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British Petroleum

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British Petroleum

This article is about the energy company. For other uses, see BP (disambiguation).
BP plc
Public limited company
Traded as Template:Lse
Template:Fwb
BP
Industry Oil and gas
Predecessor(s) Anglo-Persian Oil Company
Burmah Castrol
Standard Oil of Ohio
ARCO
Amoco
Founded 1909 (as Anglo-Persian Oil Company)
1935 (as Anglo-Iranian Oil Company)
1954 (as British Petroleum)
1998 (as BP Amoco plc)
2001 (as BP plc)
Headquarters London, England, United Kingdom
Area served Worldwide
Key people Carl-Henric Svanberg (Chairman)
Bob Dudley (CEO)
Brian Gilvary (CFO)[1]
Products Petroleum
Natural gas
Motor fuels
Aviation fuels
Petrochemicals
Production output 3.3 Mbbl/d (520×10^3 m3/d) of oil equivalent (2012)[2]
Services Service stations
Revenue Increase US$388.285 billion (2012)[3]
Operating income Increase US$19.733 billion (2012)[3]
Profit Increase US$11.816 billion (2012)[3]
Employees 85,700 (2012)[4]
Website

BP plc,[5][6][7] sometimes referred to by its former name British Petroleum, is a British multinational oil and gas company headquartered in London, England, United Kingdom. It is the fifth-largest energy company by market capitalization,[8] the fifth-largest company in the world measured by 2012 revenues, and the sixth-largest oil and gas company measured by 2012 production.[9][10] It is one of the six oil and gas "supermajors".[11] BP is vertically integrated and operates in all areas of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading. It also has renewable energy activities in biofuels and wind power.

As of December 2012, BP had operations in over 80 countries,[12] produced around 3.3 million barrels per day of oil equivalent,[2] had total proved reserves of 17 billion barrels of oil equivalent,[13] and had around 20,700 service stations.[14][15] Its largest division is BP America, which is the second-largest producer of oil and gas in the United States.[16] BP owns a 19.75% stake in the Russian oil major Rosneft, the world's largest publicly traded oil and gas company by hydrocarbon reserves and production. BP has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index; it had a market capitalisation of £85.2 billion as of April 2013, the fourth-largest of any company listed on the exchange.[17] It has secondary listings on the Frankfurt Stock Exchange and the New York Stock Exchange.

BP's origins date back to the founding of the Anglo-Persian Oil Company in 1909, established as a subsidiary of Burmah Oil Company to exploit oil discoveries in Iran. In 1935, it became the Anglo-Iranian Oil Company and in 1954 British Petroleum.[18][19] In 1959, the company expanded beyond the Middle East to Alaska and in 1965 it was the first company to strike oil in the North Sea. British Petroleum acquired majority control of Standard Oil of Ohio in 1978. Formerly majority state-owned, the British government privatised the company in stages between 1979 and 1987. British Petroleum merged with Amoco in 1998 and acquired ARCO and Burmah Castrol in 2000. From 2003 to 2013, BP was a partner in the TNK-BP joint venture in Russia.

BP has been involved in several major environmental and safety incidents, including the 2005 Texas City Refinery explosion which caused the death of 15 workers and resulted in a record-setting OSHA fine, Britain's largest oil spill, the wreck of Torrey Canyon, and the 2006 Prudhoe Bay oil spill, the largest oil spill on Alaska's North Slope which resulted in a US$25 million civil penalty, the largest per-barrel penalty at that time for an oil spill.[20] In 2010, the Deepwater Horizon oil spill was the largest accidental release of oil into marine waters in the history of the petroleum industry, and resulted in severe environmental, health and economic consequences.[21] The company pled guilty to 11 counts of felony manslaughter, two misdemeanors, and one felony count of lying to Congress, and agreed to pay more than $4.5 billion in fines and penalties, the largest criminal resolution in US history.[22][23][24] Further legal proceedings, which are not expected to conclude until 2014, are ongoing to determine payouts and fines under the Clean Water Act and the Natural Resources Damage Assessment.[25] BP faces damages of up to $17.6 billion in the trial.[26][27][28]

History

1909 to 1954


In May 1908 a group of British geologists discovered a large amount of oil at Masjid-i-Suleiman in Iran. It was the first commercially significant find of oil in the Middle East. The Shah of Iran granted a concession to William Knox D'Arcy to enable the British to drill for Iran's oil.[29][30] On 14 April 1909, the Anglo-Persian Oil Company (APOC) was incorporated as a subsidiary of Burmah Oil Company Some of the shares were sold to the public.[31] The first chairman and minority shareholder of the company became Lord Strathcona.[30]

Immediately after establishing the company, construction of the Abadan Refinery and the pipeline from Masjid to Abadan started. The refinery was commissioned in 1912.[30] In 1913, the British Government acquired a controlling interest (50.0025%) in the company and at the suggestion of Winston Churchill, the British navy switched from coal to oil. [30][32][33] The Royal Navy, which projected British power all over the world, came to be run 100% on oil from Iran.[34] In 1915, APOC established its shipping subsidiary the British Tanker Company and in 1916 it acquired the British Petroleum Company which was a marketing arm of the German Europäische Petroleum Union in Britain.[30] In 1919, the company became a shale-oil producer by establishing a subsidiary named Scottish Oils which merged remaining Scottish oil-shale industries.[35][36][37][38]

After World War I, APOC started marketing its products in Continental Europe and acquired stakes in the local marketing companies in several European countries. Refineries were built in Llandarcy in Wales (the first refinery in the United Kingdom) and Grangemouth in Scotland. It also acquired the controlling stake in the Courchelettes refinery in France and formed with the Government of Australia a partnership named Commonwealth Oil Refineries, which built the Australian's first refinery in Laverton, Victoria.[30] In 1923, Burmah employed Winston Churchill as a paid consultant to lobby the British government to allow APOC have exclusive rights to Persian oil resources, which were subsequently granted by the Iranian monarchy.[39]

