BP Slashes Its Oil Exploration Team by 85%, Starts Switching to Renewables (yahoo.com) 128
Reuters reports on big changes at BP (the company formerly known as British Petroleum):
Its geologists, engineers and scientists have been cut to less than 100 from a peak of more than 700 a few years ago, company sources told Reuters, part of a climate change-driven overhaul triggered last year by CEO Bernard Looney. "The winds have turned very chilly in the exploration team since Looney's arrival. This is happening 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 activities or laid off, current and former employees said. The exodus is the starkest sign yet from inside the company of its rapid shift away from oil and gas, which will nevertheless be its main source of cash to finance a switch to renewables for at least the next decade. BP declined to comment on the staffing changes, which have not been publicly disclosed... Looney made his intentions clear internally and externally by lowering BP's production targets and becoming the first oil major CEO to promote this as a positive to investors seeking a long-term vision for a lower-carbon economy.
BP is cutting some 10,000 jobs, around 15% of its workforce, under Looney's restructuring, the most aggressive among 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 production division, aims to cut output by 1 million barrels per day, or 40%, over the next decade while growing renewable energy output 20 fold.
Elsewhere Reuters reports that due to the pandemic, acquisitions of new onshore and offshore exploration licences for the top five Western energy companies "dropped to the lowest in at least five years," citing data from Oslo-based consultancy Rystad Energy.
Hundreds have left the oil exploration team in recent months, either transferred to help develop new low-carbon activities or laid off, current and former employees said. The exodus is the starkest sign yet from inside the company of its rapid shift away from oil and gas, which will nevertheless be its main source of cash to finance a switch to renewables for at least the next decade. BP declined to comment on the staffing changes, which have not been publicly disclosed... Looney made his intentions clear internally and externally by lowering BP's production targets and becoming the first oil major CEO to promote this as a positive to investors seeking a long-term vision for a lower-carbon economy.
BP is cutting some 10,000 jobs, around 15% of its workforce, under Looney's restructuring, the most aggressive among 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 production division, aims to cut output by 1 million barrels per day, or 40%, over the next decade while growing renewable energy output 20 fold.
Elsewhere Reuters reports that due to the pandemic, acquisitions of new onshore and offshore exploration licences for the top five Western energy companies "dropped to the lowest in at least five years," citing data from Oslo-based consultancy Rystad Energy.
I hope they revive the BPSolar brand. (Score:5, Interesting)
And manufacturing. I have BPSolar PV panels on my roof, warranted for 80% of output for 25 years. Quality gear.
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I doubt they will. BP fundamentally still exists to make money and BP sold its solar business back in the mid 2000s because it was too low margin, and that was before China massively ramped up production and dropped the bottom out of the solar industry.
From what I can see their investment at least as announced thus far is focused on Wind, Hydrogen, biofuel and CCS (the left overs of which they intend to dump into their wells).
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Try REC Twinpeak panels. They are split into two logical panels internally so they can be half-shaded and still function, they are readily available for around $0.50/W or less, and they have a 10 year product warranty and 25 year linear power output warranty. The least of them are about 17% efficient, the ones I just bought are 19%...
Bit late, isn't it? (Score:2)
Wait, they can do this? They can stop pumping oil and still make money? I though they have to fight progress until last black drop or go bankrupt. Look like it was just typical corporate greed and laziness after all. Then again, it's not really that surprising, is it?
Re:Bit late, isn't it? (Score:5, Insightful)
I'm sure this is about "typical corporate greed", as it would be with most companies - they've decided that investing in renewables is the best path towards continued future profits.
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I'm sure this is about "typical corporate greed", as it would be with most companies - they've decided that investing in renewables is the best path towards continued future profits.
It's definitely a long term vision. Corporate greed would favour burning as much oil as possible for the foreseeable future. The margin differences between renewables and the oil industry is incredible. I think they may just be seeing the writing on the wall and putting themselves in a position of long term survival over short term profits. I wonder how the likes of Exxon who haven't announced much in the way of significant alternate energy will fare in the future. Short time suspect Exxon will dominate and
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The burning of the oil isn't something BP can control. They control the supply. They see renewables creating a future supply glut which will push prices way down. That's why they're cutting their future production. It's fundamentally no different from OPEC production cuts, except they're not a cartel so they can't force their competitors to cooperate, they can only signal and hope and hedge their bets with other energy s
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The burning of the oil isn't something BP can control. They control the supply.
