BP holds around 18 billion barrels of oil equivalent in its resources plan – enough to maintain production for the next two decades, executives confirmed this week.
The London-headquartered supermajor hosted an ‘upstream showcase’ for investors in Denver this week, in which it revealed a resource hopper of around 36 billion barrels of oil equivalent (boe), around 18 billion of which it said are in current plans and expected to meet return rates.
At 2022 rates, BP said the 18bn boe represented around 20 years of production, with the group intending to hold its reserves-to-production ratio at around eight years.
It said it would be “disciplined in evaluating these potential projects” based on investment hurdle rates of 15-20%, and payback periods of ten years for oil and 15 years for gas. Annual capital investment, including inorganics, was forecast at $14-18bn
to 2030.
Average point forward development costs were pegged at around $10 per boe, with unit production cost of around $7 per barrel.
In 2020 the group unveiled an ambitious strategy to reach net zero, but in February this year rolled back plans for a 40% reduction in oil and gas production by 2030, settling instead on a 25% cut.
This week’s presentation says BP’s upstream strategy now is about “growing and sustaining value, not volume”, though it still expects to grow underlying production up to 2025.
“After divestments, we expect headline production to be around two million barrels of oil equivalent per day in 2030,” the presentation notes.
To do that, BP points to a number of growth options in oil close to existing infrastructure, in areas including the Gulf of Mexico, North Sea and Azerbaijan as well as new hub development options in Brazil, Canada and Gulf of Mexico Paleogene.
That includes an entry for the Clair Phase 3 development west of Shetland. A final investment decision (FID) for this had been eyed for next year, though it’s understood that timeline could move back.
© Supplied by BPMeanwhile it hailed start-up of three major projects so far this year, with a fourth – the North Sea’s Seagull development – said to be “imminent.”
The event was the third such gathering the supermajor has held, following similar ‘showcase’ events in Baku in 2016 and Oman in 2018, though this time focused on its Denver-headquartered US onshore business BPX.
It also marked the first major investor engagement for interim chief executive Murray Auchincloss, who took the helm at BP following the surprise departure of Bernard Looney in September after an investigation into his personal relationships with colleagues and accusations of misleading the board.
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