Appraisal Guideline

Exploration & Production

major projects common process appraisal guideline

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

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

©2007 BP International Limited

MPcp Appraisal Guideline

contents context

5

overview

9

1 habits of great appraisal leaders

15

2 BP biases

21

2.1 Integration

22

2.2 Standardization

22

2.3 Full value characterization

24

2.4 Risk and uncertainty management

25

2.5 Natural pace

26

2.6 Quality through choice

28

3 appraise work process and activities

31

3.1 Entry to Appraise (Pre-appraise)

33

3.2 Appraisal planning

36

3.3 Appraise programme

46

3.4 Appraise-Select gate

58

4 select work focus and activities

65

4.1 Select programme

66

4.2 Define preparation

75

5 organization development and design

85

5.1 Business context

86

5.2 Key accountabilities

86

5.3 Organization development

89

5.4 Setting the organiaztion strategy

92

5.5 Staffing expectations

93

5.6 Roles and accountabilities

5.7 Organization design settings

6 toolkit

95 102

109

6.1 Core multi-disciplinary tools

109

6.2 Emerging tools

110

6.3 Facilitation process to support appraisal and development teams

111

6.4 Knowledge management tools

terms and definitions


111 115


.



context

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.

Project Principles App Sel Def Exe Ope Dashboards MPcp Elements • HSSE MPcp • Subsurface Resource Guidelines Characterization • HSSE • Technology, Engineering & • Appraisal & Technical Definition Pre-development • Project Management & Execution • Engineering & Quality Mgt • Procurement & Supply Chain • Project Management & Execution Management • Procurement & Supply Chain Mgt. • Project Services • Project Services • Organizational Capability

• Organizational Design • Commissioning & Operational • Commissioning & Operational Readiness Readiness • Risk Management • Performance & Risk Management • Knowledge Management • Knowledge Management Resources

• Tools

• Templates

• Examples

figure 1.1 MPcp and related guidelines The MPcp document lists expectations for each of the ten elements of project excellence, 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). ©2007 BP International Limited


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.







overview

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). BP’s 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. 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.

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.



Ecp

Exploration

MPcp

Major Projects

BtBcp

Beyond the Best

OPcp

Opportunity Progression Base Management Excellence Production Efficiency Improvement Integrated Field Planning

BMcp PEIcp IFPcp SPMcp

Supplier Performance Managment Appraisal Guideline

De-commissioning

Decline

ILX

Plateau

Infill

Ramp

Installation

Development Case

First Oil Appraisal

Prospectivity & Development Case

Access

overview

Appraisal Guideline

figure 1.2 how Exploration & Production common processes relate over the life of an asset 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 for the creation of distinctive projects. 2. BP biases This section describes the biases of BP’s approach to appraisal that allow us to deliver viable and robust projects. 3. Appraise work focus and activities A 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 10



overview

WorkFocus

Stage Objectives

Appraise

Select

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 optimum project to take forward into Define

Appraisal Planning

Appraise Programme

AppraiseSelect Gate

Business Framing

Opportunity Characterization, Option Evaluation & Viability Assessment

Viability Confirmation

Option Evaluation

Concept Selection

• Establish selection criteria • Develop engineering data acquisition programme • Evaluate options • Engage contractors • Update risk and uncertainty management plans • Update learning and knowledge management plan

• Select concept • Engage and select contractors • Deal structuring, contract framework, market development and access

Governance

Activity

Appoint AGM • Generate options • Ensure full value characterization • Consider all sources of value and assess markets • Perform Value of Information analysis and acquire data • Develop decision framework and analysis • Consider standardization options • Identify risks and uncertainties and develop mitigation plans • Understand trade-offs • Establish reference case and alternative options • Make informed decisions

• Reconfirm strategic context and business objectives • Confirm options • Build the select team • Plan Select

Appraisal Plan Coaching Workshop

Appraisal Plan Reserves Approval Memorandum (RAM) Legend

Concept Definition

Appoint PGM

• Build appraisal team • Consider business drivers: resources, developability, markets, and external influences • Identify technologies • Identify risks and uncertainties and develop mitigation plans • Create learning and knowledge management plan • Understand heritage commercial arrangements

Appraise Entry Gate

Define Preparation

Select Programme

Select Entry Gate

HOD Review

key document

• Set targets • Build Define / Execute team • Plan Define • Complete Statement of Requirements • Manage residual risk and uncertainty

IPA Review

Select Coaching Workshop

Define Entry Gate Discipline & HOD Reviews

Appraise PHSSER entry gate

Updated Appraisal Plan and DSP workshop

Select PHSSER review

IPA Review

RAM

Define RAM PHSSER

figure 1.3 road map for creating distinctive projects 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 BP’s 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.



11

overview

4. Select work focus and activities Describes 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 design Describes 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. Toolkit Contains a set of links to core integration tools, processes and document templates.

12





13



14


Seven ‘habits’ have been defined based on the experience of BP’s 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. ‘Creating distinctive projects’

‘Delivering with world class execution’

Appraise

Select

Define

Execute

Operate

HSSE Delivery and Leadership Strategy and Framing

Scope

Performance Management

Integration

Organization

Relationships

Risk and Uncertainty Management

Contracting Strategy

Planning Ahead

Evaluation and Decision Making

Appraisal General Manager

Intervention

Project General Manager

figure 1.4 habits of great appraisal leaders

Habit 1 - HSSE delivery and leadership • Set the expectations, standards and behaviours for Health, Safety, Security and Environment (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.



15


Habit 2 - 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 3 - 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 interdependencies 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.

16




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 datause 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.



17


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 leaders In 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 – what’s going well and what’s not going well. • Business acumen. • Resilience. • Keeps promises and delivers.

18





19



20

2 BP biases

BP’s 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.

Subsurface

Full Value Characterization

Projects & Engineering

ility Viab ty ni tu ter or ac pp ar O Ch

Standardization

Integration

Business Framing

Risk & Uncertainty Management

O E v a p tio n lu a t io n

Drilling & Completions


Commercial

Natural Pace t ep n nc ctio Co ele S Concept Definition

Work Focus

Quality Through Choice BP Biases

HSSE & Operations

Disciplines

LEADER INTEGRATOR MANAGER

figure 2.1 BP biases and appraisal team scope 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. ©2007 BP International Limited


21

2 BP biases

2.1 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 CoachingWorkshop 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. Integration is a behavioural characteristic founded in the holistic, multi-disciplinary (technical and commercial) approach BP applies to appraisal.

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 by others. • Objective analysis of trade-offs. 2.2 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. 22



2 BP biases

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. The benefits of standardization are shown in figure 2.2.

$

Improved Operability/Reduced OPEX • Surety of start-up efficiency • Improved HSE from systems commonality • Commonality for spares and training • Improved uptime Reduced Cycle Time

• Not ‘re-inventing the wheel’ - proven designs, fully commissioned systems and processes • Simplified Execution - management of no change Time

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

figure 2.2 concept and component standardization 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. ©2007 BP International Limited


23

2 BP biases

For the practitioner, delivering standardization requires: • Considering asset life-cycle costs and operability. • Considering how to get maximum leverage from BP’s 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. 2.3 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 value of 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 off24



2 BP biases

take rate and co-development of assets to share fixed costs and improve schedule. 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. 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.). 2.4 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 uncertainty provide 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.



25

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.

Understanding risk provides the basis for performance management and clear activity plans. The appraisal team’s objectives are to manage uncertainty and enable informed decisions under risk.

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. 2.5 Natural pace Natural pace describes the optimum speed for a project to progress to create value 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. 26



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. 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.

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 the project. 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.



27

2 BP biases

2.6 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).

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 BP’s resources

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 BP’s 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. 28



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.



29



30

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.

WorkFocus

Stage Objectives

Appraise 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

Appraisal Planning

Appraise Programme

AppraiseSelect Gate

Business Framing

Opportunity Characterization, Option Evaluation & Viability Assessment

Viability Confirmation

Governance

Activity

Appoint AGM • Build appraisal team • Consider business drivers: resources, developability, markets, and external influences • Identify technologies • Identify risks and uncertainties and develop mitigation plans • Create learning and knowledge management plan • Understand heritage commercial arrangements

Appraise Entry Gate

• Reconfirm strategic context and business objectives • Confirm options • Build the select team • Plan Select

Appraisal Plan Coaching Workshop

Appraisal Plan Reserves Approval Memorandum (RAM) Legend

• Generate options • Ensure full value characterization • Consider all sources of value and assess markets • Perform Value of Information analysis and acquire data • Develop decision framework and analysis • Consider standardization options • Identify risks and uncertainties and develop mitigation plans • Understand trade-offs • Establish reference case and alternative options • Make informed decisions

Select Entry Gate

HOD Review

key document review

Appraise PHSSER entry gate

Updated Appraisal Plan and DSP

workshop

PHSSER

figure 3.1 road map for creating distinctive projects ©2007 BP International Limited


31

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. Creating Distinctive Projects Appraise

Select

Appraisal Plan

Governance

HoD Reviews & TVP Attestation

Integrated Coaching

World Class Execution Define

Define FM

Discipline reviews Appraisal Plan

Select Coaching

Appraise

Select

PHSSERs Appraisal Guideline

Execute

Operate

Execute FM

Discipline reviews Execute Start-up Define Health Efficiency Review Coaching check

Detailed Engineering Pre-Sanction Construction Pre- start-up Operate

figure 3.2 project governance at the principal stages 32




3.1 Entry to Appraise (Pre-appraise) Pre-appraise describes the period immediately before an opportunity enters 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 situations to senior management early so that the right conversations and decisions can occur. 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.



33


Greenfield

Exploration Success Extension/ Tie Back to Hub

Brownfield

New Greenfield Access

Appraise / MPcp

Incumbent Resource Position

New Brownfield Access

figure 3.3 entry points into Appraise

Greenfield projects Greenfield 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 between the 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 34




•

•

• • • • • • •

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 a SPU/business unit’s 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



35


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. 3.2 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 framing The 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 36




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 how The 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, uncertainties and 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. ©2007 BP International Limited


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Approach 1. 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 focus on Resource base, Developability (technical definition including technology), Markets and External Influences. • Facilitate integration, alignment and informed decision making.

Strategic Context Establish viability (strategic, technical and commercial)

Resource

Developability

• Oil / gas • Fluid properties • Structural complexity • Stratigraphic complexity • Rates and reserves • Benchmarks

• Site Characteristics • Drilling & Completions • Flow Assurance • Wells • Facilities needs • Infrastructure • Technology

External influences

Integration, Informed Decisions, Confidence

• PSA / JOA terms • Host government needs • NOC needs • Partners, stakeholders • NGOs • Local organizations • Competitor and regulatory impacts

Markets • Price • Oil and gas sales • Market intelligence • Export options • Negotiating strategy • Contracting strategy • Market developments

figure 3.4 ‘4 legged stool’ approach to business framing

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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. Partners

BP’s SPU Strategy Market

Project Scope Surface Facility

HPHT Equip Suppliers

Drilling Options

HPHT BP Team

Pump

Onshore Facility

Prod Riser Sys

USCG

Marine Vessel

Export System

Long Lead Suppliers Subsea

IST

Well Companions

Mid-Stream MMS

Salt

Other Structures?

West Bump

East Bump Operating Unit

Paleocene

Adjacent Structures?