Supply and demand follows a price curve. What is perfectly clear is that the oil companies *do* control demand. The reality is oil remains in high demand and corporate greed would favour continuing to match this demand (like basically every oil company is doing) rather than start spending money on low margin green projects.
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Present demand is high. Present demand is not what an intelligent company makes oil exploration decisions based on, considering those explorations won't pay off until a decade or two down the road. BP is making these decisions based on the demand they expect in 2030s. They expect that a combination of battery tech progress and government regulations will reduce consumer demand for oil significantly in the 2030s, so there's no sense investing lots of money in building up new sources of oil production for tha
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Indeed that is my point. BP is taking a long term gamble on a major world change while the rest of the oil industry is very much looking 5-10 years past that as a likely time for any significant upset. Corporate greed favours continuing exploration, especially since the long term trend is that we will need to keep burning oil as a species and especially for companies that are looking in places other than deep water or the arctic for exploration.
Oil isn't an on and off thing, and neither are upstream project
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Which is itself a quite significant moment, when oil companies give up the fight and pivot. Hopefully we will see less misinformation and shilling now, less bogus paid research and the like.
And hopefully the market will remain open to a number of new competitors so that competition keeps prices down. Unlike oil they can't control the supply of electrons.
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They can stop pumping oil and still make money?
BP will still pump oil. They are just cutting way back on exploration for new oil reserves. This is a trend across the entire oil industry.
I though they have to fight progress until last black drop or go bankrupt.
BP has been investing in renewables for decades. Your snarky cynicism is misplaced.
Look like it was just typical corporate greed and laziness after all.
"Greed" means economically effective use of capital.
"Laziness" means economically effective use of labor.
"Greed" and "laziness" are the foundation of our prosperity.
If you would rather live in a country where people work hard but produce little, there are many to choose from.
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They can stop pumping oil and still make money?
BP will still pump oil. They are just cutting way back on exploration for new oil reserves. This is a trend across the entire oil industry.
Cutting its exploration team by 85 percent is a normal trend int he oil industry?
A bit of digging reveals this:
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This! Partially anyway. BP sits on huge reserves, and the entire industry is not abandoning exploration (BP is somewhat unique in this regard).
That said there's no secret that Looney idolises the likes of Musk. He see's BP as a funding source to becoming the Tesla of the energy industry. Use oil money to pay to develop an alternate energy company including technology and knowhow, buying the knowledge where you need to so when the time comes and oil is on the way out they effectively are the experts of the n
You mean diversification? parallel to the new MS (Score:2)
Wait, they can do this? They can stop pumping oil and still make money? I though they have to fight progress until last black drop or go bankrupt. Look like it was just typical corporate greed and laziness after all. Then again, it's not really that surprising, is it?
Microsoft has realized that it cannot sustain profitability and growth with Windows licenses alone, so it built up Azure, happily sells linux services, and is putting good effort into XBox and other diverse markets. To me, BP is doing the same. It wants to be relevant 20-30 years down the road and petrochemicals and green energy are great ways to do so.
Wall Street was really beating them up about this a year ago. I watched it unfold daily because I am a shareholder. The pandemic reduced demand + ris
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Actually the main words the industry seem to be uttering are "green hydrogen" and "CCS", though what you said is a part of the plan. BP publishes a global energy outlook every year and their outlook last year seemed to have been written by someone who had an unhealthy obsession with hydrogen, which is interesting given BP isn't even remotely a hydrogen company.
That said Air Products an Linde the number 1 and 2 companies in hydrogen have seen their share price triple over the last couple of years while the r
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> been written by someone who had an unhealthy obsession with hydrogen, which is interesting given BP isn't even remotely a hydrogen company.
Hydrogen is and always has been heavily endorsed by the fossil fuel industry for two reasons:
1) Currently the most economical source for large quantities of hydrogen is the reformation of natural gas... which fossil energy companies like BP are already heavily invested in. They like hydrogen because it lets them leverage their existing assets and continue selling
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Hydrogen is and always has been
Let me stop you there. What we are seeing now is a massive departure from what "always has been".
