As a result of renewed focus and restructuring over the past few years, BP now will direct as much as 75-80% of its capital expenditures to upstream projects over the next decade, BP's chief executive of upstream said Monday.
The world has a "continuing need for hydrocarbons," Lamar McKay said in a breakfast at the opening of the Offshore Technology Conference in Houston. In January, the company released its latest "Energy Outlook 2030," a projection of global energy trends and the study estimated global energy demand to increase about 36% by 2030.
"It's still early, but we're acquiring and interpreting seismic data and planning to drill as many as 25 new exploration wells per year, not counting appraisal wells," McKay said. "By testing at least 10 new material conventional and unconventional opportunities every decade, we want to be able to add at least two more new significant producing areas over the next 10 years, each with multi-billion barrel potential."
He said BP has significantly expanded its exploration "hopper." Globally, it has accessed acreage covering more than 150,000 square miles since 2010 -- an area roughly as large as California and twice as much as it acquired in the previous nine years.
At the same time, the company divested roughly $38 billion in asset sales in the last few years, including 50% of its upstream facilities, around 50% of its pipelines, and about 30% of its wells, while retaining around 90% of its proved reserves.
The company has strong existing positions in an array of regions worldwide, but much of its focus is directed toward what McKay called four "very large" areas in Angola, Azerbaijan, the North Sea and the US Gulf of Mexico. By 2020, BP expects that quartet of areas to generate half its operating income, he said.
Collectively, those four regions should attract about $50 billion in investment over the next four years in BP interests and positions.
Within those target areas are what McKay called some of the more than 40 major high-quality upstream potential projects in the pipeline through the end of this decade, including 11 "mega-projects" with gross investment that exceeds $10 billion each.
For example, in the North Sea, the company is pushing the envelope on technology. BP's Clair field, for example, was discovered in 1977, but first oil did not come online until 2005. Even at that, reserves were initially estimated at just 250 million barrels, "but today that number could be in the billions," said the CEO.
"After 40 years and $50 billion of BP investment, we still have a staggering 40% of the resources left in our [North Sea] portfolio left to be produced," he said.
4-D seismic which shoots time-lapsed data over the same area allows fluid changes to be seen over time, he added. And other technologies, including a new, advanced floating production, storage and offloading vessel especially built for harsh conditions, are ramping the area's average recovery toward 50% and beyond, he said.
And an "innovative" use of 4-D seismic that promoted more "cooperation" between subsurface and production functions has also helped BP recover an additional 16 million barrels of oil at its Greater Plutonio projects offshore Angola, said McKay. That is BP's first operated project in that country, which came on stream in 2007.
In Azerbaijan, BP is planning up to $12 billion in capex between now and 2017, said McKay. BP marked its marked its 20th anniversary in Azerbaijan last year, and so far has produced 2 billion barrels from the Caspian Sea since its first oil in 1997 from the Chirag field there.
"We believe there's plenty more," said McKay. "The region has over 40 years of oil and gas resources, and BP's position is strong."
And in the Gulf of Mexico, BP is one of the leaders in the so-called Paleogene Trend, a formation in ultra-deepwater which is also sited at total depths of more than 25,000 feet below the seabed. BP has made discoveries there at the remote Tiber and Kaskida in the southern US Gulf of Mexico, and the company believes its prospects alone could contain 10-20 billion barrels.
"The Paleogene and similar layers could potentially impact production for the next 30 years," said McKay.