APOC and the Armenian businessman Calouste Gulbenkian were the driving forces behind the creation of Turkish Petroleum Company (TPC) in 1912 to explore oil in Mesopotamia (now Iraq); and by 1914, APOC held 50% of TPC shares.[40] In 1925, TPC received concession in the Mesopotamian oil resources from the Iraqi government under British mandate. TPC finally struck oil in Iraq on 14 October 1927. By 1928, the APOC's shareholding in TPC, which by now was named Iraq Petroleum Company (IPC), was reduced to 23.75%; as the result of the changing geopolitics post Ottoman empire break-up, and the Red Line Agreement.[41] Relations were generally cordial between the pro-west Hashemite Monarchy (1932–58) in Iraq and IPC, in spite of disputes centered around Iraq's wish for greater involvement and more royalties. During the 1928–68 time period, IPC monopolised oil exploration inside the Red Line; excluding Saudi Arabia and Bahrain.[42][43]

In 1932, APOC and Royal Dutch Shell formed the joint marketing company in the United Kingdom named Shell-Mex and BP.[33] In 1934, APOC and Gulf Oil founded the Kuwait Oil Company as an equally-owned partnership. The oil concession rights were awarded to the company on 23 December 1934 and the company started drilling operations in 1936.[44][45] In 1935, Rezā Shāh requested the international community to refer to Persia as 'Iran', which was reflected in the name change of APOC to the Anglo-Iranian Oil Company (AIOC).[29] In 1937, AIOC and Royal Dutch Shell formed the Shell/D'Arcy Exploration Partners partnership to explore for oil in Nigeria. The partnership was equally owned but operated by Shell. It was later replaced by Shell-D'Arcy Petroleum Development Company and Shell-BP Petroleum Development Company (now Shell Petroleum Development Company).[46]

Following World War II, nationalistic sentiments were on the rise in the Middle East; most notable being Iranian nationalism, and Arab Nationalism. In Iran, the AIOC and the pro-western Iranian government led by Prime Minister Ali Razmara resisted nationalist calls to revise AIOC's concession terms in Iran's favour. In March 1951, Razmara was assassinated and Mohammed Mossadeq, a nationalist, was elected as the new prime minister by the Majlis of Iran (parliament).[47] In April 1951, the Iranian government nationalised the Iranian oil industry by unanimous vote, and the National Iranian Oil Company (NIOC) was formed, displacing the AIOC.[48][49] The AIOC withdrew its management from Iran, and Britain organised an effective worldwide embargo of Iranian oil. The British government, which owned the AIOC, contested the nationalisation at the International Court of Justice at The Hague, but its complaint was dismissed.[50]

Prime Minister Churchill asked President Eisenhower for help in overthrowing Mossadeq. The anti-Mossadeq plan was orchestrated under the code-name 'Operation Ajax' by CIA, and 'Operation Boot' by SIS (MI6). The CIA and the British helped stage a coup in August 1953, the 1953 Iranian coup d'état, which established pro-Western general Fazlollah Zahedi as the new PM, and greatly strengthened the political power of Shah Mohammad Reza Pahlavi. The AIOC was able to return to Iran.

1954 to 1979

In 1954, the AIOC became the British Petroleum Company. After the 1953 Iranian coup d'état Iranian Oil Participants Ltd (IOP), a holding company, was founded in October 1954 in London to bring Iranian oil back to the international market.[51][52] British Petroleum was a founding member of this company with 40% stake.[47][51] IOP operated and managed oil facilities in Iran on behalf of NIOC.[51][52] Similar to the Saudi-Aramco "50/50" agreement of 1950,[53] the consortium agreed to share profits on a 50–50 basis with Iran, "but not to open its books to Iranian auditors or to allow Iranians onto its board of directors."[54][55]

In 1953 British Petroleum entered the Canadian market through the purchase of a minority stake in Calgary-based Triad Oil Company, and expanded further to Alaska in 1959, resulting discovery of oil at Prudhoe Bay in 1969.[33][56] In 1956, its subsidiary D'Arcy Exploration Co. (Africa). Ltd. has been granted four oil concessions in Libya.[57] In 1962, Scottish Oils ceased oil-shale operations.[38] In 1965, it was the first company to strike oil in the North Sea.[58] The Canadian holding company of British Petroleum was renamed BP Canada in 1969; and in 1971, it acquired 97.8% stake of Supertest Petroleum. Subsequently, Supertest was renamed to BP Canada, and other Canadian interests of British Petroleum were amalgamated to the new company.

By the 1960s, British Petroleum had developed a reputation for taking on the riskiest ventures. It earned the company massive profits; it also earned them the worst safety record in the industry.[34] In 1967, the giant oil tanker Torrey Canyon foundered off the English coast. Over 100 tonnes of crude oil were spilled into the Atlantic and onto the beaches of Cornwall and Brittany, causing Britain's worst-ever oil spill.[59] The ship was owned by the Bahamas-based Barracuda Tanker Corporation and was flying the flag of Liberia, a well-known flag of convenience, but was being chartered by British Petroleum.[59] The ship was bombed by RAF jet bombers in an effort to break up the ship and burn off the leaking oil, but this failed to destroy the oil slick.[60]

The company's oil assets were nationalised in Libya in 1971, in Kuwait in 1975, and in Nigeria in 1979.[49][45][61] In Iraq, IPC ceased its operations after it was nationalised by the Ba'athist Iraqi government in June 1972 although legally Iraq Petroleum Company still remains extant,[62] and one of its associated companies —Abu Dhabi Petroleum Company (ADPC), formerly Petroleum Development (Trucial Coast) Ltd — also continues with the original shareholding intact.[63][64]

The intensified power struggle between oil companies and host governments in Middle East, along with the oil price shocks that followed the 1973 oil crisis meant British Petroleum lost most of its direct access to crude oil supplies produced in countries that belonged to the Organization of Petroleum Exporting Countries (OPEC), and prompted it to diversify its operations beyond the heavily Middle East dependent oil production. In 1976, BP and Shell de-merged their marketing operations in the United Kingdom by dividing Shell-Mex and BP. In 1978 the company acquired a controlling interest in Standard Oil of Ohio (Sohio).[65]

In Iran, British Petroleum continued to operate until the Islamic Revolution in 1979. The new regime of Ayatollah Khomeini confiscated all of the company's assets in Iran without compensation, bringing to an end its 70-year presence in Iran. British Petroleum was forced to look elsewhere for its oil.[34]