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. An approach 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. ©2007 BP International Limited


39


‘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)

‘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

Shareholder Value

Corporate HSSE Imperatives 1. GHSSER 2. Utilization of existing infrastructure 3. Plan for Training project personnel ( CTD, N2, Current Ops Procedures ) 4. Minimise gas venting and flaring 5. Establish optimimum footprint 6. Embed rigor on control of work 7. Meet IM standard 8. Incident and injury free environment 9. Successfully managed SIMOPS 10. Successfully conduct PHSSER

BP Reputation 1. Comply with third party contracts 2. Respecting landowner, community commitment 3. Regulatory compliance 4. Proactive PR demonstrating value of BP presence 5. Good rapport with contractors 6. Manage internal expectations 7. Progressing technology for producing mature

Distinctive CTD&C Capability for Tight Gas

Financial 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

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. Completion techniques 2. Establish tight gas Frac techniques 3. Technique to Manage Hole stability 4. Knowledge management 5. Lead industry in tight gas recovery/development 6. Understand and establish Intellectual Property position 7. Identify and close technology gap 8. Identify and establish organization capability

Good project drivers & decision outcomes

figure 3.6 example project objective hierarchy 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. 40




Capture Total Infrastructure Low Cost/ Minimal CAPEX Screen Solution

Earliest Oil

Reservoir Pressure Maintainence

Number of Drill Sites

Development

Gas Injection

Single

Dry Trees

Water Injection

Multiple

Wet Trees

Combination of Gas and Water

Combination

Host Facility

Liquid Export System

Gas Management

Gas Pipeline System

Lease/ Purchase Development

Tightly design to capacity (Fit for purpose)

TLP / SPAR /

Tie Back to Infrastructure

Store in alternate horizon

Loop Existing Line

Purchase

Build for Expansion (Equity)

FPSO

Offshore Load

Export via Pipeline

Stand-alone

Lease

Tie Back to Infrastructure

PHA

Non-Pipeline Solution

Lease to Own

Flexibility to Process

Build for future growth (Reservoir Update)

Semi

Sub-Sea to tie back to host facility

Natural Depletion

Triggers

New Build Pipeline

GTL

Through Existing Host Facility

Offshore utilisation (electric power)

‘What else do we need to know?’

Decisions

Choices

Investment themes

Mapped Investment Theme example

Triggers

figure 3.7 example overview table 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. ©2007 BP International Limited


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Technology identification All 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: • • • •

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).

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 a technology is proven or unproven (new). Proven technology is 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 not previously 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 processing sequences. 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 project cannot be successfully implemented. • Enhancing - a technology upon which the project is not reliant, but if successfully implemented would enable more value to be realized for the project. 42




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 management Knowledge 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 continuous improvement. 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.



43


The AGM is accountable for ensuring a knowledge management plan exists and is implemented. A knowledge management champion should be designated to coordinate 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 Plan The 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 an activity 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. 44




Questions

Examples

What are the key issues that need to be addressed for a viable business opportunity?

Values, risks, uncertainties, opportunities, options

What information do you need to address the issues?

Value of Information analysis, benchmarks

How will the team get the required information?

Organization capability and capacity Funding availability and utility

When is the information required?

Activity sequencing Critical path - optimization of information

What is the most likely program critical path and dependencies?

Understand the key decision making interactions - Decision tree(s)

figure 3.8 appraisal plan contents 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.



45


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 BP’s 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 tiebacks 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 the Appraise-Select gate. A template for the contents of the Appraisal Plan is provided in the Projects Library. See section 6.2. 3.3 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 set definition 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. 46




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’ 3D seismic and / or collection of seafloor stability and metocean data for offshore projects. Decisions to gather this information must be consistent with VOI strategy.

Ris k/U nc ert ain ty

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

RRU

RRU

Need to Know

Need to Need to Know Know

Need to Know Known

Early Appraise

RRU

Known Known

Known

End Appraise

End Select

RRU = Residual Risk & Uncertainty ‘Need to Know’ as justified by VOI

figure 3.9 appraisal impact on risk and uncertainty 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 ©2007 BP International Limited


47


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 characterization Opportunity 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 BP’s 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.

48




Option Opportunity Option

Concept

Option 1

Project

Option 4

figure 3.10 opportunity and options in project evolution Option generation and evaluation Option 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 by processing 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 team’s 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. ©2007 BP International Limited


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Risk and uncertainty understanding and management Characterization 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 Programme to 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: 50




• • • •

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 tiebacks.

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. Resources 500 ‘Best Fit’ Volume down to mapped spill point Current Location 600’ above spill @ M51, LKO

Local Host

400 Deep S/T

00 Grey Zone

OWC S/T

00 Initial Well

SS Tieback

100

5 0/

Se

g

M

al iti In

48

P en .

5 Se g

M

54 Se g

M

51 M Se g

Se g

1

M

51

0

Reservoir segments figure 3.11 example of risk and uncertainty management from the Gulf of Mexico ©2007 BP International Limited


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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 project’s 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 be found in the Geoscience Handbook and Exploration & Production Risk Management Guideline. Data acquisition programme The objective of the appraise data acquisition programme is to gather ‘need to know’ data to inform viability. VOI analysis compares the relative value of appraisal data and assesses its impact to assist determining project viability. It allows the Appraisal Programme to focus on acquiring the most important data.

VOI is founded on the concept that data has value only if: • The data impacts current or future decisions that have uncertain outcomes. • The cost of obtaining the information does not exceed the risked value derived from the data. The struggle is to recognize when further appraisal spend does not materially impact development decisions and therefore begins to erode value from the opportunity. See figure 3.12. 52




Risked Value of Opportunity

Optimal Appraisal Spend

Appraisal Cost figure 3.12 understanding value of information The data acquisition programme must encompass technical information and sources of information from non-technical disciplines that will allow the appraisal team to evaluate the viability of the opportunity. Consideration must be given to the data required throughout field life, e.g. reservoir surveillance data for reservoir management purposes. Technical data gathered for Greenfield non-programme opportunities is biased towards defining the ranges appropriate for selecting the potential development concept. Opportunities that are part of a programme have data gathering biased towards confirming viability of the existing or previously selected concept. There are two types of information required: • Characterizing the range, type and anticipated production performance of resources available for development including uncertainties. • Characterizing concept options, developability and associated costs and schedules. ©2007 BP International Limited


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Developability and concept choices are influenced by: • Hydrocarbon phase - oil, gas, condensate, water. • Recovery factors - in place volumes and recovery process and efficiency. • Production rates - individual well potentials and productivity. • Reservoir connectivity - pressure communication, connected volumes. • Fluid chemistry - including contaminants that impact materials selection or flow assurance (H2S, CO2, mercury, wax, hydrates). • Rock mechanics - impacting potential well trajectories, pore pressure prediction, completion types etc. • Geographic location and proximity to infrastructure / markets. • Geotechnical environment - water depth, seabed or surface instability and hazards, rock strength and foundation engineering calibration. • Location of any required hydrocarbon processing. • Secondary recovery considerations – artificial lift, water injection. • Drilling & Completions scope. • Production facility thresholds and conceptual flexibility. • Technology requirements. • Final commercial value. • Life of field considerations. The Appraisal Programme should be balanced to better understand the range of uncertainty for cost and schedule information, engineering options, resource scale and definition. Decision making Making quality decisions is crucial to the success and efficiency of appraisal programmes and the project. Appraisal practitioners must always test: What are the impacts of my decisions? What is the regret position of my decision if we decide not to proceed? A balance between testing the impacts and being unable to make a decision under uncertainty is needed. Most of the time in Appraise, and frequently in Select, these trade-off decisions require judgement and experience as much as detailed evaluations. Knowing when to ask for guidance is important. The potential impact of an incomplete or poor decision should dictate the effort that goes into informing that decision. Identifying all stakeholders impacted by or requiring buy-in to the decision is always useful. Understanding the number and requirements of the stakeholders also helps determine how consultative the decision making process needs to be. 54




There are a number of excellent tools available to enhance the rigor and completeness of decision making. Decision trees are one tool which can enable the outcomes of the Appraisal Programme to be planned in advance. In this way, an objective assessment of Appraisal Programme options can be developed and outcomes can be thoroughly communicated as means for everyone to understand uncertainty and risk. Decision trees can be used to evaluate the relative value of different decision pathways (using Expected Monetary Value). They also inform concept selection choices linked back to Appraisal Programme outcomes. Figure 3.13 is an example of a decision tree used to evaluate Appraisal Programme outcomes. 3-D shows no structure, drop Lease -$15 MM

Buy

0.4

Run 3-D survey

Lea se

Drop Lease $-18MM

Drop Lease -$15 MM

5

e as Le uy b n’t $0 Do

3-D con sur v ey firm s 0.5 lead 5

Drill

y Dr

Drill second wildcat

le ho 0 6 0.

0.15

0.2 5

Dry hole drop Lease -$21 MM

0.

45 0.35 0 .2

Mid Case Discovery +$18 MM

0

Mid Case Discovery +$24 MM High Case Discovery +$99 MM

High Case Discovery +$102 MM

Dr

Drop Lease -$12 MM

Dry hole Drop Lease -$15 MM


Drill seco wildc nd at


0. 90

0.10

0.1 0

yh 0 . 8 o le 0

0 .0 5

0 .0 5



figure 3.13 example decision tree Appraisal practitioners must consider concept and component standardization to simplify and focus Appraisal Programme decision making. Where a programme standard exists, appraisal decisions are often simplified and work is reduced.



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Decision making is often informed by considering trade-offs. Typical trade-offs include: • Longer-term versus short-term value. • Capex versus opex and other financial trade-offs. • Cost versus schedule versus quality. • Simplicity of concept versus recovery maximization. More complex trade-offs occur around qualitative issues tied closely to risk and uncertainty management. These include trade-offs between remaining resource uncertainty and engineering concept flexibility. These trade-off decisions must be considered in the context of the SPU and segment strategies. Technology plan The Technology Plan will be an integrated part of the Appraisal Plan. Details on Technology Planning and the content of a Technology Plan can be found in the MPcp Engineering and Quality Management Guideline. Exploration, Beyond the Best and Opportunity Progression common processes also contain useful information regarding technology work plans for other functions. The Technology Planning process will reveal the maturity of technologies being considered, the associated risk and drive the subsequent development activities. Contracting and procurement strategy Early contracting strategy work can assist identifying risks and opportunities. Contracting risks can create boundaries on a project and recognizing these early can help to prevent the development of unrealistic delivery and timing expectations for the project. It may also create opportunities, for example, using local content to build alignment with local partners and host governments creates negotiating currency which can be used by the project. Exploration & Production PSCM sector strategies provide the context for contracting and procurement at this stage. Standardization can significantly simplify and improve contracting thinking and efficiency in Appraisal, especially where an existing programme standard can be used as the basis for considering concept options. Additional guidance is provided in the MPcp Procurement and Supply Chain Management Guideline. 56




Commercial themes During Appraise the key commercial themes to address include: Opportunity characterization • Do we understand the business drivers? • Are our objectives aligned with our partners and with government? • What business model makes money for BP, our partners and government? • Have we evaluated the value proposition for BP, competitors, partners and government? • Who are the competitors, what are they doing and how will they respond to our actions? • What is our distinctive advantage? Is our offer distinctive? • Why should the stakeholder choose to work with BP? What options do we have for improving our offer? For example, gas and infrastructure. • Is our competitive position sustainable? • How does the opportunity fit with the area or basin catchment strategy? Relationship management This is focused on external stakeholders. • Do we know the key people to influence and who makes the decisions? • Have we prepared a relationship map and do we have a plan for managing relationships? • Do we understand the country constitution and legislative framework as it may apply to the BP project? Reputation management • What are the implications for our reputation? • How best do we protect and enhance our reputation? • Is the risk commensurate with our interest and the returns we may earn? Market assessment, development and value chain management This is principally through Gas, Power & Renewables for gas and gas products. • Have we conducted a full value chain market assessment? • What is the market structure and regulation? • How is the gas market developing? • Is there a programme of product market analysis to support pricing assumptions? • Are there fundamentals that drive market growth? • How does the product get to market and do we know the cost of access to market? ©2007 BP International Limited


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Legal, fiscal, financial and regulatory management • Are there any existing agreements which impact the selection criteria? For example, Joint Operating Agreements and Production Sharing Agreements. • Can we define any key conditions precedent for the Appraise / Select stages? • Are corporate structures and local / national tax regulations understood? • Do we understand and have we taken into account the impact of local laws including competition law and the business and energy market regulatory framework? Economic Evaluation • Have we developed a range of commercial scenarios to broadly evaluate each option against and evaluate the reference case in detail? • Do we understand the value levers? Would a value tornado chart be useful to communicate the most impacting parameters of the project or of the underlying project uncertainty provinces? • How does the reference case make money? • What is the full value characterization (upstream, midstream and downstream)? • What concept selection methodology will be applied in early Select to rank options? Having reviewed the commercial themes, appraisal teams should know what the critical path items are and have built them into the Appraisal Plan / Decision Support Package as part of demonstrating viability. These link to the objective hierarchy established in section 3.2. 3.4 Appraise-Select gate The fundamental question to address at this gate is viability. By the end of Appraise, sufficient additional information should be available from the Appraise Programme to inform both technical and commercial viability. If viability cannot be demonstrated, the project must be stopped or recycled. Under all circumstances, this gate offers the opportunity to consider the best way to create value. Partner alignment should be sufficient to proceed into Select.

