BP to cut back on green shift amid booming demand for fossil fuels
By Paul Homewood
h/t Ian Magness
Sounds like BP have read their own Energy Outlook!
The boss of BP wants to “dial back” its push into clean energy after US oil giants posted record profits on the back of booming demand for fossil fuels.
Bernard Looney, chief executive of BP, is said to be concerned about the returns from its investments in renewables such as wind and solar, which have been at the heart of his plans to recast the business as a green champion.
Mr Looney now wants to narrow the company’s focus and persuade shareholders that it is committed to maximising profits, according to the Wall Street Journal, as concerns about energy security prompt renewed political support for oil and gas projects.
As recently as a year ago, Mr Looney said BP was “accelerating” its green investments. BP is one of the world’s largest oil and gas producers, pumping out more than one million barrels of oil equivalent per day in 2021.
However, investors and analysts note the backdrop has changed since Russia’s invasion of Ukraine, which has disrupted supplies of oil and gas, pushing up prices and contributing to a cost–of-living crisis.
One BP investor said shareholders were carefully watching the performance of renewable investments.
They said: “Societally, people are now more focused on the question of energy security – we’ve got to be mindful that as we run up the new system of renewables, you can’t run down the old system too aggressively; it’s a transition, it’s not a step change.”
Biraj Borkhataria, head of European energy research at RBC, said it would be better for a company to change tack now rather than spend too much and realise the returns were not high enough.
He added: “The environment, the assumptions that went into everyone’s net zero analysis in 2020 is clearly not valid today.
“It was based on a peaceful, globally cooperative world – that’s no longer valid.”
Money talks, as they say!
Renewables were only ever attractive to the likes of BP, because of all the subsidies that went with it.
Now there is a realisation that fossil fuels cannot be replaced by renewables for the foreseeable future, and BP’s ultimate duty is to its shareholders, not those pushing for Net Zero.
Comments are closed.
NOT A LOT OF PEOPLE KNOW THAT 
The concept of unintended consequences is one of the building blocks of economics. Adam Smith’s “invisible hand,” the most famous metaphor in social science, is an example of a positive unintended consequence. Smith maintained that each individual, seeking only his own gain, “is led by an invisible hand to promote an end which was no part of his intention,” that end being the public interest. “It is not from the benevolence of the butcher, or the baker, that we expect our dinner,” Smith wrote, “but from regard to their own self interest.”
full article by Rob Norton is here.
https://www.econlib.org/library/Enc/UnintendedConsequences.html
Net Zero: among our company of keen commentators are there some who can inform us as to what will be the replacement feedstocks for the manufacture of lubricants and specialist resins now commonly used for aeroplane construction and the motor industry?
Not forgetting the glorious wind turbines.
Something I am working on in my job. 3 main pathways. Polymer reclycling as in waste polymer pyrolysis; hydrogenated vegetable oils (HVO); synthetic fuels using carbon dioxide reduction to produce syn-gas which requires a source of hydrogen. None are proven technologies and all have huge issues. HVO is the most doable but the supply of veg oils is limited and competes with renewable diesel, SAF, and the dreaded biodiesel. All are very expensive.
The last sentence is the killer and likely to remain so.
Harvesting atmospheric CO2 is largely a sorption/desorption process with the principal energy input being low grade heat at approx 100° to drive the desorption from the amine adsorption filters. From memory “Climeworks” quoted 100kWh thermal and 10kWh electrical (driving fans and controls) to harvest 100kg CO2.
The thermal input required can be from the reject/waste heat from a nuclear plant. i.e. Sizewell B is 1200MWe from an initial 3600MWth. Thus a lot of waste is going out to warm the North Sea!
The Beznau Westinghouse PWR had the Refuna District heating system retrofitted “at a supply temperature from 125 °C in winter down to 80 °C in summer, induces a loss of electric power, but less than 18 GW·he/year at 2 MWe average electric power loss.” (quote from Wikipedia)
EDF are in negotiations for a CO2 atmospheric extraction partner at the Sizewell C project from construction.
Hydrogen from electrolysis requires much less (expensive) electricity input if the temperature is elevated with cheap thermal energy (High Temperature Electrolysis) and is the perfect partner for a nuclear plant that converts the water to steam. Simply size the total plant’s outputs for peak demand levels and thence switch to drive the electrolysers when demand drops and the plant is supplying surplus. Hydrogen and CO2 sorted at a reasonably economic price.
