By Ron Busso
LONDON (Reuters) – Nothing escapes the winds of change that are now engulfing BP, not even the exploration team, which has been fueling its profits for more than a century, finding billions of barrels of oil.
Its geologists, engineers and scientists have been reduced to less than 100 from a peak of more than 700 a few years ago, company sources told Reuters, part of a major overhaul based on climate change launched last year by CEO Bernard. The moon.
“The wind turned very cold on the research team after Looney’s arrival. It’s happening incredibly fast,”
In recent months, hundreds have left the oil exploration team, either transferred to help develop new low-carbon activities or laid off, current and former employees said.
The eviction is the clearest sign inside the company of its rapid move away from oil and gas, which will nevertheless be the main source of money to finance the transition to renewables for at least the next decade.
BP declined to comment on staff changes that have not been made public.
Reuters spoke with a dozen former and current BP employees, who highlighted the huge challenges the company faces in its transition from fossil fuels to carbon neutrality.
Luni clarified his intentions internally and externally by reducing BP’s production targets and became the first CEO of oil to promote this as a positive for investors seeking a long-term vision for a low-carbon economy.
BP is cutting about 10,000 jobs, about 15% of its workforce, as part of the restructuring of Looney, the most aggressive of European oil giants, including Royal Dutch Shell and Total.
The 50-year-old veteran engineer, who previously headed the oil and gas exploration and production department, aims to reduce production by 1 million barrels per day, or 40%, over the next decade, while increasing renewable energy production. 20 times.
Despite the changes, oil and gas will remain BP’s main source of revenue for at least 2030.
And Looney’s drive to rediscover BP has done nothing to boost its shares, which reached their lowest level in 25 years in late 2020 and fell 44% year-on-year, largely because of doubts about whether it will be able to transforms and realizes the profits it seeks.
The change marks the end of an era for research teams from Moscow and Houston to BP’s research headquarters in Sunbury, near London, with farewell meetings held at Zoom in recent months, they added.
“The atmosphere was brutal,” a former employee said during last year’s layoffs.
For BP’s redundant team, led by Ariel Flores, a former North Sea chief, the focus has shifted to looking for new resources near existing oil and gas fields to offset production cuts and minimize costs.
“We are in a harvest mode and what is not being said is that BP will be a much smaller company without a survey,” said a second source in BP’s oil and production division.
Flores was not available for comment.
Data from Norwegian consulting firm Rystad Energy show that BP acquired about 3,000 square kilometers of new exploration licenses in 2020, the lowest since at least 2015 and far less than Shell, which acquired about 11,000 square kilometers. , or Total, which bought about 17,000 square kilometers.
Although global research activity slowed last year due to the COVID-19 pandemic, BP’s decline was largely the result of a change in strategy, four company sources said.
(Graph: delay in the BP survey – https://graphics.reuters.com/BP-EXPLORATION/ygdpzakkkvw/chart.png)
(Graph: BP research costs – https://graphics.reuters.com/BP-EXPLORATION/yzdvxgqxnpx/chart.png)
The exploration of oil and gas is at the forefront of the evolution of companies into huge multinational companies that have brought huge profits to shareholders over the decades.
BP began cutting its exploration costs with former CEO Bob Dudley in response to the 2014 oil price crash, which aimed to use technology to unlock more oil and gas reserves.
Looney reduced the study budget even lower, to about $ 350 million to $ 400 million a year. That’s about half of BP’s spending in 2019 and a fraction of the $ 4.6 billion spent on research in 2010.
BP also wiped out $ 20 billion worth of its oil and gas assets last year after cutting its energy price outlook. Under these lower price assumptions, BP no longer considers many of its oil and gas reserves worth developing.
(Graphics: BP sharing efficiency – https://fingfx.thomsonreuters.com/gfx/ce/bdwvkyzndvm/Pasted%20image%201611156827068.png)
BEHIND THE PETROLEUM
BP, which started as an Anglo-Persian oil company in 1908 and has since discovered vast fossil fuel resources in places such as Iran, Iraq, Azerbaijan, the North Sea and the Gulf of Mexico, is trying to diversify into renewable energy sources.
Under CEO John Brown, BP launched Beyond Petroleum, investing billions in wind farms and solar energy, but most of the investment failed.
Looney believes his plan will succeed with unprecedented government support for the energy transition and technological advances that make renewable energy more affordable than ever. He appointed Julia Chierkia, a former McKinsey CEO, to oversee BP’s strategy development.
And a team of geologists and data purifiers led by Houston-based Kirsty McCormack, who was previously in the study unit, will now apply analyzes used to study and map rock structures in search of fossil fuels to develop low-carbon technologies such as carbon capture, use and storage (CCUS) and geothermal energy, company sources said.
The absorption of carbon dioxide emitted by highly polluting industries and its injection into depleted oil tanks is considered key in the energy transition, helping to offset emissions.
Other oil veterans have also been reassigned, such as Felipe Arbelaes, who previously led BP’s oil and gas operations in Latin America, now runs his renewables business, and Louise Jacobsen Flesh, an experienced oil engineer and now senior vice president of CCUS Hydrogen.
BP also deployed staff from Uber, Toyota and Silicon Valley to improve its understanding of electric vehicles, energy markets, renewables and expand its big data capabilities.
Francesca Bell, a former Toyota employee, is vice president of data and analysis at BP, while Justin Lewis joined the company in July to head its high-tech startup after working as a software engineer at Tesla.
The transformation has been met with a combination of awe and concern among employees who are wondering if the pace is sustainable and if BP is enough to compete in the rapidly changing energy world.
Some senior current and former employees have warned that BP risks embarking on investments in new areas before fully understanding how they will fit into a transformed company, while abandoning long-standing sources of money.
“There are so many internal changes that it will be a big deal to lift the organization and get things going,” said a senior research officer.
(Graph: Big Oil Costs – https://graphics.reuters.com/OILMAJORS-CAPEX/gjnpwkmwypw/chart.png)
(This story has been corrected to correct paragraph 11 by removing foreign words)
(Report by Ron Busso; Edited by Alexander Smith)