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Entry into Select requires a minimum of one technically and commercially viable option, where viable is defined as: • Do-ability – technical description and technology needs must have no foreseeable show-stoppers. • Markets - expectation of access to markets (especially gas) and to fabrication and installation contractors. • Relationships (external influences) – relationship management plan must be in place, stakeholders are aligned with forward plan. • Economics (deterministic) – expectation of a positive NPV. The appraisal team must prepare an updated Appraisal Plan which will form the Appraise-Select gate Decision Support Package. This enables a functional check-in on the key elements including strategic fit. The appraisal team must be prepared to implement the updated Appraisal Plan and be set up to enter Select. The Decision Support Package should also confirm and describe the alternative options recommended to carry forward into the Select stage. At least three options including the reference case are normally taken forward into Select. The role of the Gatekeeper is to test for readiness and viability in a formal review. If these can be confirmed then movement of the project from Appraise to Select can be approved. The Gatekeeper is also responsible for ensuring the AGM and appraisal team have the required resources and context through Appraise and Select. There is no formal requirement for a HoD Review and TVP attestation at the Appraise-Select gate. The Gatekeeper (normally the SPUL) is encouraged to consult functionally regarding the investment quality, portfolio fit, and risks for the project. HoD checkins are recommended, particularly for projects that have spent over three years in Appraise. Figure 3.14 shows the full set of documents called for in MPcp that underpin delivery of Appraise (and Select) stage expectations. Blank boxes denote the deliverables not specifically required by MPcp at end-Appraise.



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Key Deliverable

End Appraise

End Select

Appraisal Plan

Updated

N/A

Wells Basis of Design (BoD)

Preliminary Prepared

Finalized

Scenario Planning

The business case for the development scenarios is supported by appropriate schedules and cost estimates.

Project Statement of Requirements (SoR)

Outline Prepared

Complete

Life of Field Plan of Development (PoD)

1. Scoping plan prepared for each option.

1. Available for the Reference Case

2. Outline plan available for the Reference Case

2. Available for each option which tests robustness to upside and downside outcomes

Surveillance Plan

Outline Prepared

Plans described in Depletion Plan

Technology Plan

In Place

Updated

Front End Loading (FEL)

Current/Predicted FEL Assessments complete

Engineering Basis of Design (BoD)

Available for selected concept

Project Execution Plan

In place and outline communicated to team members

Operations and Maintenance Strategy

Draft Developed

Commissioning & Start-up Plans

Updated for selected concept Outlined sufficiently to identify issues relevant to Define

Relationship management plan

Preliminary plan prepared

Being implemented

Interface Management Plan

Outline Plan Drafted

Draft Plan Prepared

Organization Strategy

Drafted sufficient to identify major issues, limitations and opportunities.

Developed through to and including handover to Operations

Knowledge Management Plan

Established

Updated

figure 3.14 key deliverables and expectations at the end of Appraise and Select

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A RACI chart showing the key MPcp documents and deliverables is on the following pages. This describes which of the key leadership roles in the appraisal team owns each deliverable. Bold elements denote the single points of accountability. In addition to the key deliverables at end-Appraise the appraisal team must also meet the expectations for each of the MPcp elements.



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R = responsible; A = accountable; C = consulted; I = informed figure 3.15 RACI chart of the key Appraise stage MPcp documents and deliverables ©2007 BP International Limited


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The objective of Select is to evaluate the alternative concepts, maximize the opportunities and reduce risks and uncertainties to an acceptable level, in order to identify the optimum project to take forward into Define. An increased focus on cost and schedule definition is essential. The Select stage principally involves sequential work across two key areas: 1. Select Programme - focuses on work to evaluate and enable the necessary selection from an options shortlist brought forward from Appraise.

Evaluate the alternative concepts, seeking to maximize opportunities whilst reducing threats and uncertainties to an acceptable level, in order to identify the optimum project to take forward into Define

WorkFocus

Stage Objectives

Select

Define Preparation

Select Programme Option Evaluation

Concept Selection

Concept Definition

• Establish selection criteria • Develop engineering data acquisition programme • Evaluate options • Engage contractors • Update risk and uncertainty management plans • Update learning and knowledge management plan

• Select concept • Engage and select contractors • Deal structuring, contract framework, market development and access

Governance

Activity

Appoint PGM

Select Entry Gate

• Set targets • Build Define / Execute team • Plan Define • Complete Statement of Requirements • Manage residual risk and uncertainty

IPA Review

Select Coaching Workshop

Define Entry Gate Discipline & HOD Reviews

Select PHSSER Legend

key document review

RAM

entry gate

Define RAM workshop

PHSSER

figure 4.1 road map for creating distinctive projects ©2007 BP International Limited


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2. Define Preparation - focuses on work to mature the selection in readiness for transition into Define. 4.1 Select programme The overall appraisal scope employs the term ‘options’ to describe alternative development approaches in Appraise; it maintains this term through the first half of Select until a ‘concept’ selection choice is made. The Select Programme objective is to achieve sufficient technical and commercial maturity for each shortlisted option to implement a selection process based on predefined criteria. Decisions

Option Opportunity Option

Concept

Option 1

Project

Option 4

figure 4.2 opportunity, options and decisions in project evolution Select coaching Business framing, described in section 3.2, underpins the creation of the Appraisal Plan and provides the context and framework for execution of appraisal activities. In the early Select stage this process is revisited to ensure shortlisted options and the Select work plan remain aligned and that the select team has full ownership of this alignment and all boundary conditions. 66




The Select Coaching Workshop can provide support for Appraise insights and building on any screening criteria employed during Appraise. This workshop helps the team plan for Select and prepare for the Define FM. It also assists preparation for Select stage deliverables and an external benchmarking review that will take place later in Select (e.g. Independent Project Analysis (IPA) Pace Setter Review). Inviting IPA to prepare for the Pace Setter Review and using BP’s in-house STEP tool (from midSelect) to self assess end-Select readiness is recommended. Establishing concept selection criteria Selection criteria will be developed and agreed by the team at the start of Select. These are used to differentiate between shortlisted options carried forward from Appraise. Selection criteria should be aligned to the key business drivers. Classic economic measures such as net present value and return on investment are primary considerations in developing selection criteria. GIAAP provides guidance on the boundary constraints for criteria. Factors to consider when developing selection criteria include: • Acceptable levels of HSSE performance. • Inherently safer design criteria for the concepts. • Enabling an existing programme / standardization framework to remain viable. • Aligning with overall strategic drivers. • Aligning with access to and extraction of value from product / export markets. • Flexibility to subsurface uncertainty. • Capturing upside resource potential / protect against downside. • Enabling tie-in of future resources. • Maximizing reservoir depletion with appropriate surveillance needs. • Reliance on areas of enhanced technical or commercial risk. • Reliance on technology development. • Access to local markets and creation of local content opportunities. • Opportunities to manage / phase capex commitments. • Opportunities for a sequenced development approach. • Minimizing the extent of Brownfield modifications. • Underpinning external stakeholder alignment with partners and governments. Choices through Select will address strategic issues such as concept type and development schemes, while others will be more tactical. Select stage choices must also consider alternative scenarios as part of the concept selection process.



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It is essential the select team seek input across all disciplines to inform selection criteria. Figure 4.3 describes the process for ensuring the design case for safety in BP projects. The design case for safety must be considered as early as possible in Select and is used as the basis for the operations case for safety. Further details can be found in the Engineering and Quality Management Guideline.

OMS OPERATIONAL SAFETY Inherently Safer Design

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EXECUTE

OPERATE

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figure 4.3 design safety Option evaluation methodology (technical and commercial) Integrated development planning is required to define each option further before applying the selection criteria. This must involve all key disciplines. It is crucial the AGM ensures integration underpins each activity carried out as part of the Select work 68




plan. Experience shows dedicated and regular integration meetings are necessary to create the right environment and behaviours to deliver this. Work carried out in this period will fall into three categories: 1. Technical definition and integration. This is the effort within individual disciplines and across disciplines to deliver: • Cross discipline consistency. • Cross discipline trade-offs – relatively minor changes in an area may unlock some significant movement elsewhere resulting in overall value addition. • Holistic risk and uncertainty analyses. • Consistent technical feasibility assessment and technology selection. 2. Commercial definition, to deliver: • Continued stakeholder engagement and alignment. • The framework for development planning evaluations including focus on tax, regulatory requirements, markets, legal, tax, finance, negotiations. • The appropriate modeling basis and expectations for economic outputs. 3. Development planning work that integrates outputs from above, to deliver: • Overall concept choices by testing against previously defined selection criteria. • Concept level articulation of risk and uncertainty. • Assessment of options fit to the life of asset Depletion Plan. • A Depletion Plan that addresses the residual uncertainties carried into Select. Benchmarked and standardized input data should be used for key parameters, such as resources, cost work breakdown structures and economic methodology. This will minimize the probability of any surprises once the concept selection is made and the selection is matured towards Define. Adequate benchmarking of key parameters is essential early in Select. Additional resources will be necessary at this stage to support these activities. The section on contractor engagement and selection addresses the role of the Pre-Front End Engineering Design (Pre-FEED) contractors in this context. Risk and uncertainty understanding and management The importance of good risk and uncertainty understanding and management is equally valid during Select, as during Appraise. ©2007 BP International Limited