The Fischer-Tropsch process from then on is, as you say, pretty straight forward.
So CO2 free electricity and CO2 neutral synthetic hydrocarbons all from the same nuclear power plant. Now try selling that notion to the Greens!
Mr Looney now wants to narrow the company’s focus and persuade shareholders that it is committed to maximising profits
Wasn’t maximising profits in his job description already?
It is his legal obligation AFAIK.
No, a business can have any aim. There’s no legal requirement to maximise returns unless that is set out when marketing stock to potential shareholders.
“It was based on a peaceful, globally cooperative world – that’s no longer valid.”
Kumbaya.
It was never valid, you stupid hippie.
We always knew the silliness would end when the power goes off, we just didn’t know what the end would look like. BP sees it coming, and is eschewing decadence and moving back to reality. Somebody give Mr Looney a cigar. And call the CEOs at Shell and Exxon-Mobil.
I detect a boardroom battle. I wonder how long before Looney is ousted. He’s clearly not the right man for the job.
Of course Exxon Mobile have posted record profits and claim that this is because they have not followed the manic ESG route to doom that BP and Shell have done in the cowardly way of placating loud minority groups.
I own a lot of stock in Exxon Mobil. Glad they have not fallen prey to all of the woke nonsense.
Shell just announced over £32 billion annual profits, or ~£88 million per day. At least they can afford plenty of ‘carbon credits’ 🙄
https://www.agcc.co.uk/news-article/shell-reveals-record-annual-profits-of-32billion
– – –
When are their fuel price margins coming down?
It’s like any market, over supply no profit. Under supply high profits.
Thanks to Net Zero the market was distorted, eventually righting itself and we’re waiting for new suppliers to enter to get quick profits and drive the price down. This may take longer than a couple of years.
We’re seeing a very poorly constructed dam collapse, the river and flood are not free yet because governments are still trying to make repairs but the flooding will come and hopefully Net Zero will be swept away.
I put a bottle of champagne – or actually a bottle of world-beating English sparkling wine – on ice when I saw the Shell results. I get my cut at the end of next month. And look at the whining from the Guardian. LOL
Ah yes!
The eponymous Looney.
Another from the same stable as “Edmund John Phillip Browne, Baron Browne of Madingley, FRS, FREng, FGS.” WC & Chain.
“Chief executive of the energy company BP between 1995 and 2007. This period has been described as the company’s “golden period of expansion and diversification”. [Wikipedia].
This was the genius who changed British Petroleum to Beyond Petroleum.
How we all laughed.
The very fact that Wikipedia reckons he was in charge during the “golden period of expansion and diversification” is a good indication of what twerps he and Looney are.
It’s newspeak from corrupt goggle. John Browne famously set production targets for BP’s North Sea fields like Miller. An oilfield and its reservoir have an optimum and natural drive and efficient way of producing itself – nature at work. Trying to dictate what the field would produce with “targets” was impossible and all the reservoir engineers knew it. Browne became enobled? ennobled? of course.
Riddle me this, Batman: How long til the Left attacks BP for not doing ENOUGH for energy security?
Of course, PROFITS are the only way to achieve energy security. I’m dying to see how the Left polishes this turd.
‘after US oil giants posted record profits on the back of booming demand for fossil fuels’
The embedded link under ‘US oil giants posted record profits’ actually goes to:
‘BP profits triple as company fails to pass on petrol price cuts’
FA to do with ‘US oil giants.’
Also co-written by Ms Millard. It complains about BP profits.
‘BP revealed a tripling of profits to almost £7bn as data showed the company has cut its petrol prices more slowly than rivals in a blow to millions of motorists.’
As usual, Telegraph writers are crying out for an editor.
I’m sure that BP’s profits owe little to retailing petrol – or refining it. They don’t have much refinery capacity left, having sold or closed most of it, including no refinery in the UK now since INEOS and PetroChina bought Grangemouth quite some years ago. They used to have Grain, Llandarcy and Belfast as well.
