Appraisal Guideline

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2006 BP International Limited. All rights reserved.2007 BP International Limited. All rights reserved.

major projects common process

appraisal guideline

Exploration & Production


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2007 BP International Limited MPcp Appraisal Guideline

In appraisal, we confirm project viability, create the overall business case and

make the key strategic decisions that drive project value for years to come. This

requires excellence in many dimensions.

This guideline has been developed based on the knowledge and experience of

our multi-discipline appraisal community including our top appraisal leaders; it

provides guidance to all involved in delivering appraisal excellence.

Through the consistent application of this guideline, we will ensure that we

create the right distinctive projects in Appraise and Select to support our strategy

of being the #1 projects operator.

Neil Shaw

technology vice president - projects & engineering


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contents

context 5

overview 9

1 habits of great appraisal leaders 15

BP biases 1

.1 Integration 22

. Standardization 22

. Full value characterization 24

.4 Risk and uncertainty management 25 .5 Natural pace 26

.6 Quality through choice 28

appraise work process and activities 1

.1 Entry to Appraise (Pre-appraise) 33

. Appraisal planning 36

. Appraise programme 46

.4 Appraise-Select gate 58

4 select work focus and activities 65

4.1 Select programme 66

4. Define preparation 75

5 organization development and design 85

5.1 Business context 86

5. Key accountabilities 86

5. Organization development 89

5.4 Setting the organiaztion strategy 92

5.5 Staffing expectations 93

5.6 Roles and accountabilities 95

5.7 Organization design settings 102

6 toolkit 109

6.1 Core multi-disciplinary tools 109

6. Emerging tools 110

6. Facilitation process to support appraisal and development teams 111

6.4 Knowledge management tools 111

terms and definitions 115


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2007 BP International Limited MPcp Appraisal Guideline 4

.


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context

figure 1.1 MPcp and related guidelines

Our goal is to generate business value by delivering projects, which are efficient

in both capital investment and long-term operation. We will do this by consistently

creating distinctive projects and delivering them with world class execution. The

Major Projects common process (MPcp) is a key part of the overall project system

which is designed to support Strategic Performance Units (SPUs) in pursuit of this

goal. This system includes our people and processes, supported by networks and

functional authorities, guidelines, tools and good examples.

The MPcp document lists expectations for each of the ten elements of projectexcellence, which shall be met before proceeding to the next stage of the project.

Associated with each expectation are a number of attributes that describe and

support the achievement of this expectation. These attributes are intended to guide

teams in developing their action plans for the stage and to drive consistently good

project performance.

The MPcp document also describes the governance process, including functional

attestation, required to meet the Group Investment Assurance and Approvals Process

(GIAAP).

ProjectPrinciples

App Sel Def Exe Ope

Dashboards

MPcp Elements HSSE

Subsurface ResourceCharacterization

Technology, Engineering &Technical Definition

Project Management & Execution

Procurement & Supply ChainManagement

Project Services

Organizational Capability

Commissioning & OperationalReadiness

Performance & Risk Management

Knowledge Management

MPcpGuidelines

HSSE

Appraisal & Pre-development

Engineering & Quality Mgt

Project Management & Execution

Procurement & Supply Chain Mgt.

Project Services

Organizational Design

Commissioning & Operational Readiness

Risk Management

Knowledge Management

Resources Tools Templates Examples


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2007 BP International LimitedMPcp Appraisal Guideline6

context

Guidelines have been written for each of the MPcp elements to provide more

detailed support to teams in the achievement of MPcp expectations. They have been

compiled from the wisdom and experience that exist in the company and represent

the current view of discipline requirements and good practice, which should be

applied consistently across our range of projects.

Over time we expect the Major Projects community to identify improvements in

the practices described in these guidelines. These should be communicated to the

Directors of Appraisal within Exploration Production and Technology Function who have

clear ownership of this guideline and are accountable for its planned and systematic

update. Appraisal teams should adhere to and are responsible for implementing the

guidelines unless a material departure is considered to provide significant benefit.

Any proposed departure should be discussed with the Directors of Appraisal.


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BP carries a large and diverse appraisal portfolio. These originate from:

Successful Greenfield and Brownfield access.

Exploration success leading to standalone projects.

Hub tie backs, and increasingly from projects that exploit our very significant

Brownfield incumbent resource position.

The opportunities span Appraise and Select and also include others that have not

yet entered Appraise (in Pre-appraise or Access). BPs future depends on creating

distinctive projects with competitive returns from this portfolio.

Historical performance data shows a significant incidence of project wrecks is

caused by:

Inadequate business framing, e.g. governments, partners, geography.

Insufficient front end loading, e.g. technical definition, risk management,

contractor management.

Inappropriate target setting (including unrealistic pace).

Inadequate organizational capacity and capability.

The Appraisal Guideline has been written to serve a diverse community, which

crosses multiple disciplines and functions involved in appraisal and the front end of

projects. It describes additional aspects that go beyond just supporting delivery of

MPcp expectations to provide:

Further information on appraise and select expectations. Other important areas in delivering appraisal excellence and distinctive projects.

Examples of success with other tools and approaches.

Disciplines involved in appraisal are also involved in Access and Renewal, Exploration,

Opportunity Progression and Brownfield operations. These disciplines include

Subsurface & Wells, Drilling & Completions, Projects & Engineering, Operations and

Commercial.

overview

Six biases underpin the delivery of improved appraisal performance in BP integration,standardization, full value characterization, risk and uncertainty management, natural

pace and quality through choice. In combination, these biases lie at the heart of our

journey to be the #1 projects operator.


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overview

The fundamental emphasis is on integration that evaluates project opportunities,

improves front end loading and informs investment decisions. Figure 1.2 shows how

appraisal relates to the Exploration & Production common processes.

The Appraisal Guideline is organized in six parts.

1. Habits of great appraisal leaders

The habits are proactive behaviours leaders and teams must display and embed forthe creation of distinctive projects.

. BP biasesThis section describes the biases of BPs approach to appraisal that allow us to deliver

viable and robust projects.

. Appraise work focus and activitiesA codified and standard approach to the work focus and activities for BP projects in

Appraise to meet MPcp expectations and support teams as they form and build their

figure 1.2how Exploration & Production common processes relate overthe life of an asset

MPcp

Ecp

BtBcp

OPcp

BMcp

PEIcp

IFPcp

SPMcp

Exploration

Major Projects

Beyond the Best

Opportunity Progression

Base Management Excellence

Production Efficiency Improvement

Integrated Field Planning

Supplier Performance Managment

Access

Prospectivity&

Development

Case

Appraisal

Development

Case

Installation

Ramp

Infill

ILX

De-commissioning

First Oil Plateau Decline

AppraisalGuideline

AppraisalGuideline


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overview

work plans. A road map is used to illustrate the sequence of activities. Following

this road map is crucial to consistently create distinctive projects from BPs appraisal

portfolio.

The key work focus components are:

Appraisal Planning this includes business framing and strategy testing steps.

Appraise Programme describes option generation, opportunity

characterization, evaluation and viability testing through the Appraise stage.

