appraisal guideline
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2006 BP International Limited. All rights reserved.2007 BP International Limited. All rights reserved.
major projects common process
appraisal guideline
Exploration & Production
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2007 BP International Limited MPcp Appraisal Guideline
In appraisal, we confirm project viability, create the overall business case and
make the key strategic decisions that drive project value for years to come. This
requires excellence in many dimensions.
This guideline has been developed based on the knowledge and experience of
our multi-discipline appraisal community including our top appraisal leaders; it
provides guidance to all involved in delivering appraisal excellence.
Through the consistent application of this guideline, we will ensure that we
create the right distinctive projects in Appraise and Select to support our strategy
of being the #1 projects operator.
Neil Shaw
technology vice president - projects & engineering
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contents
context 5
overview 9
1 habits of great appraisal leaders 15
BP biases 1
.1 Integration 22
. Standardization 22
. Full value characterization 24
.4 Risk and uncertainty management 25 .5 Natural pace 26
.6 Quality through choice 28
appraise work process and activities 1
.1 Entry to Appraise (Pre-appraise) 33
. Appraisal planning 36
. Appraise programme 46
.4 Appraise-Select gate 58
4 select work focus and activities 65
4.1 Select programme 66
4. Define preparation 75
5 organization development and design 85
5.1 Business context 86
5. Key accountabilities 86
5. Organization development 89
5.4 Setting the organiaztion strategy 92
5.5 Staffing expectations 93
5.6 Roles and accountabilities 95
5.7 Organization design settings 102
6 toolkit 109
6.1 Core multi-disciplinary tools 109
6. Emerging tools 110
6. Facilitation process to support appraisal and development teams 111
6.4 Knowledge management tools 111
terms and definitions 115
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.
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context
figure 1.1 MPcp and related guidelines
Our goal is to generate business value by delivering projects, which are efficient
in both capital investment and long-term operation. We will do this by consistently
creating distinctive projects and delivering them with world class execution. The
Major Projects common process (MPcp) is a key part of the overall project system
which is designed to support Strategic Performance Units (SPUs) in pursuit of this
goal. This system includes our people and processes, supported by networks and
functional authorities, guidelines, tools and good examples.
The MPcp document lists expectations for each of the ten elements of projectexcellence, which shall be met before proceeding to the next stage of the project.
Associated with each expectation are a number of attributes that describe and
support the achievement of this expectation. These attributes are intended to guide
teams in developing their action plans for the stage and to drive consistently good
project performance.
The MPcp document also describes the governance process, including functional
attestation, required to meet the Group Investment Assurance and Approvals Process
(GIAAP).
ProjectPrinciples
App Sel Def Exe Ope
Dashboards
MPcp Elements HSSE
Subsurface ResourceCharacterization
Technology, Engineering &Technical Definition
Project Management & Execution
Procurement & Supply ChainManagement
Project Services
Organizational Capability
Commissioning & OperationalReadiness
Performance & Risk Management
Knowledge Management
MPcpGuidelines
HSSE
Appraisal & Pre-development
Engineering & Quality Mgt
Project Management & Execution
Procurement & Supply Chain Mgt.
Project Services
Organizational Design
Commissioning & Operational Readiness
Risk Management
Knowledge Management
Resources Tools Templates Examples
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context
Guidelines have been written for each of the MPcp elements to provide more
detailed support to teams in the achievement of MPcp expectations. They have been
compiled from the wisdom and experience that exist in the company and represent
the current view of discipline requirements and good practice, which should be
applied consistently across our range of projects.
Over time we expect the Major Projects community to identify improvements in
the practices described in these guidelines. These should be communicated to the
Directors of Appraisal within Exploration Production and Technology Function who have
clear ownership of this guideline and are accountable for its planned and systematic
update. Appraisal teams should adhere to and are responsible for implementing the
guidelines unless a material departure is considered to provide significant benefit.
Any proposed departure should be discussed with the Directors of Appraisal.
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BP carries a large and diverse appraisal portfolio. These originate from:
Successful Greenfield and Brownfield access.
Exploration success leading to standalone projects.
Hub tie backs, and increasingly from projects that exploit our very significant
Brownfield incumbent resource position.
The opportunities span Appraise and Select and also include others that have not
yet entered Appraise (in Pre-appraise or Access). BPs future depends on creating
distinctive projects with competitive returns from this portfolio.
Historical performance data shows a significant incidence of project wrecks is
caused by:
Inadequate business framing, e.g. governments, partners, geography.
Insufficient front end loading, e.g. technical definition, risk management,
contractor management.
Inappropriate target setting (including unrealistic pace).
Inadequate organizational capacity and capability.
The Appraisal Guideline has been written to serve a diverse community, which
crosses multiple disciplines and functions involved in appraisal and the front end of
projects. It describes additional aspects that go beyond just supporting delivery of
MPcp expectations to provide:
Further information on appraise and select expectations. Other important areas in delivering appraisal excellence and distinctive projects.
Examples of success with other tools and approaches.
Disciplines involved in appraisal are also involved in Access and Renewal, Exploration,
Opportunity Progression and Brownfield operations. These disciplines include
Subsurface & Wells, Drilling & Completions, Projects & Engineering, Operations and
Commercial.
overview
Six biases underpin the delivery of improved appraisal performance in BP integration,standardization, full value characterization, risk and uncertainty management, natural
pace and quality through choice. In combination, these biases lie at the heart of our
journey to be the #1 projects operator.
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overview
The fundamental emphasis is on integration that evaluates project opportunities,
improves front end loading and informs investment decisions. Figure 1.2 shows how
appraisal relates to the Exploration & Production common processes.
The Appraisal Guideline is organized in six parts.
1. Habits of great appraisal leaders
The habits are proactive behaviours leaders and teams must display and embed forthe creation of distinctive projects.
. BP biasesThis section describes the biases of BPs approach to appraisal that allow us to deliver
viable and robust projects.
. Appraise work focus and activitiesA codified and standard approach to the work focus and activities for BP projects in
Appraise to meet MPcp expectations and support teams as they form and build their
figure 1.2how Exploration & Production common processes relate overthe life of an asset
MPcp
Ecp
BtBcp
OPcp
BMcp
PEIcp
IFPcp
SPMcp
Exploration
Major Projects
Beyond the Best
Opportunity Progression
Base Management Excellence
Production Efficiency Improvement
Integrated Field Planning
Supplier Performance Managment
Access
Prospectivity&
Development
Case
Appraisal
Development
Case
Installation
Ramp
Infill
ILX
De-commissioning
First Oil Plateau Decline
AppraisalGuideline
AppraisalGuideline
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overview
work plans. A road map is used to illustrate the sequence of activities. Following
this road map is crucial to consistently create distinctive projects from BPs appraisal
portfolio.
The key work focus components are:
Appraisal Planning this includes business framing and strategy testing steps.
Appraise Programme describes option generation, opportunity
characterization, evaluation and viability testing through the Appraise stage.