There is a man who knows the refinng history in the UK. Both BP and Shell have divested their refining assetts in the `UK and most of Europe. BP has 4 refineries in Europe and Shell has two. You are correct the retail arms are now resellers and in many cases are licesning agreements to sell fuels under a brand name. Quite commoen really as only Esso has a refinery and retail arm. The other five fuel refineries are owned by Ineos (BP), Essar (Shell), P66(Jet), Prax (Total) and Valero(Texaco). All have agreements to swap fuels. There are also blenders such Harvest Energy and Blue Ocean who supply the supermarkets.
The fuel retailers are enjoying bumper margins as pricing has not tracked the fall in crude pricing. However we are all paying the price of biofuels E10 and B7. Both add a big chunk to the final price.
“Both add a big chunk to the final price.”
While simultaneously increasing fuel consumption and having a deleterious effect on some engine components…
Doesn’t stop the media claiming otherwise though. Can’t have the plebs actually understanding things, they might get wrong ideas.
Carnot; Thanks for that overview of the UK refineries.
It would be interesting to have your views on the diesel situation with the imminent EU embargo/price cap: I’ve seen a few articles predicting possible shortages and/or price spikes.
Notwithstanding the fact that oil will be needed, in inceasing amounts as the global population expands, BP’s Annual Statistical Review last June clearly showed that global peak oil production may already have happened in 2018.
Oil production in 2018 was 4,487 million tonnes. In 2021, it was 4,221 million tonnes.
Of course, Covid may possibly be the reason…worrying however, as “net zero” claptrap continues unabated, as I heard Ed Milliband on Today, this morning, insisting…
Tut, tut. You mentioned the word peak and global oil production in the same sentence. You will now get a lecture from the man who single handedly converted the UK to natural gas. You will be told that there are trillions of barrels of oil, cazillion metres of gas and trillions of tonnes of coal all waiting to be found and recovered, that will sustain mankind for thousands of years. All we need to do is get fraccing.
On a more serious note you are absolutely correct. The easy oil is gone. US shale looks like being far below expectations and by far the Permian Basin is the biggest source of US tight oil. However recovery factors are not encouraging and well EUR’s are if anything decling when normalised for lateral completions.
Re-investment in finding new oil and gas reserves, globally, has not kept up with annual extraction rates, meaning that reserves have declined or been drawn down. In order to grow production, each year the global rate of depletion is something like 4% of production. That 4% has to be replaced before production can grow. The ESG mob has done a fantastic job in persuading investors to invent in renewables at the expense of fossil fuels.
By the way the global production is billions of tonnes, not million. Europe consumes around 550 million tonnes of crude and NGL’s
Lots of unexploited oil reserves in Africa and the Far East.
Thanks, Carnot, for telling us what we have been told every year for decades.
Yawn.
@Carnot,
Thank you! Yes! the business need to frack is certainly an indicator that “normal” oil and gas reserves are not delivering what they used to. Certainly not as much since I was a much younger engineer working on production platforms in the Persian Gulf during the 1960s or bidding for the first, exciting production platforms in the North Sea. Those, sorry to say, were the days!
Umm…BTW, the last time I saw a billion described in normal parlance, it was/is a thousand million.
So, I guess four thousand million tonnes could rightly be described as 4 billion?
Anyway, best wishes!
Hugh, unfortunately a billion is generally accepted as 1000 million in US parlance. Very roughly 7.3 bbls per mt which is about 31 billion barrels as crude and 36 billion as total liquids (crude ,condensate and non-OPEC NGL’s) It gets even more confusing when you read MMb/d (million barrels /day) in some literature. You are right the good old days. Rather different now and a lot more complex. When I started my career directional drilling was still in its infancy and hydraulic fracturing was in development mode. How it has moved on, but the physics have not changed. Bad rock is still bad rock.
I read that as ‘green shit’ several times before it made sense saying ‘green shift’ LOL
You beat me to it.
Definitely a silent f.
It’s like a silent “P” as in “bath”!
Dammit, guys! Now I can’t read it any other way!
Rachel Reeves on WATO just now says BP should be ‘made’ to invest more in renewables. That could be interesting. Will Labour accept that they then are responsible for renewables clean-up?
Reeves is as dumb as they come. There’s no shortage of money waiting to be invested. You don’t need BP for that. It’s not invested in renewables because they do not offer attractive returns. The costs of building then has soared and no government is going to increase electricity prices to compensate.
Witness the lack of interest in the latest round of German windmills. And with their insane plans, they need to be building them weekly.
I see Siemens Gamesa is to be absorbed into the main company because of losses associated with faulty components/warranty claims.