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Opportunities for major data acquisition during Select are more limited than in Appraise. Consequently, the focus in Select is more on management and mitigation of key risks and uncertainties. Additional data can be acquired but must be carefully planned. Data collection in Select should target two areas: 1. Concept selection. 2. Concept definition. The AGM must ensure risk and uncertainty management and mitigation plans are updated to inform option maturation and concept selection. The Project General Manager (PGM) owns the residual risk and uncertainty for the chosen concept. The PGM is identified by mid-Select. The AGM and the select team will, based on the options shortlist, review and update the risk and uncertainty profile and put in place plans to: • Mitigate key risks and uncertainties that influence concept selection or overall viability. • Manage those risks where mitigation is not possible. • Re-test the selection criteria. • Reduce risk and uncertainty to a level consistent within the current business context, ready for handover to the incoming PGM. The incoming PGM, and the define team will own and manage residual risks and uncertainties following handover and transition into Define. Through Select it is necessary to consider: • How the remaining uncertainties will be managed. • The surveillance plan, including life of field data to differentiate between upside and downside outcomes. • What interventions can be made to mitigate the downside and to capture upside. • What remaining risks and uncertainties are carried into Define and Execute. Can any of these be designed out? What are the mitigation plans for the remaining risk? How can the opportunities be exploited? It is important to establish an integrated risk management process for Select (and Appraise) that enables visibility of risk items at aggregated and individual discipline levels and provides context for resulting mitigation plans. This process will ensure selection decisions can reflect the impact of the prevailing business. See the Reservoir Uncertainty Statement & Management Guideline for further 70




information. All activities here need be in compliance with the Risk Management Guidelines for Major Projects and the Engineering & Quality Management Guideline. Data acquisition programme Availability of the right data (type, quality and level of detail) is fundamental to the selection process. The primary data acquisition objectives are to gather information, of the right quality and at the right time, to enable the select team to: • Make the necessary concept choices that will underpin creation of the Define FM and progression of the project into Define. The VOI analysis should inform this thinking. • Prepare for longer term activities in the Define stage. Gathering soils data to underpin FEED is a classic example of this. • Provide a plan for life of field data requirements. In Select further data and information is required. This includes: • Data – gathered physically from the location of the opportunity or from the market. This includes: • Geohazards surveys. • Development quality seismic acquisition. • Market prices for oil and gas products. • Specifications of alternative export routes. • Accessing cost norms from analogue projects. • Existing facilities to which Brownfield modifications are proposed. • Information – gathered from analysis of the acquired data. This includes: • Reservoir models. • Facilities and wells definitions. • Cost estimates. Data and information must be integrated with those acquired in Appraise. Information that underpins the concept selection process includes: • Reservoir models, linked where appropriate, to reflect overall system dynamics (network models are recommended for complex subsea tie-back arrangements, Top Down Reservoir Modelling is a further powerful tool but must be used in an informed way). • Preliminary Depletion Plan. • Wells summary highlighting numbers and types. • Engineering definition sufficient to reconfirm technical viability and to underpin ©2007 BP International Limited


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• • •

a preliminary cost estimate. Economic outputs for and commercial analysis of each option. Articulation of concept trade-offs, e.g. standalone versus tie-back, wet versus dry trees. Integrated analysis of above to determine, in the context of the predefined selection criteria, the basis for concept selection.

Experience and judgement is required to combine the right data elements to inform the concept selection process. Peer assists are recommended to support this process. Knowledge management Knowledge management initiated early in Appraise must receive continued focus through Select to ensure documentation of, for example: • Select options. • Selection criteria. • Contracting strategy. In addition, in Select it is crucial to incorporate benchmarks from other projects to ensure maximum knowledge transfer and efficiency. For the practitioner, in Select, 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. The AGM is accountable for ensuring a knowledge management plan exists and is implemented. A knowledge management champion should be designated to coordinate this. See section 6.2 for further information. The MPcp Knowledge Management Guideline also contains further information. Contractor engagement and selection Work across the respective technical and commercial disciplines underpins the selection decision. Generally this is completed in-house (e.g. Subsurface & Wells) but the facilities teams are likely to require support from external contractors / consultants. This external activity is commonly referred to as Pre-FEED. Further definition beyond 72




concept selection will be required to support the Define FM. Integrating the output of Pre-FEED work with the other disciplines is vital. Pre-FEED enables better understanding of the conceptual design issues. It reconfirms technical viability and generates cost and schedule estimates, based on more detailed work than was appropriate in Appraise. These support the selection decision. The Pre-FEED scope of work includes evaluation of opportunities for standardization. Outputs need to be aligned with the sector strategy approach during the latter part of Select. It is expected that the Pre-FEED contractor will provide support throughout the entire Select stage, not just to concept selection, and provision for this should be made in early contractor engagement discussions. There must be BP control, ownership and performance management of Pre-FEED contractor work. Several contractors have Pre-FEED experience. The AGM should ensure use of global agreements to underpin delivery of Engineering and Project Management Services unless there is a compelling reason against this. It is necessary to ensure that prospective contractor(s) have the right skills to support Select activities. Right skills centre on ability to: • Work at a level appropriate to Select, i.e. less detailed than Define and Execute. • Engage with other technical disciplines, as integration is key to Select stage success. • Consider, with BP guidance, how to reflect uncertainty in key deliverables. Additional information is provided in the MPcp Procurement and Supply Chain Management Guideline. Concept selection Concept selection is a key Select Programme deliverable that is matured during Define Preparation. Other majors use the ‘concept selection’ term to describe the position reached at the end of the Select stage when any outstanding technical or commercial issues have been resolved. It is important to be aware of this difference in definition when engaging external stakeholders. Concept selection is: • The output from integrated technical and commercial evaluations (gathered from in-house and contracted work) tested against the agreed selection criteria. • A key opportunity to retest strategic fit with stakeholders to provide alignment ©2007 BP International Limited


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assurance for the remainder of the Select stage. Peer assist of inputs and outputs should be considered at this time. Once data analysis is complete, a concept selection recommendation can be made for internal and external endorsement. Supporting work and analysis must be fully documented to support stakeholder engagement and to provide data reference for future work through the rest of Select. The options not selected must be adequately documented, for future reference during Define Preparation. Commercial themes and outcomes In the Select phase the focus of commercial activity is on: Market and competitor analysis Updating our knowledge to develop a commercial framework which can become a robust foundation for the detailed contract structure, for example: • Supply alternatives, demand and product price differentials for oil, gas, Natural Gas Liquids. • Confirmation of commercial frameworks and contract structures for a range of concepts. • Understand the national commercial and petroleum laws applicable to the formation of new joint ventures or companies and any national factors affecting petroleum operations, including production quotas, strategic reserves or energy policy. • Identification of value chain drivers and likely acceptable outcomes for partners and other stakeholders. • Understand options to exercise control by BP and other stakeholders. External engagement, negotiations and agreements This is a deeper engagement with key external stakeholders to seek alignment on concept selection, schedule and implementation plans for the project. Preliminary negotiations will start in the Select stage to test if there is likely to be a mutually satisfactory deal framework which addresses key commercial terms (e.g. hydrocarbon supply contracts, government and contractor agreements). The Select work programme should address: • Joint venture alignment with the operator’s proposals. • Availability of external finance, where required, to implement Define and the project Execute stage. • Approval of the Plan of Development by government and relevant authorities if required at this stage. • Satisfactory negotiation with infrastructure providers or gas buyers compatible 74




• • •

with the selected concept, schedule and Authorities to Negotiate (ATN). Identification of the consequences and mitigations of schedule slippage. Development of an exit strategy as an alternative. Negotiation and agreement of key terms and pricing for gas product sales within applicable ATN.

Economic analysis • Conduct economic evaluation to assist the ranking of alternative concepts and the selection of the preferred concept, with upsides and downside sensitivities in line with GIAAP and Economics Evaluation Methodology. • The economic evaluation model should be assured externally to the SPU for Major Projects. • Finance and Finance Control & Accounting should be involved when evaluating currency effects. • Lead preparation of the Define FM to ensure the business case is properly portrayed. 4.2 Define preparation By the end of Select, a single concept will have been chosen to take into Define. The objective in Define is to improve the technical definition and project execution plan to give confidence in the conceptual design, cost estimate and schedule. Following completion of the Select Programme and to make informed decisions it is necessary to: • Mature (technically and commercially) and enhance the quality of the selected concept in readiness for the transition to Define – the AGM will remain accountable for this up to and including receipt of approval for the Define FM and successful passage through the Select / Define stage gate. • Create work and organization plans for Define - the PGM will take accountability for this with support from the AGM. The PGM will have been identified by mid-Select, and will have been engaged in concept selection. The PGM will work with the AGM to complete the Select stage, including concept definition, setting targets and preparing the Define FM. Project accountability will pass from the AGM to the PGM at the end of Select via an MOC process.



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The PGM will own: • The Define FM. • Setting Define / Execute targets. • Building the define / execute team. • The Define work plan. • Contracting strategy. • Project execution planning. • Concept residual risk and uncertainty management. • Project direction and objectives. Appropriate resources will move from the Select team to the Define team at the end of Select to ensure continuity. Some key Define/Execute team members will be appointed during late Select to support delivery of all end-Select activities, including Define preparation. Concept definition Concept definition activity is characterized by two elements: Maturing and optimizing the selected concept This focuses on enhancing the technical and commercial definition across all disciplines and maintaining a strong focus on integration, with continuing reliance on the Pre-FEED contractor. This enhanced definition enables: • An updated Depletion Plan, and where required a Plan of Development. • A fully worked (bottom up) cost estimate and schedule underpinned by the latest estimating norms; implementation of cost and schedule risk analysis. • A full suite of project economics and associated sensitivities. • Reconfirmation that no technical barriers prevent forward progress, inclusive of sufficient demonstration of viability of any new technology enablers. • Finalization of outstanding commercial matters, e.g. agreements, negotiations that are relevant to the transition to Define. • Concept detail decisions. • An update to the standardization plan based on the selected concept. • Implementation of appropriate Value Improvement Practices to drive additional value into the basis for the Define FM. • Implementation of internal assurance processes at individual discipline and at aggregated business levels including an Engineering Review. • Preparation of a Decision Support Package and Define FM. • Engagement of external stakeholders such as Partners and Concessionaires/ Host Governments. 76




• •

Implementation of an external benchmarking review, e.g. IPA Pacesetter review. Technology implementation plan.

Building the Define work programme Activities to build the Define work programme include: • Key documents to be used as the development transitions into Define, e.g. Depletion Plan, Statement of Requirements (SOR), Basis of Design, Project Execution Plan, Contracting Strategy. • Define stage work plans. • Define stage organizational and manpower requirements and team building. • Appointment of key Define and Execute team members. • Stakeholder management plan. • Update to the project risk and uncertainty characterization. Statement of Requirements The SOR is a document that clearly articulates the business and technical requirements a Project must meet. The SOR will be initiated during Appraise, to a sufficient level that provides a basis for the development and assessment of concepts during Select. It is important to ensure the boundaries set are realistic and that viable business cases can be demonstrated for the Project. From this base document the Project will progressively prepare the Integrated Project SOR through Select. At the end of Select the Integrated Project SOR is complete, frozen and rigorous MOC is applied thereafter. At the Appraise stage, the SOR should typically describe the location and boundary conditions, the HSSE criteria, the source of value, subsurface characteristics and deliverability (as appropriate) and the overall performance requirements for the main components of the Project such as, wells, flow lines and production/export facilities. During Select, the SOR will be updated with more detail as the level of understanding and definition improves and as concepts/options are reduced. The SOR will ultimately reflect the chosen concept and will be a fully integrated document encompassing the reservoir Depletion Plan, facility design throughputs, estimated operating efficiency, export stream specifications, pipeline flow assurance and installation, commissioning, operating and maintenance requirements. It is important in both the SOR and Basis of Design that the range of hydrocarbon fluid compositions which the design is to be based upon is clearly specified. ©2007 BP International Limited


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Primary stage gate deliverables outlined in MPcp as shown in figure 4.4. Examples of typical detailed delivery lists are included in the Engineering and Quality Management Guideline.

