BP’s oil discovery team swept into climate revolution

LONDON (Reuters) – Nothing survives the winds of change now through BP, not even the exploration team that drove its profits by discovering billions of barrels of oil for over a century.

FILE PHOTO: BP’s new CEO Bernard Loney will deliver a speech on 12 February 2020 in central London, UK. REUTERS / Toby Melville / File Photo

Sources in the company told Reuters that last year’s CEO Bernard Lunney cut the peak from less than 100 from a peak of over 700 last year.

The wind in the exploration team has been very strong since Luni’s arrival. This is happening incredibly fast, ”a senior team member told Reuters.

Hundreds of people have left the oil exploration team in recent months, either relocating to help develop new low-carbon activities or as stated by current and former employees.

Exodus is the hardest sign yet inside the company of its rapid shift away from oil and gas, which will be its main source of cash to switch to renewable goods for at least the next decade.

BP declined to comment on staffing changes, which have not been publicly disclosed.

Reuters spoke to a dozen former and current employees of BP, who faced the company’s enormous challenges in its transition from fossil fuels to carbon neutrality.

Lonnie has clearly stated his intentions by lowering BP’s production targets and internally as well as externally and promoting this as a positive for investors looking for a long-term vision for a low-carbon economy. Has become the first oil major CEO.

BP, under Loney’s reorganization, is the most aggressive of Europe’s oil giants, including Royal Dutch Shell and Total, cutting 10,000 jobs to some of its 10% workforce.

The 50-year-old, a veteran oil engineer who previously headed the oil and gas exploration and production division, aims to cut renewable energy production 20-fold over the next decade by 1 million barrels per day, or 40% over the next decade .

Despite the changes, oil and gas will continue to be BP’s main source of revenue until at least 2030.

And Lonnie has done nothing to boost his shares to raise BP again, which reached its lowest level at the end of 25 years in 2020 and dropped 44% in the year, most suspect. Will it be able to make changes and make profits from it.

The change marks the end of an era for investigative teams from Moscow and Houston to BP’s research headquarters in Sunbury near London, with farewell gatherings held at Zoom in recent months, he said.

“The atmosphere was brutal,” a former employee said at the time of last year’s lay-off.

For BP’s blistering exploration team led by former North Sea owner Ariel Floors, the focus is on discovering new resources near existing oil and gas fields to reduce production declines and reduce spending .

Another source from BP’s oil and production division said, “We are in a cropping mode and what is not being said is that BP is a very small company without exploration.”

Floors was not available for comment.

Data from Norwegian consultancy Ristad Energy shows that BP has acquired about 3,000 square kilometers of new exploration licenses in 2020, its lowest since 2015 and much lower than Shell, which has built about 11,000 sq. Kilometer or Total acquired, which purchased approximately 17,000 square kilometers.

Although global exploration activity slowed last year due to the COVID-19 epidemic, the decline in BP was primarily a result of a change in strategy, four company sources said.

(Graphic: BP’s slow search -)

(Graphic: BP Exploration Expense -)

The discovery of oil and gas has been the basis for the growth of companies in many multinationals that have given huge profits to shareholders over the decades.

BP began reducing its spending on exploration in response to the 2014 oil price crash under former CEO Bob Dudley, which aimed to use technology to unlock more oil and gas reserves.

Lonnie is running the exploration budget even lower, about $ 350 to $ 400 million per year. BP accounts for half of it in 2019 and nearly half of the fraction of $ 4.6 billion spent on exploration in 2010.

BP also wiped $ 20 billion in value from its oil and gas assets last year. At those low price assumptions, BP no longer considered many of its oil and gas reserves worth developing.

(Graphic: BP share performance -)

Beyond petroleum

BP, which started as the Anglo-Persian Oil Company in 1908 and has since discovered massive fossil fuel resources in places such as Iran, Iraq, Azerbaijan, the North Sea and the Gulf of Mexico, before diversifying into renewables Have tried.

BP, under CEO John Brown, invested billions of dollars in the field of petroleum and wind power technology, but a huge amount of investment failed.

Lonnie believes his plan will succeed with unprecedented government support for the energy transition and technological development that makes renewable energy more affordable than ever. He has appointed former McKinsey executive Giulia Chierchia to oversee the development of BP’s strategy.

And a team of geologists and data crunchers, led by Houston-based Kirsty McCormack, formerly in the exploration unit, now studying rock formations to discover fossil fuels to develop low-carbon technologies such as carbon-capture And will implement the analytics used to create the map. , Utilization and Storage (CCUS) and Geothermal Energy, company sources said.

Absorbing carbon dioxide emitted by heavily polluting industries and injecting it into poor oil reservoirs is seen as important in the energy transition by helping to offset emissions.

Other oil giants have also been reappointed along with Felipe Arbelaz, who previously headed BP’s oil and gas operations in Latin America, now heading his renewable business and Lewis Jacobsen Plutte, a veteran oil engineer , Who is now Senior Vice President Hydrogen CCUS.

BP has also hired Uber, Toyota and Silicon Valley employees to increase their understanding of electric vehicles, power markets, renewables, and expand their capabilities in big data.

A former Toyota employee, Franziska Bell is vice president of data and analytics at BP, while Justin Lewis joined the company to lead his high-tech start-up venture after working as a software engineer at Tesla in July Were.

This change remains a matter of awe and concern among employees, who are wondering whether the momentum is sustainable and whether it is enough to bump BP into a world of rapidly changing energy.

Some senior current and former employees warned that BP is participating in investments in new areas before fully understanding the risks of how they would fit into a converted company, while leaving long-term sources of cash.

A senior employee of the exploration division said, “There is so much internal change that it will be a big task to pick the organization and get things done.” ”

(Graphic: Big Oil costs -)

(This story was refined to correct paragraph 11 by removing the precise words)

Reporting by Ron Bousso; Editing by Alexander Smith


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