Environmental liabilities for an onshore oil field include facility abandonment, well plug and abandonment, environmental investigation and remediation, and land restoration. Having a systematic approach for discharging these liabilities offers prudent fiscal management and business planning, environmental compliance assurance, improvement of company image, minimization of legal claims, and ability to secure resources to implement work.

In 2003, Chevron began to develop a strategy to manage the liability associated with their CPI Sumatra Operations. The first step was to understand the magnitude of the liability by conducting a Liability Inventory. Next, the liabilities were prioritized based on safety, environmental, security, and operational considerations. Cost estimates were completed and an annual plan developed to discharge the liabilities over a selected time period. For larger remediation projects, decision and risk analysis was employed to determine the preferred timing for execution accounting for the time value of money, likelihood of incidents and the consequences if those incidents occurred. Management of liability for facility abandonment also involves asset write off so that integration of this financial process is required.

Technologies and procedures were developed for implementation, focusing on safety and cost effectiveness through standardization. Methods were developed for management of wastes generated which included liquid hydrocarbon wastes, contaminated soils, insulation waste, scrap equipment and piping, and concrete foundations.

Management of environmental liability is an evergreen process. At CPI, we have found that review is necessary twice per year to keep up with all the changes due to new information from environmental site assessments, schedule adjustments usually due to resource limitations, and priority changes due to public pressure or claims.

The paper will describe the strategy, processes, and methods in more detail. This approach may be applied at almost any on-plot facility or off-plot well field to plan for management of liability.

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