Appraise-Select gate describes Appraise / Select transition and viability
assessment.
figure 1.3road map for creating distinctive projects
Stage
Objectives
Activity
Governance
WorkFocus
Confirm commercial viability of opportunity and identify a
range of development options consistent with resource,uncertainty and market conditions, at least one of which is
viable technically and commercially
Evaluate the alternative concepts, seeking to maximize
opportunities whilst reducing threats and uncertainties
to an acceptable level, in order to identify the optimumproject to take forward into Define
DefinePreparation
Select ProgrammeAppraise-
Select GateAppraisal Planning Appraise Programme
Business Framing
Opportunity Characterization,Option Evaluation & Viability
Assessment
ViabilityConfirmation
Option
Evaluation
ConceptSelection
ConceptDefinition
Appraise Select
AppraiseEntryGate
Appraisal PlanCoaching Workshop
HOD Review
SelectEntryGate
Select CoachingWorkshop
Discipline & HOD Reviews
Define Entry Gate
Reserves ApprovalMemorandum (RAM)
AppraisalPlan
AppraisePHSSER
Updated AppraisalPlan and DSP RAM
Define
RAM
SelectPHSSER
Legendentry gatekey document workshop
IPA Review
review IPA Review PHSSER
Appoint AGM
Build appraisal teamConsider businessdrivers: resources,developability, markets,and external influencesIdentify technologiesIdentify risks anduncertainties anddevelop mitigation plansCreate learning andknowledge managementplanUnderstandheritage commercialarrangements
Generate optionsEnsure full valuecharacterizationConsider all sources of valueand assess marketsPerform Value of Informationanalysis and acquire dataDevelop decision frameworkand analysisConsider standardizationoptionsIdentify risks and uncertaintiesand develop mitigation plansUnderstand trade-offsEstablish reference case andalternative optionsMake informed decisions
Reconfirmstrategiccontext andbusinessobjectivesConfirmoptionsBuild theselect teamPlan Select
Establishselection criteriaDevelopengineeringdata acquisitionprogrammeEvaluate optionsEngagecontractorsUpdate riskand uncertaintymanagementplansUpdate learningand knowledgemanagementplan
Appoint PGM
Set targetsBuild Define /Execute teamPlan DefineCompleteStatement ofRequirementsManageresidual riskand uncertainty
Select conceptEngageand selectcontractorsDeal structuring,contractframework,marketdevelopmentand access
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overview
4. Select work focus and activitiesDescribes a codified and standard approach to the work focus and activities for BP
projects in Select to meet MPcp expectations and help teams to fully consider and
prepare for end-Select deliverables early.
The key work focus components are:
Select Programme describes selection criteria, concept evaluation,
commercial themes and concept selection through the Select stage.
Define Preparation includes concept definition, Define planning at the end of
the Select stage and target-setting.
5. Organization development and designDescribes the organization principles and design options for appraisal projects in
different settings in BP. This includes a list of roles and accountabilities for a standard
set of BP badged jobs in appraisal teams.
6. ToolkitContains a set of links to core integration tools, processes and document
templates.
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Seven habits have been defined based on the experience of BPs senior appraisal
leaders and practitioners. The habits are proactive behaviours that leaders and teams
must display and embed within their project. They complement the habits of great
project managers described in the Project Management and Execution Guideline.
figure 1.4 habits of great appraisal leaders
1 habits of great appraisal leaders
Habit 1 - HSSE delivery and leadership
Set the expectations, standards and behaviours for Health, Safety, Security andEnvironment (HSSE) management of the project from the start.
Demonstrate their belief that HSSE delivery is paramount and ensure inherent
safety in the design of the selected project concept.
Recognize that design safety and operational integrity outcomes originate in
appraisal.
HSSE Delivery and Leadership
Integration RelationshipsOrganization
Planning Ahead
Intervention
Strategyand Framing
Contracting
Strategy
Risk and UncertaintyManagement
Evaluation andDecision Making
Scope Performance Management
Creating distinctive projects Delivering with world class execution
Appraise Select OperateDefine Execute
Appraisal General Manager Project General Manager
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Habit - Strategy and framing See the big picture and align diverse interest groups behind a clear description
of the opportunity, scope, scale, pace and complexity to inform early decisions
on organizational capability and capital requirements.
Facilitate the right conversations early regarding the business context and
strategic fit of the opportunity, including non-technical groups such as Gas,
Power & Renewables; Legal; Finance; Tax and Integrated Supply & Trading.
Understand the impact of the external context in which the project will be
implemented and how the resource owner, regulatory agencies, license
provisions, commercial framework, partner and business environment all affect
the running and delivery of the project.
Habit - Integration Create an environment of openness, inclusiveness, creativity and transparency
where integration of diverse project components, including technical and
commercial data by staff from different disciplines, can occur effectively.
Consistently simplify, summarize and communicate the project status with the
team and stakeholders to seek integration and deliver alignment.
Promote understanding and communication of the trade-offs and inter-
dependencies in every decision before it is made. Value and recognize the importance of all disciplines and have an active
interest in them.
Own the overall integrated business delivery, not just the project delivery.
Habit 4 - Risk and uncertainty management Create a culture of understanding risk and uncertainty, followed by mitigation
of risk and reduction of uncertainty to appropriate levels over the life of the
opportunity.
Incorporate prior lessons learned (BP and industry) into risk identification and
mitigation. Plan for multiple outcomes from the appraisal programme, have well thought
responses ready and communicate them, including recycle and exit.
Prepare flexible concept designs that mitigate a range of risk and uncertainty
outcomes.
Communicate residual risk, uncertainty and their impacts to senior
management and own residual risks.
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Habit 5 - Evaluation and decision making Consider the widest possible range of opportunities and all potential sources of
value.
Always use concept and component standardization in evaluating opportunities,
including identifying technology requirements.
Be aware of the natural boundaries within a basin or area.
Have the ability to work with complex, ambiguous or limited amounts of data-
use benchmarks and analogues early to ensure options are not overlooked.
Avoid premature selection of options or concepts, particularly in Appraise, by
holding multiple options open until fully matured.
Test for team think and undue bias through frequent and informal peer input.
Focus on continually testing for viability throughout Appraise and Select.
Promote a culture where informed decisions are made in an environment of
openness and transparency. This will ensure quality through choice for all
decisions.
Base all viability, option, and concept selection decisions on full life cycle
economics and consider all sources of value.
Have an instinct for identifying problems early and intervene in a decisive and
timely manner.
Habit 6 - Organization Build the integrated team early with sufficient depth, breadth and diversity to
deliver the project; avoiding the tendency to build teams too late and too small.
Be proactive in describing the consequences of organizational gaps to enable
the right choice in deployment of resources.
Assess people to ensure they are placed in roles based on their experience,
knowledge, development and character. Have a bias to expose the next
generation of leaders to challenging roles.
Create a motivating and inspiring environment which promotes informal
communication, ownership and a strong team culture focused on delivery. Develop a performance management culture where teams understand their
performance data, forecasts and how to use them effectively.
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Habit 7 - Relationships Identify and closely manage key external relationships.
Think carefully about reporting relationships to ensure alignment across the
team (contractors and BP staff). Work on weaknesses to resolve issues rapidly.
Continually test for communication problems and break them down.
Recognize the power of team building and co-locating staff from key disciplines
to create a high-performing team.
Create a credible upward relationship with senior management by raising and
tackling relationship issues early. Report the status of the project whether good
or bad.
Personal impact of great appraisal leadersIn addition to the seven habits, successful appraisal leaders demonstrate the
following traits:
High energy.
Ability to create focus for the team.
Ability to make hard decisions.
Respect and humility when dealing with others, especially external
stakeholders.
Positions team and stakeholders for success. Is always aware of the project status whats going well and whats not going well.
Business acumen.
Resilience.
Keeps promises and delivers.
