BP and Chevron: A Difference in Style or Substance?

Guest post by Tilka Doshi, originally posted at Forbes.

In the high road of the climate crusade, marked by corporate brochures extolling social responsibility and environmental sustainability, BP was first past the post among the big oil majors. Its legendary then-CEO John Browne – now Lord Browne — had declared in a speech at Stanford University in 2002 that “We need to reinvent the energy business. We need to go beyond petroleum”. With hindsight, it may seem that BP’s $200 million re-branding exercise heralded the onset of the cultural revolution by rejecting not just the demonized fossil fuel in its hitherto marquee name but also the ‘British” qualifier, which now stands among the chattering class as a signifier of nationalism and xenophobia.

The shock announcement two weeks ago by BP’s newly-appointed CEO Bernard Looney to slash oil and gas production by 40% and boost capital spending on low-carbon energy tenfold to $5 billion a year – a plan that “even Greenpeace is cautiously praising” — signifies another milestone in the familiar narrative of corporate environmental redemption. This comes after BP had sold off its US solar assets in 2011 as Chinese competition, falling prices and reduced government subsidies made it a losing proposition. And in 2013, the company disposed its US wind business worth some $3 billion as it tried to financially recover from its disastrous oil spill in the US Gulf Coast.

Drill, Baby, Drill!

Yet this tale of “woke” corporations, inexorable as it seems with other European oil giants such as Shell and Total also committing to the “net zero by 2050” carbon emission targets of the non-binding Paris Agreement, is not without its detractors. Almost 2 decades after Lord Browne’s speech and a few weeks before BP’s latest announcement, in a speech delivered (virtually) in the heart of US oil and gas boom, in Austin, Texas, the CEO of Chevron Corporation Mike Wirth spoke to the theme of “Powering Forward – Texas Oil & Natural Gas”.  With remarkable candour – and to the dismay of news outlets such as Bloomberg News – Mr. Wirth told his audience that the global push for clean energy “doesn’t mean the end of oil and natural gas…it will be a part of the mix, just as biomass and coal are still enormous parts of the mix today”.  Chevron, he assured his audience, would “find ways to make oil and gas more efficient, more environmentally benign”.

Under Mr. Wirth, Chevron has emerged as a leading player in the shale sector in the US. Last month, the company acquired Noble Energy in an all-stock $5 billion deal. Mr Wirth’s audience of some 1,000 participant at the Texas Oil and Gas Association summit, which included United States Under Secretary of Energy Mark Menezes, Texas Governor Greg Abbott and Chairman and CEO Willie Chiang of Plains All American Pipeline, would need little reminding of the extraordinary role played by the US “shale revolution”. It made the US the world’s leading oil and gas producer within an astonishing short time span of a decade or so. The surge in US crude oil production from its shale basins, particularly the Permian across Texas and New Mexico, have had significant impacts on both Middle East oil producers and on Asian net oil-importing nations.

The Shale Revolution Legacy

The impact of the shale revolution has been transformational on the Middle East. After decades of increased consumption and reduced output of crude oil in the US, the conventional wisdom since the oil price shocks of the 1970s saw the country as increasingly dependent on the Middle East for its source of crude imports. The opposite has occurred. With its new-found unconventional oil and gas resources, the US is no more the energy supplicant in its relationship with the region’s oil producers. Saudi Arabia and other Middle East oil producers still constitute the world’s major source of low-cost conventional oil reserves. However, their overwhelming dominance is no longer a defining feature of global oil markets.

For Asia, the primary impact of the US surge in crude oil exports has been on lowering the cost of oil imports. Global oil prices would have been higher by up to $50 per barrel  if there had not been a shale boom in the US.  Given the scales involved, even with conservative estimates on the price impact, the US upsurge in unconventional oil production has arguably led to the biggest transfer of wealth in modern economic history. Largely at the cost of reduced oil revenues to OPEC and Russia, the benefits of lower oil prices have largely flowed to Asia: China, India, Japan and South Korea constitute four of the world’s five largest oil importing markets. Given that over 60% of Asia’s total oil imports are sourced from the Middle East, the US oil production surge has led to a massive foreign exchange transfer in favour of Asia’s current account balances at the expense of the Middle East and other oil exporters. The fall in oil prices spurs economic growth by lowering costs. It is estimated that a $10/barrel decrease in oil prices leads to a 0.15% increase in GDP for China, and 0.25% increase in GDP for India. In any credible scenario where governments retain legitimacy by delivering higher standards of living for their people, the Asian developing countries’ appetite for oil, gas and coal will mount for at least a few more decades to come.  