Appraise-Select gate describes Appraise / Select transition and viability

assessment.

figure 1.3road map for creating distinctive projects

Stage

Objectives

Activity

Governance

WorkFocus

Confirm commercial viability of opportunity and identify a

range of development options consistent with resource,uncertainty and market conditions, at least one of which is

viable technically and commercially

Evaluate the alternative concepts, seeking to maximize

opportunities whilst reducing threats and uncertainties

to an acceptable level, in order to identify the optimumproject to take forward into Define

DefinePreparation

Select ProgrammeAppraise-

Select GateAppraisal Planning Appraise Programme

Business Framing

Opportunity Characterization,Option Evaluation & Viability

Assessment

ViabilityConfirmation

Option

Evaluation

ConceptSelection

ConceptDefinition

Appraise Select

AppraiseEntryGate

Appraisal PlanCoaching Workshop

HOD Review

SelectEntryGate

Select CoachingWorkshop

Discipline & HOD Reviews

Define Entry Gate

Reserves ApprovalMemorandum (RAM)

AppraisalPlan

AppraisePHSSER

Updated AppraisalPlan and DSP RAM

Define

RAM

SelectPHSSER

Legendentry gatekey document workshop

IPA Review

review IPA Review PHSSER

Appoint AGM

Build appraisal teamConsider businessdrivers: resources,developability, markets,and external influencesIdentify technologiesIdentify risks anduncertainties anddevelop mitigation plansCreate learning andknowledge managementplanUnderstandheritage commercialarrangements

Generate optionsEnsure full valuecharacterizationConsider all sources of valueand assess marketsPerform Value of Informationanalysis and acquire dataDevelop decision frameworkand analysisConsider standardizationoptionsIdentify risks and uncertaintiesand develop mitigation plansUnderstand trade-offsEstablish reference case andalternative optionsMake informed decisions

Reconfirmstrategiccontext andbusinessobjectivesConfirmoptionsBuild theselect teamPlan Select

Establishselection criteriaDevelopengineeringdata acquisitionprogrammeEvaluate optionsEngagecontractorsUpdate riskand uncertaintymanagementplansUpdate learningand knowledgemanagementplan

Appoint PGM

Set targetsBuild Define /Execute teamPlan DefineCompleteStatement ofRequirementsManageresidual riskand uncertainty

Select conceptEngageand selectcontractorsDeal structuring,contractframework,marketdevelopmentand access


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overview

4. Select work focus and activitiesDescribes a codified and standard approach to the work focus and activities for BP

projects in Select to meet MPcp expectations and help teams to fully consider and

prepare for end-Select deliverables early.

The key work focus components are:

Select Programme describes selection criteria, concept evaluation,

commercial themes and concept selection through the Select stage.

Define Preparation includes concept definition, Define planning at the end of

the Select stage and target-setting.

5. Organization development and designDescribes the organization principles and design options for appraisal projects in

different settings in BP. This includes a list of roles and accountabilities for a standard

set of BP badged jobs in appraisal teams.

6. ToolkitContains a set of links to core integration tools, processes and document

templates.


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Seven habits have been defined based on the experience of BPs senior appraisal

leaders and practitioners. The habits are proactive behaviours that leaders and teams

must display and embed within their project. They complement the habits of great

project managers described in the Project Management and Execution Guideline.

figure 1.4 habits of great appraisal leaders

1 habits of great appraisal leaders

Habit 1 - HSSE delivery and leadership

Set the expectations, standards and behaviours for Health, Safety, Security andEnvironment (HSSE) management of the project from the start.

Demonstrate their belief that HSSE delivery is paramount and ensure inherent

safety in the design of the selected project concept.

Recognize that design safety and operational integrity outcomes originate in

appraisal.

HSSE Delivery and Leadership

Integration RelationshipsOrganization

Planning Ahead

Intervention

Strategyand Framing

Contracting

Strategy

Risk and UncertaintyManagement

Evaluation andDecision Making

Scope Performance Management

Creating distinctive projects Delivering with world class execution

Appraise Select OperateDefine Execute

Appraisal General Manager Project General Manager


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Habit - Strategy and framing See the big picture and align diverse interest groups behind a clear description

of the opportunity, scope, scale, pace and complexity to inform early decisions

on organizational capability and capital requirements.

Facilitate the right conversations early regarding the business context and

strategic fit of the opportunity, including non-technical groups such as Gas,

Power & Renewables; Legal; Finance; Tax and Integrated Supply & Trading.

Understand the impact of the external context in which the project will be

implemented and how the resource owner, regulatory agencies, license

provisions, commercial framework, partner and business environment all affect

the running and delivery of the project.

Habit - Integration Create an environment of openness, inclusiveness, creativity and transparency

where integration of diverse project components, including technical and

commercial data by staff from different disciplines, can occur effectively.

Consistently simplify, summarize and communicate the project status with the

team and stakeholders to seek integration and deliver alignment.

Promote understanding and communication of the trade-offs and inter-

dependencies in every decision before it is made. Value and recognize the importance of all disciplines and have an active

interest in them.

Own the overall integrated business delivery, not just the project delivery.

Habit 4 - Risk and uncertainty management Create a culture of understanding risk and uncertainty, followed by mitigation

of risk and reduction of uncertainty to appropriate levels over the life of the

opportunity.

Incorporate prior lessons learned (BP and industry) into risk identification and

mitigation. Plan for multiple outcomes from the appraisal programme, have well thought

responses ready and communicate them, including recycle and exit.

Prepare flexible concept designs that mitigate a range of risk and uncertainty

outcomes.

Communicate residual risk, uncertainty and their impacts to senior

management and own residual risks.



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Habit 5 - Evaluation and decision making Consider the widest possible range of opportunities and all potential sources of

value.

Always use concept and component standardization in evaluating opportunities,

including identifying technology requirements.

Be aware of the natural boundaries within a basin or area.

Have the ability to work with complex, ambiguous or limited amounts of data-

use benchmarks and analogues early to ensure options are not overlooked.

Avoid premature selection of options or concepts, particularly in Appraise, by

holding multiple options open until fully matured.

Test for team think and undue bias through frequent and informal peer input.

Focus on continually testing for viability throughout Appraise and Select.

Promote a culture where informed decisions are made in an environment of

openness and transparency. This will ensure quality through choice for all

decisions.

Base all viability, option, and concept selection decisions on full life cycle

economics and consider all sources of value.

Have an instinct for identifying problems early and intervene in a decisive and

timely manner.

Habit 6 - Organization Build the integrated team early with sufficient depth, breadth and diversity to

deliver the project; avoiding the tendency to build teams too late and too small.

Be proactive in describing the consequences of organizational gaps to enable

the right choice in deployment of resources.

Assess people to ensure they are placed in roles based on their experience,

knowledge, development and character. Have a bias to expose the next

generation of leaders to challenging roles.

Create a motivating and inspiring environment which promotes informal

communication, ownership and a strong team culture focused on delivery. Develop a performance management culture where teams understand their

performance data, forecasts and how to use them effectively.



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Habit 7 - Relationships Identify and closely manage key external relationships.

Think carefully about reporting relationships to ensure alignment across the

team (contractors and BP staff). Work on weaknesses to resolve issues rapidly.

Continually test for communication problems and break them down.

Recognize the power of team building and co-locating staff from key disciplines

to create a high-performing team.

Create a credible upward relationship with senior management by raising and

tackling relationship issues early. Report the status of the project whether good

or bad.

Personal impact of great appraisal leadersIn addition to the seven habits, successful appraisal leaders demonstrate the

following traits:

High energy.

Ability to create focus for the team.

Ability to make hard decisions.

Respect and humility when dealing with others, especially external

stakeholders.

Positions team and stakeholders for success. Is always aware of the project status whats going well and whats not going well.

Business acumen.

Resilience.

Keeps promises and delivers.



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BPs distinctive approach to appraisal supports our objective of becoming the leading

projects operator. This approach is summarized by six biases which describe how our

appraisal teams work together, what they do and ultimately what they deliver. These

biases are:

Integration.

