The global energy business is for the optimistic, those unafraid of facing challenges and taking risks, and it will forever be so, BP plc Group CEO Bob Dudley said Wednesday before a crowd at IHS CERAWeek 2013 in Houston.
Dudley often has been a keynote speaker at the event, now in its 32nd year. Opinions about supply and demand may have evolved, he said, but the essence of what it takes to produce energy around the world has never changed.
“Whenever I come to a conference such as this, I’m reminded of the contrast between the comfortable places where we discuss and consume energy and the sometimes inhospitable places where we produce it,” Dudley told the audience. “This is a fact that bears repeating. In order that people can live in comfort, the natural resource industries need to go to remote, challenging and often hostile environments to access the necessary sources of energy for society.”
In business, he said, “we often talk of challenges and opportunities. What we face today in energy is a series of challenging opportunities, from the shales of America to the snows of Siberia. The opportunities are plentiful, but they are also complex and difficult. And from BP’s perspective, and many other companies in our industry, the message is that we have learned from recent events and we plan to address those opportunities safely, responsibly and reliably.”
The talk about peak oil and natural gas is over, said the BP chief.
“Thanks to new frontiers such as shale and the deepwater, our industry is now producing an enormous amount of previously unreachable oil and gas. At current consumption rates, the data suggests the world has 54 years’ worth of proved oil reserves and 64 years’ worth of proved gas reserves in place — and more will be found. So we are working in a world with ever more diverse sources of supply, and diversity of course, increases energy security by avoiding over dependence on any one source.
“However, this diversity comes at a price. Many of the new supplies are in places that are hard-to-get at: shale oil and gas, tight oil and gas, heavy oil, the deepwater, and, in due course, the Arctic Circle. And the physical and technological risks are not the only ones. Other factors range from fiscal regimes and other policy-related issues, to geopolitical tensions and even the risk of terrorism.” BP was directly impacted a few weeks ago when four its employees and colleagues from other companies were murdered in a terrorist attack on the In Amenas natural gas plant in Algeria. However, “we have spent over 100 years producing energy in tough surroundings and we will not be deterred.”
BP, he said, has contributed technology to the energy industry that has helped to make big strides in exploration and development, from early hydraulic fracturing techniques to 4-D seismic processed via supercomputers. The operator now is building the world’s largest commercial supercomputing research facility in Houston (see Daily GPI, Dec. 10, 2012).
“Overall, we have invested $55 billion in the U.S. over the last five years, more than any other energy company, and more than we have invested in any other country…Last year we produced 675,000 boe each day in the U.S., more than 20% of our global total.”
BP’s focus remains on fossil fuels, but it continues to support lower-carbon energy sources. In the past eight years the operator has invested about $8 billion on alternatives, more than half of it in wind farms, as well as in advanced biofuels facilities in the United States. “We have thrown in the towel on solar,” Dudley said. “We worked on it for 35 years and it really never made money and we have exited it.
“But biofuels will be mandated as long as it doesn’t compete with food crops. There’s a real opportunity there…” As far as alternative energy, “there is no question that mankind is on a long wavelength transition to low-carbon energy. And if we can make it economically viable, we’ll invest in that.”
BP’s commitment to U.S. energy development “has never wavered,” even after the Macondo well blowout in the GOM in 2010. Today, BP remains the largest GOM deepwater leaseholder with about 750 leases. It also has seven deepwater rigs in operation.
“History in our business has favored the optimists. The resource wars that were predicted when I joined the industry never came to pass. In fact, the world’s energy companies have produced more oil in the last 40 years than was thought to exist on the entire globe in 1979…We have faced challenges in recent years, in America, Russia and elsewhere. But as I said, this is not a business for the faint-hearted or the easily discouraged. And we are neither.”
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