Hydrogen is a core component of the fuel cycle, what is being debated at the moment is hydrogen *replacing* wholesale parts of the fuel cycle, be that heating, moving equipment, running of furnaces, all manner of industrial uses that were not considered in the past.
I follow BP on instagram (don't judge, I'm an engineer and they post some amazing photos of cool process equipment in between crappy corporate posts)
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> Let me stop you there.
Sorry, yes, I meant "The Hydrogen Economy" not hydrogen in general.
I won't touch Instagram with someone else's ten-foot pole, but I'll take your word for it and yeah that's... something. Thanks for the info.
=Smidge=
Re: Bit late, isn't it? (Score:2)
BP was banned from the U.S. (Score:2)
BP had a big oil spill in 2010. It apparently cost them $65bn to clean up and it seems over $20bn in fines. So I am guessing that oil drilling companies are also in oil shipping, which is risky.
https://en.wikipedia.org/wiki/... [wikipedia.org]
With further bans on gasoline powered cars and the huge opportunities in renewables, though it might seem mad to people who like investing in petroleum I'd say it sounds like a smart bet on the next 50 years. We still need plastic though.
Prescient quip about stone age. (Score:3)
The stone age did not end because we ran out of stone
This was much bandied about during all the Peak Oil debates. Claims that we will leave half of all known reserves of oil in the ground without ever pumping it stretched our credulity.
People who were saying "Once there was the imminent loss of whale oil. Then there was the charcoal/wood shortage. People have been predicting peak oil since 1970. They will find something" sounded too flippant and irresponsible.
Looks like "they" turned out to be electrochemists, material scientists, low speed aerodynamics and civil engg. And the something turned out to be batteries, wind mills and solar arrays.
Re:Prescient quip about stone age. (Score:5, Interesting)
Not so much of a stretch for people who realize you can't just pump most of those remaining reserves. Tar sands oil requires about $60 a barrel to break even, so it would have been (with modern technology) profitable during the 1979-85 oil crisis, and was from about 2004-2015. Deep water production is just as bad or worse. US fracking is somewhere between $30-$50 a barrel, which sounds okay, but that's for the easiest stuff.
We used to joke that OPEC was motivated to keep the price of oil below $50 a barrel because otherwise people would go off and invent alternatives. Looks like the latter part of that was true.
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So it is possible for Saudi Arabia to pull all stops, and sell oil at 50$ a barrel for sustained periods to ba
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Saudi Arabia claims to have a lot of cheap oil-- but then way have they been exploring and working on off shore oil? They must be concerned about their cheap oil production... and how much left they may actually have... some of their power comes from their estimated supply so there is a massive incentive to exaggerate it's size.
Only 100 to go (Score:2)
> cut to less than 100 from a peak of more than 700 a few years ago
Only 100 left to go. I hope BP was thoughtful enough to give fair notice, training, and placement services, no doubt costing a tiny fraction of their executives' pay.
Re:Peak Oil (Score:5, Interesting)
To me this appears less about environmental concerns as it is an acknowledgement that there is simply no point doing any more exploration for oil as it has become clear that there are no more significant new oil reserves out there to dicover. Ouch.
Or to be more exact - any significant oil reserves remaining are within jurisdictions where they are not allowed to explore at present and where any exploration will require specialized equipment. Arctic and Antarctic. A combined icebreaker+drilling platform exploration rig is in the 100s of millions to build. No point to invest in that until the regulatory climate will allow its use.
In the specific case of BP, it also makes sense on another level. They have a gigantic IPR portfolio across the renewable spectrum - solar, battery chemistry, etc.
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To me this appears less about environmental concerns as it is an acknowledgement that there is simply no point doing any more exploration for oil as it has become clear that there are no more significant new oil reserves out there to dicover. Ouch.
Or to be more exact - any significant oil reserves remaining are within jurisdictions where they are not allowed to explore at present and where any exploration will require specialized equipment. Arctic and Antarctic. A combined icebreaker+drilling platform exploration rig is in the 100s of millions to build. No point to invest in that until the regulatory climate will allow its use.
In the specific case of BP, it also makes sense on another level. They have a gigantic IPR portfolio across the renewable spectrum - solar, battery chemistry, etc.
