Decommissioning V 3 07

Decommissioning v9 20-12 - PAGES 4/1/07 12:24 Page 1
For BP internal use only
Exploration and Production
Decommissioning Guidelines
• Liability Assessment • New Projects • Operations • Decommissioning Projects
© BP p.l.c. 2006
Introduction
Decommissioning is an important issue for the E&P Segment with an increased
focus on achieving greater consistency and increased auditability of
decommissioning estimates. In many of our operations, contractual and legal
obligations are placed on the Segment to decommission wells and facilities
following cessation of production. In the Group accounts, provisions to cover future
decommissioning activity are made in accordance with International Financial
Reporting Standards (IFRS) and the Group’s accounting policy. These provisions are
calculated using engineering cost estimates to execute the decommissioning
activity.
The Decommissioning Guidelines set out the governance process and

accountabilities to control the development and approval of decommissioning cost
estimates and provisions within the Group accounts. These guidelines also provide
the key principles and process for the development of decommissioning cost
estimates. To ensure consistency across the Segment, it is a requirement for all
SPUs to comply with these guidelines by end 2Q 2007 in preparation for the annual
Main Board Audit Committee (MBAC) review. Non-compliance with the guidelines
requires approval by the undersigned, in consultation with the appropriate line GVP
as necessary.
The Appendices also provide best practice guidance on decommissioning project

execution as developed by the Decommissioning Network. This Network will ensure
that the Group benefits from shared learning as we build our expertise and
experience in decommissioning.
The Due Diligence Team is available to provide support and guidance to SPUs in the
implementation of these Guidelines.
David Nagel Neil Shaw Joan Wales

Segment Controller, Technology Vice President, Head of Function,
E&P Segment Projects & Engineering, Remediation Management
E&P Segment
contents
Introduction 2
1 Context 7 3 Operational Framework 23
1.1 Decommissioning 7 3.1 HSSE and Code of Conduct 23
Guidelines Purpose 3.2 Group Requirements 23
1.2 Decommissioning Asset 9 3.3 Group Accounting Policy 25
Life Cycle
3.4 Supporting Information 25
2 Governance 13
4 Cost Estimation 29
2.1 Introduction 13
4.1 Decommissioning Cost 29
2.2 Decommissioning 15 Estimates – Key Principles
Accountabilities
4.2 Decommissioning Work 32
2.2.1 SPU/BU 15 Breakdown Structure (WBS)
2.2.2 Head of Function 16 4.3 Decommissioning Salvage 32
– Remediation Management Cost and Salvage Value
2.2.3 Technology Vice President 16 4.4 Decommissioning 32
– E&P Projects & Engineering Provisioning Milestones
2.2.4 Head of Engineering 17 4.5 Frequency of 34
– E&P Decommissioning Cost
2.2.5 Head of Discipline 17 Estimate Updates
– Drilling & Completions
2.2.6 FC&A 17 5 Compliance 37
5.1 Introduction 37
5.2 Due Diligence Process 39
5.3 Compliance Reviews 40
5.4 Sarbanes Oxley (SOX) 42
Section 404 Self Assessment
and Assertion Process
5.5 Group Main Board Audit 42
Committee Review
Decommissioning Guidelines © BP p.l.c. 2006 3

contents
A1 Appendix Overview 45 A5 Decommissioning Project 67

A1.1 Purpose 45 Execution
A1.2 Decommissioning as 45 A5.1 Introduction 67

a Business Process A5.2 Major Project 67
common process
A2 Decommissioning 46
Network A5.3 Development Projects 67
A2.1 Terms of Reference 46 A5.4 Decommissioning Projects 68
A2.2 Technology 46 A5.5 Project Controls 70
A5.6 Supply Chain Management 70
A3 Operational Framework 47
and Contractor Selection
A3.1 Key Points 47
A5.7 Handover from Operations 70
A3.2 HSSE 47 to the Decommissioning
A3.3 Regulatory Framework 47 Project
A3.4 Industry Experience 49 A5.8 Finance Memorandum 70
Requirements
A3.5 BP Recommended 49
Practices A5.9 Reputation Management 70
Plan
A4 Cost Estimation 52
A6 Example 71
A4.1 Introduction 52 Decommissioning
A4.2 Calculation of CoP Date 52 Provision Booking
A4.3 Decommissioning 53 Milestone Schedule
Cost Estimate A7 Reference Documents 72
A4.4 Scope of Activities 63 & Additional Resources
A7.1 Reference Documents 72
A4.5 Decommissioning Cost 66 A7.1 Additional Resources 72
Estimation Benchmarking
A8 Definitions 73
A9 Acronyms 74
A10 Key Contacts 77
(Decommissining Due
Diligence Team)
4 Decommissioning Guidelines © BP p.l.c. 2006


1. context
1.1 Decommissioning Guidelines Purpose

These guidelines provide a set of common requirements for each E&P Segment
SPU/BU to follow in the estimation of the decommissioning liabilities and the
provisioning thereof, within the framework of regulations, Group policies, standards,
and common processes. These guidelines provide a consistent approach to
decommissioning cost estimation and shall be applied to operated and non-operated
assets.
Decommissioning liabilities are subject to regulatory requirements and the policies

of the Group Reporting Manual (GRM). For these reasons quality estimates, based
on engineering, legislative requirements, and regular review, are necessary
throughout the life cycle of the asset.
In considering decommissioning liabilities the SPU/BU needs to be aware that

decommissioning covers a wide range of activities once Cessation of Production
(CoP) has occurred.
These guidelines also set the pricing methodology that shall be used in
decommissioning cost estimation.
Material expected to be salvaged for resale from the decommissioning activity must
be separately identified, and must NOT be included in the decommissioning
provision recorded in the Group Accounts. The estimated value of this salvaged
material is however, used for asset Depreciation, Depletion and Amortisation
(DD&A) purposes.
The Appendices herein are an important reference that provide additional detail on
the regulatory framework for decommissioning, decommissioning cost estimation,
rates and pricing methodology for cost estimation and effective decommissioning
project execution.

8
Project Life Cycle
Appraise Select Define Execute Operate
Decommisioning
Life Cycle
Estimates
Appraise Select Define Execute
Decommissioning v9 20-12 - PAGES
Updates
1. context
Decommissioning
Decommissioning Decommissioning
Cost Estimate
4/1/07
Cost Estimate for Cost Estimate for

for Capital
Long Term Provisioning Near Term Provisioning
Project Feasibility
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Evolution of Apply Unit Rates Apply Unit Rates

the Estimate consistent with Long Term consistent with view
Planning Assumptions of Current Market
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First Feasibility Execute 5 years CoP

Estimate FM to CoP
Provisioning
Milestones
Provisioning Milestones (agreed at Execute FM) Start of Commissioning (sole Provisioning)

Wells provisioned as completed over time Milestone for development project <$100m net
Figure 1.1 Decommissioning Life Cycle
Decommissioning Guidelines © BP p.l.c. 2006

1. context
1.2 Decommissioning Asset Life Cycle

All assets go through the phases of development, operation and decommissioning.
During these phases, three types of Decommissioning Cost Estimate are required,
and are illustrated in Figure 1.1.
From the Execute FM Review throughout the life of the asset a Decommissioning
Cost Estimate is required as the basis for booking the decommissioning provision.
These guidelines establish the framework for the preparation of Decommissioning
Cost Estimates and liability bookings.
A Decommissioning Cost Estimate will be created in a development project’s

Appraise Stage and will be updated as required to satisfy the needs of the project
team. Prior to the Execute FM Review, a Decommissioning Cost Estimate and
provisioning schedule shall be prepared in accordance with the Decommissioning
Guidelines. This Decommissioning Cost Estimate will then be updated, in
accordance with the requirements set out in the Decommissioning Guidelines
throughout the operational life of the development project.
The three types of Decommissioning Cost Estimate are:
1. Decommissioning Cost Estimates for Development Project Feasibility – these

estimates are used in the project economics.
2. Decommissioning Cost Estimate for Long Term Activity (First Provisioning
Milestone to 5 years prior to CoP) – The Decommissioning Cost Estimate is
used to calculate the provision for the Group accounts and is subject to regular
reviews to monitor changes to asset base, legislation, industry practice and
technology.
3. Decommissioning Cost Estimate for Near Term Activity (from 5 years Prior to
CoP to decommissioning project completion) – When the CoP date is within 5
years, for major projects, it is expected that a dedicated project team will be
established to manage the decommissioning project through Appraise to
Execute, and the project will comply with the Major Projects common process
(MPcp). Approved project estimates shall be used as the Decommissioning Cost
Estimate. Where no project team has been formed, the Decommissioning Cost
Estimate shall be based on current unit rates.
The decommissioning provision associated with a major development project
(>$100m) shall be booked according to a set of project milestones as shown in

1. context
Figure 1.1, which will be agreed during the Execute FM Review. These milestones
shall be documented; a pro forma Provisioning Milestone Schedule is included as
Appendix A6. These milestones will be used to progressively increase the provision
in the Group accounts to reflect the Group’s increasing decommissioning obligation.
Provisions associated with smaller projects (<$100m) do not require a milestone
approach. Instead these can be booked at the start of commissioning or as part of
the annual provision review as outlined in Section 4.5.
The cost estimating requirements of these guidelines must be applied to all assets,
including non-operated assets and assets under Production Sharing Agreements
(PSAs) / Production Sharing Contracts (PSCs).
The CoP date shall be calculated in accordance with the Resources and Reserves
Operating Standard (RROS) policy 10.
The CoP to be used for determining whether a decommissioning estimate is “near

term” or “long term” for PSAs and PSCs is the CoP date calculated on the net
entitlement basis to contract expiry as outlined in the RROS.
PSA decommissioning cash flows should be phased in accordance with the

requirements of the individual contracts which generally identify the triggers for
paying into the Abandonment fund on a gross reserves basis.


2. governance
2.1 Introduction
The Group’s process to control the quality of decommissioning estimating and
accounting provisions has four key elements:
• Accountabilities of certain officers of the company to ensure responsibility for:

– Proposing decommissioning estimates and endorsing any changes to those
estimates.
– Establishing effective controls in the approval and verification process of
decommissioning estimates and related provisions.
– Timely reporting of decommissioning provisions and costs.
– Execution of decommissioning projects in accordance with E&P Major Projects
common process.
• Approval Hierarchy for establishing and changing decommissioning estimates
above the Threshold Value. Figure 2.1 illustrates the approval process.
• Assurance Processes such as quarterly due diligence, Sarbanes Oxley (SOX)
Section 404 self-assessment, assertion and compliance review processes.
• Internal Audit Process that tests the effectiveness of the Group’s financial
controls and internal standards to ensure compliance with laws and regulations.