Key Deliverable

End Appraise

End Select

Appraisal Plan

Updated

N/A

Wells Basis of Design (BoD)

Preliminary Prepared

Finalized

Scenario Planning

The business case for the development scenarios is supported by appropriate schedules and cost estimates.

Project Statement of Requirements (SoR)

Outline Prepared

Complete

Life of Field Plan of Development (PoD)

1. Scoping plan prepared for each option.

1. Available for the Reference Case

2. Outline plan available for the Reference Case

2. Available for each option which tests robustness to upside and downside outcomes

Surveillance Plan

Outline Prepared

Plans described in Depletion Plan

Technology Plan

In Place

Updated

Front End Loading (FEL)

Current/Predicted FEL Assessments complete

Engineering Basis of Design (BoD)

Available for selected concept


In place and outline communicated to team members


Draft Developed

Commissioning & Start-up Plans

Updated for selected concept Outlined sufficiently to identify issues relevant to Define

Relationship management plan

Preliminary plan prepared

Being implemented


Outline Plan Drafted

Draft Plan Prepared

Organization Strategy

Drafted sufficient to identify major issues, limitations and opportunities.

Developed through to and including handover to Operations


Established

Updated

figure 4.4 key deliverables and expectations at the end of Appraise and Select 78



A M pp an ra ag isa e l Pr r Ge ne M oj an ec ra l ag t R Pr er eso M oj ur an ec ce ag t D e W r eve M el lo an ls pm ag Pr en og e t r ra C M om m an m m e ag er O er cial M pe an ra ag tio e ns H SS r D ev E el M op Pr ana m M oj en ge an ec t r ag t G er e ne ra l

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C

C

R

8

Commissioning and Start-up Plans


A

R

R

R

I

R

R

R

9

Management of Change (MoC) procedure


A

R

R

R

R

R

R

R

10

Authorities to Negociate (ATNs)


A

C

C

C

C

C

C

R

11

Define Finance Memorandum (FM)

Appraisal General Manager / Project General Manager

R

C

C

C

C

C

C

R

R = responsible; A = accountable; C = consulted; I = informed figure 4.5 RACI chart of the key Select stage MPcp documents and deliverables ©2007 BP International Limited


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A RACI chart describing which of the key leadership roles in the Appraisal team owns each deliverable is in figure 4.5. Select-Define Gate Assurance Internal assurance processes will require considerable focus at this point.The following discipline reviews must be undertaken prior to the Define FM HoD Review: • Subsurface & Wells. • Drilling & Completions. • Engineering. • Procurement and Supply Chain Management. • Commercial. • Cost and schedule. • Project HSSE Review (PHSSER). • Benchmarking and Front End Loading assessments, including an IPA Pace Setter Review. • Reserve and resource compliance. The IPA Pace Setter Review is required prior to the HoD review. It is essential these reviews are appropriately planned and resourced to ensure they are timely and effective. Any flexibility required as a result of remaining uncertainty will need careful consideration at this point. HoD reviews will assess and summarize readiness to progress to Define and provide the basis for TVP attestation. External stakeholder engagement External stakeholders may have different processes at the end of Select. Some will be happy to proceed into FEED on the basis that their only commitment is for Define expenditure; others see this as a major sanction decision. It is crucial that the outputs, recommendations and forward plans are suitably networked with stakeholders to ensure they are supported at the end-Select stage gate. The AGM and PGM must deal with any misalignment which is judged to be a potential risk to the project’s success. Detailed commercial terms must be established by end-Select. As a minimum, binding contractual frameworks, within which fully termed agreements are capable of being executed are required. There may be outstanding conditions to be satisfied (such as 80




government and regulatory approvals) which can be addressed during the Define and Execute stages. Detailed plans to deliver these are required by end-Select. Key to a successful project is the need to ensure the commercial and contractual aspects of the entire deal (from concession access, joint venture terms to product sale terms across the value chain) can progress without the project being stalled by an incomplete contract or a partner yet to commit to the terms. Define FM The Define FM is the final deliverable from the Select stage and is the basis for achieving internal approval to progress into Define. It is a relatively short document that conveys sufficient information to enable strategic and project perspectives to be taken by key decision makers. The Define FM will be prepared in line with GIAAP and the Group Economics Evaluation Methodology available on BP group websites. The Group Delegation of Authority website should be used to establish who has the financial authority to approve the resource request. Templates of the correct Define FM format and contents are available on GIAAP websites and MPcp. When entering Define, management or a joint venture may set targets for the project. This may be to achieve a performance target capex or to meet the financial frame of the SPU. The Define FM will also have a boundary condition based on Not to Exceed capex to enable the project to be executed at a lower level of delegated authority, e.g. Segment CEO rather than Resource Commitment Meeting. An open conversation, transparently informed by all appropriate data should occur with key stakeholders in setting targets (including Segment Executive Team). Capex targets should be underpinned by Project Services estimating procedures (see the Project Services Guideline) and should describe the performance target and Not to Exceed capex values. This area is typically also considered at a HoD review. The schedule in the Define FM must adequately consider the drivers of natural pace and must be transparent in describing how residual risk will be managed. Investment quality and any financial targets should be realistic and be supported by an understanding of the uncertainty ranges for resources, costs, schedule and the attendant risks.



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Decision Support Package The Decision Support Package will confirm: • The recommended concept is viable, robust and compelling and the processes used to derive it. • Risk and uncertainties have been characterized, and mitigations and processes address residual risk and uncertainty. • There are no outstanding issues (including those of stakeholders) that would preclude entering Define. • There are forward plans with appropriate targets set for the define / execute team. The Decision Support Package will also articulate the estimated development costs and schedule and the associated economic parameters along with some clearly defined sensitivities. The toolkit in section 6 provides links to Decision Support Package and Define FM templates.

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83



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A clear and consistent organization strategy underpins creating distinctive projects. Understanding, setting and developing organizations are key to project success and are essential habits of great appraisal leaders. Integrated multi-discipline teams are fundamental to creating distinctive projects. This section sets out the principles, organizational design biases, BP staffing expectations and the processes to be adopted by the AGM in developing an effective organization strategy and plans which enable detailed organization charts and staff mobilization plans to be created. It has been developed in support of the expectations set out in the organizational capability element of MPcp. There is an expectation that there will always be a BP appraisal leadership team led by an AGM accountable for overall delivery. The AGM develops the organization strategy on three levels: 1. Primary role of the BP appraisal leadership team related to the company goals and expectations. 2. Key accountabilities of the BP appraisal leadership team and individuals. 3. Detailed roles and responsibilities of individuals. Before setting the organization strategy, the AGM must first have a clear understanding of: • The project business context, as defined by business framing in section 3.2. • The roles and key accountabilities for the BP appraisal team, which cannot be delegated to others within the project. These are described in sections 5.2 and 5.6. The AGM must bring these complementary elements together and adhere to the organizational principles, as outlined in section 5.3, to form the organization strategy as described in section 5.4. The organization strategy is developed in early Appraise by the AGM and tested in the Appraisal Plan HoD review. When the organization strategy has been confirmed, organization charts are developed detailing key positions to be appointed. These feed into staff mobilization and succession plans, and ensure adequate resources are available for Appraise and Select. The organization will need revisiting at end-Appraise to enable the appropriate evolution of staff numbers and skill areas. The PGM will develop a resource plan to ramp up the define / execute teams. This is done in accordance with the MPcp Organizational Design Guideline. During Select, the Define / Execute organization is further detailed by the PGM after their identification in mid-Select. Providing data to the Resourcing for Success process is important at this stage to enable functional planning for deployment of scarce staff resources. ©2007 BP International Limited


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5.1 Business context When setting the organization, the AGM must have a detailed understanding of the context in which the opportunity will be evaluated and the project will be created. The primary elements which describe the context are: • Stakeholder alignment. • Subsurface complexity and appraisal uncertainty. • Environmental considerations. • Concept elements or building blocks that could make up the project, e.g. onshore, offshore, subsea. • Development of a programme of projects or development of a single project. • Geographical, such as multiple locations. • Political factors, such as multiple government or country expectations. • Business objectives and priorities including project pace and schedule. • Local factors, such as the requirement for national staff development, schools and rotas, housing, medical, staffing policies and visa restrictions. • The range of Brownfield activities for the project or other SPU project activities. • Technology requirements. 5.2 Key accountabilities The BP appraisal leadership team accountabilities are illustrated in figure 5.1. These must not be delegated.

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Leadership

Set context and direction, Set strategies and intervene

Provide assurance, Performance manage project disciplines

Technical definition

Technical integrity/HSSE, Enhanced reputation, Distinctive value

Performance management

Define scope and standards, Manage technology development

Integrate across functions, Manage interfaces

Interface management

figure 5.1 role of BP in Major Projects Leadership Leaders will adopt the habits of great appraisal leaders (see section 1). The AGM is accountable for leading the team and managing the project, and must: • Enforce the standards for HSSE and technical integrity, and ensure standards are not prejudiced by schedule and cost pressures. • Work across disciplines to integrate activities. • Work in an environment where uncertainty is both prevalent and acknowledged as a primary characteristic of data used in evaluations. • Provide strategic context and focus for technical and commercial activities. • Be adaptive, flexible and responsive to changing circumstances. • Effectively transition the opportunity to subsequent, more detailed stages. • Establish clear priorities. • Establish the overall scope of the project as required by the business objectives, project concept, applicable laws, regulations and BP company standards. • Set clear lines of delegated authority and accountability from the project single point of accountability to individual team members. ©2007 BP International Limited


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• • •

Manage the requirements and expectations of internal and external stakeholders including host governments, partners, third parties and Non Governmental Organizations (NGOs) as agreed with the SPU. Set the overall implementation plan for the project. Provide development opportunities for team members.

Technical definition The appraisal leadership team must: • Control the overall scope – through application of the project codes and standards, SOR and engineering and wells. • Deliver a preliminary Basis of Design – managing scope, the integration between the project elements, disciplines and overseeing technical interfaces. • Control and own the Depletion Plan. • Meet resources reporting requirements. All projects must have access to an Engineering Authority (EA), either an SPU EA or MP EA, to ensure the choices made are consistent with BP standards. See the Engineering and Quality Management Guideline for more detail. Integration management The appraisal leadership team will actively manage all project interfaces and must: • Ensure compatibility and interface management across interfaces (consistent with the interface management plan). • Ensure integration of the BP disciplines – Subsurface & Wells, Drilling & Completions, Operations, Projects & Engineering and Commercial to capture maximum value at all times. • Be accountable for the handover of the project to the PGM. Performance management The appraisal leadership team provides rigorous performance management to identify and intervene when early warning signs of problems occur, and must: • Ensure Appraisal objectives are met through monitoring Key Performance Indicators (KPIs). • Deliver a level of assurance and control dependent on the project and component risks. • Undertake regular reviews and audits of contractor activities. • Operate a rigorous risk (threats and opportunities) management process. • Deliver Appraisal activities within approved budgets. 88




5.3 Organization development Figure 5.2 shows the generic organization design for projects in Appraise and Select. The key appraisal leadership team positions are shown. These positions must be filled as early as possible in Appraise. Not all positions will report as shown to the AGM, e.g. the Commercial Manager and Operations Manager may have a dotted line reporting relationship in SPU organizations with centralized commercial / operations teams. Appraise / Select

Define / Execute

Appraisal General Manager (AGM)

Project General Manager (PGM)

SS&W

P&E

D&C

Commercial

Operations

HSSE

Project Resource Manager (PRM)

Project Development Manager (PDM)

Wells Program Manager (WPM)

Commercial Manager (CM)

Operations Development Manager (ODM)

HSSE Manager (HSSEM)