In 1970–1980s BP diversified into coal, minerals and nutrition businesses which all were divested later.[33]

1979 to 2000


The British Government sold 80 million shares of BP at $7.58 in 1979 as part of Thatcher-era privatisation. This sale represented slightly more than 5% of BP's total shares and reduced the government's ownership of the company to 46%.[66][67] Prior to the worldwide stock market crash in October 1987 Prime Minister Margaret Thatcher initiated the sale of an additional GBP7.5 billion ($12.2 billion) of BP shares at 333 pence, representing the government's remaining 31% stake in the company.[66][68] In November 1987 the Kuwait Investment Office purchased a 10.06% interest in BP, becoming the largest institutional shareholder.[69] The following May, the KIO purchased additional shares, bringing their ownership to 21.6%.[70] This raised concerns within BP that operations in the United States, BP's primary country of operations, would suffer. In October 1988, the British Department of Trade and Industry required the KIO to reduce its shares to 9.6% within 12 months.[71]

Peter Walters was the company chairman from 1981 to 1990.[72] During his period as chairman he reduced company's refining capacity in Europe.[72] In 1982, the downstream assets of BP Canada were sold to Petro Canada. In 1984, Standard Oil of California was renamed to Chevron Corporation; and it bought Gulf Oil—the largest merger in history at that time.[73] To settle the anti-trust regulation, Chevron divested many of Gulf's operating subsidiaries, and sold some Gulf stations and a refinery in the eastern United States to British Petroleum and Cumberland Farms in 1985.[74] In 1987, British Petroleum negotiated the acquisition of Britoil[75] and the remaining publicly traded shares of Standard Oil of Ohio.[65] At the same year it was listed on the Tokyo Stock Exchange where its share were traded until delisting in 2008.[76]

Walters was replaced by Robert Horton in 1989. Horton carried out a major corporate down-sizing exercise removing various tiers of management at the Head Office.[77] In 1992, British Petroleum sold off its 57% stake in BP Canada (upstream operations), which was renamed as Talisman Energy.[78] John Browne, who had joined BP in 1966 and rose through the ranks to join the board as managing director in 1991, was appointed group chief executive in 1995.[79]

British Petroleum entered into Russian market in 1990 and opened its first service station in Moscow in 1996. In 1997, it acquired 10% stake in Russian oil company Sidanco, which later became a part of TNK-BP.[80]

2000 to 2010

Under John Browne, British Petroleum acquired other oil companies, transforming BP into the third largest oil company in the world. British Petroleum merged with Amoco (formerly Standard Oil of Indiana) in December 1998, becoming BP Amoco plc.[81][82] Most Amoco stations in the United States were converted to BP's brand and corporate identity. In 2000, BP Amoco acquired Arco (Atlantic Richfield Co.) and Burmah Castrol.[83][84] As part of the merger's brand awareness, the company helped the Tate Modern gallery of British Art launch RePresenting Britain 1500–2000.[85] In 2001, in response to negative press on British Petroleum's poor safety standards, the company adopted a green sunburst logo and rebranded itself as BP ("Beyond Petroleum") plc.[82]


In the beginning of 2000s, BP became the leading partner (and later operator) of the Baku–Tbilisi–Ceyhan pipeline project which opened a new oil transportation route from the Caspian region.[86] On 1 September 2003, BP and a group of Russian billionaires, known as AAR (Alfa-Access-Renova), announced the creation of a strategic partnership to jointly hold their oil assets in Russia and Ukraine. As a result, TNK-ВР was created.[87]

In 2004, BP's olefins and derivatives business was moved into a separate entity which was sold to Ineos in 2005.[88][89] In 2007, BP sold its corporate-owned convenience stores, typically known as "BP Connect", to local franchisees and jobbers.[90]

On 23 March 2005, 15 workers were killed and more than 170 injured in the Texas City Refinery explosion. To save money, major upgrades to the 1934 refinery had been postponed.[91] Browne pledged to prevent another catastrophe. Three months later, 'Thunder Horse PDQ', BP's giant new production platform in the Gulf of Mexico, nearly sank during a hurricane. In their rush to finish the $1 billion platform, workers had installed a valve backwards, allowing the ballast tanks to flood. Inspections revealed other shoddy work. Repairs costing hundreds of millions would keep Thunder Horse out of commission for three years.[91]

Lord Browne resigned from BP on 1 May 2007. The new chief executive became head of exploration and production Tony Hayward.[92] In 2009, Hayward shifted emphasis from Lord Browne's focus on alternative energy, announcing that safety would henceforth be the company's "number one priority".[93]

In 2009, BP obtained a production contract during the 2009/2010 Iraqi oil services contracts tender to develop the Rumaila field with joint venture partner CNPC, which contain an estimated 17 billion barrels (2.7×109 m3) of oil, accounting for 12% of Iraq's oil reserves estimated at 143.1 billion barrels (22.75×10^9 m3).[94][95] In June 2010, the BP/CNPC consortium took over development of the field,[96][97] which was the epicentre of the 1990 Gulf war.[98][99]

2010 to present

On 1 October 2010, Bob Dudley replaced Tony Hayward as the company's CEO after the Deepwater Horizon oil spill.[100] After the oil spill BP announced a divestment program to sell about $38 billion worth of non-core assets by 2013 to compensate its liabilities related to the accident.[101][102] In July 2010, it sold its natural gas activities in Alberta and British Columbia, Canada, to Apache Corporation.[103] It sold its stake in the Petroperija and Bouqeron fields in Venezuela and in the Lan Tay and Lan Do fields, the Nam Con Son pipeline and terminal, and the Phu My 3 power plant in Vietnam to TNK-BP,[104][105] forecourts and supply businesses in Namibia, Botswana, Zambia, Tanzania and Malawi to Puma Energy,[106] the Wytch Farm onshore oilfield in Dorset and a package of North Sea gas assets to Perenco,[107] natural-gas liquids business in Canada to Plains All American Pipeline LP,[108] natural gas assets in Kansas to Linn Energy,[109] Carson Refinery in southern California to Tesoro, Sunray and Hemphill gas processing plants in Texas, together with their associated gas gathering system, to Eagle Rock Energy Partners,[110][111][112][113] the Texas City Refinery and associated assets to Marathon Petroleum,[114][115] the Gulf of Mexico located Marlin, Dorado, King, Horn Mountain, and Holstein fields as also its stake in non-operated Diana Hoover and Ram Powell fields to Plains Exploration & Production,[101] non-operating stake in the Draugen oil field to Norske Shell,[116] and the UK's liquefied petroleum gas distribution business to DCC.[117]