14
SPU EA
Internal SPU
SPU EA Forwards
Decommissioning Total SPU No
Decommissioning Approved
Cost Estimate Estimate Changes

Cost Estimate Estimate to
Approval as >$25m/qtr *
Approval SPU/BU
Appropriate
Controller
4/1/07
2. governance
Yes
12:24
Decommissioning
Page 14
TVP P&E
Due Diligence
* Excluding changes caused by RM HoF
Team Review
payments and fluctuation in Approval
foreign exchange rates.
of Estimate
Figure 2.1 Quarterly Estimate Approval Process

2. governance
2.2 Decommissioning Accountabilities

These accountabilities have been established to ensure compliance with
agreements, accounting standards and laws in the estimation, provisioning and
execution of decommissioning.
2.2.1 SPU/BU
SPU/BU Leader shall be accountable for:
• Establishing / maintaining Decommissioning Cost Estimates.

• Executing decommissioning projects in accordance with MPcp and regulatory
requirements.
• Recommending, to the appropriate authority, revisions to cost estimates and
timing, including a 12 month ‘look ahead’ of estimate activity.
SPU/BU Engineering Authority (EA) shall be accountable for:
• Verifying adherence to engineering, project and environmental standards.

• Ensuring that all Decommisioning Cost Estimates including those associated with
non-operated assets, are compliant with these guidelines.
• Reviewing and approving all Decommissioning Cost Estimate basis documents.
• Approval of all Decommissioning Cost Estimates and forwarding those requiring
TVP P&E/HoF RM approval using the cost estimate change form to highlight
underlying drivers of change.
• Advising the Decommissioning Due Diligence Team of forthcoming
Decommissioning Cost Estimate reviews.
SPU/BU Commercial Manager shall be accountable for:
• Advising SPU/BU Controller and EA of field CoP date.

• With Legal support, providing guidance to SPU/BU EA and Controller on
interpretation of PSA / PSC decommissioning obligations.
SPU/BU Drilling and Completions EA/TA shall be accountable for:
• Providing assurance to the SPU/BU EA that all decommissioning well P&A cost

2. governance
estimates and procedures are in accordance with the applicable policies and
Engineering Technical Practices (ETPs).
• Ensuring that Drilling and Completion functional reviews are carried out for any
P&A cost estimates.
• Ensuring that P&A cost estimate methodology, and where appropriate, specific
estimates, are endorsed by HoD Drilling and Completion.
2.2.2 Head of Function – Remediation Management

HoF RM shall be accountable for:
• Approving onshore Decommissioning Cost Estimates underpinning existing or

new provisions that exceed the Threshold Value ($25m cumulative increase or
decrease per SPU per quarter) or obligations with a material risk to the Group’s
reputation regardless of amount.
• Providing specialised skills required for managing onshore decommissioning and
demolition as required for site remediation and re-use.
• Providing specialised skills and input required to manage onshore environmental
contamination and site remediation issues.
2.2.3 Technology Vice President – E&P Projects and Engineering

Technology Vice President TVP P&E shall be accountable for:
• Approving offshore facility and all well P&A Decommissioning Cost Estimates
underpinning existing or new provisions that exceed the Threshold Value ($25m
cumulative increase or decrease per SPU per quarter) or obligations with a
material risk to the Group’s reputation regardless of amount.
• For Major Decommissioning Projects (MDPs), verifying alignment with BP
engineering technical and project management practices.
• Approving and distributing the “Standard Schedule of Unit Rates for
Decommissioning, E&P Segment”.

2. governance
2.2.4 Head of Engineering – E&P

Head of Engineering E&P (HoE E&P) shall be accountable for:
• Monitoring/verifying adherence to project, engineering and environmental

standards.
• The Decommissioning Network (Gatekeeper).
• The single point of contact for E&P decommissioning.
• Coordinating functional and technical support for decommissioning.
• Approving major project Provisioning Milestones.
2.2.5 Head of Discipline – Drilling & Completions

Head of Discipline (HoD) Drilling & Completions shall be accountable for:
• Attesting to the TVP P&E that all well P&A Decommissioning Cost Estimates are
appropriate.
• Verifying well P&A procedures comply with applicable policies and Drilling and
Completion ETPs.
2.2.6 FC&A
Segment Controller shall be accountable for:
• Ensuring effective controls are in place across the Segment to support:

– timely review of Decommissioning Cost Estimates and Decommissioning
Provisions.
– verification of financial information for Decommissioning Provisions so that they
are reported in an accurate and timely manner.
• Preparing / proposing internal and external disclosures of Segment financial
information for Decommissioning Provisions in adherence to Group accounting
and reporting policies.
• Conducting the Segment Due Diligence Process.

2. governance
SPU/BU Controller shall be accountable for:
• Calculating, recording and maintaining accounting provisions for decommissioning,

based on approved Decommissioning Cost Estimates, in accordance with Group
accounting and reporting policies.
• Implementing and maintaining an effective system of internal control within the
SPU/BU for delegated authorities for decommissioning.
• Conducting the SPU/BU quarterly due diligence process including consultation
with the SPU/BU EA to assess and review Decommissioning Cost Estimates.
• Conducting an annual review in co-ordination with Legal and Commercial of
licenses where no liability is booked to establish whether ‘nil booking’ assumption
is still appropriate.
• Preparing/ proposing financial reports and information, for internal and external
purposes, in adherence with the Group policies above.
The above listed accountabilities are illustrated in Figure 2.2.

Decommissioning v8 20-12 - PULLOUT 4/1/07 12:28 Page 1
Management of E&P Decommissioning: Approval & Reporting Accountabilities

Segment Executive Team E&P Segment
Chief Executive (EVP) • Approval levels are expressed in US$ millions, BP net share, undiscounted.
• Major Decommissioning Projects (MDPs) are those within the LTP with a cost estimate
• Oversees decommissioning in context of
of $100m or more, BP net undiscounted.
Group Standards.
• Approves Major Decommissioning
Projects (MDP) within DoA.
Group CFO
Group Vice President Group Vice President

Group Controller
(E&P Technology) (E&P sub segments)
• Review/endorse process for managing • Recommend material changes to cost

decommissioning in E&P in advisory role estimates, that have been independently
to Segment Chief Executive. approved by the TVP P&E, in advisory
• Monitor reputational impacts. role to Segment Chief Executive.
• Approve MDPs within DoA.
TVP Head of Function E&P

Projects & Engineering Remediation Management Segment Controller
• Approve offshore facility and all Well P&A • Approve onshore facility cost estimates • Ensure effective controls in place across
cost estimates underpinning existing or underpinning existing or new provisions Segment to support.
new provisions > the Threshold Value > the Threshold Value ($25m cumulative – timely review of cost estimates and
($25m cumulative across an SPU per across an SPU per quarter) or obligations provisions.
quarter) or obligations with a material SPU / BU Leaders with a material Group reputation risk
Group reputation risk regardless of regardless of amount. – verification of financial information for
amount. provisions being reported in accurate and
• Establish/maintain cost estimates. • Provide specialised skills required for timely manner.
• For MDPs, verify alignment with BP • Execute decommissioning projects in managing onshore decommissioning and
engineering technical and project demolition as required for site remedia- • Prepare / propose internal and external
accordance with MPcp and regulatory
management practices (MPcp) as well as tion and re-use. disclosures of Segment financial
requirements.
environmental policy and standards. information for provisions in adherence to
• Recommend to the appropriate authority • Provide specialised skills and input Group accounting and reporting policies.
• Approve and distribute the “Standard revisions to cost estimates methodology, required to manage onshore environmen-
schedule of Unit Rates for Decommis- tal contamination and site remediation • Conduct Segment Due Diligence process.
and where appropriate, specific
sioning”. estimates, and timing, including a 12 issues.
month 'look ahead' of estimate activity. Controllers
(SPU / BU / PU)
• Calculate, record and maintain accounting

Head of Engineering SPU/BU Engineering / SPU/BU Drilling & Commercial provisions for decommissioning, based
(HoE) Technical Authorities Completions EAs/TAs Managers on approved cost estimates, in
accordance with Group accounting and
• Monitor / verify adherence to project, • Verify adherence to engineering, project • Verify adherence to applicable policies and • Advise EAs/Controllers of CoP dates. reporting policies.
engineering and environmental standards. and environmental standards. Eng Tech Practices. • Provide guidance on interpretation of PSA • Implement and maintain an effective
• Gatekeeper for Decommissioning • Approve all cost estimates and forward • Ensure D&C functional reviews are decommissioning obligations. system of internal control within the
Network. estimates requiring TVP P&E/HoF RM conducted on any P&A SPU/BU for delegated authorities for
• The single point of contact for approval. decommissioning cost estimates. decommissioning.
Decommissioning. • Review and approval of decommissioning • Ensure P&A cost estimates are endorsed • Prepare / propose financial reports and
• Coordinate functional and technical estimating basis documents. by HoD D&C. information, for internal and external
support for decommissioning. • Ensure decommissioning cost estimates purposes, in adherence with the Group
are compliant with decommissioning policies above.
• Approve major project provisioning
milestones. guidelines. • Conduct SPU/BU quarterly DD process
• Advise D3T of forthcoming estimate including consultation with SPU/BU EA to
reviews. assess and review decommissioning
estimates.
• Conducting an annual review in
co-ordination with Legal and Commercial
of licenses where no liability is booked to
establish whether ‘nil booking’
assumption is still appropriate.
Figure 2.2 Accountability Diagram
back of
pull out page

3. operational framework
3.1 HSSE and Code of Conduct

All decommissioning activity shall be performed in accordance with Group HSSE
Policies and Code of Conduct.
3.2 Group Requirements

Decommissioning activities shall comply with all relevant laws and regulations and
all Group Policies and Standards. The following specific requirements will always
apply:
• Well P&A operations shall comply with the Global Drilling and Well Operations
Policy.
• Pipeline decommissioning shall comply with the Guidance on Practice for Pipeline
Decommissioning and Removal from Service (GP 43-57).
Separately, as indicated in Appendix A3, in areas where regulations are absent or
minimal, the Group’s recommended practices for decommissioning should be
treated as a minimum requirement.

24
IAS 37 Provision Booking Model
Present obligation as a Yes Probable Yes Reliable Yes Provide

Start
result of obligating event Outflow Estimate Provision
No No No (rare)
Possible Yes No Disclose

Remote
Obligation Contingent Liability
No Yes
Nothing
4/1/07
BP Practise
12:24
Present obligation as a Yes Reliable Decommission

Start
result of obligating event Estimate Guidelines
No
Page 24
eg Certain PSAs and PSCs CoP ⱕ 5 years CoP ⬎ 5 years

Current Long Term Unit

Market Rates Rates consistent
with LTRAP
Approval Yes Provide

Figure 3.1 Process Provision

3.3 Group Accounting Policy

The Group Accounting Policy is based on International Accounting Standards (IAS).
The Group’s practice within the context of the requirements of IAS 37 (provisions,
contingent liabilities and contingent assets) is illustrated in Figure 3.1.
The Group Reporting Manual (GRM) sets out the details of the Group’s accounting
policy and shall be followed. The policy to be applied in calculating decommissioning
provisions is defined in the accounting policy 1.32 Decommissioning Costs.
3.4 Supporting Information

Additional material about the regulatory framework for decommissioning plus BP
and industry experience and BP’s recommended practices can be found in the
Appendices.

