Key Enterprise Processes | Hess Corporation
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Key Enterprise Processes

We apply a number of key processes in our company that help to identify and mitigate risks in potential, new and existing operations; achieve operational excellence; and evaluate investment opportunities.

While these processes are focused on our operated assets, it is important to note that we have also established internal expectations for reviewing potential risks in Hess’ nonoperated joint-venture developments. We prioritize four main objectives: building respectful relationships; influencing project outcomes by focusing on issues with the greatest potential impact; establishing governance structures and project assurance plans; and documenting and internally sharing high-value lessons learned. As nonoperated assets represent a significant portion of Hess’ capital spend, we have continued to emphasize our assurance efforts by conducting targeted, high-level reviews of the operators’ facilities and designs.

Enterprise Risk Management

Hess applies a comprehensive, standardized approach to identifying and managing risks of all types across our operations. Our enterprise risk management (ERM) process is used to develop a holistic risk profile for each asset and major capital project, drawing input from subject matter experts, performance data, incident investigations, lessons learned and recent internal audits. In these risk assessments, we identify risks and assess their likelihood and potential impact to people, the environment, our reputation and our business.

Our Risk Management Standard — finalized in early 2017 — applies to all assets and major capital projects and has improved the alignment and integration of risk management across our operations and functional areas. The standard establishes a risk framework, accountabilities and expectations across the organization to provide a consistent and integrated risk management process. Key elements of the standard include the following:

  • Minimum risk management expectations for each asset and major capital project, including risk plans, ERM assessments, functional risk assessments, integrated risk registers and risk monitoring to help ensure consistent adoption and alignment in risk tools
  • A hierarchy of risk assessments, integrated across technical and functional areas, that outlines the level of management review applied to different tiers of risk and drives consistent risk prioritization of mitigation actions on an integrated basis
  • A risk monitoring process with accountabilities and an operating rhythm to help ensure appropriate monitoring, alignment and escalation of risk from the asset, project or function to and from senior management


As part of our ERM process, risk assessments are conducted for all assets and major capital projects annually and for all projects and new opportunities that go through the value assurance process (described below). Risk registers and reports that are generated through these processes are reviewed and updated throughout the year as part of each asset’s and major project’s operating rhythm.

We also require that functional-level risk assessments be included in each asset’s or project’s risk plan, as determined by each function. Examples include identifying and validating concept selection or confirming the technical basis of design for a facility.

In 2017 we concluded a detailed review of integrity risk at our producing assets, as part of our ongoing asset integrity management process. This comprehensive effort, which focused on identifying and mitigating process safety and loss of containment risks, is described further in the Safety and Health section of our 2017 Sustainability Report.

Value Assurance

Value assurance is a review process Hess uses to characterize and assess our major investment opportunities. It entails internal reviews by those who are not directly involved with the asset or project to provide additional objectivity. Following this process helps us ensure that our capital allocation and portfolio management decisions are based on independently reviewed, high-quality input.

We conduct value assurance reviews of our assets and major capital projects as part of the business planning cycle to verify that they add value to our company and that the relevant technical expertise has been incorporated. The reviews focus on economics, subsurface and facility design, environmental and socioeconomic considerations, regulatory requirements and other nontechnical risks. We apply a carbon price of $40 per tonne to the greenhouse gas emissions projected to be generated by significant new projects to evaluate the potential impact of carbon cost on project economics and to compare alternative project configurations.

The value assurance process is closely aligned with our ERM process so that we can apply consistent methodologies and criteria to risks across our company.
value-assurance-process

New Country Entry

Our new country entry process helps us assess nontechnical, aboveground risks when evaluating opportunities in a new country of operation. Through this process, subject matter experts from various functions across Hess evaluate our future operations in a particular country through a detailed risk questionnaire that accounts for social, environmental, legal, external affairs, compliance, commercial and supply chain risks. The purpose of the review, which draws on available information from governmental sources such as the U.S. State Department as well as leading nongovernmental organizations such as the World Resources Institute, is to categorize each risk as high, medium or low based on severity and whether the risk can be easily mitigated.

Through the new country entry process, we endeavor to enhance the quality and breadth of information available to Hess leadership for the evaluation of new opportunities. The process also helps the project team mitigate identified risks once a commitment is made to enter a new country. Ultimately, the process supports our ERM and value assurance workflows, utilizing the necessary information at key decision points in our investment and project planning processes.

Lean

At Hess, Lean is not a short-term program for achieving cost savings, but rather a holistic cultural shift, changing the way we think and act. Central to this shift has been encouraging our leaders to learn fundamental Lean skills and then apply them to business problems. The leaders then coach and develop employees and contractors to generate solutions themselves. The result is a distinctive Lean culture in which continuous improvement comes from the entire workforce — our “army of problem solvers.”

For nearly a decade, we have been implementing Lean principles across our operations to eliminate waste, create value and drive reliability and continuous improvement for our shareholders, business partners, employees and other stakeholders.

We continued Lean implementation across Hess in 2017. We certified more than 80 employees as embedded Lean leaders (ELLs), who then trained their teams in basic Lean skills. Our ELLs each delivered one or more kaizen (Japanese for “improvement”) workshops that endeavored to improve business results for their respective assets. We also documented a standard process for ELL selection, training and development, and assessment that includes standard content, templates and a health check. The health check provides a structured approach for evaluating the process and ensuring accountability. We are now developing over 110 ELLs, with more planned in the future. lean-leader
See examples of success stories on the Lean section of our website at hess.com/lean-advantage

Operational Readiness

Significant operational and EHS risks can occur during commissioning and startup. During these early phases, we make preparations to help ensure that both the physical equipment and the people running the equipment can operate to Hess’ safety, environmental, production and economic performance standards.

For several years we have been improving and formalizing our approach to operational readiness. Project teams undergo three Operational Readiness Assessments during the development of major projects to help identify risks and opportunities and prepare for external, pre-operational regulatory reviews. The Operational Readiness Assessments are aligned with the 14 elements of our EHS & SR management system:

  • Organization and Leadership
  • Management of Change
  • Hazard and Risk Management
  • Emergency Preparedness and Response
  • Compliance
  • Incident Reporting and Investigation
  • Improvement
  • Documents and Data Control
  • Training, Awareness and Competency
  • Performance Measurement and Communication
  • Contractor Management
  • Audit
  • Design, Operations and Maintenance
  • Management Review


As part of each assessment, Hess subject matter experts and contractors, as applicable, engage in a collaborative workshop, contributing cross-functional insights and sharing best practices and lessons learned from other regions. The project team and senior executives regularly review the risks identified through these workshops.