer and auger) and to prevent future discharges of cuttings above waterline, a decision was made to modify the contingent cuttings discharge chute so cuttings are always discharged below the water line. This modification was completed in July 2017. This document is protected by copyright. No part of this document may be reproduced, adapted, transmitted, or stored in any form by Page 9 of 9