On 15 January 2011, Rosneft and BP announced a deal to jointly develop East-Prinovozemelsky field on the Russian arctic shelf.[118] However, the deal was blocked by BP's co-shareholders in TNK-BP due to a dispute over Russian exploration rights between the two companies, and was nullified.[119] In October 2012, Rosneft reached separate agreements with BP and AAR to acquire TNK-BP, with each deal subject to regulatory approval; the price for BP's shares was $12.3 billion in cash and 18.5% of Rosneft's stock.[120] The deal was completed on 21 March 2013.[121][122]

In February 2011, BP formed a partnership with Reliance Industries, taking a 30% stake in a new Indian joint-venture for an initial payment of $7.2 billion.[123] In September 2012, BP sold its subsidiary BP Chemicals (Malaysia) Sdn. Bhd., an operator of the Kuantan purified terephthalic acid (PTA) plant in Malaysia, to Reliance Industries for $230 million.[124]

In 2011–2013 BP has cut down its alternative energy business. The company announced its departure from the solar energy market in December 2011 by closing its solar power business, BP Solar.[125][126] In 2012, BP shut down the BP Biofuels Highlands project which was developed since 2008 to make cellulosic ethanol from emerging energy crops like switchgrass and from biomass.[127][128][129]

By 2013 BP had fallen from the second largest oil company to the fourth after selling off assets to cover Deepwater Horizon oil spill-related payouts.[130]

Operations

BP has operations in around 80 countries worldwide[131] with the global headquarters in England, located in the St James's area of London.[132] As of December 2012, the company had a total of 79,700 employees.[133] BP operations are organised into two main business segments, Upstream and Downstream.[134]

Since 1951, BP publishes its annual Statistical Review of World Energy, which is considered an energy industry benchmark.[135]

Operations by location

United Kingdom and Ireland

As of 2011 the company employs more than 15,000 people in the UK and Ireland, or about 20% of its total workforce.[136][137] BP has a major corporate campus in Sunbury-on-Thames which is home to around 4,500 employees and over 40 business units.[138] Its North Sea operations are headquartered in Aberdeen, Scotland, where it employs around 3,000 people.[139] BP's trading functions are based at 20 Canada Square in Canary Wharf, London, where around 2,200 employees are based.[138] BP has three major research and development centres in the UK.[140]

BP operates more than 40 offshore oil and gas fields, four onshore terminals and a pipeline network that transports around 50 percent of the oil and gas produced in the UK, according to the company.[141][142] As of 2011, BP had produced 5 billion barrels (790×10^6 m3) of oil and gas equivalent in the North Sea[143] and as of 2012 its level of production was about 200,000 barrels per day (32,000 m3/d),[144][145] BP has invested more than £35 billion in the North Sea since the 1960s, and in 2012 announced its plans to invest another £10 billion until 2017. The company announced that it is focusing its investment in the UK North Sea into four development projects including the Clair, Devenick, Schiehallion and Loyal, and Kinnoull oilfields.[146] BP is the operator of the Clair oilfield, which has been appraised as the largest hydrocarbon resource in the UK.[144]

In Saltend near Hull, BP operates a petrochemicals plant that produces acetic acid and acetic anhydride used in the production of pharmaceuticals, textiles and other chemical products.[145][147] At the same location, the company operates a biofuel technology demonstration plant in partnership with DuPont, which uses feedstocks such as wheat to produce biobutanol.[148] In 2007 BP formed a joint venture called Vivergo with AB Sugar and DuPont to build a biofuel plant near Hull to convert wheat into ethanol; the remaining plant matter is sold as animal feed.[149] The plant went online in December 2012.[150]

Retail sites operated by BP in the UK include over 1,100 service stations.[151] Its flagship retail brand is BP Connect, a chain of service stations combined with a convenience store, a café called the "Wild Bean Cafe",[152][153] and in many stations, a M&S Simply Food shop.[154]

United States


BP's operations in the United States comprise nearly one-third of its worldwide business interests,[155] with more investment and employees than any other nation.[156][157] As of March 2013, the company employs approximately 21,000 people in the US, where it has invested over $55 billion in energy development since 2007.[158] In the US, BP is the second-largest producer of oil and gas.[159][160] The company's US operations include assets acquired from its mergers with Amoco in 1998 and with ARCO in 2000.[161][162]

BP's major subsidiary in the United States is BP America, Inc. based in Houston, Texas, which is a parent company for the BP's operations in the United States.[163] BP Exploration & Production Inc., a 1996 established Houston-based company, is dealing with oil exploration and production, including Gulf of Mexico activities.[164] BP Corporation North America, Inc., a 1889 established Warrenville-based company, provides petroleum refining services as also transportation fuel, heat and light energy, and petrochemical products.[165] BP Products North America, Inc., a 1954 established Houston-based company, is engaged in the exploration, development, production, refining, and marketing of oil and natural gas.[166] BP America Production Company, a 1930 established Eunice-based company, is engages in oil and gas exploration and development.[167] BP Energy Company, a 1985 established Houston-based company, is a provider of natural gas, power, and risk management services to the industrial and utility sectors and a retail electric provider in Texas.[168]