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BPs distinctive approach to appraisal supports our objective of becoming the leading
projects operator. This approach is summarized by six biases which describe how our
appraisal teams work together, what they do and ultimately what they deliver. These
biases are:
Integration.
Standardization.
Full value characterization.
Risk and uncertainty management.
Natural pace.
Quality through choice.
Figure 2.1 depicts how the biases relate to the scope of the appraisal team.
These biases map closely with the Project Principles which describe the high-level
BP Group approach to projects.
In the following sections we define these terms, how they make BP distinctive and
what this means for appraisal teams and practitioners.
2 BP biases
figure 2.1 BP biases and appraisal team scope
Risk &
Uncertainty
Management
Natural Pace
Full Value
Character-
ization
Standardization
Quality
Through
Choice
Integration
Subsurface
CommercialDrilling &
Completions
HSSE &
Operations
Projects &
Engineering
Opti
on
Evalu
ati
on
BusinessFraming
Opportu
nity
Character
ConceptDefinition
Work Focus DisciplinesBP Biases
Viability
Conc
ept
Sele
ctio
n
AppraisalGeneralManager
LEADER
INTEGRATOR
MANAGER
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.1 Integration
Our drive for integration is based on the concept that the whole is greater than the
sum of the parts.
Integrated coaching is a key
component of MPcp. The
Appraisal Plan Coaching Workshop
provides the foundation for
business framing and creates
cross-discipline alignment early
in Appraise. The Select Coaching Workshop supports integrated team thinking to
deliver the Select stage. This approach greatly improves team efficiency by creating
a focus on doing the right things. It also enhances knowledge transfer between the
various technical and commercial disciplines.
For the practitioner, delivering integration involves:
Timely data acquisition guided by rigorous Value of Information (VOI) analysis.
Forming a multi-disciplinary appraisal team early and with sufficient depth,
breadth and diversity to deliver the project.Co-locating appraisal discipline teams.
A team environment of trust and respect and a culture of humility when
dealing with other BP teams or partners, governments, regulators, and other
stakeholders.
All key project interfaces, internal and external, are well understood.
A high quality learning and knowledge management plan is in place and
actioned to ensure:
Relevant lessons (from BP and industry) are incorporated into Appraise
and Select activities.
Lessons learned from Appraise and Select are captured for future use byothers.
Objective analysis of trade-offs.
. Standardization
The benefits of standardization are widely recognized. Standardization allows BP
to leverage its scope and scale in the market place; by working with common
technologies, some of the risk and uncertainty associated with an option being
evaluated can be more easily quantified and mitigated.
2 BP biases
Integration is a behavioural characteristic
founded in the holistic, multi-disciplinary
(technical and commercial) approach BP
applies to appraisal.
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2 BP biases
The benefits of standardization are shown in figure 2.2.
Benefits of concept standardization include reduced schedule, better ramp up and
operability, and lower capex. Component standardization (the reuse of earlier system/major equipment designs) creates greater demand that can be leveraged through the
Procurement and Supply Chain Management (PSCM) segment sector strategies and
can also deliver the same benefits to projects.
While standardization creates an opportunity to minimize risk, it can introduce other
risks to a project. Evaluation of standard technology to demonstrate that an option
is technically viable should be just as rigorous as for any less well proven or new
technology. Standardization may also create an over dependence on a single vendor
across a number of projects which PSCM sector teams can help manage.
figure 2.2 concept and component standardization
Reduced CAPEX Repeat Engineering - design one, build many
Repeat contracts with key suppliers - equipment and services
Scarce resources deployed on what really matters
Efficiency of integration
Reduced Cycle Time Not re-inventing the wheel - proven designs,
fully commissioned systems and processes
Simplified Execution - management of no change
Improved Operability/Reduced OPEX Surety of start-up efficiency
Improved HSE from systems commonality
Commonality for spares and training
Improved uptime
$
Time
To fully realize the value of standardization, it must be considered
at the earliest stages of a project (i.e. in Appraise and Select).
Opportunities for standardization should be considered as part of the
Appraisal Planning process. The degree of possible standardization
should, at the very least, be a criterion for evaluating between
different options. Benefits can be realized from all disciplines.
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For the practitioner, delivering standardization requires:
Considering asset life-cycle costs and operability.
Considering how to get maximum leverage from BPs experience, scope, scale
and market position.
Balancing innovation and standardization.
Recognizing the value of SPU / programme optionality (e.g. sharing major
systems, sub-systems and components).
Open discussions with partners and National Oil Companies about the benefits
of standardization.
Considering and mitigating risks of standardization properly. Successful
deployment in other projects does not guarantee success in other situations.
Considering any extra resource risks if project pace is increased as a result of a
programme.
Checking that risks are not driven into other areas of the project.
. Full value characterization
This bias recognizes while the value of a subsurface asset is heavily dominated by
its resource potential, there are many places that material value enhancement and
destruction can occur. Greenfield appraisal also needs to consider the impact on valueof other drivers such as cost and schedule. In Brownfield appraisal, value may be more
dependent on plant capacity or expansion possibilities. Full value characterization
includes consideration of:
Reservoir to market as BP is a fully integrated hydrocarbon company, part
of our distinctiveness is the capability to capture value from vertical synergies
across the entire reservoir to market value chain and horizontally across a basin
or capture area strategy.
Life of field evaluating opportunities and risks over the entire asset life.
Follow on potential accessing follow on opportunities outside the asset may
provide additional sources of value. Considering the merits of a phased approach - to allow uncertainty reduction
while generating revenue.
Relationships for example, access to other opportunities in the country
resulting from a commitment of capital on the project under consideration.
Standardization and programme approaches can add value to executing
related projects.
Specific examples include leveraging infrastructure ownership to process or transport
third party production, novel commercial agreements that reduce capital risk,
standardized application of distinctive technologies to reduce cost or to increase off-
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take rate and co-development of assets to share fixed costs and improve schedule.
For the practitioner, delivering full value characterization requires:
Vertical and horizontal cross stream integration.
An understanding of the value added through the dimensions of life of field,
follow on potential, standardization and relationship opportunities.
An understanding of the value added through adoption of standardization and
programme approaches.
Assessment of value trade-offs within the business context.
Consideration of the opportunity cost of scarce resources (staff, equipment,
time etc.).
.4 Risk and uncertainty management
Exploration & Production is a business where taking informed, well-judged risks can
secure competitive positions for BP, often with advantaged returns. Risk and uncertaintyprovide a powerful basis for project and portfolio planning and are not inherently bad,
where project value can be created in a safe and responsible manner.
A risk is typically defined as an event (circumstance) that, should it occur, would
have a material effect on project value. Risk can result in a value degradation (threat)
or improvement (opportunity). Uncertainty is the mechanism for describing the
distribution of a parameter whose value is not absolutely known. It can be expressed
as a continuous range or as distinct alternatives. In appraisal it is important to divide
uncertainties into those which are irreducible and those that during appraisal may be
reduced with additional work or data. Uncertainty, or combinations of uncertainties,when allied to investment decisions with expectations of delivery, may generate risks.
Not all parameters with uncertainty will be linked to risks.
Managing key risks and associated uncertainty is crucial to delivering project value and
success. Upside opportunity must be addressed as aggressively as downside risk.
In the early phases of a project the range of uncertainty is normally large. Informed
decisions demand complete transparency of all risks and uncertainties associated with
a project.
At times, full value characterization may not necessarily be aligned with external
stakeholders. In such instances, relationships need to be managed to deliver
mutually satisfactory outcomes.