Or, with oil extraction costs moving into the the tens of billions as demonstrated by the 100s of millions price tag for a single icebreaker+drilling platform exploration rig, the cost competitiveness of oil as a fuel is looking bleak when the extraction costs of wind and solar are effectively zero.
Re:Peak Oil (Score:4, Informative)
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Those costs are dropping all the time.
It's a feedback loop: The production and transport of things like solar panels will soon be powered by solar panels.
After that it will be done by solar powered robots and self-driving trucks. Solar panels will be able to arrive virtually anywhere all by themselves for the cost of a pile of sand and aluminum ore.
(ie. dirt cheap, pun intended).
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Massively out of date there, solar EROI now 'between 8.7 and 34.2' Wind EROI is about 20, those numbers keep improving as investment keeps improving the technology and the prices keep dropping fast.
There is 1 direction for fossil fuels EROI and that is down.
If nuclear EROI was any good then it wouldn't cost so much.
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That 10:1 is an average. The undeveloped reserves are generally undeveloped because they're incredibly expensive, which also means their EROI is way below average as well. Petroleum EROI is way down, and dropping. Renewables are increasing, rapidly.
The oil producers are simply reading the graphs. As you point out, doing so may have very important consequences for civilization. We need to use our remaining easily accessible fossil energy reserves to develop and build out a viable renewable system that isn't
Re:Peak Oil (Score:4, Interesting)
> Estimates suggest that current societal organization would collapse when the EROI
> ratio drops under 7:1.
For those actually interested in this topic, consider a quick read-over of this paper, which is an excellent introduction to the topic as a whole:
https://www.sciencedirect.com/science/article/pii/S0301421513003856
Written by arguably the best-known name in EROI (Hall, he literally wrote *the* book on the topic), Figure 3 shows that the EROIs for wind were about 20 and PV about 10. Even in 2014, EROIs for renewables much higher than coal, natural gas or nuclear, and when one considers Figure 2, you can see they are also much better than any form of oil.
In the 6+ years since this paper was published, wind and PV have both have improved, wind about 15 to 25% (depending on turbine size) and PV about 35 to 125% (depending on tracker use).
Nothing else comes even close to any of the renewables now.
So if you do believe EROI is an important measurement, and increasing EROI relates to increased quality of life, you want to be all in on renewables and divesting from fossil fuels as rapidly as possible.
Re: Peak Oil (Score:2)
Re:Peak Oil (Score:5, Informative)
Well, yostupid nitpicker.
An oil rigg has an high installation cost, and absurd extraction costs.
Compared to that: wind and solars extraction costs are virtually ZERO
Do you grasp it now?
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Oil is used for transportation.
Wind and solar are not.
They are two different markets.
EVs may change that someday but are currently 1% of vehicles worldwide.
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> EVs may change that someday but are currently 1% of vehicles worldwide.
Yay, I'm in the 1% now!
But my car is 50% nuclear powered, at least until I get some panels up on the garage.
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However, get electricity production off of oil and that leaves more for transportaiont purposes. Also, get most of the commuters off of oil and that leaves more for the important transportation needs.
Petroleum is essentially a non renewable resource, we use it at a rate vastly exceeding the replenishment time (which is measured on a geological scale). At some point if we continue using it at the present rate, it will run out to the point of not being worth extracting, similar to whale oil. It's a bad long
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However, get electricity production off of oil
Who uses oil for grid electricity?
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Qatar, Kuwait, Hawaii ...
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There is an additional cost for oil extraction if you need to pump the oil out instead of relying on natural pressure for extraction. I believe it is this cost of pumping oil that Freischutz was referring to as an extraction cost that solar and wind doesn't have. Once a wind turbine or solar collector is set up the "extraction" cost is basically zero. There is a maintenance cost thus the extraction cost wouldn't be completely zero.
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There is an additional cost for oil extraction if you need to pump the oil out instead of relying on natural pressure for extraction.
Even after extraction, there are more additional costs. Raw oil isn't immediately usable, and refining is expensive: 15% of all industrial energy consumption, or 4% of total US energy consumption is used in the refining industry (from here [osti.gov]). I think this expense should be added to the extraction cost as well. On top of that, transportation of the refined gas to the final consumers doesn't come free either.
By contrast, the energy from solar panels or wind turbines is almost immediately usable, at minimal ext
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> I have no intuition about which has a lower capital investment.