BP is the largest producer of oil and gas and the largest leaseholder in the deepwater Gulf of Mexico.[159][160][169] The company produces roughly 10% of its global output in the region, over 200,000 barrels per day (32,000 m3/d) of oil equivalent.[170][171] Of the seven largest drilling platforms in the Gulf, four are operated by BP.[160] As of 2012 BP has oil and gas production in the Gulf from fields including Atlantis, Mad Dog, Na Kika, and Thunder Horse. The company also holds stakes in fields operated by other companies, including the Mars, Ursa, and Great White fields. BP is the leaseholder of Mississippi Canyon Block 252 (Macondo Prospect) and the operator of the Macondo well, the site of the Deepwater Horizon explosion and oil spill.[172][173] In December 2011, BP acquired 11 newly available leases for resource exploration rights to areas of federal waters in the Gulf and in June 2012 it acquired 40 further leases in the central region of the Gulf.[155][174]

As of 2012, the company operated about two-thirds of all Alaska North Slope production.[175] It operates 13 oil fields, four pipelines, and owns a stake in six additional fields in the North Slope.[176][177] BP is the largest partner with 46.9% stake in the 800-mile (1,300 km) long Trans-Alaska Pipeline System.[176][178] In 2011 BP invested a third of its capital budget in Alaska in infrastructure renewal.[179]

In the lower 48 states, BP has a presence in seven of the top gas basins and in 2012 produced more than 1,651 million cubic feet per day (46.8 million cubic metres per day) of natural gas.[180] The company is the country's sixth largest natural gas producer with a total of 10,000 wells.[181] Its North America Gas division has shale positions in the Woodford, Oklahoma, Fayetteville, Arkansas, Haynesville, Texas and Eagle Ford, Texas shales. In March 2012, BP announced that it had acquired a lease for gas exploration of the Utica Shale in Ohio.[182][183] In Colorado, BP operates approximately 1,500 oil and gas wells, primarily in the San Juan Basin. The majority of these wells are "unconventional", using methods other than conventional oil wells to produce oil or gas.[184] The company has gas extraction operations in "unconventional" gas fields in the New Mexico section of the San Juan basin, and in Moxa and Wamsutter, Wyoming.[185][186]

BP operates refineries in Whiting, Indiana; Toledo, Ohio; and Cherry Point, Washington.[187][188] The company's Whiting refinery is the sixth largest in the US and can refine more than 400,000 barrels per day (64,000 m3/d) of crude oil.[189] The Toledo refinery in northwestern Ohio, which processes approximately 160,000 barrels per day (25,000 m3/d) of crude oil, is a joint venture with Husky Energy, an operator of the refinery.[190][191] The Cherry Point refinery produces gasoline, jet fuel, diesel and some propane and butane. It supplies 20% of the gasoline in Washington state, and also supplies gasoline to Oregon and California. The refinery produces 8% of the world's calcined coke and is the largest supplier of calcined coke to the global aluminum industry.[178][192] Since the early 2000s, the company has been focusing its refining business on processing crude from oil sands and shales.[188][193]

The company owns three petrochemical plants in the US, which produce approximately four million tons of petrochemicals each year.[194] Its petrochemical plant in Texas City, located on the same site as the formerly owned Texas City Refinery, produces industrial chemicals including propylene and styrene.[195] BP's Decatur, Alabama and Cooper River, South Carolina petrochemical plants both produce PTA, which is used in the production of synthetic fibre for clothing, packaging and optical films.[194][196][197] The Decatur plant also produces paraxylene and naphthalene dicarboxlate.[198]

The company's alternative energy operations based in the US include 16  wind farms.[199][200]

There are over 10,000 retail sites in the US operating under a BP brand including BP, ARCO and ampm.[15][201] On the US West Coast, BP primarily operates service stations under the ARCO brand.[202][203]

Other locations

Africa

In Egypt, BP produces approximately 15% of the country's total oil production and 40% of its domestic gas.[204] The company also has offshore gas developments in the East Nile Delta Mediterranean, and in the West Nile Delta,[205] where the company has a joint investment of US$9 billion with RWE to develop two offshore gas fields.[206][207]

BP is active in offshore oil development in Angola, where it holds an interest in a total of nine oil exploration and production blocks covering more than 30,000 square kilometres (12,000 sq mi). This includes four blocks it acquired in December 2011 and an additional block that is operated by Brazilian national oil company, Petrobras, in which it holds a 40% stake.[208]

Asia

BP has a stake in exploration of two blocks of offshore deepwater assets in the South China Sea.[209][210]

In India, BP owns a 30% share of oil and gas assets operated by Reliance Industries, including exploration and production rights in more than 20 offshore oil and gas blocks, representing an investment of more than US$7 billion into oil and gas exploration in the country.[211]

BP has major liquefied natural gas activities in Indonesia, where it operates the Tangguh LNG project, which began production in 2009 and has a capacity of 7.6 million tonnes of liquid natural gas per year.[212] Also in that country, the company has invested in the exploration and development of coalbed methane.[213]

BP operates in Iraq as part of the joint venture Rumaila Operating Organization in the Rumaila oil field, the world's fourth largest oilfield, where it produced over 1 million barrels per day (160×10^3 m3/d) of oil equivalent in 2011.[214][215]

Caucasus and the Caspian region

BP operates the two largest oil and gas production projects in the Azerbaijan's sector of the Caspian Sea, the Azeri–Chirag–Guneshli offshore oil fields, which supplies 80% of the country's oil production, and the Shah Deniz gas field. It also and develops the Shafag-Asiman complex of offshore geological structures.[216][217][218] In addition, it operates the Azerbaijan's major export pipelines through Georgia such as Baku–Tbilisi–Ceyhan, Baku–Supsa and South Caucasus pipelines.[219]

Australia

In Australia, BP operates two out of the country's seven refineries: Kwinana in Western Australia, which can process up to 146,000 barrels (23,200 m3) of crude oil per day and is the country's largest refinery, and the Bulwer Island refinery in Queensland, which can process up to 102,000 barrels (16,200 m3) of crude per day.[220][221][222]

Europe (ex. United Kingdom and Ireland)

BP's refining operations in continental Europe include Europe's second-largest oil refinery, located in Rotterdam, the Netherlands, which can process up to 377,000 barrels (59,900 m3) of crude oil per day.[223]

In addition to its offshore operations in the British zone of North Sea, BP has interests in the Norwegian section of the sea. As of March 2013, BP holds a 19.75% stake in Russia's state-controlled oil company Rosneft.[122]

North America (ex. United States)