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As our portfolio of assets is becoming more
complex and costs of traditional appraisal
activities are increasing, there will be
increased pressure to carry higher levels of
residual risk and uncertainty at end-Select. As
a result, concept selection should consider
flexibility implications and alternative facility
capacity and phasing as mitigations.
For the practitioner, delivering risk and uncertainty management requires:
Avoiding the tendency to focus more on subsurface risk to the detriment of
other areas, such as commercial.
Considering risk early, in Drilling & Completions, Projects & Engineering,
Operations, Technology implementation and Commercial, and understanding
the interdependencies.
Constructing and executing a risk management plan that addresses project
expectations (value) as established by the stakeholders. The risk management
plan should be transparent and use VOI analysis to inform activity decisions.
VOI is driven by a project risk register, an understanding of uncertainty and
Select stage (and beyond) decisions. Mitigation planning to modify project threats to an acceptable residual level.
Identifying project opportunities to analyse, understand and improve value.
Information on risk tools can be found in the Exploration & Production Risk
Management Guidelines.
.5 Natural pace
Natural pace describes the optimum speed for a project to progress to createvalue and manage risk appropriately. It allows the team to deliver full project value
with confidence in meeting the target schedule. It requires judgement by senior
management, informed by appraisal team data, to make the right decision on the
pace of the project.
The key determinants of natural pace include:
Scale mega projects are more complex, have more uncertainty and take longer.
Complexity related to scale and level of technology challenge.
Technology challenges e.g. new or recently proved applications, enabling or
enhancing technologies.
Understanding risk provides the
basis for performance management
and clear activity plans. The appraisal
teams objectives are to manage
uncertainty and enable informed
decisions under risk.
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Location specific issues e.g. physical or infrastructure access.
Regional environment e.g. new basin versus developed or mature basin.
Market expectations e.g. opportunity timing window constraints.
Commercial e.g. licensing and production sharing agreements, partner and
joint operating agreements, project financing.
Organizational capability and capacity constraints internal to BP and in the
external and contractor market place.
Regulatory considerations e.g. changing fiscal or environmental boundaries.
Experience has shown that setting artificial or arbitrary schedule targets has been a
significant contributor to poor front end loading, poor project execution performance
and value extraction by external stakeholders.
For the practitioner it is critical to proactively communicate the natural pace of theproject. This requires:
Planning and executing activities that reduce risk and uncertainty to an
appropriate level.
Embedding standardization opportunities.
Identifying technology requirements, commercial framework and data
acquisition with long lead durations.
Accounting for the business environment of the project.
Understanding the true value drivers of a project (cost, schedule, quality
or production / resources) to differentiate between competing options and
projects. Obtaining stakeholder approval.
Communicating the full range of schedule uncertainty to avoid the creation of
unrealistic internal or external expectations.
Senior management (comprising the Strategic Performance Unit Leader (SPUL),
Group Vice President (GVP) and Segment Executive Team), fully informed by the
Appraisal General Manager (AGM) and team, can then make business decisions
based on the full knowledge of natural pace.
The right natural pace in Appraise and Select is fundamental for the
right work to get done. Cost and quality also need to be understood and
balanced with the project schedule to determine natural pace. Knowing
when to stop and being cost effective in Appraisal is fundamental.
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.6 Quality through choice
Quality through choice informs Portfolio
Management. It is founded on the concept
that more opportunities will be identified
than will ultimately be pursued. This enables
the selection of only the best options to
take forward in the portfolio. This approach
can be applied at both the portfolio level
(project prioritization) and the project level
(development options).
Asset monetization and operatorship decisions are also supported by quality through
choice. All projects should carry and maintain an exit option to enable dilution or
divestment decisions to be considered (if appropriate) at key stage gate milestones.
BP currently operates 80% of its projects portfolio; however, appraisal teams should
consider the comparative benefits of others operating where they are equally
competent or even advantaged. In addition, the AGM should always consider
alternative ways to monetize the opportunity.
For quality through choice to succeed, there should be multiple options from which to
choose and these must be assessed consistently. The Segment common processes
play a crucial role to establish common language and a consistent set of expectations
that enable balanced assessments of options. The characteristics of high quality
projects include:
The project can be executed in a manner that is consistent with BPs HSSE
objectives.
Investment quality (investment returns and overall value) versus risk has been
considered and there is a compelling business case that includes all significant
sources of value consistent with SPU and segment strategies. Embedded standardization and demonstrated learning from other projects.
The project benefits from integration with other BP assets or distinctive
capabilities.
The project is robust across a realistic range of schedule, cost and subsurface
uncertainties.
Key risks are managed and there is flexibility to capture upside opportunities.
There is adequate organizational capability to deliver the project.
The project enhances our broader capabilities and reputation, e.g. through new
technology or building internal expertise.
This bias enables focus and
prioritization of resources. There
should be a disciplined approach to
capital allocation and working within
organizational capability constraints.
Only the best opportunities should
attract and be allocated BPsresources
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2 BP biases
The degree to which each of these characteristics contributes to the assessment
of quality will vary for each project and depend on the role of the opportunity in the
portfolio.
For the practitioner, delivering quality through choice involves:
Understanding the business context and strategy.
Considering multiple options and scenarios of future outcomes.
A consistent and objective approach to option comparisons.
A constant inquiry into the question of viability.
A constant inquiry into investment quality versus risk and uncertainty.
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The road map below shows the Appraise work focus and activities that support
creating distinctive projects in BP and delivering MPcp expectations. It also shows the
timing relationships of key activities and governance milestones including coaching
workshops, documents and functional reviews.
figure 3.1 road map for creating distinctive projects
Stage
Objectives
Activity
Governance
WorkFocus Appraise-
Select GateAppraisal Planning Appraise Programme
Business Framing
Opportunity Characterization,Option Evaluation & Viability
Assessment
ViabilityConfirmation
Appraise
Appraise
EntryGate
Appraisal Plan
HOD Review
SelectEntryGate
Reserves ApprovalMemorandum (RAM)
AppraisalPlan
AppraisePHSSER
Updated AppraisalPlan and DSP
Legendentry gatekey document workshop
review PHSSER
Appoint AGM
Reconfirmstrategiccontext andbusinessobjectivesConfirmoptionsBuild theselect teamPlan Select
Coaching Workshop
Confirm commercial viability of opportunity and identify a range of
development options consistent with resource, uncertainty and marketconditions, at least one of which is viable technically and commercially
Build appraisal teamConsider businessdrivers: resources,developability, markets,and external influencesIdentify technologiesIdentify risks and
uncertainties anddevelop mitigation plansCreate learning andknowledge managementplanUnderstandheritage commercialarrangements
Generate optionsEnsure full valuecharacterizationConsider all sources of valueand assess marketsPerform Value of Informationanalysis and acquire dataDevelop decision frameworkand analysisConsider standardizationoptionsIdentify risks and uncertaintiesand develop mitigation plansUnderstand trade-offsEstablish reference case andalternative optionsMake informed decisions
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MPcp describes the stage objectives and the expectations for BP projects. These
represent the overarching goals of the work focus and activities.
During early Appraise, an Appraisal Plan will be developed. The Appraisal Plan is a
formal document which outlines the scope of activities and estimated expenditure in
the Appraise and Select stages. Its focus is to enable an informed decision on project
viability and concept selection. It describes the first Depletion Plan for the field or
opportunity being considered. It should capture the opportunity from a life of field
perspective and consider the project phase and also operating the asset over the
long term. The Appraisal Plan provides a single point of reference for characterizing
opportunities.