Standardization.

Full value characterization.

Risk and uncertainty management.

Natural pace.

Quality through choice.

Figure 2.1 depicts how the biases relate to the scope of the appraisal team.

These biases map closely with the Project Principles which describe the high-level

BP Group approach to projects.

In the following sections we define these terms, how they make BP distinctive and

what this means for appraisal teams and practitioners.

2 BP biases

figure 2.1 BP biases and appraisal team scope

Risk &

Uncertainty

Management

Natural Pace

Full Value

Character-

ization

Standardization

Quality

Through

Choice

Integration

Subsurface

CommercialDrilling &

Completions

HSSE &

Operations

Projects &

Engineering

Opti

on

Evalu

ati

on

BusinessFraming

Opportu

nity

Character

ConceptDefinition

Work Focus DisciplinesBP Biases

Viability

Conc

ept

Sele

ctio

n

AppraisalGeneralManager

LEADER

INTEGRATOR

MANAGER


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2007 BP International LimitedMPcp Appraisal Guideline

.1 Integration

Our drive for integration is based on the concept that the whole is greater than the

sum of the parts.

Integrated coaching is a key

component of MPcp. The

Appraisal Plan Coaching Workshop

provides the foundation for

business framing and creates

cross-discipline alignment early

in Appraise. The Select Coaching Workshop supports integrated team thinking to

deliver the Select stage. This approach greatly improves team efficiency by creating

a focus on doing the right things. It also enhances knowledge transfer between the

various technical and commercial disciplines.

For the practitioner, delivering integration involves:

Timely data acquisition guided by rigorous Value of Information (VOI) analysis.

Forming a multi-disciplinary appraisal team early and with sufficient depth,

breadth and diversity to deliver the project.Co-locating appraisal discipline teams.

A team environment of trust and respect and a culture of humility when

dealing with other BP teams or partners, governments, regulators, and other

stakeholders.

All key project interfaces, internal and external, are well understood.

A high quality learning and knowledge management plan is in place and

actioned to ensure:

Relevant lessons (from BP and industry) are incorporated into Appraise

and Select activities.

Lessons learned from Appraise and Select are captured for future use byothers.

Objective analysis of trade-offs.

. Standardization

The benefits of standardization are widely recognized. Standardization allows BP

to leverage its scope and scale in the market place; by working with common

technologies, some of the risk and uncertainty associated with an option being

evaluated can be more easily quantified and mitigated.

2 BP biases

Integration is a behavioural characteristic

founded in the holistic, multi-disciplinary

(technical and commercial) approach BP

applies to appraisal.


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2 BP biases

The benefits of standardization are shown in figure 2.2.

Benefits of concept standardization include reduced schedule, better ramp up and

operability, and lower capex. Component standardization (the reuse of earlier system/major equipment designs) creates greater demand that can be leveraged through the

Procurement and Supply Chain Management (PSCM) segment sector strategies and

can also deliver the same benefits to projects.

While standardization creates an opportunity to minimize risk, it can introduce other

risks to a project. Evaluation of standard technology to demonstrate that an option

is technically viable should be just as rigorous as for any less well proven or new

technology. Standardization may also create an over dependence on a single vendor

across a number of projects which PSCM sector teams can help manage.

figure 2.2 concept and component standardization

Reduced CAPEX Repeat Engineering - design one, build many

Repeat contracts with key suppliers - equipment and services

Scarce resources deployed on what really matters

Efficiency of integration

Reduced Cycle Time Not re-inventing the wheel - proven designs,

fully commissioned systems and processes

Simplified Execution - management of no change

Improved Operability/Reduced OPEX Surety of start-up efficiency

Improved HSE from systems commonality

Commonality for spares and training

Improved uptime

$

Time

To fully realize the value of standardization, it must be considered

at the earliest stages of a project (i.e. in Appraise and Select).

Opportunities for standardization should be considered as part of the

Appraisal Planning process. The degree of possible standardization

should, at the very least, be a criterion for evaluating between

different options. Benefits can be realized from all disciplines.


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2 BP biases

For the practitioner, delivering standardization requires:

Considering asset life-cycle costs and operability.

Considering how to get maximum leverage from BPs experience, scope, scale

and market position.

Balancing innovation and standardization.

Recognizing the value of SPU / programme optionality (e.g. sharing major

systems, sub-systems and components).

Open discussions with partners and National Oil Companies about the benefits

of standardization.

Considering and mitigating risks of standardization properly. Successful

deployment in other projects does not guarantee success in other situations.

Considering any extra resource risks if project pace is increased as a result of a

programme.

Checking that risks are not driven into other areas of the project.

. Full value characterization

This bias recognizes while the value of a subsurface asset is heavily dominated by

its resource potential, there are many places that material value enhancement and

destruction can occur. Greenfield appraisal also needs to consider the impact on valueof other drivers such as cost and schedule. In Brownfield appraisal, value may be more

dependent on plant capacity or expansion possibilities. Full value characterization

includes consideration of:

Reservoir to market as BP is a fully integrated hydrocarbon company, part

of our distinctiveness is the capability to capture value from vertical synergies

across the entire reservoir to market value chain and horizontally across a basin

or capture area strategy.

Life of field evaluating opportunities and risks over the entire asset life.

Follow on potential accessing follow on opportunities outside the asset may

provide additional sources of value. Considering the merits of a phased approach - to allow uncertainty reduction

while generating revenue.

Relationships for example, access to other opportunities in the country

resulting from a commitment of capital on the project under consideration.

Standardization and programme approaches can add value to executing

related projects.

Specific examples include leveraging infrastructure ownership to process or transport

third party production, novel commercial agreements that reduce capital risk,

standardized application of distinctive technologies to reduce cost or to increase off-


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2 BP biases

take rate and co-development of assets to share fixed costs and improve schedule.

For the practitioner, delivering full value characterization requires:

Vertical and horizontal cross stream integration.

An understanding of the value added through the dimensions of life of field,

follow on potential, standardization and relationship opportunities.

An understanding of the value added through adoption of standardization and

programme approaches.

Assessment of value trade-offs within the business context.

Consideration of the opportunity cost of scarce resources (staff, equipment,

time etc.).

.4 Risk and uncertainty management

Exploration & Production is a business where taking informed, well-judged risks can

secure competitive positions for BP, often with advantaged returns. Risk and uncertaintyprovide a powerful basis for project and portfolio planning and are not inherently bad,

where project value can be created in a safe and responsible manner.

A risk is typically defined as an event (circumstance) that, should it occur, would

have a material effect on project value. Risk can result in a value degradation (threat)

or improvement (opportunity). Uncertainty is the mechanism for describing the

distribution of a parameter whose value is not absolutely known. It can be expressed

as a continuous range or as distinct alternatives. In appraisal it is important to divide

uncertainties into those which are irreducible and those that during appraisal may be

reduced with additional work or data. Uncertainty, or combinations of uncertainties,when allied to investment decisions with expectations of delivery, may generate risks.

Not all parameters with uncertainty will be linked to risks.

Managing key risks and associated uncertainty is crucial to delivering project value and

success. Upside opportunity must be addressed as aggressively as downside risk.

In the early phases of a project the range of uncertainty is normally large. Informed

decisions demand complete transparency of all risks and uncertainties associated with

a project.

At times, full value characterization may not necessarily be aligned with external

stakeholders. In such instances, relationships need to be managed to deliver

mutually satisfactory outcomes.