BP's Canadian operations are headquartered in Calgary and the company operates primarily in Alberta, the Northwest Territories, and Nova Scotia. It purchases crude oil for the company's refineries in the US and has oil sands holdings in Alberta and four offshore blocks in Nova Scotia.[224][225][226] The company's Canadian oil sands leases include joint ventures with Husky Energy in the Sunrise Energy Project (50%),[227] and Devon Energy in Pike,[228] and a partnership with Value Creation Inc. in the development of the Terre de Grace oil sands lease.[229] The BP's investment in the Sunrise Project is £1.6 billion and it is expected to start production in 2014.[230]

BP is the largest oil and gas producer in Trinidad and Tobago, where it holds more than 1,350 square kilometres (520 sq mi) of offshore assets and is the largest shareholder in Atlantic LNG, one of the largest LNG plants in Western Hemisphere.[231]

South America

In Brazil, BP holds stakes in offshore oil and gas exploration in the Barreirinhas, Ceará and Campos basins, in addition to onshore processing facilities.[232] BP also operates biofuel production facilities in Brazil, including three cane sugar mills for ethanol production.[233][234]

Main business segments

Oil and natural gas

BP Upstream's activities include exploring for new oil and natural gas resources, developing access to such resources, and producing, transporting, storing and processing oil and natural gas.[235][236] Upstream is responsible for the operation of BP's wells, pipelines, offshore platforms and processing facilities. The activities in this area of operations take place in 30 countries worldwide, including Angola, Azerbaijan, Brazil, Canada, Egypt, India, Iraq, Norway, Russia, Trinidad & Tobago, the UK, and the US.[220] In addition to the conventional oil exploration and production, BP has a stake in the three oil sands projects in Canada.[103]

Oil refining and marketing

BP Downstream's activities include the refining, marketing, manufacturing, transportation, trading and supply of crude oil, petrochemicals and petroleum products.[235] Downstream is responsible for BP's fuels, lubricants and petrochemical businesses and has major operations located in Europe, North America and Asia.[237] As of February 2013, BP owned or held a share in 15 refineries worldwide, of which seven were located in Europe and four were in the US.[238]

BP owns or has a share in more than a dozen petrochemical manufacturing plants worldwide. The company's petrochemicals plants produce products including PTA, paraxylene, and acetic acid.[220] Its petrochemicals, lubricants, fuels and related services are marketed in over 70 countries.[220]

Air BP is the aviation division of BP, providing aviation fuel, lubricants & services. It has operations in over 50 countries worldwide. BP Shipping provides the logistics to move BP's oil and gas cargoes to market, as well as marine structural assurance.[239] It manages a large fleet of vessels most of which are held on long-term operating leases. BP Shipping's chartering teams based in London, Singapore, and Chicago also charter third party vessels on both time charter and voyage charter basis. The BP-managed fleet consists of Very Large Crude Carriers (VLCCs), one North Sea shuttle tanker, medium size crude and product carriers, liquefied natural gas (LNG) carriers, liquefied petroleum gas (LPG) carriers, and coasters. All of these ships are double-hulled.[240]

BP markets petroleum products in approximately 80 countries worldwide.[12] It has around 20,700 service stations, which are primarily operated under the BP brand.[15] BP Connect is BP's flagship retail format,[151] although in the US it is gradually being transitioned to the ampm format.[203] In Germany and Luxembourg, BP operates service stations under the Aral brand, having acquired the majority of Veba Öl AG in 2001 and subsequently rebranded its existing stations in Germany to the Aral name.[241] On the US West Coast, in the states of California, Oregon, Washington, Nevada, Idaho, Arizona, and Utah, BP primarily operates service stations under the ARCO brand.[242] In Australia BP operates a number of BP Travel Centres, large-scale destination sites located which, in addition to the usual facilities in a BP Connect site, also feature food-retail tenants such as McDonald's, KFC and Nando's and facilities for long-haul truck drivers.[243]

Castrol is BP's main brand for industrial and automotive lubricants and is applied to a large range of BP oils, greases and similar products for most lubrication applications.[244]

Alternative and low carbon energy


BP established an alternative and low carbon energy business in 2005, with plans to invest $8 billion over a 10-year period into renewable energy sources including solar, wind, and biofuels and non-renewable sources including natural gas and hydrogen power. It invested a total of $7 billion, including $4 billion in the United States, by mid-2012, with plans to invest all $8 billion by the end of 2012.[245][246][247] As of 2012, the BP Alternative Energy business employed 5,000 people.[246][248] The division is housed within the firm's "other businesses and corporate" unit, and the company does not break out its financial details.[245]

In Brazil, BP owns two ethanol producers—Companhia Nacional de Açúcar e Álcool andTropical BioEnergia—with three ethanol mills.[249][250] In England, it has a stake in the bioethanol producer Vivergo and together with DuPont has a biobutanol demonstration plant.[148][251] BP has invested in an agricultural biotechnology company Chromatin, a company developing crops that can grow on marginal land and that are optimized to be used as feedstock for biofuel,[252] and Vedrezyne, which produces petrochemicals in yeast.[253][254]

In the United States, BP had built or purchased 16 wind farms with total gross capacity of around 2,600 megawatts and another 2,000 MW under development.[199][200][255] In April 2013, BP put its wind energy unit up for sale, to shift its focus more to its main oil and gas businesses.[199][200][256] However, the sale plan was cancelled in July 2013.[257] BP withdrew from solar power in December 2011 and scrapped investment in a carbon-capture project in Scotland.