26
Further Comments:
Category BP Accounting Policy 1.32
What does this mean in practice?
“ … A provision for the cost of decommissioning The provision recognition point has
should be recognised as damage is caused on the been brought forward from “first
installation of oil or natural gas production facilities”. production” to an earlier,
Amount
“Provisioning Milestone”, which is

Recognised
aligned more precisely with IAS 37
and Timing “ Decommissioning provisions should be reviewed and the GRM requirement, “as
annually for changes in estimates resulting from the damage is caused”. This is discussed
4/1/07
addition or removal of wells. ” further in Section 4.

12:24
“ ... The cost estimates should be based on The rates to be applied are detailed
management’s best estimate of the future in Section 4.
expenditures using current costs where relevant ....
Page 26
Certain costs (e.g. costs of services) included in a cost In summary near term projects
estimate can fluctuate significantly based on various should be based on current cost
economic factors. As such, the use of market prices while long term projects will be
Unit Rate may not reflect management’s best estimate of the based on the standard schedule of
Guidance future obligation. Estimates for these costs (e.g. rig unit rates (for globally mobile
and vessel costs) should be based on management's equipment), current cost for labour
best judgement of future costs based on their and engineering and current cost for
knowledge of local markets and on the Group's long all other elements unless there is
run planning assumptions……Cost estimates should compelling data indicating that
generally be closer to current market rates the closer current costs are not reflective of
to the timing of the actual spend…..” future costs.

The cost estimator shall prepare the
estimate in today’s money. Any
rates from the Standard Schedule
are to be used as-is (not inflated) by
the estimator in preparing the
Decommissioning Cost Estimate as
“Estimates should be based on the present day view they are deemed to be in today’s
Inflation and
of future costs and should not include adjustments for money.
Discounting
inflation.”

For the purposes of the IFRS
4/1/07
provision calculation, the SPU/BU

Controller uses a “real” discount
rate which excludes the effects of
inflation. The controller must not
12:24
therefore inflate the estimate.

Page 27
“New technology is considered only where the formal

acceptance, by relevant authorities, of such technology The benefits of improved application
to complete the decommissioning is probable” of existing technology can be
IAS 37 indicates that: it is appropriate to include reflected within decommissioning
Technology expected cost reductions associated with increased cost estimates (see Table 4.1). These
experience of applying existing technology or expected benefits have been considered and
cost reductions of applying existing technology to a incorporated in the ‘Key Principles’ in
larger or more complex clean up than previously Section 4.1.
applied.
Table 3.1 – GRM Interpretations
27
4. cost estimation
Decommissioning cost estimation is used for both internal planning purposes and to
make provisions in the Group accounts for the decommissioning liability.
The provisioning process is illustrated in Figure 4.1.
Prepare/
Recognising Estimate Provision Discount Provision
update cost Discounting
the liability Approval Booking Unwinding Drawdown
estimate
Figure 4.1 Decommissioning processes
The E&P Segment has adopted a framework for long term decommissioning cost
estimating. The details of this framework are provided in Section 4.1 below.
4.1 Decommissining Cost Estimates – Key Principles

Purpose
This section summarises the E&P segment framework for developing
decommissioning cost estimates. These cost estimates are prepared to ensure
decommissioning liabilities are adequately forecast and that a reasonable provision
is carried in the Group accounts. All SPUs will comply with these guidelines with
TVP P&E, RM HoF, E&P Segment Controller and GVP approval required for any
deviations to assure consistency of approach across the Segment.
Cost estimates will be developed using pricing for goods and services consistent
with BP’s long term planning assumptions where this is appropriate.
Estimates are intended to represent management's best judgement of future costs

based on their knowledge of local markets and where appropriate, on the Group's
long term planning assumptions. This recognises that in some instances the use of
current prices for goods and services may not reflect management’s best estimate
of the future obligation. Principles have been established for short term activity
(Cessation of Production, [CoP] ⱕ5 years) and for long term activity (CoP >5 years).
Key Principles Applicable to All Estimates

• The estimate of work activity will include allowances for all known uncertainties
(e.g. waiting on weather risk, drilling non productive time) based on historical SPU
benchmarks.
29
4. cost estimation
• Cost estimates should be based on existing technology; however it is appropriate

to include expected cost reductions associated with increased experience with
applying existing technology, as permitted under IAS 37.
• CoP dates are determined in accordance with the Resources and Reserves
Operating Standard (RROS) policy 10.
• Full technical reviews of estimates will be conducted at a maximum interval of 5
years (per the Group Reporting Manual).
CoP date ⱕ5 years (Near Term Estimating)

• When the CoP date is within 5 years, decommissioning cost estimates shall be
based on current unit rates. For major projects, it is expected that a dedicated
project team will be established to manage the decommissioning project through
Appraise to Execute. The cost estimate at the Define FM will request funds for
execution of the project.
• Major Projects will follow the Major Project common process (MPcp) and the
associated cost estimating guidelines. Smaller projects are expected to follow the
broad intent and key principles of MPcp.
• Cost estimates will be prepared based on engineering definition that will mature
through FEED and ultimately detailed design.
• The SPU’s judgement of current market rates for goods and services will be used.
As the project matures, the costs will increasingly be based on firm contracts.
CoP Date >5 years (Long Term Estimating)

• When the CoP date is beyond 5 years, it is recognised that a project team
generally will not be in place.
• No additional contingency or UnAllocated Provision (UAP) will be applied for
unknown uncertainties. This recognises that the decommissioning industry will
improve its efficiency over time in its application of current technology. The
judgement is that the impact of this ‘learning curve’ will offset any unknown
uncertainties.
• Cost estimates will be based on pricing consistent with long term planning
assumptions for decommissioning as follows:

4. cost estimation
1. Goods and services that are global in nature and whose pricing is linked to oil
price (offshore rigs and heavy lift vessels) must be based on the Segment
approved Standard Schedule of Unit Rates.
2. Rates for labour and engineering, and those goods and services that are local
in nature must be based on current rates.
3. Alternative rates will only by accepted where the SPU can justify alternative
rates. Justification must follow the methodology described below for the
development of the Segment approved Standard Schedule of Unit Rates, or
analysis of local industry trends or statistical results to demonstrate
consistency of unit rates with long term planning assumptions.
• The Segment Approved Standard Schedule of Unit Rates will be based on
application of commercial and engineering judgement, considering the following:
– The price history for goods and services consistent with BP’s Long Term
Resource Allocation Price (LTRAP) assumption.
– The estimated rate which would support reinvestment and ensure sustainable
long term supply of the service.
• The Segment approved Standard Schedule of Unit Rates will be approved by TVP
P&E following consultation with TVP D&C, HoF RM and VP PSCM. The Schedule
will be reviewed on an annual basis and re-issued to SPU/BU EAs and Controllers
as required.
The following table summarises the expected application of unit rates in the
preparation of Decommissioning Cost Estimates.
CoP ⱕ5 years CoP >5 years
1. Offshore rigs
Current Market Segment Approved long run rate
and HLV
2. Labour and
Current Market Current Market
Engineering
3. Local Goods Current Market unless SPU makes
Current Market
and Services case for linkage to oil price
Table 4.1 Application of unit Rates.

4. cost estimation
4.2 Decommissioning Work Breakdown Structure

(WBS)
The standard decommissioning WBS shall be used to Level 3 at a minimum in the
preparation of all Decommissioning Cost Estimates and decommissioning project
estimates.
Details of the decommissioning WBS are provided in Appendix A4.
4.3 Decommissioning Salvage Cost and Salvage Value

The Decommissioning Cost Estimate should include an allowance for disposal and
recycling of material including cost to transport, off-load, clean, cut up, waste
disposal and material tracking in manifests. All non-waste material has value if
recovered and should be included separately in the Decommissioning Cost Estimate
and clearly reported to the SPU/BU Controller.
Salvage value shall not be netted off against the Decommissioning Cost Estimate
estimate as the SPU/BU Controller requires the gross decommissioning estimate to
book the provision and the estimated value of the salvaged material for use in the
Depreciation, Depletion and Amortisation (DD&A) calculation.
The transportation and disposal of waste material from the decommissioning activity
represents a significant risk to the Group and will require significant project
management time to mitigate and manage this risk. Waste should be properly
characterised and handled in accordance with relevant regulations.
4.4 Decommissioning Provisioning Milestones

It is necessary under IAS 37 to recognise provisions when the obligation is created.
To reasonably account for increasing obligations as projects are developed, the
provision will be incrementally increased at the appropriate Provisioning Milestone(s).
For Major Projects (>$100m BP net), the Provisioning Milestone(s) must be agreed
and approved by the Head of Engineering, during the Define / Execute stage gate
review. These milestone(s) shall be documented on the Decommissioning Provision

4. cost estimation
Booking Milestone Schedule, included in Appendix A4. The objective is to identify

the minimum number of milestones possible taking into consideration materiality.
Provisions for smaller projects (<$100m) shall be booked at the start of

commissioning or if more practical, as part of the annual provision review conducted
in the 1H of each year. The annual update described in Section 4.5 caters for minor
changes to the decommissioning liability such as small sub sea developments.
The respective Engineering Authority and Controller as appropriate to the SPU/BU

and the project shall agree the Provisioning Milestone(s) in conjunction with the
preparation of the Define – Execute FM. These milestones are a requirement for
passing the Stage Gate.
The Controller is expected to set up a process with the relevant EA so that as

milestones are reached the Controller is notified. If the Decommissioning Cost
Estimate remains unchanged at the Provisioning Milestone(s), no further approval
will be necessary. The SPU EA shall be advised when booking updates occur, and
consulted as necessary.
The Provisioning Milestone(s) shall include the start of commissioning and will
include earlier milestones as appropriate for the project. Some example milestones
that may be appropriate include installation of the following:
• Well Template
• Gathering Facilities
• Platforms
• Pipelines
• Tank Battery
• Processing Plant
Actual wellcount changes post the initial recognition should be reviewed annually in
3Q and the cost estimate and provision updated accordingly (as outlined in Section
4.5).
Controllers shall book provisions for pipeline projects on a quarterly basis during the
course of construction based on a proportion of the total decommissioning cost
estimate for that pipeline.

4. cost estimation
4.5 Frequency of Decommissioning Cost

Estimate Updates
Decommissioning Cost Estimates will be reviewed regularly as follows:
• Quarterly for significant changes in the asset base such as facility installation,
asset acquisition or divestment, or significant changes in the underlying
assumptions.
• Annually in the first half of the year for:
– Minor changes such as small sub-sea developments.
– Changes in technology and regulatory assumptions.
– Rates and prices for assets with CoPs ⱕ5 years to ensure they remain current.
– Any change in the segment standard schedule of unit rates due to a change in
LTRAP.
– Change in well-bore and well-site counts.
• At an interval of no more than five years, a full review of the cost estimate model
is required to ensure it continues to accurately represent the expectations of the
SPU/BU and the Group. This review will include a review of rates and prices. SPUs
must ensure that assets with CoPs > 5 years are updated to current rates. (Note:
SPUs are not expected to update to "current rates" on an annual basis for assets
where the CoP falls outside the 5 year window.) These reviews will include a peer
review by members of the Decommissioning Due Diligence Team and
Decommissioning Network.
The SPU EA and the SPU/BU Controller should consult to determine if a change is
significant.