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2 BP biases

As our portfolio of assets is becoming more

complex and costs of traditional appraisal

activities are increasing, there will be

increased pressure to carry higher levels of

residual risk and uncertainty at end-Select. As

a result, concept selection should consider

flexibility implications and alternative facility

capacity and phasing as mitigations.

For the practitioner, delivering risk and uncertainty management requires:

Avoiding the tendency to focus more on subsurface risk to the detriment of

other areas, such as commercial.

Considering risk early, in Drilling & Completions, Projects & Engineering,

Operations, Technology implementation and Commercial, and understanding

the interdependencies.

Constructing and executing a risk management plan that addresses project

expectations (value) as established by the stakeholders. The risk management

plan should be transparent and use VOI analysis to inform activity decisions.

VOI is driven by a project risk register, an understanding of uncertainty and

Select stage (and beyond) decisions. Mitigation planning to modify project threats to an acceptable residual level.

Identifying project opportunities to analyse, understand and improve value.

Information on risk tools can be found in the Exploration & Production Risk

Management Guidelines.

.5 Natural pace

Natural pace describes the optimum speed for a project to progress to createvalue and manage risk appropriately. It allows the team to deliver full project value

with confidence in meeting the target schedule. It requires judgement by senior

management, informed by appraisal team data, to make the right decision on the

pace of the project.

The key determinants of natural pace include:

Scale mega projects are more complex, have more uncertainty and take longer.

Complexity related to scale and level of technology challenge.

Technology challenges e.g. new or recently proved applications, enabling or

enhancing technologies.

Understanding risk provides the

basis for performance management

and clear activity plans. The appraisal

teams objectives are to manage

uncertainty and enable informed

decisions under risk.


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2 BP biases

Location specific issues e.g. physical or infrastructure access.

Regional environment e.g. new basin versus developed or mature basin.

Market expectations e.g. opportunity timing window constraints.

Commercial e.g. licensing and production sharing agreements, partner and

joint operating agreements, project financing.

Organizational capability and capacity constraints internal to BP and in the

external and contractor market place.

Regulatory considerations e.g. changing fiscal or environmental boundaries.

Experience has shown that setting artificial or arbitrary schedule targets has been a

significant contributor to poor front end loading, poor project execution performance

and value extraction by external stakeholders.

For the practitioner it is critical to proactively communicate the natural pace of theproject. This requires:

Planning and executing activities that reduce risk and uncertainty to an

appropriate level.

Embedding standardization opportunities.

Identifying technology requirements, commercial framework and data

acquisition with long lead durations.

Accounting for the business environment of the project.

Understanding the true value drivers of a project (cost, schedule, quality

or production / resources) to differentiate between competing options and

projects. Obtaining stakeholder approval.

Communicating the full range of schedule uncertainty to avoid the creation of

unrealistic internal or external expectations.

Senior management (comprising the Strategic Performance Unit Leader (SPUL),

Group Vice President (GVP) and Segment Executive Team), fully informed by the

Appraisal General Manager (AGM) and team, can then make business decisions

based on the full knowledge of natural pace.

The right natural pace in Appraise and Select is fundamental for the

right work to get done. Cost and quality also need to be understood and

balanced with the project schedule to determine natural pace. Knowing

when to stop and being cost effective in Appraisal is fundamental.


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2 BP biases

.6 Quality through choice

Quality through choice informs Portfolio

Management. It is founded on the concept

that more opportunities will be identified

than will ultimately be pursued. This enables

the selection of only the best options to

take forward in the portfolio. This approach

can be applied at both the portfolio level

(project prioritization) and the project level

(development options).

Asset monetization and operatorship decisions are also supported by quality through

choice. All projects should carry and maintain an exit option to enable dilution or

divestment decisions to be considered (if appropriate) at key stage gate milestones.

BP currently operates 80% of its projects portfolio; however, appraisal teams should

consider the comparative benefits of others operating where they are equally

competent or even advantaged. In addition, the AGM should always consider

alternative ways to monetize the opportunity.

For quality through choice to succeed, there should be multiple options from which to

choose and these must be assessed consistently. The Segment common processes

play a crucial role to establish common language and a consistent set of expectations

that enable balanced assessments of options. The characteristics of high quality

projects include:

The project can be executed in a manner that is consistent with BPs HSSE

objectives.

Investment quality (investment returns and overall value) versus risk has been

considered and there is a compelling business case that includes all significant

sources of value consistent with SPU and segment strategies. Embedded standardization and demonstrated learning from other projects.

The project benefits from integration with other BP assets or distinctive

capabilities.

The project is robust across a realistic range of schedule, cost and subsurface

uncertainties.

Key risks are managed and there is flexibility to capture upside opportunities.

There is adequate organizational capability to deliver the project.

The project enhances our broader capabilities and reputation, e.g. through new

technology or building internal expertise.

This bias enables focus and

prioritization of resources. There

should be a disciplined approach to

capital allocation and working within

organizational capability constraints.

Only the best opportunities should

attract and be allocated BPsresources


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2 BP biases

The degree to which each of these characteristics contributes to the assessment

of quality will vary for each project and depend on the role of the opportunity in the

portfolio.

For the practitioner, delivering quality through choice involves:

Understanding the business context and strategy.

Considering multiple options and scenarios of future outcomes.

A consistent and objective approach to option comparisons.

A constant inquiry into the question of viability.

A constant inquiry into investment quality versus risk and uncertainty.


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3 appraise work focus and activities

The road map below shows the Appraise work focus and activities that support

creating distinctive projects in BP and delivering MPcp expectations. It also shows the

timing relationships of key activities and governance milestones including coaching

workshops, documents and functional reviews.

figure 3.1 road map for creating distinctive projects

Stage

Objectives

Activity

Governance

WorkFocus Appraise-

Select GateAppraisal Planning Appraise Programme

Business Framing

Opportunity Characterization,Option Evaluation & Viability

Assessment

ViabilityConfirmation

Appraise

Appraise

EntryGate

Appraisal Plan

HOD Review

SelectEntryGate

Reserves ApprovalMemorandum (RAM)

AppraisalPlan

AppraisePHSSER

Updated AppraisalPlan and DSP

Legendentry gatekey document workshop

review PHSSER

Appoint AGM

Reconfirmstrategiccontext andbusinessobjectivesConfirmoptionsBuild theselect teamPlan Select

Coaching Workshop

Confirm commercial viability of opportunity and identify a range of

development options consistent with resource, uncertainty and marketconditions, at least one of which is viable technically and commercially

Build appraisal teamConsider businessdrivers: resources,developability, markets,and external influencesIdentify technologiesIdentify risks and

uncertainties anddevelop mitigation plansCreate learning andknowledge managementplanUnderstandheritage commercialarrangements

Generate optionsEnsure full valuecharacterizationConsider all sources of valueand assess marketsPerform Value of Informationanalysis and acquire dataDevelop decision frameworkand analysisConsider standardizationoptionsIdentify risks and uncertaintiesand develop mitigation plansUnderstand trade-offsEstablish reference case andalternative optionsMake informed decisions


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2007 BP International LimitedMPcp Appraisal Guideline

2 BP biases

MPcp describes the stage objectives and the expectations for BP projects. These

represent the overarching goals of the work focus and activities.

During early Appraise, an Appraisal Plan will be developed. The Appraisal Plan is a

formal document which outlines the scope of activities and estimated expenditure in

the Appraise and Select stages. Its focus is to enable an informed decision on project

viability and concept selection. It describes the first Depletion Plan for the field or

opportunity being considered. It should capture the opportunity from a life of field

perspective and consider the project phase and also operating the asset over the

long term. The Appraisal Plan provides a single point of reference for characterizing

opportunities.