The Appraisal Plan does not constitute financial approval. Individual Finance
Memoranda (FM) are required to release funding for each element of the Appraisal
Programme. The Appraisal Plan is the key governance document used to assure
delivery to MPcp expectations.
MPcp describes the governance expectations for BP Major Projects. The scope of
the Appraisal Guideline relative to MPcp and the principal components of governance
are shown in figure 3.2 below.
figure 3.2 project governance at the principal stages
HoD Reviews
& TVP
Attestation
Integrated
Coaching
PHSSERs
Appraise Select Define Execute Operate
Appraisal Plan Define FM Execute FM
Discipline
reviews
Discipline
reviews
AppraisalPlan
SelectCoaching
Define
Coaching
ExecuteHealth
check
Start-upEfficiency
Review
Appraise Select Pre-SanctionDetailed Engineering
Construction
Pre- start-up Operate
Creating DistinctiveProjects World Class Execution
Governance
Appraisal Guideline
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.1 Entry to Appraise (Pre-appraise)
Pre-appraise describes the period immediately before an opportunity enters
Appraise.
The AGM is responsible for building the appraisal team which can include resources
from Exploration Access (Greenfield projects) or Opportunity Progression (Brownfield
projects). The steps to build the team and develop the organizational strategy for the
Appraise and Select phases of a project are described in section 5.
As the opportunity transitions to the appraisal team, all information completed in
the Pre-appraise stages should be transferred as part of a Management of Change(MOC). If any of the documentation does not exist at the time of transition, it should
be developed during Appraisal Planning, prior to developing the Appraisal Plan. Ideally
appraisal front end loading occurs through some early appraisal team participation and
connectivity with the access stage team. This early awareness and pre-consideration
of appraisal objectives from the outset will help ensure the appraisal team is well
positioned for success. In some SPUs the Access / Appraise activity set may merit
the organization to develop early appraise teams to facilitate front end loading and
rapid follow on success planning.
Figure 3.3 shows the entry points into Appraise.
An opportunity entering Appraise must have senior management
support. Clear expectations must be set based on an understanding
of the strategic context and country risk. Sometimes opportunities
emerging within existing business units will materially affect or
change strategy. It is very important to communicate these situationsto senior management early so that the right conversations and
decisions can occur.
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Greenfield projectsGreenfield resource development opportunities that lead to Major Projects typically
originate when a successful exploration discovery confirms the potential for a
commercial development, or when we acquire a Greenfield opportunity. MPcp and
the Exploration common process describe the expectations at handover betweenthe exploration team and the appraisal team. Greenfield projects include discoveries
that are candidate tie-backs to existing infrastructure.
It is vital that the MOC through the transition into Appraise is effective and includes:
Existing HSSE thinking from Exploration.
Agreement on transition process including a handover meeting.
Description of the opportunity including strategic fit, outline costs, schedule
and methods used to derive them.
Technical Assurance Memorandum identifying thoughts on developability and
3 appraise work focus and activities
figure 3.3 entry points into Appraise
Greenfield
Appraise/ MPcp
Brownfield
ExplorationSuccess
Extension/Tie Back toHub
NewGreenfield
Access
IncumbentResourcePosition
NewBrownfieldAccess
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Hydrocarbons Initially In Place estimates, calibrated by the exploration well
results from the exploration team. Ideally appraisal teams will have had an
opportunity to interface with exploration teams to help typify assumptions for
pre-drill Long Term Plan / project characterization purposes.
Reserves Approval Memorandum and Reserves Support Package plus
supporting Depletion Plan with complexity and reservoir technical limit
assessments developed by the appraisal team but with the input and
experience of the exploration team as its foundation.
Key contacts and relationships identified (and existing Relationship
Management Plans and SPAs), commitments (including license or contract
obligations), outcomes from market assessments, access / regulatory reviews,
issues and associated opportunities and co-owner, joint-venture agreements
and relationship items.
Agreed ownership of significant previously identified risks (threats and
opportunities) as appropriate.
Early scenario-based outcomes describing the potential opportunity with a low,
mid and high case should be considered and captured in an Appraise Stage
Dashboard.
Associated opportunities for standardization and follow on potential have been
identified. Post discovery developability assessment.
Record of any known contracting limitations (e.g., regional, infrastructure, host
government or partner requirements).
Record of lessons learnt during Pre-appraise and a learning and knowledge
management plan for Appraise.
A thorough data management handover plan.
Brownfield projects
Brownfield Major Projects originate when either, an option is progressed from aSPU/business units Opportunity Progression Hopper, or an access deal is signed
to develop an existing discovered resource (often under an agreed bid with a capital
or work programme commitment). All business transformation of existing assets is
considered Brownfield.
MPcp and Opportunity Progression common processes describe the expectations
at handover between the asset or renewal team and the appraisal team. For new
access Brownfield opportunities, MPcp, with a combination of the Exploration
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and the Opportunity Progression common processes, may need to be followed.
Early involvement of senior functional and line management representatives is
recommended to guide opportunities until a more structured approach is in place.
As with Greenfield opportunities, effective MOC is vital. In addition to the Greenfield
project requirements from Exploration, Brownfield opportunities will require the
following from Operations:
The HSSE Management Plan.
The Safety & Operations Integrity Plan and Operations philosophy.
Asset Long Term Plan and Ultimate Resource Potential. MOC procedure for existing operations.
Details of other BP interests in the opportunity (e.g. midstream or
downstream).
An Integrated Field Plan.
A Production Efficiency Improvement plan.
All of the required handover processes and transition meetings must take place, for
both Greenfield and Brownfield projects, before an Appraisal Plan Workshop is held.
. Appraisal planning
The objective of the Appraise stage is to confirm the commercial viability of the
opportunity and identify a range of development options consistent with resource,
uncertainty and market conditions, at least one of which is viable technically and
commercially.
The work focus of Appraisal Planning covers:
Business framing.
Technology identification.
Knowledge management.
Appraisal Plan.
Business framingThe objective of business framing is to understand the issues, challenges and
opportunities and their potential impact on business value and delivery.
Internal studies of our projects, as well as industry studies, clearly show projects
inadequately framed at the front end seldom deliver the expected value. Conversely,
projects that put in the effort and rigor at the front end, to adequately frame the
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opportunity set, have a high probability of delivering the true business value.
Business framing is achieved through creating a shared understanding of project
scope, issues, drivers, decision criteria and boundaries and then identifying a range
of unique alternatives that help define the potential business value a project has to
offer consistent with SPU and BP strategy.
MPcp sets out the framework and expectations to create a distinctive project and
includes the provision for support, advice and guidance from integrated, coaching
events (Appraisal Plan Coaching Workshop and Select Coaching Workshop).
These coaching events, which are part of MPcp governance, are led by the appraisal
coaching team and supported by the Directors of Appraisal.
Who and howThe coaching workshops are structured multi-disciplinary events aimed at assisting
appraisal teams frame the business opportunity and develop the future work
programme through:
Understanding the strategic framework, business drivers and decision criteria.
Characterizing and transparently communicating the key risks, uncertaintiesand opportunities.
Identifying / evaluating the project scope, development scenarios and business
options.
Prioritizing data needs to address the key risks, uncertainties and opportunities.
Considering standardization and global agreements.
Facilitating discipline integration and alignment.
Transferring learning and best practice across the organization.