What it Means to Most People

But perhaps the unapologetic remarks by Mr. Wirth mean most to the wretched of the earth, those without, or with limited means, to access fossil fuels-based energy. Some 940 million people in the developing countries, constituting 13% of the world’s population, do not have access to electricity. Three billion people, 40% of all people alive, do not have access to clean fuels for cooking, leading to the high health costs of indoor air pollution which kills almost 4 million people every year. These people need access to affordable gasoline to power their cheap motor-cycles to bring them to work or their children to school (yes, they ride their families of three or four kids on a two-seater bike), and they need LPG canisters to cook cleanly without resorting to cow-dung, foraged wood and crop residues – mankind’s oldest dirtiest fuels from time immemorial. They need cheap power from coal or natural gas to escape grinding poverty. If they have competent governments, they would be doubly blessed as clean power generating plants with low emission technologies would mitigate ambient air pollution.

For the third of the global population struggling up the economic development ladder, and for the many more who live from monthly paycheck to paycheck, stern lectures from a privileged teen-aged prophetess preaching impending global doom, or from those who dabble in complex ‘hockey-stick’ models of global warming 50 or 100 years hence, seem callous. For them, the words of an old-school oil man in Texas ring truer today than those habitually delivered to the initiated well-off in uber-green California. The difference between BP and Chevron is indeed one of substance, and of huge consequence to the welfare of countless individuals.

41 thoughts on “BP and Chevron: A Difference in Style or Substance?

  1. Chevron’s acquisition of Noble was not just Permian Basin focused, but it has positioned itself well by picking up Noble Energy’s Meditteranean Gas Portfolio (Leviathan, Tamar and Aphrodite – Leviathan alone has approximately 16 Tcf of Natural Gas at a 2P Level). The BP position reminds of the clip in IronMan when Tony Stark announces that Stark Industries are no longer in the weapons business..cut to Cramer on Mad Money roasting Stark Industries…BP’s share price has since tanked. Oh well.

  2. Bernard Looney! ……… I bet he’s got issues carrying that name around. Probably explains his wokeyness.

    Get woke, go broke…….

    • Mr Looney ….. yes … this clown is in charge of my pension. He comes from County Kerry (enough said) in Ireland a well known oil producing part of the Emerald Isle.
      He makes me ashamed to admit I am a fellow Irishman.
      I remember well John Browne – us offshore wallahs called him Brown with an E – when he cut his teeth in Aberdeen. He started the companies descent into madness. That was before he “came out” as a member of the limp wristed fraternity.

  3. BP & Shell more or less funded the wind industry in its early days. The idea that fossil fuel coys have ever been sceptics is one of the most bizarre claims that anyone has ever made.

    • Shell have almost certainly been the biggest supporters. They have organised big conferences in the gherkin, london with all the major players present and paid for.

    • Yep I remember their annual investor reports in the mid-to-late 90s bragging about investment in alternative energies.

  4. Lord Browne and his mantra , “ BP …..beyond petroleum”
    Words do fail me.
    Would McDonalds institute a marketing program ,“ Beyond Hamburgers”?
    In the current crazy world with ‘meatless burgers’, they might.
    But would they say to the public, “ Don’t buy our product; it’s dangerous”. “The climate demands better”.
    If they did, we would have massive numbers of climate deniers.
    In fact with BP, we already do.

  5. BP peaked at just under 600 GBX and is now around 225.

    And with this latest announcement from Looney, will probably not recover much.

  6. It’s all woke posturing. The bottom line is, corporations have to make a profit. If their board deliberately sets out to destroy a company they can be removed by shareholders. Even the most timid, “never rock the boat” pension funds have an even greater duty to the savers they are entrusted with. Apart from that, the more “renewables” like wind and solar are deployed, the more fossil fuels will be needed to power the mining, smelting and manufacturing of them. So, oil and gas isn’t going away in our life times.