Easy enough to find online:
https://www.lazard.com/media/451419/lazards-levelized-cost-of-energy-version-140.pdf
Page 11 has capital costs.
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> Interesting data, but doesn't have "oil".
It used to, but its use has declined (for electricity use!) so much over the last 15 years that they no longer show the capex side.
> which means they're virtually free to idle
Well, yes and no. The bank still charges interest even if the plant isn't generating, so there's the incessent grind there. But of course, in those cases, it's precisely the numbers on page 11 that show why that works so strongly in their favor.
> The "cost" of fossil fuel is going to
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Or to be more exact - any significant oil reserves remaining are within jurisdictions where they are not allowed to explore at present and where any exploration will require specialized equipment. Arctic and Antarctic. A combined icebreaker+drilling platform exploration rig is in the 100s of millions to build. No point to invest in that until the regulatory climate will allow its use.
You mean to say that all those predictions about "oil running out in XX years" that I used to hear at school are actually coming true??
Don't tell all those deniers who are still going around saying all those old predictions will never happen.
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You mean to say that all those predictions about "oil running out in XX years" that I used to hear at school are actually coming true??
No. The problem is the opposite. Oil is plentiful, demand is falling, and prices are low. So the cost of finding new reserves can't be recovered.
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This ++.
This is especially well illustrated by the shale oil boom (and now bust) in the US. A victim of its own success - companies started lowering prices so the Saudis did the same, and then suddenly a whole lot of companies found themselves underwater. No point looking for new drill sites now.
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if its plentiful, why are they having to extract it in more and more complicated and hard to get places.
Because oil is plentiful but easy oil is not.
There are immense deposits of oil shale. Enough to last for many centuries.
Exploring for new reserves only makes sense if the cost of exploration+production is less than the cost of shale oil. As the cost of producing from shale falls, the economics of new exploration gets worse.
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Oil may be plentiful but readily available oil is becoming harder and harder to find. If this wasn't the case then things like the tar sands in Canada or fracking wouldn't be a viable source of oil.
Re: Peak Oil (Score:2)
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You mean to say that all those predictions about "oil running out in XX years" that I used to hear at school are actually coming true??
This is /. you can just say 20 years instead of using those fancy Roman Numerals. :-)
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I thought he was referring to female years?
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Or, with oil extraction costs moving into the the tens of billions as demonstrated by the 100s of millions price tag for a single icebreaker+drilling platform exploration rig, the cost competitiveness of oil as a fuel is looking bleak when the extraction costs of wind and solar are effectively zero.
That's not remotely correct. The cost competitiveness of oil is incredibly high compared to renewables. Renewables have tight margin and long repay values. The value of oil extraction remains incredibly lucrative. While it's correct that costs of deep wells are incredible often so is the payback, but that's not what exploration is about, exploration is about finding oil and in that regard the world is still finding more and more cost effective sources.
This is before you even consider exploration of shale or
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BP is sitting on reserves so they don't have to find more oil to continue pumping oil.
But the future looks like it will have lots of laws against use of fossil fuels in it, so investment in renewables only makes sense if you want to sell energy in those markets.
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Yes indeed. 11.5mmboe worth (more than was discovered by all companies combined last year). But that's not much. That's 11 years worth at their 2019 production rate.
Mind you the company is also investing in unconventional oil so presumably they will increase those proven reserves.
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Cheaper? Companies don't invest based on how cheap something is, they invest based on how much they can sell something for vs how much it costs them to produce. The sun stops being free the moment you hire one janitor to empty the waste paper basked in the substation. The profit margins of renewables are tiny compared to those of oil and gas, even BP admitted as such in their investor Q/A session around this time last year when they announced their big green decision. It was literally the second question as
Re:Peak Oil (Score:5, Informative)
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> Thank god! I don't know what the auto industry would do if they couldn't keep filling cars with cheap injection-moulded plastic
Most plastic is made from natural gas feedstock these days. Same carbon, less pricy.
https://www.eia.gov/tools/faqs/faq.php?id=34&t=6
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> Nuclear can be done clean, but as you said, regulation makes it so you have reactors that
> need to be refueled every few years after spending just 10% of their fuel on the off-chance
> some terrorist may steal the fuel rods and make weapons out of it.