• Reservoir Management • Base Management • New Well Delivery

• Concept Selection • Facilities Engineering Definition • Projects services • PSCM

• Completion Engineering • Well Construction • Drilling Engineering

• Economics • Agreements • Non technical functions • Markets

• O&M Strategy • Readiness

• Safety • Operations integrity • Security • Environment

High Level Work Fronts PGM - Identified by mid-Select - Accountable for project team and delivery from end-Select - Key Appraisal team staff will transition to Define / Execute organization at end-Select

figure 5.2 appraisal (Appraise and Select) organization design The AGM is accountable for building and leading the Appraise / Select organization. The PGM is accountable for building the Define / Execute organization from midSelect and transitions from the AGM into the leadership role at end-Select. Examples of recent Appraise and Select organizations and a description of the factors to be taken into account depending on the type of project – Greenfield, Brownfield, non-BP Operated and Host & Satellites - are provided in section 5.7. ©2007 BP International Limited


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Leadership • The project accountability is delegated by the Gatekeeper (usually the SPUL, but in some cases the BUL or PUL) to the project Single Point of Accountability, who is named in the Appraisal Plan, who is usually the AGM in Appraise and Select. This accountability transitions to a PGM at end-Select. The Single Point of Accountability is the first position in the organization where accountability exists for all aspects of project creation. • The project Single Point of Accountability should split accountability such that each individual has a manageable workload with an understanding of the risk, geographical diversity, scale, scope and complexity. • Where project scope and scale allows, the project Single Point of Accountability should be the AGM with accountability for all project activities, including Subsurface & Wells, Drilling & Completions, Projects & Engineering, Operations and Commercial, maximizing integration between the BP disciplines. See figure 5.2. • The roles of each team within the BP appraisal leadership team should be clearly defined by the AGM in Appraise. • The AGM sets the overall strategy and organization of their direct reports. The leadership team should define their own organizations, and agree on the size and shape of their team with the AGM. This allows the managers to take ownership of their teams. • The organization should be sized to allow development and succession planning. AGMs can come from any of the core technical disciplines (Projects & Engineering, Subsurface & Wells, Drilling & Completions, Operations and HSSE), including Commercial (provided they have a technical background), and have integration skills and habits of great appraisal leaders. A specific integrator role should be considered to ensure effective cross discipline integration. In Appraisal, the Project Development Manager (PDM) acts as the Engineering Manager and EA. Technical Definition The PDM and the engineering team are central to the creation of long-term value and technical integrity. • The PDM should report directly to the AGM. The PDM will also have a reporting relationship to the SPU EA. • The PDM (supported by the technical authorities, the SPU EA, advisers, senior 90




•

•

advisers, chief engineers, and HoD Engineering as necessary) has Single Point of Accountability for technical quality and the resolution of engineering issues. Development engineers will be appointed within the BP engineering teams. They will cover process, structural and subsea positions as a minimum requirement, as well as other positions as required by the complexity and scale of the opportunity. Where the AGM has a subsurface background the PDM will be their second in charge.

The Project Resource Manager (PRM) and the subsurface team are central to the characterization of the resource and the overall understanding of value of the project. • The PRM will report directly to the AGM. • The PRM is the Single Point of Accountability for resource issues and technical quality of the work. • The PRM will also hold the relationship with the SPU Reserves Authority including resources assurance via the reserves Compliance Managers. • The PRM will be second in charge to the AGM, if the AGM has a nonsubsurface background. The Wells Programme Manager (WPM) and the wells team are central to well planning, design, cost estimation, wells programme execution and the overall understanding of value of the project. • The WPM will report directly to the AGM. • The WPM is the Single Point of Accountability for wells issues and technical quality of the work. The Operations Development Manager is central to operations best practices being considered in engineering design. They will work with the operations team in existing assets to ensure Brownfield projects are fully informed by asset learning and are fully integrated with host facility and infrastructure plans. The HSSE Manager will support this process and ensure inherently safe design, operations integrity, security and environment areas are fully addressed. The AGM and their second in charge should be from different disciplines. Of the other disciplines, the Commercial Manager offers a further powerful integration perspective.



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Integration Management The appraisal leadership team will directly manage: • Driving integration across the team. • Cross-functional interfaces between all disciplines. • Transition between the appraisal leadership team and the project management team. A member of the appraisal leadership team will be delegated responsibility to ensure integration is effectively managed. Continuity of staffing between Appraise/Select and Define will be considered to ensure knowledge of the underlying rationale for the creation of the project is carried forward into the project management team. Performance management processes The AGM will establish systems to aggregate project performance information and analysis to ensure the appraisal leadership team has a holistic view of the project status. Suitable KPIs must be established as early as possible in Select. This will ensure intervention as required to performance manage delivery. 5.4 Setting the organization strategy An organization strategy is a required deliverable for the Appraisal Plan review and should: • Clearly describe the role to be undertaken by the appraisal leadership team. • Define how the project scope will be delegated from the project Single Point of Accountability to individuals and teams providing a clear rationale for the work breakdown structure and demonstrating alignment with the opportunity. • Be supported by organization structure and charts, and a resource Staffing Plan. • Provide clear job descriptions so people understand their role and accountabilities. • Provide clarity on the use of agency personnel and secondees from contractors or partners. • Define how Projects & Engineering, Drilling & Completions, Subsurface & Wells, Commercial and Operations will be integrated into the project organization. • Include a Staff Mobilization Plan. • Use a RACI chart to help understand delivery ownership in complex SPU organization settings. 92




5.5 Staffing expectations Key positions Key project positions, including all leadership positions (figure 5.2), must be filled by competent BP staff, to: • Ensure business value is optimized. • Ensure BP policies and values are upheld and implemented. • Identify and manage key business, safety and integrity risks within the project. • Provide detailed and specific skills which are not readily available in the agency or contractor market. The balance of BP, agency and partner secondees on a specific project will be influenced by the availability of experienced people, the agency market, strength of contractors, partner needs and political requirements. Opportunities to second experienced staff into joint ventures should be considered to make a distinctive contribution for mutual advantage. BP staff will be employed in other positions to provide staff development, discipline capability for the future, training and for the retention of knowledge within the company. The high level principles used to determine the BP badged positions are in figure 5.3.



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BP in-house

BP development

Agency / Partner

• Key part of role is to instill strategic BP values, through leadership, Code of Conduct, GHSER and brand • Reputational expectation • Legal duty holder • Engineering or Technical Authority • BP specific knowledge • Strategic leverage • No local expertise • Frequently required, highly skilled role

• Role provides succession for more senior BP badged role • Role is a key early development and training slot specifically for challenge and early development

• Not frequently required, highly skilled role • Local developed market • Niche service • Market is mature – role exists in the contractor scope • JV and partnership dictates third party employee • Local legislation dictates third party employee

figure 5.3 badging strategy table The alternative of using partner or agency staff for positions recommended for BP staff should be carefully considered both in terms of the business need and on the basis of advice from HoD Projects and HoD Engineering. The number of positions from figure 5.3 which are required for a project should be defined within the organization strategy and will be a function of the scope, scale and complexity of the project. Team staffing and succession planning A succession review should be undertaken each year as part of the segment wide organizational capability assessment and to identify development needs for individuals. These processes are managed by the Directors of Organization Capability through the Staff Development and Deployment Network (SDDN) process. Subsurface & Wells, Drilling & Completions, Operations and Commercial Directors of Organization Capability and SDDNs will need to be consulted as well as Projects & Engineering. The AGM should maintain a project succession plan for key positions in their own project and for staff development. The plan should ensure the project can be staffed adequately even if key people leave. It should recognize the role of the project in developing junior staff for more senior positions across the segment, and address generic roles as well as the specific needs of the project. 94




5.6 Roles and accountabilities The following are the key roles in the appraisal organization. Other roles in the appraisal team are described in the individual discipline SDDNs / Competencies Online. Appraisal General Manager Overall role Leads and integrates the overall project as the Single Point of Accountability in Appraise and Select stages. Key accountabilities • Act as the Single Point of Accountability delegated by the gatekeeper (SPUL) for Major Projects as a Major Project Leader in Appraise and Select. Ensure all MPcp expectations in Appraise and Select are met. • Demonstrate visible HSSE leadership by example and deliver the Appraise and Select programmes consistent with BP’s Safety & Operations Integrity agenda. • Build and lead an integrated multi-discipline team of Subsurface & Wells, Projects & Engineering, Drilling & Completions, Commercial and Operations staff. Plan for success. • Ensure strategic fit and business context and drivers are understood and communicated at the beginning of Appraise. • Prepare an Appraisal Plan and lead the team through HoD and TVP reviews to achieve attestation and approval of this key governance document. • Lead the team to characterize Appraise opportunities in terms of uncertainty understanding, risk, natural pace and value. • Lead the team to generate and evaluate the options informed by the most appropriate data, considering all sources of value, and taking into account trade-offs. • Inform decisions involving quality through choice and a full value chain assessment of investment quality versus risk to determine if a technical and commercial viability option exists at end-Appraise. • Lead the Select programme to establish selection criteria, gather the data to evaluate and select the concept option and prepare sufficiently for Define entry, including the Define FM. • Ensure the chosen concept is tested for strategic fit, technical viability and technology risk and has a commercially robust business case; all via open and transparent conversations with SPU and Segment leadership. • Ensure effective transition of the chosen concept and the team to the PGM by end-Select. ©2007 BP International Limited


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• •

Establish performance management systems and KPIs for the project (including schedule milestones). Develop and implement a Knowledge Management Plan.

Competencies, skills and knowledge • An appropriate technical degree. • Experienced leader with business acumen. • Is a graduate of the Projects Academy, or is booked to attend. • Deep experience in MPcp and project management. • Experienced in leading teams in Appraise and Select and also Define and Execute. • Able to deal with complex or ambiguous data. • Able to integrate effectively across data and discipline boundaries. • Able to build and maintain both strong internal and external relationships. • Capable of making difficult decisions. Project Development Manager Overall role To lead the appraise / select team – a mix of discipline engineers, project services and PSCM staff. Key accountabilities • Manage a diverse group of discipline engineers, project services and PSCM staff, provide leadership, strategic context, coaching, development and objectives / appraisals; define team resource and deployment requirements. • Represent team members at SPU People Day development discussion sessions. • Provide overall technical assurance of work delivered by the team. • Drive connectivity with the define / execute teams. • Drive facilities connectivity across all Appraise and Select activities. • Facilitate Appraise / Select input to and ownership of the facilities aspects of the technical standard. • Participate in the appraise / select leadership teams comprising AGM and team leaders for Subsurface & Wells, Commercial and Operations. • Facilitate formal and informal cross-discipline integration within Appraise / Select and implementation / delivery of Development Planning activities / outputs. • Provide leadership input to Partner and Concessionaire Technical and Project meetings. • Facilitate focus on future facilities technology development requirements. • Provide accountability for engagement of external resources, such as Exploration & Production Technology Group (EPTG) and contractors. • Ensure inherent safety in engineering designs and delivery of Integrity Management Standards. 96




• • •

Act in the capacity of Major Projects EA from the beginning of Appraise. Ensure project contributes to SPU strategic delivery and overall company technical and business objectives. Manage interfaces with BP Shipping (where applicable) and midstream facilities (gas plants, pipelines).

