• Friday, April 19, 2024
businessday logo

BusinessDay

BP ventures back into oil frontiers to boost output amid renewables push

BP ventures back into oil frontiers to boost output amid renewables push

British Petroleum (BP) is ramping up oil exploration and drilling activity in frontier prospects as the energy giant tries to stem a decline in its oil and gas output after years of focusing on a shift to renewables to cut carbon emissions, according to a report by Reuters.

The move comes as companies try to balance pressure to slash climate-warming pollution against a desire to capitalise on soaring profits from oil and gas sales, even as governments work to tame energy prices following Russia’s invasion of Ukraine, Reuters said.

Early last month, the multinational oil and gas company said that it started drilling a wildcat, or exploratory, well far off the east coast of Canada which could open a new oil province in one of the world’s most remote locations.

The Stena IceMax drilling ship arrived early last month at the site of the Ephesus well in the Orphan basin some 400 kilometres offshore, according to ship tracking data.

Early seismic testing shows the Orphan basin may hold up to 5 billion barrels of oil equivalent (boe), one company source told Reuters. BP has drilled for oil there in the past with no success but continues its search for resources.

“It also holds a 35 percent stake in the nearby Bay du Nord offshore acreage operated by Norway’s Equinor (EQNR.OL), which is considering developing the block after making several discoveries there,” Reuters said.

“In addition, BP has revived in recent weeks plans to develop a complex oil reservoir in the Gulf of Mexico named Kaskida that was shelved a decade ago due to technical challenges. The new technology it will use to do so, if successful, could help unlock other similar resources around the world.”

Read also: Global energy efficiency must increase over $1.8trn by 2030 to attain net-zero targets – IEA

Strategy Shift

BP largely abandoned exploration of new oil and gas frontiers after Bernard Looney, its chief executive officer in 2020 announced plans to reduce its oil and gas output by 40 percent by 2030 as part of an ambitious climate strategy.

Instead, it has focused on searching for small reservoirs in basins where it operates such as the Gulf of Mexico, the North Sea, and Angola that can be easily and quickly linked to existing platforms.

But Looney decided in February to scale back plans to cut oil and gas output – already down some 10 percent from 2019 levels – in response to investor pressure, now aiming to cut output by 25 percent by 2030 to 2 million boe per day, Reuters said.

The global news agency added that the focus has once again shifted to discovering, developing, and acquiring new resources to offset a 3 percent to 5 percent natural decline of fields as reservoirs are depleted.

“BP will reach its lower production target mostly through selling aging oil and gas assets by 2030 while maintaining its underlying production by investing in new fields, Looney said in February, as quoted by Reuters.

The group has 15 oil and gas projects, including in Canada, Brazil, Senegal and Mauritania, which it is considering developing after 2025 to sustain its production, Murray Auchincloss, chief financial officer, BP told Reuters.