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Asset Retirement Obligations and Accrued Environmental Costs | 12 Months Ended
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Dec. 31, 2019
Asset Retirement Obligation Disclosure [Abstract] |
Asset Retirement Obligations and Accrued Environmental Costs | Note 10—Asset Retirement Obligations and Accrued Environmental Costs Asset retirement obligations and accrued environmental costs at December 31 were: Millions of Dollars 2019 2018 Asset retirement obligations $ 6,206 7,908 Accrued environmental costs 171 178 Total asset retirement obligations and accrued environmental costs 6,377 8,086 Asset retirement obligations and accrued environmental costs due within one year* (1,025) (398) Long-term asset retirement obligations and accrued environmental costs $ 5,352 7,688 *Classified as a current liability on the balance sheet under “Other accruals.” $ 741 million relates to assets which are held for sale as of December 31, 2019. For additional information see Note 5—Asset Acquisitions and Dispositions. Asset Retirement Obligations We record the fair value of a liability for an ARO when it is incurred (typically when the asset is installed at the production location). When the liability is initially recorded, we capitalize the associated asset retirement cost by increasing the carrying amount of the related PP&E. If, in subsequent periods, our estimate of this liability changes, we will record an adjustment to both the liability and PP&E. Over time, the liability increases for the change in its present value, while the capitalized cost depreciates over the useful life of the related asset. We have numerous AROs we are required to perform under law or contract once an asset is permanently taken out of service. Most of these obligations are not expected to be paid until several years, or decades, in the future and will be funded from general company resources at the time of removal. Our largest individual obligations involve plugging and abandonment of wells and removal and disposal of offshore oil and gas platforms around the world, as well as oil and gas production facilities and pipelines in Alaska. During 2019 and 2018, our overall ARO changed as follows: Millions of Dollars 2019 2018 Balance at January 1 $ 7,908 7,798 Accretion of discount 322 348 New obligations 155 657 Changes in estimates of existing obligations 50 (266) Spending on existing obligations (229) (228) Property dispositions (1,920) (161) Foreign currency translation (80) (240) Balance at December 31 $ 6,206 7,908 Accrued Environmental Costs Total accrued environmental costs at December 31, 2019 and 2018, were $ 171 million and $ 178 million, respectively. We had accrued environmental costs of $ 112 million and $ 100 million at December 31, 2019 and 2018, respectively, related to remediation activities in the U.S. and Canada. We had also accrued in Corporate and Other $ 47 million and $ 67 million of environmental costs associated with sites no longer in operation at December 31, 2019 and 2018, respectively. In addition, $ 12 million and $ 11 million were included at both December 31, 2019 and 2018, respectively, where the company has been named a potentially responsible party under the Federal Comprehensive Environmental Response, Compensation and Liability Act, or similar state laws. Accrued environmental liabilities are expected to be paid over periods extending up to 30 years. Expected expenditures for environmental obligations acquired in various business combinations are discounted using a weighted-average 5 percent discount factor, resulting in an accrued balance for acquired environmental liabilities of $ 97 million at December 31, 2019. The expected future undiscounted payments related to the portion of the accrued environmental costs that have been discounted are: $ 10 million in 2020, $ 7 million in 2021, $ 10 million in 2022, $ 3 million in 2023, $ 2 million in 2024, and $ 108 million for all future years after 2024.

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- Definition The entire disclosure for an asset retirement obligation and the associated long-lived asset. An asset retirement obligation is a legal obligation associated with the disposal or retirement from service of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except for certain obligations of lessees. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 410 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2175671 + Details
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