To: Professor Mark Abkowitz From: Nur Khairunnisa Abdul Rahimi Date: February 4th, 2013 Re: Assignment

3, NAICS code The six digit NAICS code that is of interest to me is 211111. 211111 is an industrial code for Oil and Gas Extraction. According to NAICS, the Oil and Gas Extraction industry and its subsectors operate or/and develop oil and gas field properties. This industry includes exploration for crude petroleum and natural gas, drilling, completing, and equipping wells, operating separators, emulsion breakers, de-silting equipment and field gathering lines for crude petroleum and natural gas. Besides that, this code includes all activities involving preparation of oil and gas up to the point of shipment from the production property. This subsector includes the production of crude petroleum, the mining and extraction of oil from oil shale and oil sands, and the production of natural gas, sulfur recovery from natural gas, and recovery of hydrocarbon liquids (NAICS). Conducting geological surveys using seismic waves, drilling, and transporting of oil and gas can inflict negative disturbances to the environment. Hydraulic impact up to 150 atmospheres by the seismic waves can destroy tissues and organs of fish and change the existing ecosystem in the targeted area. Migration routes by any particular fish species in the area of seismic surveys are easily disrupted. Some organisms that can only live in strictly determined conditions may die because they are unable to adapt to a new environment (Fossheim). In return, this may negatively affect the entire fishing area nearby, if there is any. The most important and the most deadly risk is an oil spill. It may occur at the platform, anywhere along the pipelines or during transportation, mostly because equipment failures, staff handling errors or extreme environmental conditions. The environmental consequences are especially severe when they happen in remote areas of near the shore. The worst case scenario is a big uncontrolled blowout; an uncontrolled release of oil or gas during drilling or production. Oil or gas begins to flow into the wellbore and up the annulus and/or inside the drill pipe. If this situation escalates, the outcome is a blowout and oil and gas will reach the surface. Blowouts can cause huge damage to drilling rigs and injuries to rig personnel, as well as being an environmental disaster (Fossheim). One-off or recurring oil spills even on very small scale, may seriously impair the functioning of the marine ecosystem by deterioration in the chemical composition of the water and its physical characteristics, deaths of living organisms as a result of oil products penetrating the surface layers of the skin and plumage, etc. Two organizations that are directly involved and filed under the SEC in this industry are ConocoPhillips and SM Energy. Both companys main operations are exploration and production of oil and gas. Therefore, both are vulnerable to these risks. ConocoPhillips is a big player in the worlds oil and gas field, but SM Energy focuses more on the exploration of oil and gas in North America.

References Maria Fossheim, February 3The Bellona Foundation, Norway, http://bellona.no/assets/fil_Chapter_3._Environmental_risks_when_extracting_and_exporting_oil_and_ga s.pdAf NAICS Association February 3, http://www.naics.com/censusfiles/NDEF211.HTM

http://www.sm-energy.com/about-us/ http://www.conocophillips.com/what-we-do/Pages/default.aspx

http://www.cdc.gov/niosh/programs/oilgas/risks.html http://www.epa.gov/radiation/tenorm/oilandgas.html