I am guessing here, but they manufacture at least the nacelles in Taiwan, is it unreasonable to assume Chinese components? Potentially another downside of destroying your own high quality industry engineering manufacturing.
They have also announced that they made a loss of 940m euros in 2022 and have a backlog of orders at a record 35,051m euros. Earlier this year they were pleading with the EC to change the system for approving new wind farms and provide more subsidies. All 5 of Europe’s wind turbine manufacturers have been operating “at massive losses” for some time now.
Well, aren’t the “windfarms” really “subsidy farms”. The “massive losses” seem to be built-in to the concept!
O/T. Very interesting podcast discussion between Brendan O’Neill and the Telegraph’s Ross Clark. (He’s been across this subject to eons, producing a long list of outstanding DT articles. Obviously every last one has been ignored by TPTB.)
They both ask exactly the questions our gullible political classes are refusing to ask, probably as they have no answers.
Basically it’s a plea for some reason to enter the hysterical world of climate policy. It’s an hour so worth putting on in the background. A very good listen.
https://www.spiked-online.com/podcast-episode/the-folly-of-net-zero/
That’s what happens when the growth in fossil fuel use exceeds the addition of renewable energy sources. We can’t even displace the increase and the goal is to replace it? Even widespread adoption of nuclear energy won’t stop fossil fuels.
He added: “The environment, the assumptions that went into everyone’s net zero analysis in 2020 is clearly not valid today.
“It was based on a peaceful, globally cooperative world – that’s no longer valid.”
He is still clueless. Thus, he is unable to contribute to solutions.
So many Looneys, so little time.
“It was based on a peaceful, globally cooperative world – that’s no longer valid.”
It was never valid. A naive, ahistorical, immature, teenaged outlook.
How about longterm, authoritarian/dictatorial, philosophically top down autocracy like China, Russia, Iran, Libya, Iraq and North Korea are going to recognize their “errors” and become freewheeling capitalist democracies of the UK-US style, because we gave them money and promised to buy their stuff?
Same problem.
We have ongoing wars and upcoming wars because virtue-signalling hippies were elected to government offices.
I think the Ukraine thing in this instance is being used as a convenient reason to cut the waste of money on unreliables as the lying politicians have put it in people’s minds that it is the cause of everything getting more expensive as opposed to their incompetence.
At this time, it is hard to see either the US with its massive electoral fraud as well as corruption in the FBI and DoJ, or the UK with no difference between any of the viable parties as functioning democracies given the lack of power held by the people.
The amount of undiscovered hydrocarbons beneath the earth’s surface is unknown. My guess is that it’s an enormous quantity, probably beyond the ability of mankind to measure.
You are correct- sort of. There are resources, technically recoverable resources and proven reserves. The proven reserves are what are produced because the net energy gain is positive. Most technicallly recoverable reserves cannot be produced profitably with a net energy gain. Some, very small, technically recoverable reserves may be produced in the future but there is no cure for bad rock, even with fraccing. Fraccing will never be widely employed. It is generally used on tight rocks – in the US this usually means source rock, rather than reservoir rock.
Your assertions are clownish. Unless your ability to predict the future is better than anyone else’s.
People have been guessing – incorrectly – peak oil since 1956.
“But this time, we’ve got it right!”
“Fraccing will never be widely employed.”
To the contrary, fraccing IS already widely employed and had been for decades, what do you think made the USA (until the idiot Biden messed it up) an overall exporter for the first time since the 1950s?
Now even the Germans are carrying out surveys.
In fact, I seriously doubt you understand the process of fraccing in the first place, it isn’t used on “tight” rock, it is used to extract the oil and gas directly from the shale beds before it has migrated into the reservoirs.
I think your knowledge of oil extraction is stuck in the 1950s.
Using modern prospecting and extraction techniques there are hundreds – perhaps thousands of years’ worth of available petroleum resources left as yet unexplored and untouched.
https://energiesnet.com/the-offshore-oil-business-is-gushing-again-wsj/
Then, using the steerable drilling techniques used for shale extraction and in situ gasification which produces synthesis gas, feedstock for the Fischer-Tropsch coal to oil process, there are billions – perhaps trillions – of tons of coal accessible in the UK alone.
https://www.ingenia.org.uk/ingenia/issue-43/underground-coal-gasification
And then there is the vast amount of methane available as hydrate on the ocean bed and in the arctic permafrost which is even now being investigated with a view to commercial exploitation, see here:
“At the same time, new technologies are being developed in Germany that may be useful for exploring and extracting the hydrates.
