Returning BP’s challenge

Lord Browne, the Chief Executive of BP, is known for his rejection of oil and gas depletion, being on record as saying that he sees his mission as to achieve the impossible. His views are amply confirmed by the following extract from a recent speech to the World Petroleum Congress in South Africa. While he is not necessarily informed about the world discovery record, as for example published by Exxon (see Page 2) , he should at least be able to find out how much his own company has found over the past Century.

He speaks of the challenge to prove those who recognise Peak Oil to be wrong. We therefore would like to return the challenge and invite him to publish a graph depicting BP’s discovery by new field wildcat of oil (plus condensate) and gas for the onshore, offshore, deepwater (>500m) and polar domains. Any reserve revisions are to be backdated to the discovery of the fields concerned in order to obtain a valid discovery trend. If it is too much trouble to check all the records, it would suffice to show just the results of BP-operated ventures, showing BP’s net share thereof.

"Those are the reasons why people are concerned. Why people are talking about the end of oil. The challenge for the industry, for all of us, is to prove them wrong. It is our industry and we can’t expect anyone else to do the job for us. And I believe we can prove them wrong.

"First we can explain very clearly the reality which is well known to everyone in this room. The world isn’t running out of oil. There is no physical shortage of oil or gas. There are decades of booked reserves of both oil and natural gas and even more yet to be found.

And there are huge volumes of heavy oil – in Canada and Venezuela – which are identified and which have yet to be developed."

"Secondly we can bring that oil to market at a reasonable cost – a cost well below the current market price. And the industry is investing to do just that. The 1990s were a period of relatively low investment – for the simple reason that prices were low and cash flow was limited. But that began to change with the turn of the century. The underpinning of prices from 2000 onwards has increased the funds available and the industry has responded by increasing investment. BP alone has invested $ 50 bn upstream since 2000. In places, such as Russia, Angola, Trinidad, in the deep water of the Gulf of Mexico, in Algeria and in the Caspian. The industry has also invested in the continuous improvement of the refining business – upgrading capacity and ensuring that there is sufficient refining capability to meet the changing and growing needs of the market."

We don’t have good information on BP’s discovery record but suppose that the record would look something like the attached graph, which depicts the total size of the main identified BP operated oil discoveries. It would make better sense to report the BP net holding, deducting the partner interests, which would probably show a greater flattening since most discoveries over the past 50 years have been in joint ventures. The plot excludes reserves from acquisition or merger, which cannot be treated as discovery as such.

Evidently, BP has mounted a fairly successful deepwater campaign, which is probably now passing its prime, but does not appear to have been able to replace its Regular Conventional reserves by new discovery. We stand to be corrected if granted access to better information.