LONDON (Reuters) – Nothing escapes the winds of change now blowing through BP, not even the exploration team that has fueled profits for over a century by discovering billions of barrels of oil.
The geologists, engineers and scientists have been reduced to less than 100 from a peak of more than 700 a few years ago, corporate sources told Reuters, part of a climate change-powered overhaul triggered last year by CEO Bernard Looney.
“The wind has turned very cold in the reconnaissance team since Looney arrived. This is going incredibly fast, ”a senior member of the team told Reuters.
Hundreds have left the oil exploration team in recent months, either transferred to help develop new low-carbon businesses or laid off, current and former employees said.
The exodus is the strongest sign yet from within the company of the rapid shift of oil and gas, which will nonetheless be the main source of cash to fund a switch to renewables for at least the next decade.
BP declined to comment on the staff changes, which have not been made public.
Reuters spoke with a dozen former and current BP employees who highlighted the daunting challenges the company faces in moving from fossil fuels to carbon neutrality.
Looney made his intentions clear internally and externally by lowering BP’s production targets and becoming the first major oil CEO to promote it positively for investors seeking a long-term vision for a low-carbon economy.
BP is cutting about 10,000 jobs, about 15% of its workforce, under the restructuring of Looney, the most aggressive of Europe’s oil giants including Royal Dutch Shell and Total.
The 50-year-old, a veteran oil engineer who previously headed the oil and gas exploration and manufacturing division, aims to reduce production by 1 million barrels per day, or 40%, over the next decade, while simultaneously reducing production of renewable energy to grow 20-fold.
Despite the changes, oil and gas will remain BP’s main source of income until at least 2030.
And Looney’s drive to reinvent BP has done nothing to boost its stock, which hit its lowest level in 25 years in late 2020 and fell 44% in the year, mostly due to doubts it will be able to to transform and make the profit it seeks.
The change marks the end of an era for exploration teams from Moscow and Houston to BP’s research headquarters in Sunbury, near London, with farewell meetings held at Zoom in recent months, they added.
“The atmosphere was brutal,” said an ex-employee during last year’s layoffs.
For BP’s demarcated exploration team, led by Ariel Flores, the former North Sea boss, the focus is limited to looking for new resources near existing oil and gas fields to offset production declines and minimize spending.
“We are in a harvesting mode and what is not being said is that BP will be a much smaller business without exploration,” said a second source in BP’s oil and production division.
Flores was not available for comment.
Data from Norwegian consulting firm Rystad Energy shows that BP acquired approximately 3,000 square kilometers of new exploration permits in 2020, the lowest since at least 2015 and much less than Shell, which acquired approximately 11,000 square kilometers, or Total, which acquired approximately 17,000 square kilometers. kilometer bought.
While global exploration activity slowed last year due to the COVID-19 pandemic, the decline at BP was mainly driven by the change in strategy, four company sources said.
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Oil and gas exploration has spearheaded the evolution of corporations into massive multinational corporations that have delivered massive profits for shareholders over the past few decades.
BP began cutting its exploration spending under former CEO Bob Dudley in response to the 2014 oil price crash, with the aim of using technology to free up more oil and gas reserves.
Looney is driving the exploration budget even lower, to about $ 350 to $ 400 million per year. That’s about half of what BP spent in 2019 and a fraction of the $ 4.6 billion spent on exploration in 2010.
BP also swept $ 20 billion from the value of its oil and gas assets last year after lowering its energy price outlook. With those lower price assumptions, BP found much of its oil and gas reserves no longer worth developing.
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BEYOND PETROLEUM
BP, which started as the Anglo-Persian Oil Company in 1908 and has since discovered massive sources of fossil fuels in places like Iran, Iraq, Azerbaijan, the North Sea and the Gulf of Mexico, has previously sought to diversify into renewable energy sources.
Under CEO John Browne, BP launched “Beyond Petroleum,” investing billions in wind farms and solar energy technology, but the vast majority of investments failed.
Looney believes his plan will succeed with unprecedented government support for the energy transition and technological advancements that make renewable energy more affordable than ever. He has engaged Giulia Chierchia, a former McKinsey manager, to oversee the development of BP’s strategy.
And a team of geologists and data crunchers led by Houston’s Kirsty McCormack, who was previously in the exploration unit, will now apply analyzes used to study and map rock structures in search of fossil fuels to develop low-carbon technologies. , such as carbon capture. , use and storage (CCUS) and geothermal energy, the company’s sources said.
Absorbing carbon dioxide emitted from highly polluting industries and injecting it into depleted oil reservoirs is seen as a key to the energy transition by helping to offset emissions.
Other oil veterans have also been reassigned, with Felipe Arbelaez, who previously headed BP’s oil and gas operations in Latin America, now led the renewable energy business and Louise Jacobsen Plutt, an experienced oil engineer, now senior vice president of hydrogen CCUS.
BP has also poached staff from Uber, Toyota and Silicon Valley to increase its knowledge of electric vehicles, energy markets, renewables and expand its big data capabilities.
Franziska Bell, a former Toyota employee, is vice president of data and analytics at BP, while Justin Lewis joined the company in July to lead the high-tech start-up after working as a software engineer at Tesla.
The transformation has been met with a mix of awe and concern among employees who question whether the pace is sustainable and whether it is enough for BP to compete in a rapidly changing energy world.
Some senior current and former employees warned that BP is at risk of investing in new domains before fully understanding how they will fit into a transformed company, leaving old sources of cash behind.
“There is so much internal change that it is going to be a big job to pick up the organization and get things going,” said a senior associate in the exploration division.
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(This story has been re-compiled to correct paragraph 11 by removing unnecessary words)
Reporting by Ron Bousso; Editing by Alexander Smith