A decade after Deepwater, BP faces new existential challenges

Yahoo - AFP, Véronique DUPONT, April 22, 2020

BP says it has reformed its culture over the past decade to emphasise operational
security and to prevent environmental damage (AFP Photo)

London (AFP) - Ten years after an oil spill that BP's new boss Bernard Looney admits tested the company "to the core", the firm is facing two existential challenges: the collapse of prices and climate change.

It was a decade ago this week that an explosion on the Deepwater Horizon rig in the Gulf of Mexico triggered the worst oil spill in US history, killing 11 employees and ultimately costing the British firm more than $70 billion.

Speaking in February as BP announced plans to go carbon neutral by 2050, chief executive officer Looney said that "we learned some hard lessons we will never forget".

"We remember those lessons in this new decade, where the big challenge for BP is the one the world faces: climate change," he said.

Anglo-Dutch oil giant Royal Dutch Shell has followed suit in pledging to become carbon neutral but the US groups and French firm Total are lagging behind.

Map and factfile on the environmental disaster in the Gulf of Mexico triggered by

 the explosion in April 2010 of BP's Deepwater Horizon oil drilling platform US 

environment energy oil disaster (AFP Photo)

BP says it has reformed its culture over the past decade to emphasise operational security and to prevent environmental damage, for example through a programme to detect methane leaks.

The company's latest figures show an increase in its oil spills from 124 in 2018 to 152 in 2019, but BP puts this down to acquisitions over the period.

The 2020s began amid greater pressure on multinationals to reduce their carbon emissions, from investor demands to dramatic protests by climate campaigners.

The global coronavirus pandemic has brought a new and unprecedented challenge for oil firms, causing a drop in demand that has sent prices plummeting.

The collapse in prices complicates the transition to cleaner energy for oil majors, because cheap oil makes green energy comparatively less attractive.

For campaign group Greenpeace, the choice for the industry is clear: 'Either 

becoming renewable energy companies or ultimately shutting down' (AFP 

Photo/Mark RALSTON)

BP puts almost all of its $15 billion annual investment budget into fossil fuels, although it has acquired stakes in solar panel firms and electric vehicle charging companies worth a total of $400 million.

"Their basic business model hasn't changed," said Bobby Banerjee, professor of management at City, University of London.

"They invest most of their money in gas and oil" because "they're confident there will be demand for oil" in the next 50 to 70 years, he said.

He said for BP, the energy transition was all about shifting from oil to gas, which is still a polluting hydrocarbon.

"The return they get on fossil fuels is not the return they'll get on renewables," he said.

In this file photo taken on June 08, 2010, veterinarians clean an oil-covered brown 

pelican found off the Louisiana coast and affected by the BP (AFP Photo/Saul LOEB)

Changing the model 

Russ Mould, investment director at AJ Bell, said after the Deepwater crisis BP shed some assets and bet on low oil prices in the long run, reducing its costs and making the group more resilient.

But it has huge debts, totalling some $45 billion at the end of 2019, leaving it vulnerable to a sustained drop in revenues.

Looney now faces a dilemma. He must decarbonise the group while preserving its profitability and share price, which has fallen by 40 percent since the beginning of the year, a plunge experienced by many rivals.

He has promised to say more in September about how he will reach his carbon neutral target and is expected to bet on gas, still untested carbon capture technology and renewables.

BP could also take advantage of carbon offsetting schemes, which involve investing in green projects but are heavily criticised by environmentalists.

For campaign group Greenpeace, the choice for the industry is clear: "Either becoming renewable energy companies or ultimately shutting down."

"The crash in the oil market is the closest thing BP and the rest of the global oil industry will get to a dress rehearsal for the transition to come," a spokesperson said.

Related Article:

BP agrees to $20 billion fund for spill costs

US Navy evacuating virus-struck aircraft carrier Roosevelt

Yahoo – AFP, Paul HANDLEY, April 1, 2020

US Defense Secretary Mark Esper says he does not see US military adversaries
taking advantage of the coronavirus pandemic to threaten the United States (AFP
Photo/Brendan Smialowski)

The US Navy is evacuating thousands of sailors from the nuclear-powered aircraft carrier USS Theodore Roosevelt in Guam after its captain warned a coronavirus outbreak was threatening the lives of the crew.

With dozens of COVID-19 cases discovered, a senior official said the navy was rapidly arranging hotel rooms on the Pacific island for many of the 4,000-plus crew, while organizing a skeleton team of uninfected sailors to keep the ship operational.

Pentagon officials admitted the Roosevelt's plight was a challenge for military readiness, noting that defense forces worldwide are equally confronted by the pandemic.

"The plan at this time is to remove as many people off the Teddy Roosevelt as we can, understanding that we have to leave a certain amount of folks on-board to perform normal watch-standing duties that keep the ship running," Rear Admiral John Menoni, commander for the Marianas region, told reporters in Guam on Wednesday.

Earlier this week the captain told the Pentagon that the new coronavirus was spreading uncontrollably through his ship and called for immediate help to quarantine its crew.

"The spread of the disease is ongoing and accelerating," Captain Brett Crozier wrote in a letter to superiors.

"We are not at war. Sailors do not need to die," he pleaded.

"Removing the majority of personnel from a deployed US nuclear aircraft carrier and isolating them for two weeks may seem like an extraordinary measure," Crozier said. "This is a necessary risk."

Hotels in Guam

Menoni said a plan was being developed to get as many sailors off the ship as possible, and they were awaiting the arrival of 40 US Marines health specialists to help in testing.

US Defense Secretary Mark Esper says he does not see US military adversaries 

taking advantage of the coronavirus pandemic to threaten the United States (AFP 

Photo/Brendan Smialowski)

He said only sailors deemed healthy would be housed outside the Guam naval base, a strategically important Pentagon port in the middle of the western Pacific Ocean.

"No one is allowed off the base unless they have tested negative for COVID-19," Menoni said.

Crozier did not give the number of infections aboard the ship, and the Navy is not offering figures for security reasons.

But one official said it was fewer than the 100 reported by US media.

More than 1,400 Defense Department employees, contractors and dependents have been infected by the novel coronavirus, including 771 military personnel, the Pentagon said.

Balancing health and security

The Roosevelt's docking in Guam on March 28 left both of the Pentagon's western Pacific aircraft carriers in port, with the USS Ronald Reagan berthed in Japan, also reportedly suffering an unknown number of coronavirus cases.

On Tuesday Acting Navy Secretary Thomas Modly admitted it was a challenge for US forces' defense readiness.

"This is a unique circumstance and we're working through it, and trying to maintain that proper balance, to ensure our friends and allies, and most importantly our foes and adversaries out there, understand that we are not standing down," he told CNN.

"We have the responsibility to protect the seas and to protect our friends and allies around the world. We have to adjust the best way we can to do that."

Defense Secretary Mark Esper said he did not see anyone testing US military readiness amid the pandemic.

"Not at this time," he said on Tuesday.

"What we find, tend to find right now, it's that a lot of countries have turned inward and are focusing inward," he said.