The relatively small size of BP's alternative energy operations has led to allegations of greenwashing by Greenpeace,[258] Mother Jones[259] and oil and energy analyst Antonia Juhasz,[260] among others.[261] Juhasz notes BP's investment in green technologies peaked at 4% of its exploratory budget prior to cutbacks.[262] BP's 2008 budget included $20 billion in fossil fuel investment and $1.5 billion in all alternative forms of energy.[263] The Australian publication The Monthly reported in August 2010 that BP's renewable capacity sold annually was "minuscule", less than 1000 megawatts of wind and solar energy worldwide.[264]

Corporate affairs

BP is the fifth-largest energy company by market capitalization,[8] fifth-largest company in the world measured by 2012 revenues, and the sixth largest oil and gas company measured by 2012 production.[9][10]

In 2012, the company's revenue was US$388.285 billion, operating income was $19.733 billion and net income was $11.816 billion.[3] As of 2012, 85,700 people employed by the company worldwide.[4]

The chairman of the BP board of directors is Carl-Henric Svanberg and the chief executive officer is Robert Dudley.[265]

Stock

BP stock is composed of original BP shares as well as shares acquired through mergers with Amoco in 1998 and the Atlantic Richfield Company (ARCO) in 2000.[266][267] The company's shares are primarily traded on the London Stock Exchange, but also listed on the Frankfurt Stock Exchange in Germany. In the United States shares are traded in US$ on the New York Stock Exchange in the form of American depository shares (ADS). One ADS represents six ordinary shares.[268]

Following the United States Federal Trade Commission's approval of the BP-Amoco merger in 1998, Amoco's stock was removed from Standard & Poor's 500 and was merged with BP shares on the London Stock Exchange.[266] The merger with Amoco resulted in a 40% increase in share price by April 1999.[269] However, shares fell nearly 25% by early 2000, when the Federal Trade Commission expressed opposition to BP-Amoco's acquisition of ARCO.[270] The acquisition was ultimately approved in April 2000 increasing stock value 57 cents over the previous year.[267]

After the Texas City Refinery explosion in 2005, stock prices again fell. By January 2007, the explosion, coupled with a pipeline spill in Alaska and production delays in the Gulf of Mexico, left BP's stock down 4.5% from its position prior to the Texas City explosion.[271] However by April 2007, stocks had rebounded 13% erasing the 8.3% loss from 2006.[272] Declining oil prices and concerns over oil sustainability also caused shares to fall in value in late 2008.[273]

The Deepwater Horizon oil spill in April 2010 initiated a sharp decline in share prices, and BP's shares lost roughly 50% of their value in 50 days.[274] BP's shares reached a low of $26.97 per share on 25 June 2010 totalling a $100 billion loss in market value[275] before beginning to climb again. Shares reached a post-spill high of $49.50 in early 2011[276] and as of April 2012 shares remain down approximately 30% from pre-spill levels.[277]

On 22 March 2013, BP announced an $8 billion share repurchase programme which will be implemented during 12–18 months.[278][279][280] As of April 2013, $300 million was used, with a minimal impact to the share price. The buyback decision followed closure of the TNK-BP deal and it has to offset the dilution to earnings per share following the loss of dividends from TNK-BP.[280] According to the company the buyback programme would provide shareholders near-term benefits from the reshaping of the company's Russian business.[278] The buyback is also seen as a way to invest excess cash from the TNK-BP deal.[280]

As of 2012, 38% of BP shares were held by American investors, 36% by British investors, and 14% by the rest of Europe with the remaining shares held by investors from other countries.[281] Major institutional shareholders include BlackRock Investment Management (UK) Ltd. (5.39% as of 19 February 2013), Legal & General Investment Management Ltd. (3.82% as of 19 February 2013), and Capital Research & Management Co. (Global Investors) (2.33% as of 19 February 2013).[282]

Branding and public relations

In the first quarter of 2001 the company adopted the marketing name of BP, and replaced its "Green Shield" logo with the "Helios" symbol, a green and yellow sunflower logo named after the Greek sun god and designed to represent energy in its many forms. BP introduced a new corporate slogan – "Beyond Petroleum" along with a $200M advertising and marketing campaign.[283][284] According to the company, the new slogan represented their focus on meeting the growing demand for fossil fuels, manufacturing and delivering more advanced products, and to enable transitioning to a lower carbon footprint.[285]

By 2008, BP's branding campaign had succeeded with the culmination of a 2007 Effie Award from by the American Marketing Association, and consumers had the impression that BP was one of the greenest petroleum companies in the world.[286] BP was criticised by environmentalists and marketing experts, who stated that the company's alternative energy activities were only a fraction of the company's business at the time.[287] According to Democracy Now, BP's marketing campaign amounted to a deceptive greenwashing public-relations spin campaign given that BP's 2008 budget included more than $20 billion for fossil fuel investment and less than $1.5 billion for all alternative forms of energy.[262][263] Oil and energy analyst Antonia Juhasz notes BP's investment in green technologies peaked at 4% of its exploratory budget prior to cutbacks, including the discontinuation of BP Solar and the closure of its alternative energy headquarters in London.[262][288] According to Juhasz, "four percent...hardly qualifies the company to be Beyond Petroleum", citing BP's "aggressive modes of production, whether it’s the tar sands [or] offshore".[289]

BP attained a negative public image from the series of industrial accidents that occurred through the 2000s, and its public image was severely damaged after the Deepwater Horizon explosion and Gulf Oil spill. In the immediate aftermath of the spill, BP initially downplayed the severity of the incident, and made many of the same PR errors that Exxon had made after the Exxon Valdez disaster.[290][291] CEO Tony Hayward was criticised for his statements and had committed several gaffes, including stating that he "wanted his life back."[292] Some in the media commended BP for some of its social media efforts, such as the use of Twitter and Facebook as well as a section of the company's website where it communicated its efforts to clean up the spill.[293][294][295]

BP began a re-branding campaign in late 2010, and decided to focus its brand on the idea of "bringing brilliant minds together with technology at a massive scale to meet the world's energy needs", and focus its messaging on telling stories about people.[296] In February 2012 BP North America launched a $500 million branding campaign to rebuild its brand.[297]

The company's advertising budget was about $5 million per week during the four-month spill in the Gulf of Mexico, totaling nearly $100 million.[298][299]

In May 2012, BP tasked a press office staff member to openly join discussions on the World Heritage Encyclopedia article's talk page and suggest content to be posted by other editors.[300] Controversy emerged in 2013 over the amount of content from BP that had entered this article.[301][302] World Heritage Encyclopedia co-founder Jimmy Wales stated that these actions complied with site policy regarding conflicts of interest.[301]