      • No , it was replaced with something at WORKED BETTER

        Wind and solar need not apply.

        Coal will ALWAYS provide a better, more stable supply of electricity,

        And the CO2 is totally beneficial to the atmosphere and all life on Earth.

        Your puerile, irrelevant comment is just nonsense BS as usual..

        • The UK has just 4 coal power plants left. Last year coal supplied just 2% of UK electricity as UK went 3665 hours free from coal electricity generation…

          Co2 is of course rapidly warming the planet with a number of consequences not good for human society

          • What is about leftists that they actually seem to believe that whatever government orders them to do, is always the best solution.

          • Yes… CO2 has warmed the planet so much it was announced last week Death Valley was getting close to being as warm as it was in the 1910s. At this rate.. we might actually break the record some time in 2300.

          • These plants did not close because they were uneconomical, they were closed because the government wanted them to close. On a level playing field, coal always beats solar and wind, especially at night. The planet is not rapidly warming, but slowly. This is a good thing considering the increase in plant growth to feed the world. If you are really concerned about CO2, let’s support liquid thorium reactor development.

          • And as a consequence, Drax is denuding vast forest lands half a world away and releases their former CO2 sinks into the atmosphere.(Let us not mention the former wildlife that dies with them.)

          • Hey griff, why the UK? How’s CA doing? Are rolling blackouts without consequences? Good for human society?

          • griff, CO2 is not rapidly warming the planet.

            If you did some basic homework you would find that water vapour is far and away the most import greenhouse gas, in its atmospheric volume, its very broad operational frequency ranges, its effectiveness, variability and rapid atmospheric turnover and replenishment.

            CO2 operates effectively only at a single spike centred around 14.9u, an electromagnetic radiation (EMR) frequency also partially occupied by water vapour.

            Once this frequency area is saturated adding more atmospheric CO2 will have little or no additional warming effect.

            The IPCC AR5 Report discloses in the main Report that 95.7% of the increase in atmospheric CO2 is from natural causes, making mankind’s addition of 3.8% from burning fossil fuels and .5% from land use change, inconsequential.

            On the other hand the world is rapidly greening with increasing crop yields, largely because of the increase in CO2.

            This can only be highly beneficial for both mankind and biota.

            All this information is readily verifiable.

          • Co2 is of course rapidly warming the planet with a number of consequences not good for human society

            Name them and prove that they are anything more than fantasy.

            And since you seem to believe the lie that warmer = bad. Please tells us what the ideal temperature of the planet is (obviously colder than now since we’ve had “dangerous” global warming for decades) and when were we ever at the temperature?

            I won’t be holding my breath waiting for coherent, real science-based answers to the above questions.

  7. Woke BO versus Fracking Chevron? I like to take a quick look at the stock history, to see what the people who put their money where their mouth is think, to get an idea of a company on the right/wrong track. BP 52 week spread is 40.08 to 15.51, and current 22.37 (US$), whereas Chevron is 125.27 to 51.60, current 87.63. Here’s the telling statistic: BP has recovered to 56% of max, whereas Chevron has recovered to 70% of max. Guess who is indicated by the stock market to be on the right track?

  8. For those who like history –
    In the 1920s, one of the world’s richest and largest gold mines was operating at Mount Morgan, a small town 50 km or so west of the city of Rockhampton, which sits on the Tropic of Capricorn on the east coast of Australia.
    The immense wealth flowed to some people who left a large legacy. Walter and Elizabeth Hall went on to found a highly-regarded medical research institute based in Melbourne, where Nobel level work proceeds today. The Hall’s home at Mt Morgan is maybe still there. In 1974 it was rented for one of my project managers with whom we enjoyed some dining.
    Another wealthy person of note was William Knox D’Arcy, who went to the deserts of the Middle East, now Arabia, with a conviction that payable reserves of oil could exist below that barren looking desert sand. Colleagues thought him delusional. He drilled many holes at great personal cost before he hit the gusher that led to the eventual establishment of British Petroleum, then its abbreviation BP.
    If BP wants to play with its name, perhaps some mention of its Australian origins might be nice.
    There is a deeper lesson behind this little history tour. These days, a common anti-mining chant of the ignorati is “Leave it in the ground”. Such shallow indoctrinated non-think fails totally to understand the sometimes indirect importance of mining to the broader society, which would be unimaginably worse off by leaving it in the ground. Geoff S