The Appraisal Plan does not constitute financial approval. Individual Finance

Memoranda (FM) are required to release funding for each element of the Appraisal

Programme. The Appraisal Plan is the key governance document used to assure

delivery to MPcp expectations.

MPcp describes the governance expectations for BP Major Projects. The scope of

the Appraisal Guideline relative to MPcp and the principal components of governance

are shown in figure 3.2 below.

figure 3.2 project governance at the principal stages

HoD Reviews

& TVP

Attestation

Integrated

Coaching

PHSSERs

Appraise Select Define Execute Operate

Appraisal Plan Define FM Execute FM

Discipline

reviews

Discipline

reviews

AppraisalPlan

SelectCoaching

Define

Coaching

ExecuteHealth

check

Start-upEfficiency

Review

Appraise Select Pre-SanctionDetailed Engineering

Construction

Pre- start-up Operate

Creating DistinctiveProjects World Class Execution

Governance

Appraisal Guideline


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.1 Entry to Appraise (Pre-appraise)

Pre-appraise describes the period immediately before an opportunity enters

Appraise.

The AGM is responsible for building the appraisal team which can include resources

from Exploration Access (Greenfield projects) or Opportunity Progression (Brownfield

projects). The steps to build the team and develop the organizational strategy for the

Appraise and Select phases of a project are described in section 5.

As the opportunity transitions to the appraisal team, all information completed in

the Pre-appraise stages should be transferred as part of a Management of Change(MOC). If any of the documentation does not exist at the time of transition, it should

be developed during Appraisal Planning, prior to developing the Appraisal Plan. Ideally

appraisal front end loading occurs through some early appraisal team participation and

connectivity with the access stage team. This early awareness and pre-consideration

of appraisal objectives from the outset will help ensure the appraisal team is well

positioned for success. In some SPUs the Access / Appraise activity set may merit

the organization to develop early appraise teams to facilitate front end loading and

rapid follow on success planning.

Figure 3.3 shows the entry points into Appraise.

An opportunity entering Appraise must have senior management

support. Clear expectations must be set based on an understanding

of the strategic context and country risk. Sometimes opportunities

emerging within existing business units will materially affect or

change strategy. It is very important to communicate these situationsto senior management early so that the right conversations and

decisions can occur.


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Greenfield projectsGreenfield resource development opportunities that lead to Major Projects typically

originate when a successful exploration discovery confirms the potential for a

commercial development, or when we acquire a Greenfield opportunity. MPcp and

the Exploration common process describe the expectations at handover betweenthe exploration team and the appraisal team. Greenfield projects include discoveries

that are candidate tie-backs to existing infrastructure.

It is vital that the MOC through the transition into Appraise is effective and includes:

Existing HSSE thinking from Exploration.

Agreement on transition process including a handover meeting.

Description of the opportunity including strategic fit, outline costs, schedule

and methods used to derive them.

Technical Assurance Memorandum identifying thoughts on developability and


figure 3.3 entry points into Appraise

Greenfield

Appraise/ MPcp

Brownfield

ExplorationSuccess

Extension/Tie Back toHub

NewGreenfield

Access

IncumbentResourcePosition

NewBrownfieldAccess


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Hydrocarbons Initially In Place estimates, calibrated by the exploration well

results from the exploration team. Ideally appraisal teams will have had an

opportunity to interface with exploration teams to help typify assumptions for

pre-drill Long Term Plan / project characterization purposes.

Reserves Approval Memorandum and Reserves Support Package plus

supporting Depletion Plan with complexity and reservoir technical limit

assessments developed by the appraisal team but with the input and

experience of the exploration team as its foundation.

Key contacts and relationships identified (and existing Relationship

Management Plans and SPAs), commitments (including license or contract

obligations), outcomes from market assessments, access / regulatory reviews,

issues and associated opportunities and co-owner, joint-venture agreements

and relationship items.

Agreed ownership of significant previously identified risks (threats and

opportunities) as appropriate.

Early scenario-based outcomes describing the potential opportunity with a low,

mid and high case should be considered and captured in an Appraise Stage

Dashboard.

Associated opportunities for standardization and follow on potential have been

identified. Post discovery developability assessment.

Record of any known contracting limitations (e.g., regional, infrastructure, host

government or partner requirements).

Record of lessons learnt during Pre-appraise and a learning and knowledge

management plan for Appraise.

A thorough data management handover plan.

Brownfield projects

Brownfield Major Projects originate when either, an option is progressed from aSPU/business units Opportunity Progression Hopper, or an access deal is signed

to develop an existing discovered resource (often under an agreed bid with a capital

or work programme commitment). All business transformation of existing assets is

considered Brownfield.

MPcp and Opportunity Progression common processes describe the expectations

at handover between the asset or renewal team and the appraisal team. For new

access Brownfield opportunities, MPcp, with a combination of the Exploration


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and the Opportunity Progression common processes, may need to be followed.

Early involvement of senior functional and line management representatives is

recommended to guide opportunities until a more structured approach is in place.

As with Greenfield opportunities, effective MOC is vital. In addition to the Greenfield

project requirements from Exploration, Brownfield opportunities will require the

following from Operations:

The HSSE Management Plan.

The Safety & Operations Integrity Plan and Operations philosophy.

Asset Long Term Plan and Ultimate Resource Potential. MOC procedure for existing operations.

Details of other BP interests in the opportunity (e.g. midstream or

downstream).

An Integrated Field Plan.

A Production Efficiency Improvement plan.

All of the required handover processes and transition meetings must take place, for

both Greenfield and Brownfield projects, before an Appraisal Plan Workshop is held.

. Appraisal planning

The objective of the Appraise stage is to confirm the commercial viability of the

opportunity and identify a range of development options consistent with resource,

uncertainty and market conditions, at least one of which is viable technically and

commercially.

The work focus of Appraisal Planning covers:

Business framing.

Technology identification.

Knowledge management.

Appraisal Plan.

Business framingThe objective of business framing is to understand the issues, challenges and

opportunities and their potential impact on business value and delivery.

Internal studies of our projects, as well as industry studies, clearly show projects

inadequately framed at the front end seldom deliver the expected value. Conversely,

projects that put in the effort and rigor at the front end, to adequately frame the



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opportunity set, have a high probability of delivering the true business value.

Business framing is achieved through creating a shared understanding of project

scope, issues, drivers, decision criteria and boundaries and then identifying a range

of unique alternatives that help define the potential business value a project has to

offer consistent with SPU and BP strategy.

MPcp sets out the framework and expectations to create a distinctive project and

includes the provision for support, advice and guidance from integrated, coaching

events (Appraisal Plan Coaching Workshop and Select Coaching Workshop).

These coaching events, which are part of MPcp governance, are led by the appraisal

coaching team and supported by the Directors of Appraisal.

Who and howThe coaching workshops are structured multi-disciplinary events aimed at assisting

appraisal teams frame the business opportunity and develop the future work

programme through:

Understanding the strategic framework, business drivers and decision criteria.

Characterizing and transparently communicating the key risks, uncertaintiesand opportunities.

Identifying / evaluating the project scope, development scenarios and business

options.

Prioritizing data needs to address the key risks, uncertainties and opportunities.

Considering standardization and global agreements.

Facilitating discipline integration and alignment.

Transferring learning and best practice across the organization.

Identifying resource needs for delivery.

