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Home / Business / BP’s oil exploration team swept through the climate revolution

BP’s oil exploration team swept through the climate revolution

LONDON (Reuters)-Today, there is nowhere to escape the wind of change sweeping the world by BP, and even the exploration team that has been powering its profits by discovering billions of barrels of oil for more than a century.

File picture: BP’s new CEO Bernard Looney will deliver a speech in central London, UK on February 12, 2020.REUTERS/Toby Melville/File Image

Company sources told Reuters that its geologists, engineers and scientists have been cut from a peak of more than 700 a few years ago to less than 1

00. This was initiated by CEO Bernard Looney last year. Part of climate change-driven reforms.

Since Rooney arrived, the wind of the exploration team has become very cold. A senior member of the team told Reuters that this happened very quickly.

Current and former employees said that in recent months, hundreds of people have left the oil exploration team and were either mobilized to help launch new low-carbon activities or were fired.

The evacuation is the most obvious sign of the company’s rapid shift from oil and gas. Despite this, oil and gas will still be its main source of cash to switch to renewable energy for at least the next ten years.

BP declined to comment on the personnel changes, but has not disclosed it publicly.

Reuters interviewed more than a dozen current and current employees of BP. They highlighted the huge challenges the company faces in its transition from fossil fuels to carbon neutrality.

Rooney made clear his intentions internally and externally by lowering BP’s production target and becoming the first major oil company CEO to promote it. This is positive for investors seeking a long-term vision of a low-carbon economy. of.

Under Rooney’s reorganization, BP will lay off about 10,000 employees, accounting for about 15% of its total workforce. It is the most active part of European oil giants including Royal Dutch Shell and Total.

The 50-year-old senior petroleum engineer has served as the head of the oil and gas exploration and production department. His goal is to reduce daily production by 1 million barrels, or 40%, within the next ten years, while increasing renewable energy production by 20 Times.

Despite these changes, at least until 2030, oil and natural gas will still be BP’s main source of income.

Looney’s efforts to reshape BP did not increase its share price. The stock fell to its lowest level in 25 years at the end of 2020 and fell 44% that year, mainly due to its ability to transform and achieve its expectations Doubts about profits.

They added that this change marks the end of the era of exploration teams from Moscow and Houston to BP’s research headquarters in Sunbury near London, with a farewell party held at Zoom in recent months.

“The atmosphere is cruel,” said a former employee during the layoffs last year.

For BP’s reduced exploration team led by the former North Sea boss, Ariel Flores, the focus has been reduced to finding new resources near existing oil and gas fields to compensate for the decline in production and minimizing expenditures. .

Another source in BP’s oil and production department said: “We are in harvest mode. This is not to say that BP will become a smaller company without the need for exploration.”

Flores could not comment.

According to data from the Norwegian consulting company Rystad Energy, BP obtained a new exploration license of approximately 3,000 square kilometers in 2020, which is the lowest level since 2015 and far below Shell’s acquisition of approximately 11,000 square kilometers, or Total ), the latter purchased approximately 17,000 square kilometers.

Four company sources said that although global exploration activities slowed down last year due to the COVID-19 pandemic, the decline in BP was mainly the result of strategic changes.

(Picture: BP’s exploration pace is slow -)

(Picture: BP exploration expenditure -)

Oil and gas exploration has always been a pioneer in the development of companies into large multinational companies, which have brought substantial profits to shareholders in the past few decades.

In response to the sharp drop in oil prices in 2014, British Petroleum (BP), under the leadership of former CEO Bob Dudley (Bob Dudley), began to reduce its exploration expenditures in order to use technology to release more oil and gas reserves.

Rooney is further reducing the exploration budget, which is approximately US$35-400 million per year. This is only about half of BP’s expenditure in 2019, and only a small part of the US$4.6 billion exploration expenditure in 2010.

BP also wiped out $20 billion from the value of its oil and gas assets last year after cutting energy price expectations. Under these lower price assumptions, BP no longer considers many of its oil and gas reserves worth developing.

(Picture: BP stock performance -)

Beyond oil

BP started in 1908 as the Anglo-Persian Petroleum Company. Since then, it has discovered a large number of fossil fuel resources in Iran, Iraq, Azerbaijan, the North Sea and the Gulf of Mexico. Previously, the company tried to diversify and develop it. For renewable energy.

Under the leadership of CEO John Browne, BP initiated the “Beyond Oil” project and invested billions of dollars in wind farms and solar technology, but most of the investments failed.

Looney believes that his plan will be supported by the government’s unprecedented energy conversion and technological advancement, which will make renewable energy more affordable than ever. He has hired former McKinsey executive Giulia Chierchia to oversee the development of BP’s strategy.

A team of geologists and data processors led by Kirsty McCormack of Houston (previously working in the exploration department) will now apply the analytical methods used to study and map rock structures to find fossil fuels. To develop low-carbon technologies, such as carbon capture company sources said, including use, storage (CCUS) and geothermal energy.

Absorbing carbon dioxide emitted by heavily polluting industries and injecting it into lean oil depots is seen as the key to the energy transition by helping to offset emissions.

Other oil experienced people have also been transferred. Felipe Arbelaez, who was previously head of BP’s oil and gas operations in Latin America, now leads its renewable energy business, and Louise Jacobsen Plutt, an experienced petroleum engineer, is now Senior Vice President of Hydrogen CCUS.

BP also recruited employees from Uber, Toyota, and Silicon Valley to deepen its understanding of electric vehicles, the electricity market, and renewable energy, and expand its capabilities in the field of big data.

Franziska Bell, a former Toyota employee, is BP’s vice president of data and analysis, and Justin Lewis joined the company in July after working as a software engineer at Tesla and is responsible for its high-tech start-ups.

The employees are full of awe and concern. They are undergoing transformation. They want to know whether the pace is sustainable and whether BP is sufficient to compete in the rapidly changing energy world.

Some current and former senior employees have warned that BP may venture into new areas until they fully understand how they will adapt to the transformed company while giving up long-term cash sources.

A senior employee in the exploration department said: “The internal changes are huge, and it will be a tough job to take over the organization and make things go smoothly.”

(Picture: Expenses of major oil companies -)

(In order to delete paragraph 11, redundant text was deleted and the story was rewritten)

Reporting by Ron Bousso; Editing by Alexander Smith

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