You see, this is precisely the problem the post you're replying to is talking about. Specifically, the part about:
"Economics is much more difficult than people want to admit."
The reason we don't close the fuel cycle, which is what you're proposing her
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(summary for at the source is the number of years since 2016, you can do the math to see for yourself that it's currently 41.87 years left)
I realize that you said, "taking into account the increasing rate of moving to renewables". But that transition will be slow, and how close to running out of oil will we get before we are only using the crude for plastics? Currently, about 10% of our
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China has the bite on making solar panels cheapest. BP Solar panels died out...
BP solar panels were made in China and India.
They shut it down in 2011. I'm not sure why they failed. It may have been a victim of Deepwater Horizon, which put BP deep in the red.
The Indian operations are still going, but are now owned by Tata.
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> What renewables?
On the power plant side, not the panel production side.
We don't say BP isn't in the oil business because Hyundai Heavy Industries built their oil derricks.
> They shut it down in 2011. I'm not sure why they failed
Although for us end-users the plummetting price of PV is fantastic, it's not so great if you're a producer of the panels and have a certain profit margin to maintain or your stock price craters.
BP has a certain profit margin to maintain or their stock price craters. The Chine
Re: Peak Oil (Score:2)
Trump's final weeks in office the entire alaskan arctic was opened up to drilling. Less 25% of the land received bids and no major companies placed any bids.
https://www.npr.org/2021/01/06... [npr.org]
We are we still flushed with oil and they are recovering from the oil crash. Saudi, Russia and opec are all still pumping way under max to inflate the oil price meanwhile the American drills are still running full out to make up for losses back 2016. By shutting exploration for 5 years of so(that's how long things
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At least for the large majority of the accessible Arctic - the Russian sector - you wouldn't do it that way anyway. You'd use ice-hardened service boats to double-up as floating deckspace and icebreakers - probably 3 on location and one or two in port/ transit, depending on transit time from the shorebase to the exploration location. And, of course, you'd do your actual drilling (this is complex, so try to understan
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Honestly I don't know if bp will survive as a company the way it's currently going. The margins for oil and gas are far larger than the margins for renewable
Maybe he's looking further ahead than the people who can't see past today's market prices.
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> Maybe he's looking further ahead than the people who can't see past today's market prices.
He may be looking too far ahead.
He may well be looking at 2107 and thinking it's 2027.
He may be preparing for a situation that his company will not be around to see, because he's abandoning the activities that bring in revenue for his company. He might be making a decision that will be right sixty years from now, but not today.
Kinda like at some point in the future after they'll be a lot more activity in space an
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> He may well be looking at 2107 and thinking it's 2027.
Hmmm.
It looks to me like the next 25 years are going to include a *whole lot* of offshore wind construction, especially in Britain.
A company called "BP" happens to have massive offshore construction experience in those very waters, along with an underutilized engineering pipeline and supplier chain.
I suspect there is a lot of money to be made for the company to go all-in on wind in its home market.
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No, this is the only sensible strategy. People thought that it was kind of crazy for Apple to cannibalize their own lineup by releasing an iPhone that would obviate the iPod, which was clearly a huge seller at the time. You want to invest while you have the resources to do so, and also when it's early enough that you can overcome any competition. BP is big, and has big resources. They don't want to slowly crumble by chasing the old thing when the new thing is already so clearly here. RIM/Blackberry kept cha
Re:Peak Oil (Score:5, Interesting)
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Its the peak in profits they care about. They can see that oil is already becoming less and less profitable.
That doesn't fit with the timeline. Bp appears to have gone off the deep end in their January investor announcement when the industry itself was quite healthy and profitable. Back then they already announced they will scale back exploration and back then there were lots of profits to be had.
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No it's not. The timeline for abandoning oil is far larger than the payback of any oil project which would be started today. There's a reason BP seems to be alone in their view in the industry. TFS mentions Shell but failed to mention that Shell got dragged down the renewable path through multiple lawsuits and shareholder activism, not because they think it's financially lucrative.
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Oil producers who aren't Saudi Aramco have another problem as well. Do you develop an unconventional oil source that costs $50 a barrel to break even, when the Saudis can produce it for under a dollar if they want to?