Clarifying Functional Excellence Elements Expectations and Requirements.

Business framing at the Appraisal Plan Coaching Workshop helps inform the

Appraisal Plan. The Appraisal Plan is a fundamental governance document in MPcp

for the Appraise and Select stages. Technical and non-technical functions should

be consulted and involved in Appraisal Plan Heads of Discipline (HoD) Reviews

(commercial business development planning and analysis Finance Control &

Accounting, Shipping, Legal, Finance, Tax, Gas Power & Renewables, Integrated

Supply & Training, as appropriate). Appraisal teams are encouraged to establish

contact with the non-technical functions early.


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Approach1. Collect and analyse key existing data by discipline

This data is collated and used to develop a baseline understanding of what we do and

do not know about the project. The 4 legged stool is used to develop the business

context, integrate the initial findings, identify key gaps and establish communications

lines across disciplines within the appraisal team. This simple structured approach (in

figure 3.4 below) is used to help integrate the discipline data and also to:

Understand and test the strategic context (project alignment with strategy).

Develop insights on discipline issues (uncertainties, risks, opportunities)

and identify interfaces and challenges across the disciplines with a focuson Resource base, Developability (technical definition including technology),

Markets and External Influences.

Facilitate integration, alignment and informed decision making.


figure 3.4 4 legged stool approach to business framing

Strategic Context

DevelopabilityResource

External influences Markets

Oil / gas

Fluid properties

Structural complexity

Stratigraphic complexity

Rates and reserves

Benchmarks

PSA / JOA terms

Host government needs

NOC needs Partners, stakeholders

NGOs

Local organizations

Competitor and regulatory impacts

Site Characteristics

Drilling & Completions

Flow Assurance

Wells

Facilities needs

Infrastructure

Technology

Price

Oil and gas sales

Market intelligence Export options

Negotiating strategy

Contracting strategy

Market developments

Integration,Informed Decisions,

Confidence

Establish viability (strategic, technical and commercial)


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2. Define and agree on the project scope

The project scope should define what is in, what is out, and acknowledge the

boundaries, interfaces and dependencies. The stick model visually articulates the

project scope. It also causes team integration across the disciplines by graphically

characterizing the functional components. A clearly defined project scope provides

focus and alignment as the team moves forward. An example of a stick model

developed during a workshop is shown below.


figure 3.5 example stick model

3. Gain internal alignment on project drivers, decision criteria and boundaries

It is important teams understand how the project will be viewed and what the decision

making process will be. This helps the team establish screening criteria, prioritize

and focus their data gathering, frame business options and evaluate trade-offs. Anapproach to agreeing and documenting drivers, decision criteria and boundaries is

shown below.

Once the multi-discipline team has an integrated understanding of the project scope,

drivers, decision criteria, boundaries, key issues and challenges, it is in a position to:

Clearly articulate the range of risks, uncertainties and opportunities the project

presents.

Identify the data needs (need to know) to make informed decisions.

Salt

Drilling

Options

Well

Companions

ProdRiserSys

Marine VesselSurface Facility

Export System

Pump

West Bump East Bump

PaleoceneOperating Unit

Subsea

Other Structures?

Adjacent Structures?

Market

Partners BPs SPU Strategy

HPHT Equip Suppliers

USCG

HPHT BP Team

Long Lead Suppliers

Project Scope

OnshoreFacility

IST

Mid-Stream

MMS


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4. Develop creative alternatives

These creative alternatives capture the range of business value the project has to

offer. This is best done as a two-stage process.

The objective of the first stage is to:

Capture the key decisions by discipline.

List the choices for each decision.

Identify the triggers (what do we need to know to make the choice?) under

each decision.

An overview table approach for documenting key decisions, choices and triggers is

recommended. Figure 3.7 is an example of an overview table.


figure 3.6 example project objective hierarchy

Shareholder Value

Stage Gate Decision Criteria Identification of risks/uncertainties Demonstrates Viable Business Case (fully loaded) Meets HSSE requirements Organizational capability and

Resourcing plan Technology delivery plan Demonstrate capability to drill and

Complete well on a constant basis Knowledge management plan Establish impact on value of export

options

Absolute Project Boundaries Work through Integrated Asset

Organization Structure Confirm with IM Standards (coordination with Ops) Only Existing Regulatory

and lease contracts Only CTD used for re-entry (no grassroots CTD)

Good project drivers & decision outcomes

GHSSER

Utilization of existing

infrastructure

Plan for Training project

personnel ( CTD, N2, Current

Ops Procedures )

Minimise gas venting and flaring

Establish optimimum footprint

Embed rigor on control of work

Meet IM standard

Incident and injury free

environment

Successfully managed SIMOPSSuccessfully conduct PHSSER

1.

2.

3.

4.

5.

6.

7.

8.

9.10.

Comply with third party

contracts

Respecting landowner,

community commitment

Regulatory compliance

Proactive PR demonstrating

value of BP presence

Good rapport with contractors

Manage internal expectations

Progressing technology for

producing mature

1.

2.

3.

4.

5.

6.

7.

Utilization fo existing

infrastructure (IM)

Resource (NP4) progression

Manage project pace

Cost effectivness for life of field

Identify and manage long lead

items

Integrated schedule for project

operations/activitties

Incremental Reserves and

expected project profile

Recognize the technical

challenge (uncertainty)Fully Integrated cost across all

project elements and interfaces

SPMcp, Supplier performance

management system

Establish space for learning

Unwavering Management

Commitment (funding)

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

Completion techniques

Establish tight gas Frac

techniques

Technique to Manage Hole

stability

Knowledge management

Lead industry in tight gas

recovery/development

Understand and establish

Intellectual Property position

Identify and close technology

gap

Identify and establishorganization capability

1.

2.

3.

4.

5.

6.

7.

8.

Corporate HSSE

Imperatives BP Reputation Financial Distinctive CTD&C

Capability for Tight Gas


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The overview table allows multi-disciplinary contribution to brainstorming with

the purpose of identifying conceptual business scenarios/creative alternatives

(Investment Themes) that satisfy the decision criteria and project objectives.

The objective of the second stage is to select an example investment theme and

map it across the overview table. This ties together the unique set of choices that

satisfy the chosen investment theme. The purpose is to:

Understand the potential business value the project has to offer.

Define potential data gaps and needs. What are the critical data items and

when will they be available?

Understand key multi-discipline interfaces.

Develop a focused and prioritized activity and resource plan. This plan is used in

the creation of the Appraisal Plan.


figure 3.7 example overview table

ReservoirPressure

Maintainence

Number ofDrill Sites

DevelopmentFlexibility to

ProcessHost Facility

Liquid ExportSystem

GasManagement

GasPipelineSystem

Lease/Purchase

Development

CaptureTotal

Infras-tructure

LowCost/

MinimalCAPEX

Decisions

Investment themes

Triggers

Choices

Mapped Investment Theme example

ScreenSolution

EarliestOil

TriggersWhat else do we need to know?