5. compliance
5.1 Introduction
The decommissioning assurance process shall confirm the following:
• All decommissioning obligations associated with installed assets are estimated

and included in the accounts. In those cases where no liability exists, such as
certain PSAs/PSCs and concessions, an annual review shall be conducted to
ensure the nil booking assumption is still appropriate.
• Decommissioning Cost Estimates are sound and represent the best known
estimate of the liability at the time of review.
• Decommissioning Provisions are accounted for in accordance with the external
reporting or regulatory requirements.
This assurance framework is summarised in Table 5.1.
37
5. compliance
Assurance Who
Purpose / Action Frequency
Process Reviews
Review Segment
Group
Decommissioning Provisions
CEO
at Segment DD Session
Group CFO Review Segment
& Group Decommissioning Provisions
Controller at Segment DD Session
Review Segment
Segment
Decommissioning Provisions
CEO
at Segment DD Session
Due Conducts segment DD process with

Diligence Segment SPU/BU Controllers and TVP P&E Quarterly
Process Controller and HoF RM. Approves Segment
DD pack and signs segment LRA.
Make enquiries to SPU EAs

TVP P&E
(via P&E/RM DD team) regarding
and
changes to cost estimates.
HoF RM
Approves cost estimate changes.
Review Engineering estimates,

SPU/BU discount and book. Conducts DD
Controller session with SPU Leader and
EA/TA for decommissioning.
TVP P&E On a periodic

Compliance Review SPU’s
and or event
reviews engineering estimates
HoF RM triggered basis
SOX 404 Tests and reports

SPU/BU Annually
Assertion effectiveness of the
Controller (3Q)
process key controls
Table 5.1 – Assurance Framework

5. compliance
5.2 Due Diligence Process

Within BP, a quarterly due diligence process is used by the Group Chief Executive to
ensure that issues of Group significance including accounting policy judgements,
financial control weaknesses and fraud are brought to the attention of the
Disclosure Committee. The purpose of the Group’s quarterly processes of Letters of
Representation and Attestation (LRAs) and due diligence reviews is to ensure
internal disclosure of all potentially relevant items so that the GCE and CFO can
determine relevant external disclosure on a timely basis.
This is conducted in the E&P Segment by the Segment Controller through reviews
both within FC&A (Regional Controller and SPU/BU Controller) and with other
functions. These reviews are a monitoring process designed to address the risk that
the information submitted by the SPU/BU leads to the financial statements being
incorrect.
SPU/BU Due Diligence – Decommissioning

The quarterly due diligence process requires the SPU/BU Controller and SPU/BU
Leader to conduct a review and to sign an LRA. With regards to decommissioning
the Controller is attesting that “provisions have been made for the future cost of
decommissioning oil and natural gas production facilities and related pipelines in
accordance with the group’s accounting policy”.
As part of the quarterly due diligence process, the SPU/BU Controller shall consult
with the SPU/BU EA to assess and review Decommissioning Cost Estimates and
liabilities. This consultation shall include a review of activities that might impact
future liabilities and the schedule of future activity. This schedule of future
Decommissioning Cost Estimating activity shall be submitted to the
Decommissioning Due Diligence team in the form of a quarter by quarter 12 month
look ahead.
Functional Due Diligence – Decommissioning

The Segment Controller shall hold a quarterly due diligence meeting with the TVP
P&E and HoF RM, and shall:
• Confirm a consistent understanding of decommissioning issues exists.

• Confirm all decommissioning issues have been identified.

5. compliance
• Review the functional representation and assertion as to the completeness and

reasonableness of the cost estimates underpinning the Decommissioning
Provision.
To provide this assurance the TVP P&E and HoF RM shall identify:
• Any changes to Decommissioning Cost Estimates above the Threshold Value in

the quarter and approve those changes.
• Where Decommissioning Cost Estimate revisions are in progress but not
completed or approved within the quarter.
• Required remediation, timeframe and status of issue resolution.
The functional due diligence meeting agenda shall include a review of the
consolidated Schedule of Future Activity in the form of a quarter by quarter 12
month look ahead.
Signed LRAs from the TVP P&E and HoF RM to the E&P Segment Controller shall
conclude this process on a quarterly basis.
5.3 Compliance Reviews

Frequency
The SPU/BU Decommissioning Cost Estimates shall be periodically tested at the
segment level. This is in addition to the reviews associated with changes to
Decommissioning Cost Estimates detailed above in Section 4. The TVP P&E and
HoF RM or delegates shall conduct compliance reviews with SPUs/BUs on a regular
basis. Reviews will be conducted if a material event occurs, or at the discretion of
the TVP P&E and HoF RM.

5. compliance
Two types of review will be conducted:
• Event-triggered reviews typically triggered by the following:

– Significant regulatory changes
– Significant Group policy changes
– Natural disasters
– Significant technology changes
– Mergers and acquisitions
• Periodic reviews shall take place no later than 3 years after an estimate review as
set out in Section 4, unless otherwise directed by the TVP P&E and HoF RM.
Scope
Compliance reviews shall apply to all Decommissioning Cost Estimates that
underpin the Decommissioning Provisions held in the Group accounts.
The scope of the compliance review shall include the following:
• Review and confirm SPU understanding of assets.

• Ensure proper consideration of regulatory requirements and issues.
• Evaluate appropriateness of major underlying assumptions.
• Confirm scope and boundary conditions of decommissioning work.
• Review cost estimating basis including rates and pricing methodology.
• Identify issues having potential reputational impact.
The above are to be forwarded to the designated Compliance Leader ahead of the
review.
Compliance Review Documentation

Each compliance review shall be documented outlining the issue and resulting
action required. An action plan in response to issues identified shall be developed
jointly by the SPU EA and the Decommissioning Due Diligence Team Compliance
Lead. Monitoring of the progress of the action plan shall be recorded through the
segment quarterly due diligence process. Closure of the action shall also be

5. compliance
recorded through the Segment quarterly due diligence process. If the action results
in a re-estimate then it shall be approved through the normal approval process
outlined in the governance section.
5.4 Sarbanes Oxley (SOX) Section 404

Self Assessment and Assertion Process
BP is required to comply with SOX 404 and as such certain BUs may be required to
document aspects of the internal control environment relating to the
decommissioning process in the form of a CET and comply with the Group SOX
compliance requirements. SPU / BU Controllers will be notified of the requirements
by the E&P Head of Internal Control.
5.5 Group Main Board Audit Committee Review

Annually, the Main Board Audit Committee (MBAC) shall review E&P
decommissioning provisions. This review shall include a review of the provisions and
the operating effectiveness of the estimating and provisioning process.


appendix 1
A1 Appendix Overview
A1.1 Purpose
The appendicies supplement the requirements in the Decommissioning Guidelines
by including additional background and recommended practices for
decommissioning. The appendicies are designed to aid practitioners as SPU/BU’s
approach decommissioning activities.
A1.2 Decommissioning as a Business Process

Decommissioning is an integral part of the asset life-cycle as execution frequently
requires significant cash flow post CoP. Importantly, decommissioning projects can
vary widely in scope, ranging from simple and swift to execute to complex and time
consuming. The costs for decommissioning will be included in the long-term plan
(LTP), but often are beyond the 5-year LTP (LTP5) time frame.
Asset management strategy also utilises decommissioning cost estimates as a

factor in assessing risks and identifying opportunities for divestment prior to end of
field life.
Decommissioning projects are integrated into the overall SPU/BU performance

management processes.
45
appendix 2
A2 Decommissioning Network
A2.1 Terms of Reference
The Decommissioning Network under the joint sponsorship of Head of Engineering
(HoE) EPTF and Head of Function (HoF) RM is expected to:
• Develop consistent guidance and processes for decommissioning cost estimation.

• Provide guidance, process and tools for decommissioning project management.
• Maintain the BP recommended practices.
• The network will promote and encourage:
– Sharing of technology developments which have proven to have value to the
Group.
– Integrating decommissioning with integrity management planning and other
requirements of the Integrity Management Standard.
– Sharing knowledge gained through planning and execution of decommissioning
projects.
– Prevention of future environmental liabilities associated with decommissioning
activities, divestments, mergers and acquisitions.
Membership in the Network is expected to include:
• The Decommissioning Due Diligence Team, made up of representatives from

Projects & Engineering (P&E), Remediation Management (RM) and Finance,
Control & Accounting (FC&A).
• Representative SPU EA.
• Representative SPU/ BU Technical Authorities for Decommissioning.
• Representative RM Regional and Project Managers.
A2.2 Technology
Although technology is not explicitly included in the terms of reference, above, it is
appropriate for the network to identify leveraging technologies, promote support for
development, and share learnings across the Group.

appendix 3
A3 Operational Framework
A3.1 Key Points
This section describes:
• HSSE considerations during decommissioning.

• Regulatory framework governing decommissioning.
• BP’s recommended practices for decommissioning.
A3.2 HSSE
Decommissioning is potentially a hazardous activity and requires the highest level of
safety awareness particularly as facilities can be old and not designed with
decommissioning in mind. Similarly, protection of the environment is paramount in
decommissioning activities. There is always the potential for oil spills during
dismantling and leakage of residual chemicals built up over production life.
A3.3 Regulatory Framework

Wherever BP operates laws exist that govern the decommissioning of producing
assets.
Legal advice on the legislation shall be sought prior to the start of decommissioning
cost estimating, provision booking and project execution.
Selected key laws governing decommissioning in various regions of the world are
discussed below.
A3.3.1 Offshore
The United Nations (UN) provides the international law that governs activities in the
ocean not covered by national or federal laws. The United Nations Convention on the
Law of the Sea (UNCLOS)
(http://www.un.org/depts/los/convention_agreements/convention_overview_conventi
on.htm) provides the framework for laws governing decommissioning in conjunction
with a sister organisation of the UN, the International Maritime Organisation (IMO).
Specifically the IMO is concerned about the safety of shipping and creating cleaner
oceans.

appendix 3
The United States is not a signatory to UNCLOS.
Under IMO Resolution 672 (http://www.imo.org/home.asp) platforms weighing less

than 4,000 tonnes in air and installed in less than 100 m water depth shall be
completely removed, except for platforms installed prior to 1998, where the depth
limit is 75m. Additionally, if a coastal state allows the bottom section of a platform
to remain, the resolution calls for the remaining portions to be at least 55 m (180 ft.)
below the sea surface. IMO Resolution 672 also provides for general exceptions to
removal because of specific technical and safety reasons.
Decommissioning in the North East Atlantic, which includes the North Sea, is
governed by the Oslo and Paris Convention (OSPAR)
(http://www.ospar.org/eng/html/welcome.html). OSPAR Convention agreements are
supplemented by local regulations. Key to the OSPAR Convention agreements is
Decision 98/3 (also known as the Sintra Decision) which requires complete removal
of steel platforms with the exception of platforms installed prior to 1999 with
substructures weighing more than 10,000 tonnes. The owners of pre-1999 steel
platforms weighing more than 10,000 tonnes may apply for derogation to allow a
portion of the substructure to remain in place.
Decommissioning in the United States is governed by the regulations of the

