At last year's CERAWeek, Robert Dudley, group chief executive, BP plc, stated the industry needs to prepare for "lower for longer," a default phrase for discussing the future direction of energy prices. He amended that phrase at the 2017 event to "lower for longer but not forever."
"If you remember, everyone was flying high in some ways, unless you were in the refining sector," he said. "But then we started to look at supply and demand and noticed that the demand was still there but stocks were starting to build up steadily. We recognized there was too much stock in the market and realized that a crash was coming.
"There is a serious intent among OPEC and the 11 non-OPEC countries to move back on production, and now we're heading to a balance point. The world needs a higher oil price and BP has made some investments on the confidence that we will have $55 barrels of oil."
Dudley discussed the company's nearterm plans and projects in the works and openly discussed the financial after-effects of the Macondo incident.
"At BP, we've had our own special problems over the last six to seven years that are well-known," he said. "We had to sell $50 billion worth of assets, or $75 billion if you count our Russian assets, to meet our obligations in the United States, specifically the Gulf of Mexico. We have been quietly working to build projects and retool in order to turnaround our assets."
The company will bring on more projects in 2017 than in the history of the company in terms of activity levels, he added. To compare, he said that in 2011, BP had 8 million work hours, and in 2017, it will log 88 million hours for projects under construction around the world.
BP is currently investing in seven projects expected to come on line this year:
- The West Nile Delta Project, located in Egypt, involves the development of gas and condensate fields located within the North Alexandria and West Mediterranean Deepwater concessions in the Mediterranean Sea. BP serves as the operator.
- The Khazzan Natural Gas Project, located in Oman, requires the development of 300 wells over the lifetime of the project to contribute 1.5 billion cubic feet of gas per day to the Omani economy. BP serves as the operator.
- The Quad 204 Project, located in the North Sea, involves the redevelopment of the Schiehallion and Loyal fields, which includes a new floating production, storage and offloading unit -- Glen Lyon -- connecting to an infrastructure network. The vessel has a storage capacity of 800,000 barrels of oil, with the ability to process 130,000 barrels of oil and 220 MMcf/d of gas. BP serves as the operator.
- The Juniper Project, located in Trinidad, involves the construction of a normally unmanned platform and subsea infrastructure that will produce gas from the Corallita and Lantaria fields located 50 miles off the coast of Trinidad. BP serves as the operator.
- The Thunder Horse South Expansion, located in the Gulf of Mexico, requires three new wells and an existing fourth well to connect to a new subsea drill center. BP serves as the operator.
- The Trinidad Onshore Compression will increase production from low-pressure wells in existing acreage in the Columbus Basin, using an additional inlet compressor at the Point Fortin Atlantic LNG plant.
- Persephone, located in Western Australia, is a two-well subsea tieback to the existing Rankin complex.
"These projects were initiated during the downturn and are very important projects for the company," Dudley said. "We're about 50-percent focused on oil, and within the next decade we'll be about 60 percent, considering these projects, which represents a shift for us."
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