GasInjection

Single Dry Trees Tightly design tocapacity (Fit for

purpose)

TLP / SPAR / Tie Back toInfrastructure

Store inalternatehorizon

Loop ExistingLine

Purchase

WaterInjection

Multiple Wet Trees Build forExpansion

(Equity)

OffshoreLoad

Export viaPipeline

Stand-alone Lease

Combination Semi GTL Tie Back toInfrastructure

PHA

NaturalDepletion

Sub-Sea totie back tohost facility

ThroughExisting

Host Facility

Offshoreutilisation

(electric power)

Non-PipelineSolution

Lease toOwn

Combinationof Gas and

Water

Build forfuture growth

(Reservoir

Update)

FPSO

New BuildPipeline


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Technology identificationAll technologies must be analysed to assess associated risks, but they should also be

selected with reference to the technology biases that have been developed for the

Exploration & Production segment. The biases are intended to ensure a consistency

of approach in the application of technology and form the foundation of our Major

Project Technology Plans, they are:

See the Engineering and Quality Management Guideline for more information on

the biases. It is important to include an assessment of all technologies including

Subsurface & Wells, e.g. seismic imaging. After the preliminary selection of the

technology it is important for the project to understand the nature of the technology

it plans to utilise and a key step in this process involves determining whether atechnology is proven or unproven (new).

Proven technologyis that practice or item which has been provided to BP before,to the same specification and manufactured at the same location with the same

techniques, for use under the same known conditions.

Unproven technology is a practice or item providing a function which has notpreviously been used in a BP project under the conditions appropriate to that project.

This definition includes both novel technology in familiar application environments and

existing (proven) technology in new application environments or in new processingsequences.

In the context of Major Projects, unproven (or new) technology can fall into two

categories based on value:

Enabling- a technology critical to project success, without which the projectcannot be successfully implemented.

Enhancing- a technology upon which the project is not reliant, but ifsuccessfully implemented would enable more value to be realized for the

project.


Highly predictable performance and integrity through inherently reliable

equipment and materials with supporting monitoring. Component standardization linked to well-defined functional requirements.

Process automation allowing control capability from an optimized location.

Continuous optimization of operations and access to global know-how

through an Advanced Collaborative Environment (ACE).


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It is important to note that all unproven technologies must have reached a certain

level of maturity by the end of the Select stage. The Technology section of the

Engineering and Quality Management Guideline provides much more detail in this

area and should be consulted, but the key point relates to Technology Readiness

Levels (TRLs) and by the end of Select any technology selected should be at TRL3.

A TRL value lower than this means the technology is immature and the project will

carry additional risk.

To maximize the value of new technologies and minimize the implementation risk

and uncertainty, multi-disciplinary reviews of project technology requirements for

each alternative development concept should be held early in the Appraisal Planning

stage, and refreshed after key data is acquired and the opportunity characterization

matures. The outputs from these reviews and updates will form the basis for the

technology section of the Appraisal Plan which should also contain a technology

development schedule.

The objective is to define not only the project specific requirements, but also to

assess how to implement key technology biases and technology levers into the

project. There must be a plan to get to the right technology choices by the end of

Select and a detailed technology delivery plan for Define.

Technology planning is addressed in more detail in MPcp, the Engineering and Quality

Management Guideline and the other common processes.

Knowledge managementKnowledge management leverages the unique diversity of experience, expertise and

general know-how that resides throughout BP and externally.

Knowledge management should be initiated early in Appraise. The implementation

of the knowledge management plan is crucial to risk mitigation and continuousimprovement.

For the practitioner, learning and knowledge management requires:

Capturing and applying relevant learning from other similar projects, including

those outside BP.

Transferring learnings to other appraisal teams and the Projects library.

Document control and the data management plan to support current and future

decision making.



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The AGM is accountable for ensuring a knowledge management plan exists and

is implemented. A knowledge management champion should be designated to co-

ordinate this.

A variety of knowledge sources exists in BP including:

Appraisal coaching team.

Heads of Discipline.

Functional Directors.

Network leaders.

Subject Matter Experts / Advisers.

Segment Technical Authorities.

Chief Engineers.

Projects and Engineering shared learning system.

Projects library.

Projects forum.

See section 6.2 for further information. The MPcp Knowledge Management Guideline

also contains further information.

The Appraisal PlanThe Appraisal Plan is a formal document which outlines the scope of activities and

estimated expenditure in the Appraise and Select stages. The focus of the Appraisal

Plan is to enable an informed decision on project viability and concept selection.

The Appraisal Plan is the output of the Appraisal Planning stage. It sets a broad

framework for the activity plan from discovery to first production. The plan is

specifically the execution plan for the Appraise and Select stages.

The purpose of an Appraisal Plan is to capture current understanding of the ranges

of technical and commercial uncertainty and risks / opportunities. It also defines anactivity programme that will lead to robust, compelling and viable business options

to be carried into Select. The Appraisal Plan provides the team and the Executive with

an opportunity to endorse or comment upon the full activity set envisioned during the

Appraise and Select stages at a time when it is most meaningful. A robust Appraisal

Plan also allows the team to deliver that activity set within the strategic bounds of

the endorsed plan.

The appraisal team should create the Appraisal Plan by addressing the questions in

the Appraisal Plan contents table in figure 3.8.



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An Appraisal Plan is required for all potential Major Projects from new exploration

discoveries to Brownfield opportunities. It should be initially developed as soon

as practical after a discovery or selection of an opportunity from the Opportunity

Progression hopper or provided through a new access arrangement. The plan will

be cross-disciplinary and an integrated assessment covering front end loading

activities for key opportunities, risks and uncertainties, including technology. Market

opportunities for market facing projects should also be included in the Appraisal

Plan.

Other discipline specific support processes and standards, such as resource

compliance reviews, will underpin the Appraisal Plan.

The Appraisal Plan will be reviewed with the HoDs and approved by the project

Gatekeeper - usually the SPUL or GVP. The Gatekeeper will be agreed by the GVP or

appropriate authority. Technology Vice Presidents (TVPs) are required to attest to the

adequacy of Appraisal Plans. This is informed by the HoD reviews. Progress against

the Appraisal Plan will be monitored through the Quarterly Performance Review

process with the GVP.


figure 3.8 appraisal plan contents

What are the key issues that need tobe addressed for a viable businessopportunity?

Values, risks, uncertainties,opportunities, options

Value of Information analysis,benchmarks

Organization capability and capacityFunding availability and utility

Activity sequencingCritical path - optimization of information

Understand the key decision makinginteractions - Decision tree(s)

What information do you need toaddress the issues?

How will the team get the requiredinformation?

When is the information required?

What is the most likely program criticalpath and dependencies?

Questions Examples


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The Appraisal Plan should be fit for purpose and as short as practical. It is not intended

to contain all the support material necessary to underpin the recommended activities.

It should be derived from cross-disciplinary integration, addressing all of the key risks

and uncertainties which impact the decision on project viability and commerciality,

including:

An evaluation of the strategic fit of the opportunity.

A strategic review of BPs opportunity position versus the competition in the area.

Well evaluation and new data acquisition including the need for appraisal

well(s), additional seismic data and reprocessing existing data.

Feasibility studies on the host facility capability and performance, including

compatibility of produced fluids when Infrastructure Led Exploration or tie-

backs are an option.

Identification of potential development options and associated costs and schedules.

Preconceived options may not always be the optimal choice or decision.

Identification of any new technology which requires early investment to

execute the project.

Organizational capability necessary to carry out activities within the proposed

schedule.

An update to the Appraisal Plan will form the Decision Support Package for theAppraise-Select gate.

A template for the contents of the Appraisal Plan is provided in the Projects Library.

See section 6.2.

. Appraise programme

The need to know information and data and the perceived impact on the key

decisions, as discussed in business framing (section 3.2), drives the activity setdefinition in the Appraise Programme.

The Appraise Programme activities focus on assessing which combination of sources

of value (in a risked sense), result in the greatest overall value impact. The activities

should also focus on demonstrating viability.