Identifying resource needs for delivery.
Clarifying Functional Excellence Elements Expectations and Requirements.
Business framing at the Appraisal Plan Coaching Workshop helps inform the
Appraisal Plan. The Appraisal Plan is a fundamental governance document in MPcp
for the Appraise and Select stages. Technical and non-technical functions should
be consulted and involved in Appraisal Plan Heads of Discipline (HoD) Reviews
(commercial business development planning and analysis Finance Control &
Accounting, Shipping, Legal, Finance, Tax, Gas Power & Renewables, Integrated
Supply & Training, as appropriate). Appraisal teams are encouraged to establish
contact with the non-technical functions early.
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Approach1. Collect and analyse key existing data by discipline
This data is collated and used to develop a baseline understanding of what we do and
do not know about the project. The 4 legged stool is used to develop the business
context, integrate the initial findings, identify key gaps and establish communications
lines across disciplines within the appraisal team. This simple structured approach (in
figure 3.4 below) is used to help integrate the discipline data and also to:
Understand and test the strategic context (project alignment with strategy).
Develop insights on discipline issues (uncertainties, risks, opportunities)
and identify interfaces and challenges across the disciplines with a focuson Resource base, Developability (technical definition including technology),
Markets and External Influences.
Facilitate integration, alignment and informed decision making.
3 appraise work focus and activities
figure 3.4 4 legged stool approach to business framing
Strategic Context
DevelopabilityResource
External influences Markets
Oil / gas
Fluid properties
Structural complexity
Stratigraphic complexity
Rates and reserves
Benchmarks
PSA / JOA terms
Host government needs
NOC needs Partners, stakeholders
NGOs
Local organizations
Competitor and regulatory impacts
Site Characteristics
Drilling & Completions
Flow Assurance
Wells
Facilities needs
Infrastructure
Technology
Price
Oil and gas sales
Market intelligence Export options
Negotiating strategy
Contracting strategy
Market developments
Integration,Informed Decisions,
Confidence
Establish viability (strategic, technical and commercial)
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2. Define and agree on the project scope
The project scope should define what is in, what is out, and acknowledge the
boundaries, interfaces and dependencies. The stick model visually articulates the
project scope. It also causes team integration across the disciplines by graphically
characterizing the functional components. A clearly defined project scope provides
focus and alignment as the team moves forward. An example of a stick model
developed during a workshop is shown below.
3 appraise work focus and activities
figure 3.5 example stick model
3. Gain internal alignment on project drivers, decision criteria and boundaries
It is important teams understand how the project will be viewed and what the decision
making process will be. This helps the team establish screening criteria, prioritize
and focus their data gathering, frame business options and evaluate trade-offs. Anapproach to agreeing and documenting drivers, decision criteria and boundaries is
shown below.
Once the multi-discipline team has an integrated understanding of the project scope,
drivers, decision criteria, boundaries, key issues and challenges, it is in a position to:
Clearly articulate the range of risks, uncertainties and opportunities the project
presents.
Identify the data needs (need to know) to make informed decisions.
Salt
Drilling
Options
Well
Companions
ProdRiserSys
Marine VesselSurface Facility
Export System
Pump
West Bump East Bump
PaleoceneOperating Unit
Subsea
Other Structures?
Adjacent Structures?
Market
Partners BPs SPU Strategy
HPHT Equip Suppliers
USCG
HPHT BP Team
Long Lead Suppliers
Project Scope
OnshoreFacility
IST
Mid-Stream
MMS
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4. Develop creative alternatives
These creative alternatives capture the range of business value the project has to
offer. This is best done as a two-stage process.
The objective of the first stage is to:
Capture the key decisions by discipline.
List the choices for each decision.
Identify the triggers (what do we need to know to make the choice?) under
each decision.
An overview table approach for documenting key decisions, choices and triggers is
recommended. Figure 3.7 is an example of an overview table.
3 appraise work focus and activities
figure 3.6 example project objective hierarchy
Shareholder Value
Stage Gate Decision Criteria Identification of risks/uncertainties Demonstrates Viable Business Case (fully loaded) Meets HSSE requirements Organizational capability and
Resourcing plan Technology delivery plan Demonstrate capability to drill and
Complete well on a constant basis Knowledge management plan Establish impact on value of export
options
Absolute Project Boundaries Work through Integrated Asset
Organization Structure Confirm with IM Standards (coordination with Ops) Only Existing Regulatory
and lease contracts Only CTD used for re-entry (no grassroots CTD)
Good project drivers & decision outcomes
GHSSER
Utilization of existing
infrastructure
Plan for Training project
personnel ( CTD, N2, Current
Ops Procedures )
Minimise gas venting and flaring
Establish optimimum footprint
Embed rigor on control of work
Meet IM standard
Incident and injury free
environment
Successfully managed SIMOPSSuccessfully conduct PHSSER
1.
2.
3.
4.
5.
6.
7.
8.
9.10.
Comply with third party
contracts
Respecting landowner,
community commitment
Regulatory compliance
Proactive PR demonstrating
value of BP presence
Good rapport with contractors
Manage internal expectations
Progressing technology for
producing mature
1.
2.
3.
4.
5.
6.
7.
Utilization fo existing
infrastructure (IM)
Resource (NP4) progression
Manage project pace
Cost effectivness for life of field
Identify and manage long lead
items
Integrated schedule for project
operations/activitties
Incremental Reserves and
expected project profile
Recognize the technical
challenge (uncertainty)Fully Integrated cost across all
project elements and interfaces
SPMcp, Supplier performance
management system
Establish space for learning
Unwavering Management
Commitment (funding)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Completion techniques
Establish tight gas Frac
techniques
Technique to Manage Hole
stability
Knowledge management
Lead industry in tight gas
recovery/development
Understand and establish
Intellectual Property position
Identify and close technology
gap
Identify and establishorganization capability
1.
2.
3.
4.
5.
6.
7.
8.
Corporate HSSE
Imperatives BP Reputation Financial Distinctive CTD&C
Capability for Tight Gas
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The overview table allows multi-disciplinary contribution to brainstorming with
the purpose of identifying conceptual business scenarios/creative alternatives
(Investment Themes) that satisfy the decision criteria and project objectives.
The objective of the second stage is to select an example investment theme and
map it across the overview table. This ties together the unique set of choices that
satisfy the chosen investment theme. The purpose is to:
Understand the potential business value the project has to offer.
Define potential data gaps and needs. What are the critical data items and
when will they be available?
Understand key multi-discipline interfaces.
Develop a focused and prioritized activity and resource plan. This plan is used in
the creation of the Appraisal Plan.
3 appraise work focus and activities
figure 3.7 example overview table
ReservoirPressure
Maintainence
Number ofDrill Sites
DevelopmentFlexibility to
ProcessHost Facility
Liquid ExportSystem
GasManagement
GasPipelineSystem
Lease/Purchase
Development
CaptureTotal
Infras-tructure
LowCost/
MinimalCAPEX
Decisions
Investment themes
Triggers
Choices
Mapped Investment Theme example
ScreenSolution
EarliestOil
TriggersWhat else do we need to know?
