LONDON (Reuters) – Nothing escapes the winds of change now sweeping BP, not even the exploration team that has fueled its profits for more than a century by uncovering billions of barrels of oil.
Its geologists, engineers and scientists have been reduced to less than 100 from a peak more than 700 years ago, company sources told Reuters as part of a climate change review launched by the CEO last year. Bernard Looney.
“The winds have become very cold in the exploration team since Looney’s arrival. This is happening incredibly fast, “a senior team member told Reuters.
Hundreds have left the oil exploration team in recent months, either transferred to help develop new low-carbon or laid-off activities, current and former employees said.
The exodus is the strongest sign inside the company that it is rapidly moving away from oil and gas, which will nevertheless be its main source of cash to finance the switch to renewable sources for at least the next decade.
BP declined to comment on the personnel changes, which were not publicly disclosed.
Reuters spoke with a dozen former and current BP employees who highlighted the massive challenges facing the company in its transition from fossil fuels to carbon neutrality.
Looney has expressed clear intentions internally and externally, by lowering BP’s production targets and becoming the first major oil CEO to promote this as a positive thing for investors looking for a long-term vision for a low-emission economy. carbon.
BP is reducing about 10,000 jobs, about 15% of its workforce, as part of the restructuring of Looney, the most aggressive of Europe’s oil giants, including Royal Dutch Shell and Total.
A 50-year-old veteran engineer who previously led the oil and gas exploration and production division aims to reduce production by 1 million barrels a day, or 40%, over the next decade, while increasing production. renewable energy 20 times.
Despite the changes, oil and gas will remain BP’s main source of income until at least 2030.
And Looney’s effort to reinvent BP has done nothing to boost its stock, which has reached its lowest level in 25 years by 2020 and dropped 44 percent year-on-year, mostly because of doubts about whether it will could transform and obtain the profits it aims for.
The change marks the end of an era for exploration teams in Moscow and Houston at BP’s research headquarters in Sunbury, near London, with farewell rallies on Zoom in recent months, they added.
“The atmosphere was brutal,” said a former employee at the time of last year’s layoffs.
For BP’s small exploration team, led by Ariel Flores, the former head of the North Sea, the focus has shifted to finding new resources near existing oil and gas fields to offset production declines and minimize spending.
“We are in a harvest mode and what is not being said is that BP will be a much smaller company without exploration,” said a second source in BP’s oil and production division.
Flores was not available for comment.
Data from Norwegian consultancy Rystad Energy shows that BP acquired around 3,000 square kilometers of new exploration licenses in 2020, the lowest since at least 2015 and much less than at Shell, which acquired about 11,000 square kilometers. or Total, which bought about 17,000 square miles.
Although global exploration slowed last year due to the COVID-19 pandemic, the decline in BP was mainly the result of a change in strategy, four company sources said.
(Chart: BP’s slow exploration -)
(Chart: BP exploration expenses -)
Oil and gas exploration has been the spearhead of the evolution of companies into huge multinationals that have offered huge profits to shareholders over the decades.
BP has begun cutting exploration spending under former CEO Bob Dudley in response to the 2014 oil price crash, seeking to use the technology to unlock more oil and gas reserves.
Looney is pushing the exploration budget even lower to about $ 350 million to $ 400 million a year. This represents about half of BP’s spending in 2019 and a fraction of the $ 4.6 billion spent on exploration in 2010.
Last year, BP wiped out $ 20 billion from its oil and gas assets after lowering its energy price outlook. Under these lower price assumptions, BP no longer considered that many of its oil and gas reserves were worth developing.
(Chart: BP action performance -)
Beyond oil
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, has tried to diversify into renewable sources before.
Under executive leadership, John Browne BP launched “Beyond Oil”, investing billions in wind farms and solar energy technology, but the vast majority of investments 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 recruited Giulia Chierchia, a former McKinsey executive, to oversee the development of BP’s strategy.
And a team of geologists and data analysts led by Houston-based Kirsty McCormack, who was previously in the exploration unit, will now apply the analysis used to study and map rock structures in search of fossil fuels to develop technologies with Low carbon emissions, such as carbon capture, use and storage (CCUS) and geothermal energy, company sources said.
The uptake of carbon dioxide by highly polluting industries and its injection into depleted oil reservoirs is seen as key in the energy transition, helping to offset emissions.
Other oil veterans were also assigned, along with Felipe Arbelaez, who previously led BP’s oil and gas operations in Latin America, now running the renewable energy business, and Louise Jacobsen Plutt, an experienced oil engineer now senior hydrogen vice president. CCUS.
BP has also introduced staff from Uber, Toyota and Silicon Valley to increase its understanding of electric vehicles, electricity markets, renewable energy sources and to expand its capacity in the field of big data.
Franziska Bell, a former Toyota employee, is vice president of data and analytics at BP, while Justin Lewis joined the company in July to lead the high-tech startup after working as a software engineer at Tesla.
The transformation has been met with a mixture of amazement and concern among employees who wonder if the pace is sustainable and if it is enough for BP to compete in a rapidly changing energy world.
Some current and former employees have warned that BP risks rushing to invest in new areas before fully understanding how they will fit into a transformed company, while abandoning long-standing cash sources.
“There are so many internal changes that it will be an important job to build the organization and make things work,” said a senior employee in the exploration division.
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(This story has been redesigned to correct paragraph 11 by removing foreign words)
Reporting by Ron Bousso; Edited by Alexander Smith