Minerals Management Service. As a general rule sub-structures must be removed.
However, there are provisions to allow the coastal states, such as Louisiana and
Texas, to establish artificial reef sites. These artificial reef sites are exempt from
international regulations requiring 55m clearance.
A3.3.2 Onshore
Specific national or state laws apply to onshore decommissioning activities. The
degree of regulation and experience varies across the world. In Canada, the US, and
the European Union, regulations are well developed.
In other areas of the world where the Group operates decommissioning regulations
may be less well developed.
The SPU/BU shall be responsible for complying with all laws associated with
decommissioning. In operating areas where such regulations do not exist or are
ambiguous the SPU/BU shall follow BP’s Recommended Practices in
decommissioning.

appendix 3
A3.4 Industry Experience

Experience demonstrates that onshore decommissioning is influenced by land
ownership, future land use, current surrounding land use and local regulations.
Decommissioning remote facilities, with passive land use tends to take place slowly
and with less rigour than those facilities with active land use and government,
tribal/native or private ownership. In these cases decommissioning occurs rapidly
and to a high standard.
Offshore decommissioning experience is largely restricted to the Gulf of Mexico and

the UK Southern North Sea. Virtually all of the facilities have been dismantled and
reused or scrapped in accordance with IMO Resolution 672. Those exceptions were
the small percentage of platforms in the Gulf of Mexico which were used to create
artificial reefs.
The experience of the industry in 1995 when attempting to decommission a facility

in the North Sea, with full approval of the UK government, illustrates the impact of
public opinion on potentially environmentally sensitive activities. The DTI approved
programme proposed towing the facility to deep water on the Atlantic margins and
sinking it. This plan backfired due to pressure from environmental NGOs leading to
one occupying the facility for 24 days and activist activities in other EU countries
which significantly damaged the operator’s reputation. The environmentalists
described the plan as dumping. As a result of intense public pressure on the
operator throughout Europe, the facility was taken to a fjord in Norway, where it
was dismantled and used to build a jetty in 1999.
A3.5 BP Recommended Practices

The guidance governing decommissioning set out in this appendix constitutes
recommended practice. In areas where regulations are absent or minimal, the
Group’s recommended practices for decommissioning should be treated as a
minimum requirement. These recommended practices have been informed through
the Group’s offshore experience in the North Sea, the Cook Inlet, and the Gulf of
Mexico plus the onshore UK, Canada and US in addition to Group’s HSSE standards.

appendix 3
The following are considered BP’s recommended practices for the E&P Segment. In
all cases, governing laws and regulations should be followed.
• Fixed offshore platforms should be removed to the seafloor except where an

alternative is considered beneficial to the environment or for other Group or
external stakeholders HSSE reasons. Examples of alternatives include:
– Jackets and decks being reused to create an artificial reef.
– Derogation under OSPAR Decision 98/3 to not remove bottom sections of large
jackets.
• Offshore floating facilities should be removed from site and recycled or re-used.
• Offshore pipelines:
– All offshore pipelines should be flushed and cleaned as part of the
decommissioning process.
– The decision to remove or retain pipelines should be dependent on regulations.
– In the absence of a regulatory or commercial requirement for removal,
pipelines should be decommissioned in accordance with the Guidance on
Practice for Pipeline Decommissioning and Removal from Service (GP 43-57).
• Offshore drill cuttings:
– Prevention of environmental damage and future liabilities are key
considerations. Removing the cuttings may, on balance, result in more
environmental damage than leaving them in place.
• Sub-sea facilities, such as trees, manifolds, flowlines, gathering lines, etc:
– In shallow water of less than 60m subsea facilities should be completely
removed to the sea floor.
– In deep water (generally viewed as >600m) subsea facilities may be flushed,
cleaned and left in place.
• Onshore facilities:
– Above ground structures and pipelines should be reused, salvaged, recycled
off-site, or disposed of.
– Sub-surface structures, excluding storage tanks, should be left in place.

appendix 3
– Sub-surface storage tanks should be removed.

– In the absence of a regulatory or commercial requirement for removal, sub-
surface pipelines should be decommissioned in situ in accordance with the
Guidance on Practice for Pipeline Decommissioning and Removal from Service
(GP 43-57).
– Soil and ground water contamination should be remediated to ensure there are
no ongoing human health impacts.
– Physical infrastructure both internal and external to facilities (such as roads,
pads, pipeline corridors, borrow pits or ponds, etc) should be addressed on a
case by case basis.
– Reinstatement and reclamation of the site should be consistent with expected
future land uses.
The scrapping of material from decommissioning should be carried out in
compliance with necessary laws and BP’s policies and standards. The review of
scrapping operations should extend to the handling, transportation and final
disposition of all materials generated in the decommissioning process.

appendix 4
A4 Cost Estimation
A4.1 Introduction
This section provides additional information to that included in Section 4 of the
Decommissioning Guidelines including:
• Guidance on Decommissioning Cost Estimation preparation and required

documentation.
• The Decommissioning Work Breakdown Structure.
• A preferred scope of activities to create a consistent and complete
decommissioning cost estimate.
• The process for cost estimate change verification.
• A framework for future benchmarking.
A4.2 Calculation of CoP Date

The commercial viability of producing assets is reassessed from time to time,
sometimes resulting in additional development that may extend the producing
lifetime of an asset. CoP dates are updated annually through the RROS update
process. The situation may arise where the field CoP dates that had previously
been less than 5 years, and vice versa, are revised to greater than 5 years. Should
this arise after an estimate has been booked using the near term estimating
methodology, SPUs/ BUs, should adhere rigorously to these Guidelines, revising the
basis of calculation accordingly, and advise the Decommissioning Due Diligence
team regarding the impact of the revised basis for the estimate.

appendix 4
A4.3 Decommissioning Cost Estimate

In developing a Decommissioning Cost Estimate the following additional information
is expected:
• Summary of the relevant regulations, leases and permits and their impact on
decommissioning.
• Scope Document for the decommissioning estimate giving details of both
included and excluded elements.
• High level milestone schedule giving details of the timing of decommissioning
activities such as CoP, Permitting, Project Execution and regulatory close out.
A4.3.1 Decommissioning Cost Estimate Model

Each SPU/BU shall develop and maintain Decommissioning Cost Estimate models
taking into account local regulations and requirements and using the expertise of
the Decommissioning Network.
The Decommissioning Network under the leadership of Head of Engineering (HoE)

EPTF is expected to provide:
• Guidance on development of Decommissioning Cost Estimate models.

• Sharing common regional models.
• Documentation on the standard approaches to decommissioning.
Estimate models should be constructed so that changes in Unit Rate assumptions
can be readily implemented on 30 days notice. This should be accomplished by
designing the models so that Unit Rate calculations are referenced to a single,
readily accessible central location within the model structure.
A4.3.2 Decommissioning Cost Estimate Change Form

SPU/BU estimate changes shall be submitted on the following Decommissioning
Cost Estimate Change form. This will ensure that the underlying causes of estimate
change are clearly and consistently communicated across the segment.

appendix 4
The body of the form breaks down estimate changes into the following catagories:
• Beginning Balance
– The opening balance at the start of the quarter. This should be advised by
SPU/BU FC&A Controller.
• External Impact
– Forex: Foreign Exchange impacts.
– Other: Includes other impacts outside the influence of the SPU/BU such as
natural disasters.
• Change in the Asset Base
– New Projects including Wells: New Projects including new wells.
– Acquisitions: New assets or an increases in the ownership of existing assets.
– Divestments: Asset sales or decreases in the ownership of existing assets.
• Estimate Revisions
– Impact of unit rate change: Changes due to changes in unit rates. Changes may
be the result of revisions to the Segment Approved Unit Rates, changes in
current cost or change Long to Near Term rates as driven by CoP date.
– Wells definition: Revisions due to changes in estimated scope (durations,
technology, number of wells (update to existing well count), basic assumptions,
regulatory changes).
– Facility definition: Revisions due to changes in estimated scope (durations,
technology, as driven by complexity, regulatory change, etc.).
• Estimated Payments
– Estimate payments for decommissioning project works within the SPU/BU for
the quarter.
The Decommissioning Due Diligence Team should be contacted with questions
relating to the Cost Estimate Change Form.

appendix 4
Decomissioning Cost Estimating Change Form
SPU Name: Date of Update:

Previously Approved Estimate US$ Date of Last Review:
Current Estimate For Approval US$ Next Planned Review:
$5,000
$4,500
$4,000
Cost Estimate (Undiscounted) $m
$3,500
$3,000
$2,500
$2,000
$1,500
Revisions to Previous Estimates
$1,000
Beginning Bal. External Changes in Asset Unit Rates Wells Definition Facilities Estimated Forecast Ending
Influences Base Definition Payments Balance
$0 $0 $0 $0 $0 $0 $0 $0
Beginning Estimated Revised

Undiscounted Balance External Influences Changes in the Asset Base Estimate Revisions Payments Delta Balance
Revised
US$m
Balance
Paydown
(Note: This table should against Excluding
exclude Savlage Values) e.g.: New Projects Impact of Unit provisions - the Forecast
Forex Hurricanes Including Wells Acquisitions Divestments Rate Change Wells Definition Facilities Definition Actual P&As Payment
Wells $ - $ - $ - $ -
Facilities
Onshore Facilities $ - $ - $ - $ -
Offshore Facilities $ - $ - $ - $ -
Pipelines $ - $ - $ - $ -
Owner's Cost $ - $ - $ - $ -
Operations $ - $ - $ - $ -
UAP $ - $ - $ - $ -
Subtotal Facilties $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $ - $ - $ -
Total $ - $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $ - $ - $ -
0 0 0 0 0 0 0 0 0 0 0
Salvage Values $0.0 $0.0 $0.0
Description of Change to Decommissioning Cost Estimate
Action Taken
Approval Signature Date

