Decommissioning Liabilities

12 Months Ended

Dec. 31, 2020

Provision For Decommissioning Restoration And Rehabilitation Costs [Abstract]

27. DECOMMISSIONING LIABILITIES

The decommissioning provision represents the present value of the expected future costs associated with the retirement of upstream crude oil and natural gas assets, refining facilities and the crude-by-rail terminal.

The aggregate carrying amount of the obligation is:

	2020			2019
Decommissioning Liabilities, Beginning of Year		1,235			875
Liabilities Incurred		14			3
Liabilities Settled		(42	)		(52	)
Liabilities Disposed		(2	)		(8	)
Change in Estimated Future Cash Flows		13			21
Change in Discount Rate		(28	)		339
Unwinding of Discount on Decommissioning Liabilities (Note 6)		57			58
Foreign Currency Translation		1			(1	)
Decommissioning Liabilities, End of Year		1,248			1,235

As at December 31, 2020, the undiscounted amount of estimated future cash flows required to settle the obligation is $4,953 million (2019 – $5,173 million), which has been discounted using a credit-adjusted risk-free rate of 5.0 percent (2019 – 4.9 percent) and an inflation rate of two percent (2019 – two percent). Most of these obligations are not expected to be paid for several years, or decades, and are expected to be funded from general resources at that time. The Company expects to settle approximately $40 million to $45 million of decommissioning liabilities over the next year. Revisions in estimated future cash flows resulted from a change in the timing of decommissioning liabilities over the estimated life of the reserves and an increase in cost estimates.

Sensitivities

Changes to the credit-adjusted risk-free rate or the inflation rate would have the following impact on the decommissioning liabilities:

		2020						2019
As at December 31,	Sensitivity Range	Increase			Decrease			Increase			Decrease
Credit-Adjusted Risk-Free Rate	± one percent		(228	)		313			(236	)		332
Inflation Rate	± one percent		321			(235	)		340			(243	)