The Appraise Programme will not mitigate all risks. Residual risks must be owned,

planned for and managed by the team beyond the end of Appraise.



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The Appraise Programme activity set comprises:

Opportunity characterization.

Option generation and evaluation.

Risk and uncertainty understanding and management.

Data acquisition programme.

Decision making.

Technology plan.

Contracting and procurement strategy.

Commercial themes.

Long-lead work may need to be initiated to optimize project delivery. Examples

include a technology maturation program, acquisition of development quality 3-

D seismic and / or collection of seafloor stability and metocean data for offshore

projects. Decisions to gather this information must be consistent with VOI strategy.

The proportions of known, need to know and residual risk and uncertainty change

over time as a result of risk and uncertainty management and data acquisition. See


figure 3.9 appraisal impact on risk and uncertainty

Need

Early Appraise End Appraise End Select

Need toKnow

Known

Risk/U

ncertainty

to KnowNeed toKnow

KnownKnown

Needto Know

Known

RRURRURRU

RRU = Residual Risk & Uncertainty

Need to Know as justified by VOI

figure 3.9.

The Appraise Programme is complete when data for the need to know has been

addressed sufficiently to enable informed decisions between concept options during

the Select stage. All significant sources of value, development options, and options


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that will be further evaluated during the Select stage, will have been identified.

Entry into Select requires that there is a minimum of one technically and commercially

viable option. Viability is described in MPcp. Commercial viability requires an

expectation of positive net present value and of sufficient investment quality

(Investment Rate of Return).

Section 3.4 describes the specific deliverables and governance requirements at the

Appraise-Select gate.

Opportunity characterizationOpportunity characterization is the key to creating distinctive value from an asset

relative to our competitors. As an opportunity is characterized in more detail, the

Appraisal Plan should be updated to provide a central repository of information.

To understand the degree of this distinctive value, potential opportunities are characterized

with an integrated, full value approach that includes initial assessments of:

Strategic fit how well is the opportunity aligned with segment and SPU strategies?

Full value characterization, particularly those derived through synergies with

other BP assets.

The primary risks and uncertainties to delivering value from the opportunity. The resources and organizational capabilities required to progress the opportunity.

Potential to leverage BPs unique know-how, experience, or technologies

including the potential benefits of standardization.

Figure 3.10 shows how opportunities evolve through options into concepts as a

project develops. These terms are the standard approach taken in this guideline to

describe project evolution.



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Option generation and evaluationOption generation and evaluation is a core work focus during Appraisal. Options are

mechanisms to deliver value from opportunities. If we design facilities with a certain

amount of flexibility, we may have the option to reduce some of our investment risk byprocessing third party production. A few options will be obvious and easily identified;

others will need a structured approach. A reference case must be established to

compare options.

The key to option generation is to understand the risks and opportunities. Steps

include:

1. Developing tactics to align stakeholders.

2. Refreshing the overview table created during the business framing workshop.

Ensure the top eight to ten Select stage decisions are represented.

3. Mapping the relative sequence of Select stage decisions in reverse order

begin with the end in mind and identify dependencies between the decisions.4. For each major decision, brainstorm the alternatives and develop a list of

reasonable options from which to choose.

5. Developing initial screening criteria and ranking options to identify the three to

four options to be carried forward into Select.

A very wide set of options should be maintained during the early Appraise Programme.

Although boundaries help constrain and focus a teams efforts, too many boundaries

may prematurely eliminate options and adversely impact cost, schedule or risk. Too

many boundaries may also impact team buy-in and ownership of the project.


Opportunity Project

Option 1

Option

Option

Option 4

Concept

figure 3.10 opportunity and options in project evolution


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Risk and uncertainty understanding and managementCharacterization of the risks and uncertainties lies at the heart of a good Appraisal

Programme. A comprehensive understanding can be used to devise the work plan

for the stage ahead. The detailed treatment of risk and uncertainty will change as

the project moves from Pre-appraise into Appraise and on into Select. This change

reflects the objectives of the specific MPcp stages.

The risk and uncertainty management objectives in Pre-appraise are to characterize

uncertainties in the resource base, understand developability and identify the key risks

and opportunities to a technically and commercially viable project. The appraisal team

must consider alternative scenarios to capture a full understanding of uncertainty.

This should include describing the shape of the uncertainty envelope does the

uncertainty distribution have a flat top? Is it skewed? How good is the definition?

This characterization identifies what data must be collected and studies performed.

In Appraise this includes the elements in the 4 legged stool (figure 3.4) and:

Appraisal wells targeted at increasing reserves, or increasing the confidence in

reserves and calibrating wells cost uncertainty.

Understanding rock, fluid and log data required to help typify reservoir performance.

Reprocessing and new acquisition of seismic data. Gathering cost and market data.

Analogue and benchmarking studies..

Technology requirements for the development to proceed.

Government or other political risk.

Articulating any non-traditional aspects of the project risk profile (e.g. HPHT,

high sulphur crudes, etc.).

By the end of Appraise, sufficient resources should have been established to be

confident the project is viable in the context of expected contractor market conditions.

Enough studies should have been completed as part of the Appraise Programmeto establish there are no fundamental barriers to development. Residual risk and

uncertainty carried beyond the end of Appraise must be owned by the select team in

situations where a business choice has been made to carry risk into Select.

By the end of Appraise, detailed characterization of uncertainties and risks will have

been carried out, focusing on those that may differentiate between development

options. For example, the project may have a choice between a tie-back to an existing

facility or a standalone development. In this example, the key uncertainties and risks

that will differentiate between development options are:



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Timing of capacity in the existing facility and likelihood of access rights.

Impact of Brownfield work on existing production.

Size of resource to be developed a larger resource would favour a standalone

development. Determining this may require further data collection.

Flow assurance characteristics a critical differentiator when considering tie-

backs.

Figure 3.11 shows the expected volume increments per penetration from the Gulf

of Mexico. It illustrates how the tie-back versus standalone decisions depend on

resources, and how this was used to inform development decisions.


figure 3.11 example of risk and uncertainty management from the Gulfof Mexico

Best Fit Volume down to mapped spill point

Current Location 600 above spill @ M51, LKO

500

Resources

Reservoir segments

400

00

00

100

0

Seg1M

51

SegM

51

SegM

54

SegM

5

Initi

alPe

n.

SegM

50/48

LocalHost

GreyZone

SSTieback

OWC S/T

Initial Well

Deep S/T


52/120


Once risks, uncertainties and opportunities have been considered, the data and

studies needed to resolve them will form the basis of the Appraisal Programme.

Establishing the business drivers of a project helps to facilitate quality trade-off

discussions and decisions. It is essential to develop the drivers early and in concert

with the projects internal and external stakeholders. Risks and uncertainties, their

impact and mitigations need to be clearly stated in the Appraisal Plan.

Tools available to identify, assess and design mitigations for risk and uncertainty

include:

Risk register single location for recording project risks.

Risk matrix Boston square describing the probability / impact and manageability.

Risk Assessment Tool assesses relative risk.

Decision trees enable responses to Appraisal Programme outcomes in advance.

Design Structure Matrix investigates links between data acquisition and risk

reduction via system dynamic models.

Recommended practice for framing, assessing and managing subsurface risk and

uncertainty is described in the Reservoir Uncertainty Statement & Management

Guideline. Additional information on risk and uncertainty management can also befound in the Geoscience Handbook and Exploration & Production Risk Management

Guideline.

Data acquisition programmeThe objective of the appraise data acquisition programme is to gather need to know

data to inform viability. VOI

Appraisal Guideline

Documents