If you're an American wildcat fracker you just have to convince somebody to pony up a couple million, and if you hit the jackpot before Saud notices, you make some money. If not, you're not out that much. If you're building offshore platforms, trundling equipment up to the arctic or mining tar
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The Saudi's can't produce it for under a dollar. That's a fantasy which saw them slapped around by American shale as much as anyone else. Additionally oil isn't oil. There are various properties that make different oils desirable. Most of Saudi's oil is already sold at a discount as it's largely an incredibly sour high TAN crude which would require some investment in refining to run. If they started selling it for cheap tomorrow most of the world would continue to not touch it as doing so would cause them t
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You mean the same US that up until 2015 imported more oil than it exported?
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Yep. Exactly my point. You think the Saudis would just sit around while someone else became a world exporter? If they could "pump oil for a dollar".
Reality in the oil industry is insanely complex.
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has become clear that there are no more significant new oil reserves out there to discover. Ouch.
There is plenty more oil to discover. The problem is that the discoveries aren't competitive with fracking.
Sure, you can go to the Arctic Sea, spend ten years drilling exploratory wells, locate the oil, spend billions building your platforms and infrastructure, pump the oil ashore, move it thousands of km to a tanker port, load it on the tanker, and then ship it thousands of km more to the refinery in Louisiana.
Or you can drive your pickup truck into a field in North Dakota, pump some soapy water down one
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has become clear that there are no more significant new oil reserves out there to discover. Ouch.
There is plenty more oil to discover. The problem is that the discoveries aren't competitive with fracking.
Sure, you can go to the Arctic Sea, spend ten years drilling exploratory wells, locate the oil, spend billions building your platforms and infrastructure, pump the oil ashore, move it thousands of km to a tanker port, load it on the tanker, and then ship it thousands of km more to the refinery in Louisiana.
Or you can drive your pickup truck into a field in North Dakota, pump some soapy water down one hole, and suck the oil out the other.
Which sounds more cost-effective?
With fracking, little exploration is needed. We know where the shale beds are. The challenge is driving down the costs.
You make that sound awfully simple. Firstly, fracking liquid is not soapy water, it's pretty toxic https://news.yale.edu/2016/01/... [yale.edu]. Secondly, you need to drill a bunch of holes for every one that actually produces worthwhile amounts of oil which is why most of these fracking companies have negative cash flow. So exploration is very much a thing in fracking since at a cost of $5-10 million per hole you had better get your productivity projections right pretty much all of the time before you even start dril
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You make that sound awfully simple. Firstly, fracking liquid is not soapy water, it's pretty toxic
Yeah, but for the oil companies' part it's not much different from using soapy water, in that fracking fluids are clearly refinery wastes. Actually, for them it's better than using soapy water, because it answers the question what do I do with these waste products?
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This attitude is actually likely why natural gas from fracking is so cheap. You've got hundreds of these companies that were expecting the next gold rush. They go out, borrow a lot of money, and get to it. But then fluctuating prices and economic instability drove down the price of a barrel of oil. Suddenly a bunch of these companies are overextended. Some go bankrupt, some borrow more money. But they're leveraged to hilt, so they're willing to sell gas no matter what the cost, and they can't ease back on p
Re: Peak Oil (Score:2)
The keystone pipeline is worthless to americans and anyone who says otherwise is an idiot.
The keystone pipe is to deliver canadian tar oil to ships on the coast so it can be shipped to europe for refinery and sell. American refineries can't handle it. And american consumers can't use the heavy tar oil it produces.
So if all americans get is the load use cost for the pipeline and some port fees why do it?
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Actually that couldn't be further from the truth. There are many more sources for oil and gas available. Right up until Looney took over bp was in battle with the Australian government for new exploration licenses in South Australia. Expectations are also that due to global warming a lot of new exploration opportunities are opening in the arctic. This all just includes conventional oil as well. Non-conventional oil is a lovely new field too (fracking, oil sands, shale, TPD, etc) and there are many new explo
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So, we are far away from "peak oil" because we discovered in 2020 about 8 billion barrles of oil? ...
Are you sure your numbers are not absurdly way off?
Yearly oil production is 35 billion, so the punny little bit discovered 2020 would not even cover one quarter of a years usage
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So, we are far away from "peak oil" because we discovered in 2020 about 8 billion barrles of oil? ...
Are you sure your numbers are not absurdly way off?
