Is BP's Shift for Real?
Story number one is all about be p the P is of course for petroleum now be once said it wanted to get beyond petroleum more than a decade ago that strategy failed and now BP has a new CEO Bernard Looney. He came in recently in announced almost immediately that the company is going to try to offset or eliminate all of its carbon emissions by twenty fifty. Looney also said that he wants a fifty percent reduction in carbon intensity and he says ep will just depend less on oil production for its revenue and continue to ramp up in clean energy. And finally it's going to support a carbon taxes or climate related policy and pull out any money from climate denying trade organizations. Now this is a big deal for a company that has a very spotty record but there are not many details yet and loonie says that they'll those details will come in September so jigger we know that you used to work for BP. We have seen this movie before when BP attempted to rebrand beyond petroleum in the early two thousands. Is this any different? Yeah I think it is different right. So what about it? I think what happened under John Brown. Was that there was a realization on. John. Brown's part that this was a megatrend the BP had to figure out that it didn't know what it was doing but it really had to figure it out and John. Was Lord Browne actually. I was very dedicated to doing it. You Know Tony Hayward Org remind us who lured Brown is so Lord. Browne was the longest the loudness CEO and VP history. I think he was. Ceo for twenty years he found the prudhoe. Bay Alaska Find Which is really what made. Bp As a corporation and became CEO in the late eighties and busy never missed a quarterly earnings report. Until sort of the end of his tenure was heralded as probably one of the most powerful oil. Ceo's in modern times and and you know when you think about the people came after him right Tony Hayward and others Bob Dudley was actually my boss before I left. Bp Solar And so it was one of those things where where people ridiculed John Brown after? He laughed thought that he was distracted by non oil pursuits and the beyond petroleum stuff. And I think what the data shown is at pretty much every single unconventional oil project that BP has embarked on In the last ten years has lost money pretty much every single one and they are now worried that what the krona virus and everything else going on that oil prices might actually stay it forty fifty dollars a barrel forever because we've hit peak demand. Which was you know another artifact that was crafted by BP Guy Right so one of my bosses at BP was tool Aria. Who's now at the Cambridge Energy Research Group and and they you know he's crafted this peak demand scenario which. I think a lot of oil people believe now that we're never going to get above. Let's call it one hundred and three million barrels a day of oil so these are macro fundamental trends that BP is now starting to come to grips with saying their oil and business is actually fundamentally Not Profitable for future oil finds that they're looking for now. Bob Dudley the former CEO who Looney took over the company from you mentioned in a recent episode. His interview with Jason Board off of the Columbia Energy Exchange podcast. And you criticize him for that interview saying that he really wasn't in touch with the reality of the changing energy markets today. So Bob Dudley. What did he do at BP? And how might looney change that? So Bob Dudley came through the Amoco side of the business and then when BP Amoco merged in the ninety eight. I think it was twenty. Eight is when he joined. Bp At the time B. P. was all about gas. I mean it was a long time ago now but but Natural gas was a waste fuel. It was not counted in reserves. Right so when you went to a stock analyst and they care deeply in the oil industry about reserve replacement ratio. Natural gas wasn't allowed to be counted in that today. Exxon Mobil seventy percent of their reserve place ratio is natural gas. So that was Bob Dudley's education right. It was really the power of gas. And that's what you know Lord Browne of inculcated in him and you know and then he went to Russia he you know our assets and BP were taken over by the government and then he fled in the middle of the night and like had to be kept in a secret location because people feared for his life. I mean those are the kinds of experiences that shaped Bob Dudley. And but to this day he's really just a natural gas fan. He just believes very strongly that the way. Bp gets there in this changing world is by converting everything to gas. Catherine you sat down and you watched Bernard loonies speech. What did he say? And what feels different to you? Yes so interestingly he just got this job. A couple of weeks ago He started at BP as an entry level engineer in early in his career nineteen ninety-one or something so he's grown up in that company so he knows a lot about the company so two weeks into being the CEO isn't starting a job without knowing anything about it. And I spoke to Mary Street. A friend of mine who works at BP. She's a senior vice president of communications and External Affairs. And she said he is setting a new direction Of course the double is in the details of how that's going to be executed but the speech was pretty impressive to his employees and investors and stakeholder community. Which is they're going to be reimagining. Energy reinventing EP and performing wild transforming. That's how he put it. And they have ten main goals or aims as he says five of them are internal so they wanna get to net zero across their operations on an absolute basis by twenty fifty or earlier they WanNa get to net zero on carbon in their oil and gas production by twenty fifty or sooner they wanna cut their carbon intensity of their products that they sell by fifty percent by twenty fifty or sooner they need to install methane measurement on all of their processing sites and reduced intensity by fifty percent and they want to increase the proportion of investment into non oil and gas businesses over time. And they're even saying that is going to increase while their oil and gas investment is going to decrease and then there are other five goals. Those are sort of the five internal goals the five external goals are that they want to more actively advocate for Pie policies that support at zero including carbon pricing. And what they would do is shift dollars from reputational advertising so all those ads you see on tv about how awesome oil and gas are. Those funds would be shifted into policy advocacy. They would incentivize their employees to you know to deliver on some of these goals. They would set expectations for relationships with trade associations. And that's gonNA come out later. This month and analysis of what trade associations they want to still affiliate with and which ones they can no longer affiliated with based on this new direction They want to be recognized as being very transparent and align with all these disclosure groups to make sure that people know what they do remember. They have had people protesting outside of their headquarters every day for a very long time And then they want to launch a new team to help others decarbonised and to look for New Investments. So with these ten aims. He's really serious about this and I think it is setting. A new trajectory for the company will be really interesting to see in September. What the details of that are and how they do plan to go to net zero on the carbon intensity and all that