Approved by: SPU Decommissioning Technical Authority
SPU Engineering Authority
SPU Wells Director
TVP P&E
Group Remediation Management
Communicated to: SPU / BU / PU Line Management
BU / PU Commercial Director
BU / PU Controller and FC&A
* NOTE: Submission for approval to P&E Decommissioning Director and Group Remediation Management must include all revised estimates which make up the total adjustment.
Decommissioning Cost Estimate Change Form

appendix 4
Definitions and Expectations

Beginning Balance – The opening balance at the start of the quarter. This should be
advised by SPU/BU FC&A Controller.
External Influences – 'One-off / Force Majeure' changes (e.g. Hurricane damage, forex).
Changes in Asset Base – Acquisitions, Divestments, New Projects including wells added
DURING THE PRIOR PERIOD (include corrections and 'catch-ups' with Revisions).
Revisions (Unit Rates) – Changes due either to revisions in Segment Approved, or SPU
Derived, Unit Rates or change from Near or Long Term calculation method as driven by CoP
date.
Revisions (Wells) – Revisions to previous estimates due to changes in estimated scope
(durations, technology, basic assumptions, regulatory changes).
Revisions (Facilities) – Revisions to previous estimates due to changes in estimated scope
(durations, technology, as driven by complexity, regulatory change, etc.).
Payments – Drawdown of the provision to fund actual decommissioning operations. Note
that actual drawdown will not be known ahead of quarter closing and is expected to be
treated as an estimate.
Ending Balance – Estimated closing balance as recommended.
Reference the Decommissioning Work Breakdown Structure, Level 3, for further context
around the following categories:
Onshore Facilities – All onshore costs other than wells and onshore pipelines. Includes
Major Facilities and Minor Facilities (terminals, plants, gathering systems, and site
restoration).
Offshore Facilities – All offshore costs other than wells and offshore pipelines. Includes
Major Facilities and Minor Facilities (topsides and structures, including subsea structures,
and jumpers, and site restoration as necessary).
Pipelines – All low and high pressure gathering lines and transmission systems, including
flowlines, export systems, etc.
Wells – All onshore and offshore wells costs.
Operations – Land holding costs, Security, Monitoring, On-site personnel, logistics and
consumables.
Owner's Cost – Pre-EXECUTE overhead for project planning and preparation.
UAP – Unallocated Provision (for use ONLY when CoP date is <5 years). UAP allowance is
NOT to include allowances for Drilling Non-Productive Time, or for other statistically
supported contingencies such as weather downtime.

appendix 4
A4.3.3 Decommissioning Work Breakdown Structure

A standard Decommissioning Work Breakdown Structure exists as detailed below.
The intent of the WBS is to promote completeness and consistency of approach to

decommissioning. This supports the establishment of common language and basis
for learning and improvement, and the foundation for benchmarking. The WBS is
available in spreadsheet form from the Decommissioning Due Diligence Team. The
following includes specific examples of elements found in each level of the WBS.
Decommissioning Work Breakdown Structure

General Purpose
The Standard Decommissioning Work Breakdown Structure (WBS) is to be used to

assist in the development and updating of cost estimates for facility
decommissioning.
Instructions
The Standard Decommissioning WBS – The WBS shall be considered a guideline

or best practice to follow in developing and/or updating cost estimates for
decommissioning. The WBS provides the basic structure or framework for
Decommissioning Cost Estimation.
Use of WBS for New Facilities (facilities with no previous decommissioning
cost estimate) – These cost estimates are normally developed at the beginning of
the development of the asset (i.e. Appraise Stage), though others may be developed
later in the asset's life cycle. For new assets for which a decommissioning cost
estimate is yet to be developed, the WBS is to be used as a template to develop a
comprehensive cost estimate at an "Appraise stage" level of confidence.
Use of WBS for Existing Facilities (facilities with existing decommissioning cost
estimate) – For existing assets for which a decommissioning cost estimate already
exists, the intent is to use the WBS to ensure the existing decommissioning cost
estimate is comprehensive and consistent with other decommissioning cost
estimates of similar assets. As such, all cost estimates for facility decommissioning
do not have to be formatted exactly to follow this WBS, but must be consistent with
it such that all major areas of costs are covered by the subject cost estimate.

appendix 4
Terminology and Organisation – The WBS uses terminology to describe various

facilities and actions which may vary in different parts of the company. The major
levels are defined below to assist the user in understanding some of the
terminology. Also, the WBS is organised to generally follow an oil and gas
Exploration and Production (i.e. upstream) operation, though how individual E&P
facilities are organised may also vary throughout the company.
Levels / Descriptions
1. Overall Project – The specific facility or asset to be decommissioned. Normally,

this is a specific, discrete facility or asset, such as an oil field or other set of oil
and gas (upstream) facilities which would be logically decommissioned at the
same time, e.g. the overall project could be an entire production unit, including
wells, gathering lines, production/oil treatment and storage facilities, or the overall
project may be a discrete facility such as a gas plant.
2. Stage – This refers to the life cycle step of the project, as defined by the BP CVP
process. The cost estimate should include those costs incurred at each stage of
the project, such as design and pre-planning costs in the Define stage, and all
construction costs in the Execute stage. For decommissioning projects most
costs will be in the Execute stage, with minor costs in the other stages.
3. Group – This refers to the type of oil and gas facility of the given asset to be
decommissioned. The options for type of facilities include assets usually
necessary for oil or gas to be developed and produced from the wellhead,
through processing, to sale. Given that offshore facilities are significantly different
from onshore facilities, and the logistics of decommissioning them vary
significantly, it is at this level the WBS is divided into a breakdown for offshore
and onshore facilities.
Each major group for Offshore Facilities are further described below:
• Wells – All downhole systems, well plugging, cutting and abandonment.
• Facilities – All offshore costs other than wells and offshore pipelines. Includes
Major Facilities and Minor Facilities – topsides and structures, including subsea
structures, jumpers and site restoration as necessary.
• Export Pipelines – Pipelines from production platform.
• In Field Pipelines – All low and high pressure in field gathering lines and
transmission systems, including flowlines, etc.

appendix 4
• Owners Costs – Pre-Execute overhead for project planning and preparation.
• Operations – Post CoP holding costs, security, monitoring, personnel, logistics

and consumables.
• Owners – Pre-Execute overhead for project planning and preparation.
Each major group for Onshore Facilities are further described below:
• Major Facility – Relatively large or complex oil or gas production or processing

facility, usually numbering only a few in a given production field, e.g. gas plants,
or large centralised processing facility.
• Minor Facility – Relatively small or less complex oil or gas production or

processing facility, usually having many individual units in a given field, e.g.
compressor stations, tank batteries.
• Export Pipelines – Pipelines from production facility after point of sale.
• Wellsites – Surface facilities directly related to an individual well (such as

christmas tree, well pad, etc.)
• In Field Pipelines – All low and high pressure in field gathering lines and
transmission systems, including flowlines, etc.
• Wells – All downhole systems, well plugging, cutting and abandonment.
• Owners – Pre-Execute overhead for project planning and preparation.
• Operations – Post CoP land holding costs, security, monitoring, on-site

personnel, logistics and consumables.
UAP
• Unallocated Provision (for use ONLY when CoP date is < 5 years). UAP
allowance is NOT to include allowances for Drilling Non-Productive Time, or for
other statistically supported contingencies such as weather downtime.
• Instructions on the calculation of UAP can be found in the Project Services

Guidelines.

appendix 4
"An allowance for goods and services which at the present state of project
definition cannot be positively identified and quantified but which history,
experience, and judgment show that will be needed to achieve, on average,
project complete costs."
• UAP is not to cover for major scope changes or missing scope. Nor is it to
cover for poor estimating quality.
4. Delivery – Refers to the actual decommissioning activity necessary to

decommission the given oil and gas (upstream) facility defined in Levels 1
through 3. At this Level, the facility is further defined and the action taken to
decommission this facility is specified. Specific delivery areas are customised for
the Group (type of facility), and it is expected that there would be a fairly detailed
breakdown of costs related to more complex facilities (such as offshore platforms
or major facilities) and less detail for less complex assets (such as pipelines, well-
sites).
5. Delivery Sub-Package – The further specification or detailed description of the
decommissioning activity. As such, it is further defining an area of spend which
normally is encountered in decommissioning the given facility.
Additional levels – These are allowed, and certainly expected for more complex
facilities and for more detailed cost estimates that would be developed at the
Define stage of the decommissioning project.

appendix 4
A4.3.4 Decommissioning Cost Estimate Contacts

Onshore Processing Facility
Larry Stone, Calgary
larry.stone@bp.com
+1 403 233 1645
Onshore Pipeline
Larry Stone, Calgary
larry.stone@bp.com
+1 403 233 1645
Onshore Oil / Gas Field

Tom Straub, Houston
Thomas.straub@bp.com
+1 281 366 2106
Offshore Pipeline
Sue Dunlop, Aberdeen
sue.dunlop@uk.bp.com
+44 (0)1224 833 688
Offshore Infield Equipment (Wells, Manifolds, Pipelines, etc.)

+44 (0)1224 833 688
Offshore Large Platform

+44 (0)1224 833 688
Offshore Deepwater Systems

Bob Peloubet, Houston
robert.peloubet@bp.com
+1 281 366 5481

appendix 4
A4.3.5 Data Requirements

Using the best available data and information will have a substantial impact on the
accuracy of the decommissioning cost estimate. The information required where
available is:
• Regulations, leases, permits, contracts – what needs to be decommissioned

and how, including what equipment should be removed, what can be buried or left
in situ.
• Area information – water depth, metocean, weather windows for work,
environmental issues and seabed stability.
• Wells – number of producers, injectors, wellheads, platform type, subsea,
onshore, downhole gauges, downhole pumps, NORM, LSA, H2S, reservoir
conditions such as pressure and temperature, reservoir and overburden
properties, shallow hazards, rig availability and status.
• Offshore platforms – platform type and age, water depth, topside and jacket
weights, number of jacket piles and diameter, presence and nature of any drill
cuttings, topsides weight divided into major components (e.g. drilling, process,
utilities and structural steel, accommodation, helideck, flare), presence of NORM,
LSA scale, installation details stating number of lifts, construction and as built
drawings.
• Sub sea structures – water depth, type and age, weight, number of piles, HLV,
DSV or ROV intervention required, number, length and extent of burial of flow
lines, jumpers, umbilicals, extent of mattress protection.
• Floating systems (FPSO, SPAR, TLP or Semi-Submersible) – number of risers,
anchor chains with more detail if adopting for demolition option. Details of the
vessel if it is to be scrapped.
• Pipelines – type, duty, length, buried length, diameter, wall thickness, flexible or
rigid, number and type of structures such as SSIVs and T pieces, right of way
status, number of crossings over and under other lines, integrity status and
suitability for reeling.
• Onshore site plans – schedule of pipelines, equipment, buildings, structures, etc.
Details of any access restrictions that could affect the decommissioning strategy
such as width of easements.
• Equipment data – tank and vessel diameters, wall thickness, material type,
insulation type, cladding type, pumps and ancillary equipment.

appendix 4
• Onshore pipeline crossings – number and type of Road, Rail or River crossings
and exposed or buried status.
• Infrastructure to be retained – details of any of the facilities to be retained
following decommissioning.
• Site investigation data – describing the extent and type of contamination
present, details of any spills or releases at or associated with the operation of the
facility.
• Remediation strategy – details of any existing remediation undertaken and
subsequent recommendations for future clean up.
• Future land use – for onshore in particular, plans for future land use by
landowners and/or agencies of jurisdiction.
• Transportation and disposal – details of mode of transportation, logistical issues
and potential disposal locations.
• Turnarounds (TARs), shutdowns and vessel inspection data – stating clean out
of hydrocarbons and extent of hazardous wastes such as oil sands, NORM, LSA,
radiologically contaminated equipment and mercury.
• Operational experience – personnel with direct experience of restrictions, spills
and remediation occurring during operations.
• BP's experience – reflecting BP’s track record of delivery for comparable projects
and analogues.
• Industry Experience – based on other operators, third-party consultants and
industry experience.
A4.4 Scope of Activities

Confidence in the decommissioning cost estimate is achieved by fully defining the
scope of activities for each of the phases of cost estimation. Each Decommissioning
Cost Estimate is expected to be accompanied by a thorough scope document
clearly identifying all of the activities included and excluded from the estimate. The
following sections provide a consistent set of activities to be included and excluded.
A4.4.1 Scope of the Decommissioning Cost Estimate

The scope document shall describe the nature of the decommissioning obligation
and shall include but not be limited to Group policies, standards and guidelines,

appendix 4
regulations, industry practice and the SPU/BU strategy. The SPU/BU shall use
regulations, decommissioning liabilities, the Group’s experience and preferences in
preparing the Scope Document. Exceptions to BP’s Recommended Practices shall
be noted and explained.
Activities to Include in Decommissioning Cost Estimates
Decommissioning includes all those activities required to address a facility, including

well plugging and abandonment. Decommissioning Cost Estimates should be
inclusive of all costs incurred in the decommissioning of the facility both pre and
post CoP.
Decommissioning Cost Estimates should include but not be limited to:
• Isolation and “make safe” of all facilities.