Competencies, skills and knowledge • An appropriate engineering degree and relevant engineering experience and qualifications. • A deep understanding of Appraise and Select requirements from Facilities and Integration perspectives. • Familiarity with BP’s Capital Value Process / Common Process, with particular focus on Appraise / Select expectations. • Able to define and prioritize issues. • Good working knowledge of front end (Appraise / Select) facilities and integration activities, and experience of Define and Execute. Project Resource Manager Overall role Leads and integrates Subsurface & Wells activity to represent subsurface understanding and forward plan at Performance Unit or project level from preAppraise through Appraise, Select to Define FM. Key accountabilities • Creates and owns the Depletion Plan and resource progression. • Leads key Subsurface & Wells Common Processes where relevant (Exploration, Opportunity Progression, Base Management) and ensures timely Subsurface & Wells input to other key processes (notably MPcp, Beyond the Best). • Manages multi-disciplinary interfaces especially with Projects & Engineering, Wells, Commercial and Operations teams. • Informs project natural pace with clear characterization of subsurface activities and constraints. • Resourcing and managing Subsurface & Wells team within the project organization. • Ensures long lead data and information needs are being addressed, including geotechnical and geohazard areas. • Provides the subsurface elements of the SOR. • Compliance with Resources and Reserves Operating Standard. • Provides overall technical assurance for the work completed by the team. • Manage external contractors and HSSE performance. ©2007 BP International Limited


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Competencies, skills and knowledge • An appropriate subsurface degree. • Strong proven Subsurface & Wells discipline experience in project environment. • Strong and respected foundation in technical discipline skills. • Attended Subsurface & Wells Team Leader Mastery. • Demonstrated leadership skills and behaviours. • Ability for dialogue with senior projects personnel. Wells Programme Manager Overall role Single Point of Accountability for all Drilling & Completions activities within the project. Ensures Drilling & Completions issues are understood and resolved in order to support appraisal programme delivery and concept selection. Key accountabilities • Lead the Drilling & Completions team within the project organization. • Establish and manage plans for Drilling & Completions activities. • Well Design & Construction Performance (Cost / Schedule / Quality). • HSSE on Drilling & Completions operations. • Execution of the Operations Integrity standards on Drilling & Completions activities. • Resourcing and people basics for Wells teams. • Supporting the contracting strategy and performance management of appropriate contractors. • Appropriate functional support to and integration with, the Projects team. • Technical input to business proposals and providing necessary cost, risk and deliverability assessments. • Manage wells contractors. Competencies, skills and knowledge • Strong proven Drilling & Completions discipline experience in project environment. • Strong technical discipline skills. • Demonstrated leadership skills and behaviours. Commercial Manager Overall role Responsible for financial planning, performance management, integrated business case development and negotiation of external agreements. 98




Key accountabilities • Economic modelling and analysis. • Interpreting existing business agreements. • Interface with non-technical disciplines, e.g. Legal, Tax, Finance Control & Accounting, and Communication & External Affairs. • Production of Long Term Plan. • Group Financial Outlook analysis and reporting. • Production of all governance of Documents – ATN and FM. • Quality verification of models and analysis. • Business agreements development and negotiation. • Interface with Gas Power & Renewables on term Gas Sales Agreements. • Interface with all technical functions, including PSCM and Project Services. • Non-technical assurance - Peer Reviews and MPcp events. • Communicating the project impacts of the licence and commercial agreement terms. Competencies, skills and knowledge • High level of competency in each of the Commercial activity areas – Planning and Performance Management, Commercial Operations and Business Development. • Track record of multi-discipline team integration. • Experienced coach. • Strong presentation skills. Operations Development Manager Overall role Provide operating input to concept development and selection. Establish project operations and maintenance strategy. Key accountabilities • Identify key operations risks and issues to be addressed in the Select stage. • Ensure operations issues are understood and resolved in order to support concept selection and the Define FM. • Establish plans for operations activities in the Define stage. • Accountable as the interface for operations in existing facilities. • Deliver Commissioning and Operations Readiness MPcp expectations for Appraise and Select stages. • Ensure the proposed concepts can meet the project’s operations strategy and identify high level risks with each option from an operations viewpoint. Bring a ©2007 BP International Limited


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• • • • •

• • • •

current understanding of operations strategy, excellence and respective value to the project. Contribute to the business case. Develop a high level opex estimate and target for operations efficiency (detail dependent upon knowledge in area). This should be benchmarked where possible. Create high level location support models (e.g. what logistics, people and engineering will be needed and respective sourcing). Plan for recruitment and training needs at the Appraise stage, when preparing for activity in a new country. This may also apply in an over-heated resource market. Ensure the concept selected and the SOR meet all requirements of the project’s operations strategy. Provide all required input in the concept selection and SOR development, to reflect the operations strategy in the statement of requirements, Basis of Design (to address the operational implications of the reservoir surveillance plan, equipment location, maintenance access, specific vendor requirements for standardization) and PEP. Represent operations in capex / opex trade-offs to maximize whole life cycle value opportunities. Contribute to the interpretation of the Integrity Management standard in the project concepts. Create a high level plan for the operation and maintenance of the facility including staffing, recruitment and competency assessment. Ensure adequate time is incorporated into the project schedule for final commissioning and proper handover to Operations.

Competencies, skills and knowledge • An appropriate technical degree. • Must have Major Projects start up experience. • Capable of articulating operations strategy intent and vision. • Understanding and communicating the key attributes of an effective maintenance and integrity programme. • Understanding of design and ability to communicate an operational out turn into front end recommendations. • Experience in developing the operations strategy, application of the Operations Management System, Integrity Management standard, Common Maintenance Strategy and operational staff planning. • Aware of available trade-offs between capex opex model (Choke Model) and have a knowledge of available and emerging technology. • Strong influencing skills and ability to communicate operating requirements in 100




•

business case terms. Ability for dialogue with senior projects personnel.

HSSE Manager Overall role Leads and integrates HSSE activity and advises on inherently safe concept design. Key accountabilities • Confirm that significant HSSE issues that could affect the viability of the potential project have been identified and that the information required to assess HSSE risks, liabilities, regulatory compliance, HSSE contractual commitments and adverse impacts is either available or measures are in place to obtain it. • Ensure operational risks related to appraisal activities (wells, seismic) are being managed appropriately. • Confirm HSSE risks (including Major Accident Review) are taken into account in the evaluation of project options. • Ensure all HSSE concerns relating to the characteristics of the full life-cycle of the project, novel technology and the nature of the chosen location have been identified. • Develop a Project HSSE Management Plan that defines the HSSE expectations, organizations, and systems to manage HSSE throughout project development and execution. • Ensure all applicable regulations, BP standards, practices, requirements and expectations relative to HSSE are identified and delivered. • Provide support to the team in meeting MPcp expectations, requirements of the MPcp HSSE Guidelines, and BP standards and practices (including Environmental Requirements for New Projects). Competencies, skills and knowledge • Experience in MPcp and developing a Project HSSE Management System. • Experience in leading people and developing HSSE organizations. • Experience from current / recent projects is applied. • Recognized as credible HSSE leader. • Ability for dialogue with senior projects personnel. • Understanding of Operating Management System.



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5.7 Organization design settings Greenfield projects Greenfield organizations are relatively straightforward to design and should follow the suggested template in figure 5.2. Thought should be given to key staff transitioning with the project from the Access / Exploration phase to provide continuity as the project enters Appraise. Similarly planning early for future stage gates (Appraise / Select, Select / Define) is important in Greenfield settings, particularly where the project is, or could become, part of a programme. Integrated multi-discipline teams are fundamental to creating distinctive projects and each of the core disciplines must have a leader as a direct report to the AGM. In some situations a specific integrator position can be used to drive integration across the disciplines in support of the AGM and appraisal leadership team. Dedicated resources are imperative for success and must also be present for all core disciplines. In most SPU settings at least some of the positions will be resourced by staff in centralized or shared services teams, e.g. commercial staff. In these situations it is important that a single, dedicated point of contact with a clear performance contract held with the AGM or a member of the appraisal team leader is in place from such teams and that they attend all regular appraisal team meetings. Greenfield projects in programme settings are more complex. They need to be designed to integrate standardized facilities delivery lines across multiple assets in the programme. Each asset in the programme will be at different stages on the road map (figure 1.3) and the organization design will need to account for this. Staffing programme organizations requires a well-designed process for managing the recycle of core staff between project stages as each programme element matures. Brownfield projects Progressing a Major Project in a Brownfield environment adds another potential layer of complexity to the organizational design. This added complexity means a wider range of possible models can be considered. Specifically, there are more interfaces to manage compared to the normal interfaces with a Greenfield project. A Brownfield project tasked with working in an operating Asset typically means that the Asset has huge ongoing responsibilities and is almost always challenged to make time to provide the needed input for the project. The experience and knowledge of 102




the Asset in all disciplines (Drilling & Completions, Subsurface & Wells, Commercial, Operations, etc.) must be woven into the project. The organization model needs to take into account the ability of the Asset team to meet their existing responsibilities and the demands of a new project. Teams historically underestimate the effort and time required to manage these interfaces and technical exchanges. Consideration should be given to staffing the project with full-time resources in most, if not all, disciplines. If a team separate to the Asset is deemed appropriate, then strong consideration should be given to taking people experienced in the Asset and embedding them in the project team. By definition, a Brownfield project builds on the wealth of data, information, experiences and evolving business context inherent in the existing asset. Drivers include: • Considerable volumes of static and dynamic reservoir data, often stored in inconsistent databases. • Multiple historic interpretations of production data leading to apparent complexity. • Complexity in commercial and land agreements due to the heritage of historical negotiations and deals. • Often greater visibility with, and attention from, regulatory agencies. These drivers should be taken into account when assessing levels of resourcing in a Brownfield team. As with any project, the organization design will need to evolve as the project progresses. Brownfield projects should start with the same organizational model as a Greenfield and then work down with a quality assessment of which resources in the existing Asset can actually be shared resources. This obviously depends upon the scope, scale and pace of the new project and the existing activity level in the Asset. In a large complex Brownfield project, early development planning is complicated and may warrant a small development planning team. The development scenario is complicated by the interfaces with the Asset (existing programme) and the amount of information to include in the plan. Non-BP operated projects A significant proportion of our projects are operated by others. The principles of MPcp and the Appraisal Guideline are applicable to these projects, but the role as non-operating coventurer must be acknowledged in the organizational design of the ‘non-operated’ team. ©2007 BP International Limited