GasInjection
Single Dry Trees Tightly design tocapacity (Fit for
purpose)
TLP / SPAR / Tie Back toInfrastructure
Store inalternatehorizon
Loop ExistingLine
Purchase
WaterInjection
Multiple Wet Trees Build forExpansion
(Equity)
OffshoreLoad
Export viaPipeline
Stand-alone Lease
Combination Semi GTL Tie Back toInfrastructure
PHA
NaturalDepletion
Sub-Sea totie back tohost facility
ThroughExisting
Host Facility
Offshoreutilisation
(electric power)
Non-PipelineSolution
Lease toOwn
Combinationof Gas and
Water
Build forfuture growth
(Reservoir
Update)
FPSO
New BuildPipeline
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Technology identificationAll technologies must be analysed to assess associated risks, but they should also be
selected with reference to the technology biases that have been developed for the
Exploration & Production segment. The biases are intended to ensure a consistency
of approach in the application of technology and form the foundation of our Major
Project Technology Plans, they are:
See the Engineering and Quality Management Guideline for more information on
the biases. It is important to include an assessment of all technologies including
Subsurface & Wells, e.g. seismic imaging. After the preliminary selection of the
technology it is important for the project to understand the nature of the technology
it plans to utilise and a key step in this process involves determining whether atechnology is proven or unproven (new).
Proven technologyis that practice or item which has been provided to BP before,to the same specification and manufactured at the same location with the same
techniques, for use under the same known conditions.
Unproven technology is a practice or item providing a function which has notpreviously been used in a BP project under the conditions appropriate to that project.
This definition includes both novel technology in familiar application environments and
existing (proven) technology in new application environments or in new processingsequences.
In the context of Major Projects, unproven (or new) technology can fall into two
categories based on value:
Enabling- a technology critical to project success, without which the projectcannot be successfully implemented.
Enhancing- a technology upon which the project is not reliant, but ifsuccessfully implemented would enable more value to be realized for the
project.
3 appraise work focus and activities
Highly predictable performance and integrity through inherently reliable
equipment and materials with supporting monitoring. Component standardization linked to well-defined functional requirements.
Process automation allowing control capability from an optimized location.
Continuous optimization of operations and access to global know-how
through an Advanced Collaborative Environment (ACE).
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It is important to note that all unproven technologies must have reached a certain
level of maturity by the end of the Select stage. The Technology section of the
Engineering and Quality Management Guideline provides much more detail in this
area and should be consulted, but the key point relates to Technology Readiness
Levels (TRLs) and by the end of Select any technology selected should be at TRL3.
A TRL value lower than this means the technology is immature and the project will
carry additional risk.
To maximize the value of new technologies and minimize the implementation risk
and uncertainty, multi-disciplinary reviews of project technology requirements for
each alternative development concept should be held early in the Appraisal Planning
stage, and refreshed after key data is acquired and the opportunity characterization
matures. The outputs from these reviews and updates will form the basis for the
technology section of the Appraisal Plan which should also contain a technology
development schedule.
The objective is to define not only the project specific requirements, but also to
assess how to implement key technology biases and technology levers into the
project. There must be a plan to get to the right technology choices by the end of
Select and a detailed technology delivery plan for Define.
Technology planning is addressed in more detail in MPcp, the Engineering and Quality
Management Guideline and the other common processes.
Knowledge managementKnowledge management leverages the unique diversity of experience, expertise and
general know-how that resides throughout BP and externally.
Knowledge management should be initiated early in Appraise. The implementation
of the knowledge management plan is crucial to risk mitigation and continuousimprovement.
For the practitioner, learning and knowledge management requires:
Capturing and applying relevant learning from other similar projects, including
those outside BP.
Transferring learnings to other appraisal teams and the Projects library.
Document control and the data management plan to support current and future
decision making.
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The AGM is accountable for ensuring a knowledge management plan exists and
is implemented. A knowledge management champion should be designated to co-
ordinate this.
A variety of knowledge sources exists in BP including:
Appraisal coaching team.
Heads of Discipline.
Functional Directors.
Network leaders.
Subject Matter Experts / Advisers.
Segment Technical Authorities.
Chief Engineers.
Projects and Engineering shared learning system.
Projects library.
Projects forum.
See section 6.2 for further information. The MPcp Knowledge Management Guideline
also contains further information.
The Appraisal PlanThe Appraisal Plan is a formal document which outlines the scope of activities and
estimated expenditure in the Appraise and Select stages. The focus of the Appraisal
Plan is to enable an informed decision on project viability and concept selection.
The Appraisal Plan is the output of the Appraisal Planning stage. It sets a broad
framework for the activity plan from discovery to first production. The plan is
specifically the execution plan for the Appraise and Select stages.
The purpose of an Appraisal Plan is to capture current understanding of the ranges
of technical and commercial uncertainty and risks / opportunities. It also defines anactivity programme that will lead to robust, compelling and viable business options
to be carried into Select. The Appraisal Plan provides the team and the Executive with
an opportunity to endorse or comment upon the full activity set envisioned during the
Appraise and Select stages at a time when it is most meaningful. A robust Appraisal
Plan also allows the team to deliver that activity set within the strategic bounds of
the endorsed plan.
The appraisal team should create the Appraisal Plan by addressing the questions in
the Appraisal Plan contents table in figure 3.8.
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An Appraisal Plan is required for all potential Major Projects from new exploration
discoveries to Brownfield opportunities. It should be initially developed as soon
as practical after a discovery or selection of an opportunity from the Opportunity
Progression hopper or provided through a new access arrangement. The plan will
be cross-disciplinary and an integrated assessment covering front end loading
activities for key opportunities, risks and uncertainties, including technology. Market
opportunities for market facing projects should also be included in the Appraisal
Plan.
Other discipline specific support processes and standards, such as resource
compliance reviews, will underpin the Appraisal Plan.
The Appraisal Plan will be reviewed with the HoDs and approved by the project
Gatekeeper - usually the SPUL or GVP. The Gatekeeper will be agreed by the GVP or
appropriate authority. Technology Vice Presidents (TVPs) are required to attest to the
adequacy of Appraisal Plans. This is informed by the HoD reviews. Progress against
the Appraisal Plan will be monitored through the Quarterly Performance Review
process with the GVP.
3 appraise work focus and activities
figure 3.8 appraisal plan contents
What are the key issues that need tobe addressed for a viable businessopportunity?
Values, risks, uncertainties,opportunities, options
Value of Information analysis,benchmarks
Organization capability and capacityFunding availability and utility
Activity sequencingCritical path - optimization of information
Understand the key decision makinginteractions - Decision tree(s)
What information do you need toaddress the issues?
How will the team get the requiredinformation?
When is the information required?
What is the most likely program criticalpath and dependencies?
Questions Examples
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The Appraisal Plan should be fit for purpose and as short as practical. It is not intended
to contain all the support material necessary to underpin the recommended activities.
It should be derived from cross-disciplinary integration, addressing all of the key risks
and uncertainties which impact the decision on project viability and commerciality,
including:
An evaluation of the strategic fit of the opportunity.
A strategic review of BPs opportunity position versus the competition in the area.
Well evaluation and new data acquisition including the need for appraisal
well(s), additional seismic data and reprocessing existing data.
Feasibility studies on the host facility capability and performance, including
compatibility of produced fluids when Infrastructure Led Exploration or tie-
backs are an option.
Identification of potential development options and associated costs and schedules.
Preconceived options may not always be the optimal choice or decision.
Identification of any new technology which requires early investment to
execute the project.
Organizational capability necessary to carry out activities within the proposed
schedule.
An update to the Appraisal Plan will form the Decision Support Package for theAppraise-Select gate.
A template for the contents of the Appraisal Plan is provided in the Projects Library.
See section 6.2.