      • MW,
        There were and are several names, some colloquial, some legal as on agreements. Google can help, though accounts of the history, written recently, can have stupid and depressing moral virtual signalling, anti fossil-fuel, that was not there in the first accounts that I read in the 1970s. The do-gooders have no ethics.
        For brevity, I did not mention that the work of D’Arcy and these huge oil reserves was before other explorers succeeded in a major way. This contributed greatly to geological resource understanding and can be regarded as the birth of the global oil industry.
        Auto-correct is not my friend. Please delete “Elizabeth” and insert “Eliza”.

        • No worries Geoff. I remember seeing an old Anglo-Persian (BP) information film on my first day as a mudlogger, on how not to do well control on a blowout in Iran. Filmed on a hill overlooking the wellsite, the 600m of drill pipe, the kelly and most of the oil/mud came out of the hole like high velocity spaghetti. Safe to say I had a new found respect for the science of well control….

  9. The takeover of our major companies especially resource companies has been no doubt targeted policy of climate alarmists. The large institutions are just as bad. They become activists on the register and influence boards to appoint to prominence people who think like them . Soon these people then surround themselves with people who think the same and next thing you know rather than trying to maximise shareholder earnings these companies are interested in diversity and gender quotas and their carbon footprint. Stuff all the child labour being used to extract metals in corrupt countries around the world to build their renewables. No matter how big these companies are it’s only a matter of time before the go woke go broke saying will apply to them.

  10. I noted that recently the green press has been celebrating the asset downgrades that oil companies have been announcing. They fail to note two things: these are the result of lower oil prices being used in the valuation of proven reserves, not permanent reserve abandonment, and secondly the lower prices mean that renewable companies on fixed subsidies should also be recording writedowns, while governments guaranteeing fixed prices for renewable output need to provide for higher subsidies.

  11. Europe has very little oil, natural gas, thermal coal or metallurgical coal left, therefore, companies with their head offices in Europe are going to accept the shoddy science as do their residents. As well, they recognize the funds they are spending for energy from outside their own area. Same attitude in Canada, Central Canada (with the population base) also has little oil, natural gas or coal and is willing to ruin the economy on the CDN prairies. There are always going to be the extremists but then there are many whose principles are determined by their own self interests. btw the CDN prairies have subsidized Canada’s national health care for decades.

  12. BP and Shell – and even Exxon – were way ahead of 2002 pushing that they were investing in alternative energy.

    BP was the gasoline choice for enviros. Even on RealClimate they were the “good buy” in the gas and oil business. Then Deepwater Horizon happened.

    • Plus ça change

      General Atomic

      A brief history of the company:

      1967: Sold to Gulf Oil and renamed Gulf General Atomic.[citation needed]
      1973: Renamed “General Atomic Company” when Royal Dutch Shell Group’s Scallop Nuclear Inc. became a 50–50 partner.[citation needed]
      1982: Renamed “GA Technologies Inc” when Gulf bought out its partner.[citation needed]
      1984: Taken ownership of by Chevron following its merger with Gulf Oil.[citation needed]
      1986: Sold to a company owned by Neal Blue and Linden Blue when it assumed its current name.[citation needed]

      • Probably should include the origin in your brief history (rather that copy from the wiki entry that your brief history came from, I’ll borrow from the ga.com history page):

        1956: General Dynamics creates the General Atomic (GA) Division of General Dynamics for research and development in the peaceful uses of atomic energy

  13. Griff:
    Co2 is of course rapidly warming the planet with a number of consequences not good for human society

    There is no evidence that the increase in CO2 is responsible for most of the warming.
    There is no evidence that the consequences of the warming of the planet are not good for human society.
    There is evidence that the consequences of the increase in CO2 are good for human society and the biosphere as a whole.

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