The basic idea is very simple: the methane (CH4) is harvested from the hydrates by replacing it with CO2. Laboratory studies show that this is possible in theory because liquid carbon dioxide reacts spontaneously with methane hydrate.
If this concept could become economically viable, it would be a win-win situation, because the gas exchange in the hydrates would be attractive both from a financial and a climate perspective.”
http://worldoceanreview.com/en/wor-1/energy/methane-hydrates/2/
So don’t worry, we won’t have to worry about energy for centuries – perhaps millennia, by which time we’ll have much more efficient energy technology, for example someone will get fusion going sooner r later.
We, kemo sabe? Gamecock expects to be fully, completely, irrecoverably dead in 30 years. The future will just have to take care of their own energy.
“Not my job, mon.”
Oh, I absolutely agree, Gamecock, I’ve already comfortably exceeded my own three score and ten!
When I use the term “we” I mean “we” as in the human race.
Thank you for your response. Having read my comment on the use of hydraulic fracturing it would have been better had I described which type of hydraulic fracturing i.e multi -stage cluster fracturing of extended horizontal lateral completions- up to 15000 ft in lateral length (the limit of what is about achievable at present) on a low permeability rock containing hydrocarbons. In addition the fractures are propped open by the use of a proppant, usually a sand but other options exist.
My knowledge of the subject is not stuck in the 1950’s. Far from it. When I started my career many years ago the ability to deviate well bore was in its infancy. Now with the advent of mud motors, and latterly rotary steerable systems, in conjunction with MWD it is possible to drill well bores of just about any design. The practical limit on length is essentially the hook load.
You are quite right fracturing of well completions was been around since 1865. The Roberts Petroleum Torpedo company used a torpedo filled with nitroglycerine to fracture the rock around the well bore to improve flow rates.
These days perforating guns are frequently employed to perforate the well casing and open pathways to the well bore. Vertical hydraulic fracturing is also widely employed. Much depends on the reservoir characteristics, especially permeability. Halliburton developed hydraulic fracturing in 1949, and has steadily developed its application on well stimulation to the current impressive standard. But is comes a cost; quite a significant cost in the case of multi stage cluster fracturing with high proppant loadings. I trust that this clarification meets with you approval.
On the subject of source rock you might wish to amend your comment. The acknowledged grandfather of hydraulic fracturing with proppants, was a man called George Mitchell. He developed the concept of fracturing tight gas reservoirs and later the technique was used on source rocks. Source rocks are the source of the oil and gas in conventional reservoirs (i.e a trap structure). The source rock generally sits below the reservoir (but not always). Primary migration is the expulsion of the hydrocarbon from the source rock. As the kerogen undergoes maturation- also known as catagenesis- the oil and gas formed has a lower density and the change in volume and increase in pressure expels some of the hydrocarbons until equilibrium is restored. The expelled hydrocarbons migrate through carrier beds, also know as secondary migration. If a trap structure is in the path of the migrating hydrocarbons then this will trap the hydrocarbons in what is termed a conventional reservoir. If no trap exists then the hydrocarbons usually migrate to the surface and are lost. This is the fate of most oil and gas expelled from source rock.
The source rock does not expel all the hydrocarbons and a significant amount of hydrocarbons remain in what is usually a very low permeability rock. It is these rock formations that the US is exploiting for natural gas and tight oil. Your statement that the hydrocarbons are being produced from the shale beds before it migrates to the reservoirs is not correct. Most of the hydrocarbons are long gone.
As I previously advised, why not go and read up on the subject of oil generation instead of making offensive comments. Had you done so you would not have made a rookie error which only demonstrates the limit of your knowledge on the subject. If I recall you did not even understand what a gas gathering system is.
I am told by someone in the industry that the major car manufacturers are all drawing up a plan B in case EVS do not take off for whatever reason. The likeliest scenario being that the systems will run side by side or hybrid only.
So no surprise there…
Why is all public discussion of Net Zero about electricity generation which produces 4% of UKs energy? How is the other 96% to be decarbonised when clearly electricity can’t be?
I think your numbers are way off, though your point is correct.