• Well plugging and abandonment and conductor removal.
• Operational shutdown of facilities.
• Clean out and hydrocarbon freeing of all facilities.
• Strip out and removal of all fittings, lights, and trimmings.
• Removal of any re-useable equipment.
• Identification, removal and disposal of waste from plant clean out and demolition
including identification and removal of any hazardous waste
(e.g. NORM, LSA, asbestos, mercury, lead paint, etc. containing materials).
• Demolition of all process and utility plants.
• Scrap processing and disposal costs.
• Supporting facilities costs (e.g. scaffolding, craneage, etc).
• Regulatory fees, permit applications and associated costs
(e.g. UK Decommissioning Programme approval).
• Decommissioning design and construction oversight.
• Pre and post decommissioning site inspections.
• Post decommissioning long term site inspection requirements.
• Internal staff costs to oversee and manage the decommissioning, directly
attributable to the project.

appendix 4
• Post CoP operations support costs

(e.g. lighthouse phase for a large offshore platform, lease costs, utilities).
Offshore Decommissioning Cost Estimates should include but not be limited to:
• Topsides removal to shore.

• Jacket removal to shore or decommissioning in place.
• Removal of floating systems to quayside or designated reefing location.
• Subsea structures removal to shore (if not decommissioned in place).
• Offshore pipeline burial (decommission in place) or removal to shore.
• Removal of pipeline crossings, structures, jewellery (T's, sleds, etc) and
mattresses in accordance with regulations and GP 43-57.
• Offloading topsides and/or jacket to shore.
• Supporting facilities costs
(e.g. flotel, supply boats, helicopters, barges, guard boats).
• Seabed debris removal where practicable.
Onshore Decommissioning Cost Estimates may include but not be limited to:
• Demolition of roads/rails/surface pipelines/fencing/street lighting.
• Demolition of all buildings/warehouses/offices.
• Break-up and removal of all hard-standings/roadways.
• Treatment and disposal of all subsurface drains/pipelines and cabling.
• Cleaning and plugging of pipelines decommissioned in place in accordance with
regulations and GP 43-57.
• Treatment of beach landfall and crossings for offshore pipelines.
• Removal, remedial treatment and disposal of soil contamination above applicable
risk levels typically associated with an operating facility.
• Replacement of removed soils with clean topsoil and revegetating as appropriate
for expected re-use.
Salvage/scrap values should be estimated and reported separately from the
Decommissioning Cost Estimate as scrap value. Instead it is used as the residual

appendix 4
value in the DD&A calculation. The full cost of salvaging and scrapping of materials
is to be included in the Decommissioning Cost Estimate, however, since the
exclusion for scrap applies only to the value of the material itself.
Additional activities to exclude from Decommissioning Cost Estimates
The following are to be excluded entirely from the Decommissioning Cost Estimate:
• Environmental remediation associated with a contamination in excess of that

expected through normal operation of a facility.
• Long term soil and groundwater remediation requirements which will be
coordinated by Remediation Management.
• Internal and external legal costs (provided by Legal Function).
• Costs associated with plugging and abandoning zones within a currently
producing well where the well will continue to produce.
• Overhead costs not directly attributable to a specific project or facility.
• Costs associated with preparation of the cost estimate.
• Fines, penalties.
A4.5 Decommissioning Cost Estimation Benchmarking

Benchmarking can provide important calibration information for decommissioning
cost estimation and, where practical, should be carried out for all cost estimates in
accordance with Project Services Guideline on Project Benchmarking. Benchmarking
information should be drawn from an analogous set of projects from both BP
experience and external.
Should benchmarking reveal either gaps to best in class performance or

performance above industry average, a qualified explanation shall be provided.
For a list of typical metrics, reference should be made to the benchmarking section
of the eProjects data base http://eprojects.bpweb.bp.com/
An eProjects tutorial guide to benchmarking is available on line.
The Decommissioning Network provides an excellent source of information for cost

estimation for those regions with little or no decommissioning experience.

appendix 5
A5 Decommissioning Project Execution

A5.1 Introduction
• Development projects shall adequately reflect all decommissioning requirements
during all stages of the project regardless of the decommissioning jurisdiction.
• Key considerations in decommissioning projects are HSSE, contractual
requirements and regulations.
• Decommissioning projects should be sensitive to BP’s reputation and
stakeholders such as local governments and regulators; Non-Governmental
Organisations (NGOs) and the general public.
• Decommissioning projects should incorporate Communications & External Affairs
into the project team.
A5.2 Major Project common process

These guidelines serve to supplement but do not replace the existing Major Projects
common process (MPcp). This section lists expectations which should be addressed
in the development stage of new projects (Appendix A5.3) and details the additional
elements that are expected to be taken into account when applying MPcp to the
decommissioning of an asset (Appendix A5.4).
A5.3 Development Projects

A5.3.1 Decommissioning Role in Concept Selection
Decommissioning scope is expected to be reviewed in the Appraise and Select
Stages of a development project, as concepts are developed. The decommissioning
approach should be run in parallel with the development concept. Post CoP costs
associated with maintenance and holding of an asset (e.g. lease and utility costs)
should be included in any life-cycle costs for each development option (consistently
with their representation in the Decommissioning Cost Estimate).
Decommissioning assessments are expected to be included in the relevant stage-

gate documentation.

appendix 5
A5.3.2 Design for decommissioning

In UNCLOS jurisdictions offshore platforms must be designed to be removed. It is a
recommended practice and an expectation that all offshore and onshore new facility
designs include a view of how they would be decommissioned and the design
adjusted as appropriate.
Inclusion of decommissioning into design can range from a notional

decommissioning study to a detailed decommissioning study. The minimum
expectation is a description of how the facilities would be decommissioned using
conventional technology at the time of design.
A5.3.3 Decommissioning Cost Estimate in Execute Finance Memoranda

The decommissioning cost, estimated in accordance with the Decommissioning
Guidelines, is expected to be included in project economics that are presented in
the Define and Execute FMs. (However this decommissioning cost should not be
included within the amount requested for sanction at that time.) The
decommissioning estimate is expected to include final disposal of the facility. Reuse
of a facility should only be included if its reuse is identified in the FM as part of the
long-term development.
A5.4 Decommissioning Projects

Decommissioning projects comprise four activities:
• Assessment of ongoing business opportunities.

• Well Plugging and Abandonment.
• Facilities decommissioning.
• Plant or platform removal and disposal, including pipelines.
Decommissioning projects are often cost driven within the boundaries of HSSE,
reputation, local regulations, and external stakeholders’ expectations. Schedule is
rarely a driver at the outset, but may become a driver as the project progresses (e.g.
after regulatory approval).
Decommissioning projects in excess of US$100m (BP net) should follow the Major
Projects common process (MPcp). Each project will use the MPcp requirements to
meet its project needs. Decommissioning projects less than US$100m (BP net)
should apply the principles of the MPcp where practicable.

appendix 5
The scope of work contained within the decommissioning cost estimate should be
understood prior to undertaking the decommissioning project, as discussed in
Section 4 of the Decommissioning Guidelines.
A5.4.1 Assessment of Business Opportunities

As part of managing a declining asset, the value of reserves, cost (including risk
cost) of continuing to operate, and cost of decommissioning need to be understood.
Based on this understanding, alternative opportunities utilising the existing facilities
can be evaluated. Based on an understanding of the costs and projected income,
divestment opportunities can be evaluated and, where appropriate, implemented.
There are situations where divestment is not the appropriate course of action. In
these cases, the planning of all activities associated with physical decommissioning
(e.g. well P&A, equipment cleanup, removal / recycling of facilities) should begin
with adequate time to plan the field activities. The potential for asset recovery (sale
of facilities or components) should be investigated during this phase. The start time
for this phase is from three to five years prior to CoP. Depending on complexity of
the facility, an earlier start may be appropriate. It is also a recommended practice to
include appropriate staff from FC&A as part of the planning process to ensure that
adequate and appropriate provisions are recorded.
A5.4.2 Well Plugging and Abandonment

Well Plugging and Abandonment (P&A) can be conducted as a separate activity from
any facilities decommissioning. Any division between well P&A and facilities
decommissioning should be decided, agreed and documented prior to commencing
any work. The work may range from setting plugs to the removal of tubulars.
A5.4.3 Facilities Decommissioning

Facilities decommissioning is limited to the activities of cleaning, de-oiling, de-
energising, isolating, and generally making the facility safe for de-construction crews
to remove or dismantle the facility. It is a recommended practice for a large portion
of this work to be performed by, or under the direction of, the team which was
operating the facility prior to CoP.
A5.4.4 Removal of Facilities or Pipelines

Cleaned and de-energised facilities should be removed from site or dismantled. For

appendix 5
large offshore structures, this may constitute the largest decommissioning cost item
and it may be appropriate to treat this work scope as a project in itself.
A5.5 Project Controls

The Decommissioning Work Breakdown Structure as provided in Appendix 4 is
expected to be used to facilitate consistency, coherency, and corporate learning.
A5.6 Supply Chain Management and Contractor Selection

The role of Procurement Supply Chain Management (PSCM) in the project can be
highly variable depending on market conditions and the project execution plan. For
small projects, it may be appropriate to use several small contracts with a BP-led or
contracted team coordinating the various contractors. For large projects, an
Engineering Procurement Construction (EPC) type approach may be the best option.
The overriding consideration is to adhere to BP’s HSSE standards, minimise risk and
cost of the decommissioning project.
A5.7 Handover from Operations to the Decommissioning Project

Handover from operations staff to the Decommissioning Project should be carefully
planned, budgeted and agreed as part of the formal Management of Change (MoC).
Some decommissioning activities such as purging, flushing and de-energising
facilities are best conducted or supervised by operations personnel.
A5.8 Finance Memorandum Requirements

Requirements for Finance Memoranda are the same for those stated in the MPcp
for major Decommissioning Projects or SPU processes for non-major projects.
A5.9 Reputation Management Plan

Communications & External Affairs is expected to be involved in all stages of
Decommissioning Projects to ensure that third parties and stakeholders are
informed and the Group addresses matters of concern.

appendix 6
A6 Example Decommissioning Provision Booking

Milestone Schedule
Milestone Schedule
Decommissioning Provision for Major Project
SPU Name Project Name
Date of Initial Joint Review by Controllers with SPU Participants:

Engineering Authorities, both for the Project and SPU
Date of Approval by Head of Engineering
Anticipated Estimate at
Milestone Schedule Estimate at FM time of Booking * Date of
BP Net BP Net Booking
Total Decommissioning Cost Estimate n/a
Project Milestones
Total n/a
• Should the estimate change after the time of project sanction. Changes can be recorded by the Controller
Comments
Instructions
This form records the milestone plan for booking decommissioning provisions associated with major projects (or greater
than $100m BP net in spend). Provisions for other projects are expected to become booked at the start of commissioning.
Completed wells are to be booked as part of the regular well count review.
The milestones and division of estimate above should be agreed among appropriate Engineering Authroities and Controllers
in conjunction with the Execute Stage Gate Review, and is a requirement for passing the gate. The Milestone Schedule is to
be approved by the Head of Engineering.
Controllers are expected to manage the process following the initial review, by monitoring project progress.

appendix 7
A7 Reference Documents and Additional Resources

A7.1 Reference Documents
The following reference documents should be accessed from their source to ensure
the most current version.
1. FC&A: GRM Section 1.32 Decommissioning Costs.