Yearly oil production is 35 billion, so the punny little bit discovered 2020 would not even cover one quarter of a years usage
The problem with "peak oil" projections is they have always been wrong. They attempt to project based on known recoverable reserves, consumption rates, and current technology. As the technology changes all the conditions change.
Re: Peak Oil (Score:3)
No they haven't been wrong they have been right if you look at scientists saying it. Peak oil is the end of cheap oil. The saudi $5 a barrel oil. Fracking is $50 a barrel. Also peak oil is not until the 2040's and 2050's. And has been since the mid 90's when I was in high school.
Of which both accounts are well true. No one thought we would handle $50 a barrel but didn't think inflation would get as bad as it has.
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No they haven't been wrong they have been right if you look at scientists saying it. Peak oil is the end of cheap oil. The saudi $5 a barrel oil. Fracking is $50 a barrel. Also peak oil is not until the 2040's and 2050's. And has been since the mid 90's when I was in high school.
Of which both accounts are well true. No one thought we would handle $50 a barrel but didn't think inflation would get as bad as it has.
Apparently you missed the high school class on peak oil.
What is peak oil? https://www.investopedia.com/t... [investopedia.com]
"Peak oil refers to the hypothetical point at which global crude oil production will hit its maximum rate, after which production will start to decline. This concept is derived from geophysicist Marion King Hubbert's "peak theory," which states that oil production follows a bell-shaped curve."
What is wrong with Marion King Hubbert's "peak theory"? https://www.investopedia.com/t... [investopedia.com]
"But Hubbert’s
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I think you simply try to misunderstand what "peak oil" means.
I never saw or heard about a "projection". That is irrelevant.
It is a no brainer that at some point in time we will be "peak production" of oil and after that it will decline. Perhaps coming back again to another - smaller, or bigger - peak.
That is all. No one can with current data make a prognosis when and how high our peak production of oil will be. But unless you are of old age: you most likely will experience that point in time.
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"no point doing any more exploration for oil as it has become clear that there are no more significant new oil reserves out there to dicover. Ouch."
No, with the current laws and CO2 tariffs to pay which will rise automatically and the countries having pledged to forbid selling ICE cars in a couple of years, it's just not worth it.
Even if they discovered new oil this minute, it will be over before it's possible to exploit it.
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To me this appears less about environmental concerns as it is an
acknowledgement that there is simply no point doing any more exploration for oil as it has become clear that there are no more significant new oil reserves out there to dicover. Ouch.
Since it is pretty implausible for BP of all evil companies do something not motivated by greed, my take is that their market is shrinking fast enough that they now look for new opportunities.
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What market share? The crude market is not about giving customers a shiny new interface or about market share. It's exclusively about the properties of the oil you are getting out of the ground which is fundamentally completely out of your control. Market share doesn't grow or shrink, there are simply changing demands for your products, and in that regard there's nothing that has fundamentally changed that would push an oil company to go down this path other than a new leader having an agenda.
Greed would im
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So, your claim is what an oil company sells is constant in volume and price and there is no competition?
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Constant volume, yes.
Price, no, that varies heavily but it varies evenly.
Competition exists but not in a free market sense. If I build computers and suddenly decide to give them away demand for that would skyrocket. If I dig out Arab Heavy from the ground and suddenly decide to give that away demand would wiggle only slightly. There's no customers out there sitting around with their refineries not running waiting for a bargain. A refinery that isn't running heavy sours can't just magically switch over. A fe
Stone age didn't end because we ran out of stones (Score:2)
...and the oil age isn't going to end because we ran out of oil.
Mostly its hitting the cost/benefit curve of complex extraction vs. demand. Although I wonder, without the pandemic to stifle demand, what would be happening to oil prices.
I think some of these moves are partly driven by the pandemic effects and maybe some internal math on available, easy to tap reserves (tar sands, fracking, etc) and low demand balancing out the need for a whole lot of near term exploration. If you see both a slow erosion
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There are countless new oil reserves likely undiscovered as of yet. The problem is that already discovered ones will last us many decades at this point, and they are very cheap to exploit.
Which means that exploration is utterly economically unviable for at least a few decades, until House of Saud and US Shale producers finally get some kind of a resolution to their ongoing price war. Which considering how it was going so far isn't going to end in several decades. We're looking for a very long period of chea