Asset Retirement Obligations

12 Months Ended

Dec. 31, 2011

Asset Retirement Obligations [Abstract]

Asset Retirement Obligations

Note 25

Asset Retirement Obligations

The company records the fair value of a liability for an asset retirement obligation (ARO) as an asset and liability when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. The legal obligation to perform the asset retirement activity is unconditional, even though uncertainty may exist about the timing and/or method of settlement that may be beyond the company’s control. This uncertainty about the timing and/or method of settlement is factored into the measurement of the liability when sufficient information exists to reasonably estimate fair value. Recognition of the ARO includes: (1) the present value of a liability and offsetting asset, (2) the subsequent accretion of that liability and depreciation of the asset, and (3) the periodic review of the ARO liability estimates and discount rates.

     AROs are primarily recorded for the company’s crude oil and natural gas producing assets. No significant AROs associated with any legal obligations to retire downstream long-lived assets have been recognized, as indeterminate settlement dates for the asset retirements prevent estimation of the fair value of the associated ARO. The company performs periodic reviews of its downstream long-lived assets for any changes in facts and circumstances that might require recognition of a retirement obligation.

     The following table indicates the changes to the company’s before-tax asset retirement obligations in 2011, 2010 and 2009:

	2011			2010			2009
Balance at January 1	$	12,488		$	10,175		$	9,395
Liabilities incurred		62			129			144
Liabilities settled		(1,316	)		(755	)		(757	)
Accretion expense		628			513			463
Revisions in estimated cash flows		905			2,426			930
Balance at December 31	$	12,767		$	12,488		$	10,175

     The long-term portion of the $12,767 balance at the end of 2011 was $11,999.