2. Group Technology: Group Project Principles.
3. E&P P&E Function: E&P Segment Major Project common process (MPcp), and
associated Supplements.
4. Group Technology: Risk Management Guidelines for Major Projects.
5. Engineering Technical Practices (ETP).
6. BP Drilling & Wells Operations Policy.
7. The Guidance on Practice for Pipeline Decommissioning and Removal from
Service (GP 43-57).
A7.2 Additional Resources

The following resources are available to assist with the development of
decommissioning cost estimates:
1. Decommissioning Network (guidance on best practices and standard approaches

to estimating decommissioning costs).
2. RM (guidance on onshore decommissioning and remediation).
3. eProjects (database of analogue decommissioning projects).
4. FC&A (CETs).

appendix 8
A8 Definitions
Cessation of Production or CoP means the point at which economic production is
deemed to cease from a filed, calculated according to the terms of the Resources
and Reserves Operating Standard.
Decommissioning Due Diligence Team means a combination of Segment and

Group level individuals charged with fulfilling delegated responsibilities associated
with the accountabilities of E&P Segment Controller, Technology Vice President for
Projects and Engineering (TVP – P&E), and Head of Function for Remediation
Management (HoF RM).
Decommissioning Cost Estimate means an engineering estimate of the cost to

decommission an asset; which serves as the basis for calculating a
decommissioning provision.
Decommissioning Provision means an accounting term to represent the

discounted obligation based on the decommissioning cost estimate.
Major Decommissioning Project means a decommissioning project with a cost

equal to or greater than US$100m, BP net, or a decommissioning project with
significant reputational risk to the Group.
Provisioning Milestone(s) means a milestone(s) when a decommissioning

provision is booked for a development project. Methods to determine the
appropriate Provisioning Milestones are provided in the Appendix 6.
Resources and Reserves Operating Standard or RROS means the Operating

Standard issued by the Group on the reporting of resources and reserves.
Start of Commissioning means the milestone within a project in which the facility
starts to become energised.
Standard Schedule of Unit Rates means the listing of Segment-provided unit rates
to be used for developing long-term and project feasibility Decommissioning Cost
Estimates
Threshold Value means a cumulative change in decommissioning estimates during

a quarter within a Strategic Performance Unit / Business Unit (SPU/BU) amounting
to equal or greater than US$25m, BP net. Changes associated with exchange rate
movements shall be excluded.

appendix 9
A9 Acronyms
ACM Asbestos Containing EPC Engineering Procurement
Materials and Construction
ARA Annual Report and Accounts EPT Exploration & Production

Technology
BPMF BP Management Framework
EPTF Exploration & Production
BU Business Unit Technology Function
CBS Cost Breakdown Structure EPTG Exploration & Production
Technology Group
CEO Chief Executive Officer
ETP Engineering Technical
CET Control Evaluation Template
Practice
CFO Chief Financial Officer
EVP Executive Vice President
CoP Cessation of Production
FC&A Finance, Control and
D3T Decommissioning Due Accounting
Diligence Team
FCP Financial Control Process
DD Due Diligence
FEED Front End Engineering
DD&A Depreciation, Depletion and Design
Amortisation
FEL Front End Loading
DoA Delegation of Authority
FM Finance Memorandum,
DSV Diving Support Vessel as defined in GIAAP
DTI Department of FPSO Floating Production Storage

Trade & Industry (UK) and Offloading
E&P Exploration and Production GAAP Generally Accepted

Accounting Principles
EA Engineering Authority
GCE Group Chief Executive
EL Electric Line

appendix 9
GC&E Group Compliance and M&A Mergers and Acquisitions

Ethics
MBAC Main Board Audit
GRM Group Reporting Manual Committee
http://grm.bpweb.bp.com/
MDP Major Decommissioning
GVP Group Vice President Project
H2S Hydrogen Sulphide MLV Multi-Lift Vessel
HLV Heavy Lift Vessel MMS Minerals Management

Service (US)
HoD Head of Discipline
MoC Management of Change
HoE Head of Engineering
MPcp Major Project
HoF Head of Function common process
http://mpcp.bpweb.bp.com/
HSSE Health, Safety, Security and
Environment NGO Non-Governmental
Organisation
IAS International Accounting
Standard NORM Naturally Occurring
Radioactive Material.
IFRS International Financial
Also know as LSA
Reporting Standards
NUI Normally Unattended
IMO International Maritime
Installation
Organisation
OSPAR Oslo and Paris Convention
LRA Letter of Representation and
Attestation P&E Projects and Engineering
http://epti.bpweb.bp.com/
LSA Low Specific Activity.
Also know as NORM P&A Plugging and Abandonment
LTP Long Term Plan PSA Product Sharing Agreement
LTRAP Long Term Resource PSC Product Sharing Contract
Allocation Price.

appendix 9
PSCM Procurement and Supply UAP Unallocated Provision

Chain Management
UN United Nations
PU Performance Unit
UNCLOS United Nations Convention on
RM Remediation Management Law of the Seas
http://rm.bpweb.bp.com/
VP Vice President
ROV Remotely Operated Vehicle
WBS Work Breakdown Structure
RROS Resources and Reserves
Operating Standard
SEC Securities and Exchange

Commission
SMOG Standardised Measure of Oil

and Gas
SOX Sarbanes Oxley Act of 2002

(US Federal Law). The Act
governs the reporting of
financial and other
information by companies
listed on the US stock
exchange.
SPU Strategic Performance Unit
SSIV Subsea Isolation Valve
TA Technical Authority
TAR Turnaround. A planned plant

or process shutdown.
TLP Tension Leg Platform
TVP Technology Vice-President

appendix 10
A10 Key Contacts (Decommissioning Due Diligence Team)

Dave Barrow
Houston
dave.barrow@bp.com
+1 281 366 4475
Craig Lines
Sunbury
craig.lines@bp.com
+44 (0)1932 774637
Susan Ellis
Sunbury
susan.ellis@bp.com
+44 (0)1932 767796
Mark Berman
Houston
mark.berman@bp.com
+1 281 366 7063
Alan Pryor
Sunbury
alan.pryor@bp.com
+44 (0)7799 071733

BP Exploration
Sunbury Business Park
Sunbury-on-Thames
Middlesex
TW16 7LN
UK
Issue 1, December 2006

Decommissioning V 3 07

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Decommissioning v9 20-12 - PAGES 4/1/07 12:24 Page 1

For BP internal use only

Exploration and Production

The Decommissioning Guidelines set out the governance process and

The Appendices also provide best practice guidance on decommissioning project

David Nagel Neil Shaw Joan Wales

Decommissioning Guidelines © BP p.l.c. 2006 3

A1 Appendix Overview 45 A5 Decommissioning Project 67

A1.2 Decommissioning as 45 A5.1 Introduction 67

4 Decommissioning Guidelines © BP p.l.c. 2006

Decommissioning Guidelines © BP p.l.c. 2006 5

1.1 Decommissioning Guidelines Purpose

Decommissioning liabilities are subject to regulatory requirements and the policies

In considering decommissioning liabilities the SPU/BU needs to be aware that

Decommissioning Guidelines © BP p.l.c. 2006 7

Appraise Select Define Execute Operate

Cost Estimate for Cost Estimate for

Evolution of Apply Unit Rates Apply Unit Rates

First Feasibility Execute 5 years CoP

Provisioning Milestones (agreed at Execute FM) Start of Commissioning (sole Provisioning)

Figure 1.1 Decommissioning Life Cycle

Decommissioning Guidelines © BP p.l.c. 2006

1.2 Decommissioning Asset Life Cycle

A Decommissioning Cost Estimate will be created in a development project’s

The three types of Decommissioning Cost Estimate are:

1. Decommissioning Cost Estimates for Development Project Feasibility – these

Decommissioning Guidelines © BP p.l.c. 2006 9

The CoP to be used for determining whether a decommissioning estimate is “near

PSA decommissioning cash flows should be phased in accordance with the

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Decommissioning Guidelines © BP p.l.c. 2006 11

• Accountabilities of certain officers of the company to ensure responsibility for:

Decommissioning Guidelines © BP p.l.c. 2006 13

Cost Estimate Estimate Changes

Figure 2.1 Quarterly Estimate Approval Process

Decommissioning Guidelines © BP p.l.c. 2006

2.2 Decommissioning Accountabilities

• Establishing / maintaining Decommissioning Cost Estimates.

SPU/BU Engineering Authority (EA) shall be accountable for:

• Verifying adherence to engineering, project and environmental standards.

SPU/BU Commercial Manager shall be accountable for:

• Advising SPU/BU Controller and EA of field CoP date.

Decommissioning Guidelines © BP p.l.c. 2006 15

2.2.2 Head of Function – Remediation Management

• Approving onshore Decommissioning Cost Estimates underpinning existing or

2.2.3 Technology Vice President – E&P Projects and Engineering

16 Decommissioning Guidelines © BP p.l.c. 2006

2.2.4 Head of Engineering – E&P

• Monitoring/verifying adherence to project, engineering and environmental

2.2.5 Head of Discipline – Drilling & Completions

• Ensuring effective controls are in place across the Segment to support:

Decommissioning Guidelines © BP p.l.c. 2006 17

SPU/BU Controller shall be accountable for:

• Calculating, recording and maintaining accounting provisions for decommissioning,

The above listed accountabilities are illustrated in Figure 2.2.

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Management of E&P Decommissioning: Approval & Reporting Accountabilities

Group Vice President Group Vice President

• Review/endorse process for managing • Recommend material changes to cost

TVP Head of Function E&P

• Calculate, record and maintain accounting

Decommissioning Guidelines © BP p.l.c. 2006 21

3.1 HSSE and Code of Conduct