. Appraise programme
The need to know information and data and the perceived impact on the key
decisions, as discussed in business framing (section 3.2), drives the activity setdefinition in the Appraise Programme.
The Appraise Programme activities focus on assessing which combination of sources
of value (in a risked sense), result in the greatest overall value impact. The activities
should also focus on demonstrating viability.
The Appraise Programme will not mitigate all risks. Residual risks must be owned,
planned for and managed by the team beyond the end of Appraise.
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The Appraise Programme activity set comprises:
Opportunity characterization.
Option generation and evaluation.
Risk and uncertainty understanding and management.
Data acquisition programme.
Decision making.
Technology plan.
Contracting and procurement strategy.
Commercial themes.
Long-lead work may need to be initiated to optimize project delivery. Examples
include a technology maturation program, acquisition of development quality 3-
D seismic and / or collection of seafloor stability and metocean data for offshore
projects. Decisions to gather this information must be consistent with VOI strategy.
The proportions of known, need to know and residual risk and uncertainty change
over time as a result of risk and uncertainty management and data acquisition. See
3 appraise work focus and activities
figure 3.9 appraisal impact on risk and uncertainty
Need
Early Appraise End Appraise End Select
Need toKnow
Known
Risk/U
ncertainty
to KnowNeed toKnow
KnownKnown
Needto Know
Known
RRURRURRU
RRU = Residual Risk & Uncertainty
Need to Know as justified by VOI
figure 3.9.
The Appraise Programme is complete when data for the need to know has been
addressed sufficiently to enable informed decisions between concept options during
the Select stage. All significant sources of value, development options, and options
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that will be further evaluated during the Select stage, will have been identified.
Entry into Select requires that there is a minimum of one technically and commercially
viable option. Viability is described in MPcp. Commercial viability requires an
expectation of positive net present value and of sufficient investment quality
(Investment Rate of Return).
Section 3.4 describes the specific deliverables and governance requirements at the
Appraise-Select gate.
Opportunity characterizationOpportunity characterization is the key to creating distinctive value from an asset
relative to our competitors. As an opportunity is characterized in more detail, the
Appraisal Plan should be updated to provide a central repository of information.
To understand the degree of this distinctive value, potential opportunities are characterized
with an integrated, full value approach that includes initial assessments of:
Strategic fit how well is the opportunity aligned with segment and SPU strategies?
Full value characterization, particularly those derived through synergies with
other BP assets.
The primary risks and uncertainties to delivering value from the opportunity. The resources and organizational capabilities required to progress the opportunity.
Potential to leverage BPs unique know-how, experience, or technologies
including the potential benefits of standardization.
Figure 3.10 shows how opportunities evolve through options into concepts as a
project develops. These terms are the standard approach taken in this guideline to
describe project evolution.
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Option generation and evaluationOption generation and evaluation is a core work focus during Appraisal. Options are
mechanisms to deliver value from opportunities. If we design facilities with a certain
amount of flexibility, we may have the option to reduce some of our investment risk byprocessing third party production. A few options will be obvious and easily identified;
others will need a structured approach. A reference case must be established to
compare options.
The key to option generation is to understand the risks and opportunities. Steps
include:
1. Developing tactics to align stakeholders.
2. Refreshing the overview table created during the business framing workshop.
Ensure the top eight to ten Select stage decisions are represented.
3. Mapping the relative sequence of Select stage decisions in reverse order
begin with the end in mind and identify dependencies between the decisions.4. For each major decision, brainstorm the alternatives and develop a list of
reasonable options from which to choose.
5. Developing initial screening criteria and ranking options to identify the three to
four options to be carried forward into Select.
A very wide set of options should be maintained during the early Appraise Programme.
Although boundaries help constrain and focus a teams efforts, too many boundaries
may prematurely eliminate options and adversely impact cost, schedule or risk. Too
many boundaries may also impact team buy-in and ownership of the project.
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Opportunity Project
Option 1
Option
Option
Option 4
Concept
figure 3.10 opportunity and options in project evolution
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Risk and uncertainty understanding and managementCharacterization of the risks and uncertainties lies at the heart of a good Appraisal
Programme. A comprehensive understanding can be used to devise the work plan
for the stage ahead. The detailed treatment of risk and uncertainty will change as
the project moves from Pre-appraise into Appraise and on into Select. This change
reflects the objectives of the specific MPcp stages.
The risk and uncertainty management objectives in Pre-appraise are to characterize
uncertainties in the resource base, understand developability and identify the key risks
and opportunities to a technically and commercially viable project. The appraisal team
must consider alternative scenarios to capture a full understanding of uncertainty.
This should include describing the shape of the uncertainty envelope does the
uncertainty distribution have a flat top? Is it skewed? How good is the definition?
This characterization identifies what data must be collected and studies performed.
In Appraise this includes the elements in the 4 legged stool (figure 3.4) and:
Appraisal wells targeted at increasing reserves, or increasing the confidence in
reserves and calibrating wells cost uncertainty.
Understanding rock, fluid and log data required to help typify reservoir performance.
Reprocessing and new acquisition of seismic data. Gathering cost and market data.
Analogue and benchmarking studies..
Technology requirements for the development to proceed.
Government or other political risk.
Articulating any non-traditional aspects of the project risk profile (e.g. HPHT,
high sulphur crudes, etc.).
By the end of Appraise, sufficient resources should have been established to be
confident the project is viable in the context of expected contractor market conditions.
Enough studies should have been completed as part of the Appraise Programmeto establish there are no fundamental barriers to development. Residual risk and
uncertainty carried beyond the end of Appraise must be owned by the select team in
situations where a business choice has been made to carry risk into Select.
By the end of Appraise, detailed characterization of uncertainties and risks will have
been carried out, focusing on those that may differentiate between development
options. For example, the project may have a choice between a tie-back to an existing
facility or a standalone development. In this example, the key uncertainties and risks
that will differentiate between development options are:
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Timing of capacity in the existing facility and likelihood of access rights.
Impact of Brownfield work on existing production.
Size of resource to be developed a larger resource would favour a standalone
development. Determining this may require further data collection.
Flow assurance characteristics a critical differentiator when considering tie-
backs.
Figure 3.11 shows the expected volume increments per penetration from the Gulf
of Mexico. It illustrates how the tie-back versus standalone decisions depend on
resources, and how this was used to inform development decisions.
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figure 3.11 example of risk and uncertainty management from the Gulfof Mexico
Best Fit Volume down to mapped spill point
Current Location 600 above spill @ M51, LKO
500
Resources
Reservoir segments
400
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00
100
0
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OWC S/T
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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 projects internal and external stakeholders. Risks and uncertainties, their
impact and mitigations need to be clearly stated in the Appraisal Plan.
Tools available to identify, assess and design mitigations for risk and uncertainty
include:
Risk register single location for recording project risks.
Risk matrix Boston square describing the probability / impact and manageability.
Risk Assessment Tool assesses relative risk.
Decision trees enable responses to Appraisal Programme outcomes in advance.
Design Structure Matrix investigates links between data acquisition and risk
reduction via system dynamic models.
Recommended practice for framing, assessing and managing subsurface risk and
uncertainty is described in the Reservoir Uncertainty Statement & Management
Guideline. Additional information on risk and uncertainty management can also befound in the Geoscience Handbook and Exploration & Production Risk Management
Guideline.
Data acquisition programmeThe objective of the appraise data acquisition programme is to gather need to know
data to inform viability. VOI