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The non-BP operated team’s purpose is to: • Influence the Operator to deliver the project according to BP principles and business objectives. • Provide assurance regarding the project to allow TVP attestation as required. • Recover and disseminate learning from and to the Operator and within BP. The principles below should be followed for the composition of such a team. Levels of financial exposure are a driver for resource allocation, so bigger projects should have bigger teams. Small projects will usually be the last in the chain of developments within a given venture; a track record will have been established, so it will be possible for a relatively small team to discharge its responsibilities by focusing on critical elements of the project. In non-BP operated projects, incremental risk is introduced through the competencies and biases of the Operator. All key functions (static reservoir description, reservoir engineering, development engineering, Drilling & Completions) would normally be represented on a non-BP operated team for a material project. However, the relative emphasis for staffing decisions should be informed by a preliminary gap analysis of the Operator’s skills and practices versus BP’s. The analysis should be performed and reviewed as part of the Appraisal Plan, and updated as required based on the results of subsequent technical work by the full team. The core team will usually consist of the disciplines above. Dedicated individual team members for specific disciplines will not always be justified - the implied requirement for sharing of resources should, where possible, be with operated assets in order to promote learnings transfer. Non-core disciplines, e.g. Commercial, HSSE, should be sourced from other teams within the SPU or EPTG. The need for a dedicated resource acting as AGM versus the role being performed by one of the core discipline contributors should be assessed on a case-by-case basis. Since the team will probably be relatively small but experienced, a flat organization is usually appropriate, modeled on the standard design (see the Greenfield project section). As far as possible, there should be clear role alignment with the Operator. The ability to influence an Operator wanes rapidly after the Appraise and Select stages, so it is critical to focus on this during Appraisal. Significant influencing impacts are best made through a combination of appropriate influencing skills with the early recognition, using highly developed integrating skills, of key strategic issues. Inevitably, this requires a relatively senior profile for a non-BP operated team. The non-BP operated team is the first source of assurance for HoDs and TVPs. Although 104




other BP SMEs and peers are also valuable sources, the lens through which they see the project is that of the non-BP operated team. The judgement required to ensure focus of assurance efforts on key issues will require a relatively senior set of technical team members. Host & satellites projects This section will look at two generic types of Host and Satellites organizations through the lens of two specific BP Projects: 1. BP operated host with BP operated satellites. 2. BP operated host with non-operated satellites. BP operated host with BP operated satellites A good example of this is the Farragon Project, which was a very successful BP Operated Satellite tied-back to the North Sea Andrew platform in 2005. This was developed quickly, efficiently and safely through excellent communication and cooperation between all disciplines involved, resulting in a record 31 months from discovery to first oil (one month ahead of schedule), a doubling of the production from the Andrew platform, and all achieved safely and on budget. The keys to success for this project can be used as a model for other BP Operated Satellites. They are: • Alignment at the Gatekeeper and Steering Group level to ensure the Asset and Project teams worked together constructively and cooperatively. • A high level of cross discipline and cross team integration. • Working closely with the project contractors to ensure requirements are understood. • Co-location of facilities, subsurface and drilling teams to ensure good communication. • Strong integration between operations and project teams to tailor a successful start-up programme. • Strong interdisciplinary integration naturally created an environment for creative and innovative thinking – a cradle for technology firsts in the North Sea. BP operated host with non-operated satellites The Fiddich Project in the North Sea is a proposed tie-back of a Talisman field through the ETAP central processing facility. The project scope is divided such that Talisman is the project managing the wells and subsea pipeline to the ETAP platform, while BP is project managing the riser and topsides modifications. The organization of the BP Fiddich project team is similar to the Farragon team, minus ©2007 BP International Limited


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the Subsurface & Wells teams which are part of the Talisman project team. The key part of the organizational design in this case is the relationship map between BP and Talisman. This describes the key interfaces and communication channels between BP and Talisman at the Owner, Commercial, Project team and Contractor levels and is crucial to ensure the necessary alignment to deliver a successful project for both parties. This type of third party hub development requires a much deeper level of multidiscipline integration both within the appraisal team and across the BP and third party project teams, plus excellence in Integrated Field Planning incorporating third party requirements.

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The toolkit is to support appraisal. The focus here is on tools that integrate across the disciplines. An up-to-date list of tools is available on the BP MPcp web pages http://mpcp.bpweb.bp.com and the appraisal network web page http://pe.bpweb. bp.com/Default.aspx?tabid=416 Most contractors have a well-developed set of tools. The Concept Modelling and Development team in EPTG can also assist. Where appropriate these should be considered for use by the appraisal team where they improve work efficiency. The key integration tools cover the following areas: • Concept Evaluation and Screening. • Risk & Uncertainty Characterization / Management. • Planning & Implementation. 6.1 Core multi-disciplinary tools The multi-disciplinary tools recommended for use during appraisal are below. Support is available from the EPTG Concept Modelling and Development team if required. PetroVR (Caesar Systems) This is a project planning, evaluation and decision support tool, enabling teams to evaluate conceptual field development plans in an integrated environment, incorporating risk assessments and economics. The tool has three modules: PlanVR creates profiles and cost phasing from reservoir, well and surface layout data; EconVR assesses Plan VR costings and profiles using the appropriate fiscal terms and price assumptions to calculate economics; and PortfolioVR can create multiple EconVR outputs. The first two modules are widely used within BP. A corporate license for PetroVR exists. Integrated Production Modelling (Petroleum Experts) Mbal, Prosper and GAP are software packages that can be combined to model and optimize production profiles and pressures from reservoir through the facilities to the point of sale. BP has a global license to the software. Integrated Planning Environment (Granherne) This is an application in which surface and well layouts can be combined within a Geographic Information System in order to model drill targets and centres, pipelines and surface facilities together with surface topography and other infrastructure ©2007 BP International Limited


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such as roads. Combining user defined cost and schedule information enables rapid comparison of alternative development schemes. Top Down Reservoir Modelling (BP) TDRM™ is a technology developed by BP that consists of a philosophy and tools to enable a faster and more robust exploration of uncertainty than has been possible. The philosophy is to start investigations with the simplest possible model and simulator appropriate to the business decision. Detail is added later as required. The approach overcomes the problems of the conventional ‘bottom-up’ process, which uses detailed models that are too slow and cumbersome to fully explore uncertainty and identify critical issues. Ongoing research and development is expanding the scope from reservoir to wells and surface facilities. OGM (BP) Is used to generate the technical definition and costs for surface facility and infrastructure components down to the equipment level for both offshore and onshore developments. OLGA (BP) Is used to model steady state and transient response of pipeline networks to demonstrate the viability of development solutions using multi-phase flow, e.g. subsea well systems and gathering systems for cold climate onshore projects. 6.2 Emerging tools Maximus (FEESA) Maximus is a prototype integrated asset modelling software tool developed between BP and FEESA. Maximus can provide deliverability predictions for complex converging flowline systems through the lifetime of a project while simultaneously solving rigorous thermal-hydraulic models for flow through wells, flowlines and risers. VIPNOW (Pinnacle Resources) This is a web-based spreadsheet tool used to support teams during Value Improving Practice workshops. It enables the recording and more systematic reporting of ideas generated and actions taken after the meetings. It has the added value of enabling teams to search the corporate data base from other teams to see if similar opportunities have been identified, and if so to learn from the outcomes. 110



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Clone (BP) A work process tool developed jointly between BP and MIT to allow evaluation of the economic value of standardized solutions either as clones of existing designs or copies versus bespoke designs to assist business units in exploring the value of a programme of standard solutions. Major Projects Information Highway mpIH (BP) A systems-orientated architecture and database structure is being developed by BP which will allow the federation of development planning tools such as PetroVR, IPE to allow rapid integrated evaluation of development options in both time and space. 6.3 Facilitation processes to support appraisal and development teams bpSTART workshops (BP) Strategic Technology Assessment workshops (bpSTART) can be used at the Appraise stage to explore the potential value of combinations of both enhancing and enabling technologies in creating development options. Use of enhancing technology biases such as standardization, automation, operations optimization and predictable performance can be assessed alongside any enabling technologies necessary to make the development work. The process provides a methodology of rapid searching of development options to identify a shortlist of those solutions which best meet business expectations. ALIGN workshops (BP) Facilitated workshops can be used to develop contracting strategies or project execution plans. These use techniques such as functional analysis, dependency structure matrices and interviews to test project execution plans, optimise the sequencing of activities, test project pace and resourcing plans and assist in aligning contractor interfaces and expectations. 6.4 Knowledge management tools MPcp is supported by a common framework for knowledge management which is described in the MPcp Knowledge Management Guideline http://mpcp.bpweb. bp.com.



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open discussion

written record P&E SLS

• Post a question • Search past discussions

• Lessons

Project Library

Connect

• Guidance • Templates • Tools • Examples

ETP Application

Project Forum

• Find people and networks in P&E and BP

Local SLS • Team documents

figure 6.1 knowledge management resources framework

This standard approach to knowledge management tools and processes enables appraisal teams to access and share knowledge with the rest of the Major Projects community. This means that the best collective wisdom can be brought to bear where necessary in any situation. Category 91 of the Exploration & Production Projects Library http://pelib.bpweb. bp.com is the single federal repository where validated examples, tools, templates and further guidance can be found relevant to the implementation of the MPcp Knowledge Management Guidelines. The Projects & Engineering Shared Learning System http://etpsl.bpweb.bp.com is the single federal repository for validated lessons of relevance to the Major Projects community. Librarian support is available for the Library and the Shared Learning System via [email protected] e-Projects http://eprojects.bpweb.bp.com is the BP online knowledge management database for key project information. 112



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Projects Forum http://epforums.bpweb.bp.com/projects is the online question and response tool for the projects and engineering community. As well as raising questions, past discussion threads can be searched. Other discussion forums of relevance to appraisal and pre-development are: • Well Engineering and Performance Forum (for Drilling & Completions, and Wells function) http://epforums.bpweb.bp.com/wepf • OperationsCLIPS (for the Group Operations function) http://oe.bpweb.bp.com/ eclips/eclips.asp?ForumID=1



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terms & definitions

Accountability The obligations and commitments assumed by an individual to deliver agreed activities for which a delegation of authority has been given. AGM Appraisal General Manager. Appraisal Plan The 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. ATN Authorities to Negotiate. Basis of Design The Facilities and Drilling & Completions Basis of Design documents define the respective technical basis for the project. It represents the conversion of the business requirements (given in the Statement of Requirements) into a technical basis for the project. Brownfield projects Projects involving modifications or additions to existing facilities. BUL Business Unit Leader. EA Engineering Authority. EPTG Exploration & Production Technology Group. ETPs Engineering Technical Practices. FEED Front End Engineering Design.



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FM Finance Memoranda. GHSSER Getting Health Safety Security and Environment Right. GIAAP Group Investment Assurance and Approvals Process. Procedures for establishing authority to progress major capital investments. Reference GIAAP for format and guidance for preparing FM and Authority to Negotiate (ATN) documents. Greenfield Projects involving new facilities resulting from successful access or exploration. They can be tie backs or extensions to existing hubs. GVP Group Vice President. HoD Head of Discipline. HSSE Health, Safety, Security and Environment. IPA Independent Project Analysis. KPIs Key Performance Indicators. MOC Management of Change. MPcp Major Projects common processes. NGO Non Governmental Organizations. E.g. Greenpeace, Friends of the Earth, Amnesty International etc. 116



terms & definitions

PDM Project Development Manager. PGM Project General Manager. PHSSER Project Health, Safety, Security and Environmental Review. A seven-stage process linked to the CVP stages, which provides external reviews of the Health, Safety Security and Environmental (HSSE) activities of projects. Provides assurance to management that projects are setting appropriate HSSE standards and meeting those standards. Ref BP ETP GP 48-01. PRM Project Resource Manager. PSCM Procurement and Supply Chain Management. Regret position BP’s exposure in terms of financial commitments if the investment or project does not proceed. Responsibility The roles and enduring duties to be performed by a leader or team member that may be individual or shared on an ongoing basis. SDDN Staff Development and Deployment Network. SIMOPS Simultaneous Operations. SOR Statement of Requirements. SPU Strategic Performance Unit.



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SPUL Strategic Performance Unit Leader. TRL Technology Readiness Levels. TVP Technology Vice President. VOI Value of Information. WPM Wells Programme Manager.

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©2007 BP International Limited. All rights reserved. This document is the confidential and proprietary property of BP and is provided solely for use within BP by its employees or contractors who have a confidential relationship with BP. Use or reproduction of this document is only by permission of BP and only for the purpose or project for which it is disclosed and authorized. BP makes no warranty or representation as to the accuracy, completeness, or usefulness of the information contained in the document, or that the same may not infringe any third party rights. BP assumes no liability for any damages that arise from the use of information contained in this document. ©2007 BP International Limited


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EPTF Projects & Engineering BP Exploration Chertsey Road Sunbury on Thames Middlesex TW16 7LN Date of publication September 2007

Appraisal Guideline

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