BP America chief: Pursuit of efficiencies meeting ‘dual challenge’
At BP, the motto is “reduce, improve, create,” according to Susan Dio, president of the London-based oil major’s America division.
Dio spoke June 20 to a crowd gathered in Anchorage for the Resource Development Council for Alaska’s annual membership lunch.
Her speech largely focused on how one of the world’s largest oil companies plans to match its business objectives with the larger, global need for cleaner, if not clean, energy supplies. It’s what BP is calling the “dual challenge.”
“We’re working to reduce emissions in our operations, improve our products and create new low-carbon businesses,” Dio said.
She noted that the expected increase in future energy demand will be driven less by population growth than a rapidly growing global middle class.
According to BP’s annual Energy Outlook, which examines all aspects of global energy consumption and production, worldwide economic output is projected to increase by nearly 75 percent by 2040 as more than 2.4 billion people move to the positive side of the poverty line.
“Over that same period, we project that global energy demand will increase by 35 percent,” Dio said. “Interestingly, the entire increase will come from developing countries, most notably, China and India.”
Oil industry advocates have long touted affordable energy supplies — primarily fossil fuels — as a building block for developing nations.
China in particular is embarking on a major overhaul of its energy consumption away from coal and towards natural gas as a feedstock for electrical generation.
Not coincidentally, three of the country’s large government-owned companies are potential lynchpin partners to buy from and finance the $43 billion Alaska LNG Project that BP is assisting the Alaska Gasline Development Corp. with.
BP and AGDC also announced in May that they had reached agreement on North Slope gas pricing and volume terms should Alaska LNG continue to move forward, the first time a producer has taken that step for an Alaska gasline proposal.
However, Dio also stressed that even under the most aggressive global energy transition scenarios the company has forecast for the next 20-plus years, traditional energy sources will still represent the lion’s share of the world’s energy consumption.
Oil and natural gas currently account for 57 percent of the world’s energy mix, with coal totaling 28 percent and all other supplies combining for the remaining 15 percent, according to BP’s Energy Outlook.
“Even in a scenario thought to be consistent with meeting the Paris climate goals, fossil fuels still account for more than 50 percent of total energy in 2040, and oil and gas alone account for more than 40 percent,” she said.
Under that scenario, hydropower and other renewables would make up 41 percent of worldwide energy sources. Coal usage would decline the most — down to 10 percent of the energy portfolio — with nuclear power growing from 4 percent to 8 percent of the overall supply.
BP estimates that if current energy policy and technology trends persist, fossil fuels will still comprise nearly three-quarters of global consumption in 2040, with renewables collectively making up 21 percent of the energy mix. That is despite the fact that renewable energy sources are currently the fastest-growing energy source in history, according to the company.
It’s important to note that all of the projections are based on overall energy demand increasing by roughly one-third by 2040, which means consumption of energy from a given source could increase even if the source becomes a smaller portion of the global energy portfolio in years to come.
That all means business operations will have to become much more energy efficient, at least for BP, to meet broader carbon emissions reduction goals.
Dio highlighted one of BP’s chemicals plants located in South Carolina as an example of the company’s efforts on that front, among others.
“In 2017, BP’s Cooper River plant completed a modernization project that will allow the site to reduce the amount of electricity it purchases from the grid by 40 percent and cut up to 110,000 tons of carbon emissions per year, while also boosting production by 10 percent,” Dio said.
She said further that the company’s 26 freight and crude tankers are more than 20 percent more fuel efficient than its older vessels and the six LNG tankers BP is building now will be about 25 percent more fuel efficient than their predecessors.
Additionally, BP, which sells more traditional natural gas in North America than any other company, is also the largest supplier of renewable “biogas” — derived from methane-producing organic waste — to the country’s transportation industry, according to Dio.
The company is also a strong proponent of carbon pricing mechanisms.
“In BP, we continue to believe that carbon pricing must be a key element of any such (emissions reduction) approach as it provides incentives for everyone — producers and consumers alike — to play their part,” CEO Bob Dudley wrote in the 2018 Energy Outlook report.
The state’s draft Climate Change Policy released in April by Gov. Bill Walker’s administration recommends Alaska develop its own carbon pricing plan.
BP Alaska President Janet Weiss is on the governor’s task force that generated the climate policy objectives, a fact that Dio said BP is “enormously proud” of.
“We’ve been urging policymakers to remember that energy production and environmental protection are not mutually exclusive,” she said. “The world can have the energy that powers economic growth and lifts people out of poverty while also reducing greenhouse gas emissions.
New look at Prudhoe
As for Alaska, Dio was quick to emphasize that BP has managed to hold oil output steady at Prudhoe Bay since 2015 — not a small feat considering the size and age of the oil field that has been producing oil for more than 40 years.
“BP Alaska has been a global leader in deploying enhanced oil recovery technology. For many years now, this technology has helped us increase production at Prudhoe Bay. We’ve also become more efficient through increased well work,” Dio said.
Operational advancements of late have improved the company’s efficiency on the North Slope from 80 to 85 percent, which equates to between 10,000 and 15,000 additional barrels of oil from Prudhoe, according to Dio.
She also announced that the company will be conducting a 3D seismic shoot of the entire Prudhoe Bay field next year using its internal proprietary technology.
“The survey will provide high seismic coverage to support new drilling and well work, which will help us further prolong the life of the field,” Dio said.
Elwood Brehmer can be reached at [email protected].