Environmental record

Position on global warming

In 1997 BP became the first multinational outside the reinsurance industry to publicly support the scientific consensus on climate change, which Eileen Caussen, President of the Pew Center on Global Climate Change described as a transformative moment on the issue.[303] As then CEO of BP, John Browne, stated during a speech at Stanford University in May 1997, "The time to consider the policy dimensions of climate change is not when the link between greenhouse gases and climate change is conclusively proven … but when the possibility cannot be discounted and is taken seriously by the society of which we are part."[304] Prior to 1997, BP was a member of the Global Climate Coalition an industry organisation established to promote global warming scepticism but withdrew in 1997, saying "the time to consider the policy dimensions of climate change is not when the link between greenhouse gases and climate change is conclusively proven, but when the possibility cannot be discounted and is taken seriously by the society of which we are part. We in BP have reached that point.".[305] In March 2002, Lord John Browne, the group chief executive of BP, declared in a speech that global warming was real and that urgent action was needed.[306]

Hazardous substance dumping 1993–1995

In September 1999, one of BP's US subsidiaries, BP Exploration Alaska (BPXA), pleaded guilty to criminal charges stemming from its illegally dumping of hazardous wastes on the Alaska North Slope, paying fines and penalties totaling $22 million. BP paid the maximum $500,000 in criminal fines, $6.5 million in civil penalties, and established a $15 million environmental management system at all of BP facilities in the US and Gulf of Mexico that are engaged in oil exploration, drilling or production. The charges stemmed from the 1993 to 1995 dumping of hazardous wastes on Endicott Island, Alaska by BP's contractor Doyon Drilling. The firm illegally discharged waste oil, paint thinner and other toxic and hazardous substances by injecting them down the outer rim, or annuli, of the oil wells. BPXA failed to report the illegal injections when it learned of the conduct, in violation of the Comprehensive Environmental Response, Compensation and Liability Act.[307]

Air pollution violations

In 2000 BP Amoco acquired ARCO, a Los Angeles-based oil group.[83] In 2003 California’s South Coast Air Quality Management District (AQMD) filed a complaint against BP/ARCO, seeking $319 million in penalties for thousands of air pollution violations over an 8-year period.[308] In January 2005, the agency filed a second suit against BP based on violations between August 2002 and October 2004. The suit alleged that BP illegally released air pollutants by failing to adequately inspect, maintain, repair and properly operate thousands of pieces of equipment across the refinery as required by AQMD regulations. It was alleged that in some cases the violations were due to negligence, while in others the violations were knowingly and willfully committed by refinery officials.[309] In 2005 a settlement was reached under which BP agreed to pay $25 million in cash penalties and $6 million in past emissions fees, while spending $20 million on environmental improvements at the refinery and $30 million on community programs focused on asthma diagnosis and treatment.[310]

In 2013, a total of 474 Galveston County residents living near the BP Texas City Refinery filed a $1 billion lawsuit against BP, accusing the company of "intentionally misleading the public about the seriousness" of a two-week release of toxic fumes which began on 10 November 2011. "BP reportedly released Sulfur Dioxide, Methyl Carpaptan, Dimethyl Disulfide and other toxic chemicals into the atmosphere” reads the report. The lawsuit further claims Galveston county has the worst air quality in the United States due to BP's violations of air pollution laws. BP had no comment and said it would address the suit in the court system.[311][312][313][314][315]

Colombian farmland damages claim

In 2006, a group of Colombian farmers reached a multimillion dollar out-of-court settlement with BP for alleged environmental damage caused by the Ocensa pipeline.[316] An agreed statement said: "The Colombian farmers group are pleased to say that after a mediation process which took place in Bogotá in June 2006 at the joint initiative of the parties, an amicable settlement of the dispute in relation to the Ocensa pipeline has been reached, with no admissions of liability." The company was accused of benefiting from a regime of terror carried out by Colombian government paramilitaries to protect the 450-mile (720 km) Ocensa pipeline; BP said throughout that it has acted responsibly and that landowners were fairly compensated.[317]

In 2009, another group of 95 Colombian farmers filed a suit against BP, saying the company's Ocensa pipeline caused landslides and damage to soil and groundwater, affecting crops, livestock, and contaminating water supplies, making fish ponds unsustainable. Most of the land traversed by the pipeline was owned by peasant farmers who were illiterate and unable to read the environmental impact assessment conducted by BP prior to construction, which acknowledged significant and widespread risks of damage to the land.[318]

Canadian oil sands

In Canada, BP is involved in the extraction of oil sands, also known as tar sands or bituminous sands. The company uses in-situ drilling technologies such as Steam Assisted Gravity Drainage to extract the oil.[225][319][320] Members of US and Canadian oil companies say that using recycled groundwater makes in situ drilling an environmentally friendlier option when compared with oil sands mining.[321]

Members of Canada's Cree Nation have criticized BP's involvement in the Canadian project for the impacts oil sands extraction has on the environment.[322] NASA scientist James Hansen said that the exploitation of Canadian oil sands would mean "game over for the climate".[323] In 2010, activist shareholders asked BP for a full investigation of the project, but were defeated.[324] In 2013 shareholders criticized the project for being carbon-intensive.[325]

Health and safety violations

Citing conditions similar to those that resulted in the 2005 Texas City Refinery explosion, on 25 April 2006, the U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) fined BP more than $2.4 million for unsafe operations at the company's Oregon, Ohio refinery. An OSHA inspection resulted in 32 per-instance willful citations including locating people in vulnerable buildings among the processing units, failing to correct de-pressurization deficiencies and deficiencies with gas monitors, and failing to prevent the use of non-approved electrical equipment in locations in which hazardous concentrations of flammable gases or vapors may exist. BP was further fined for neglecting to develop shutdown procedures and designate responsibilities and to establish a system to promptly address and resolve recommendations made after an incident when a large feed pump failed three years prior to 2006. Penalties were also issued for five serious violations, including failure to develop operating procedures for a unit that removes sulfur compound; failure to ensure that operating procedures reflect current operating practice in the Isocracker Unit; failure to resolve process hazard analysis recommendations; failure to resolve process safety management compliance audit items in a timely manner; and failure to periodically inspect pressure piping systems.[326][327]

In 2008 BP and several other major oil refiners agreed to pay $422 million to settle a class-action lawsuit stemming from water contamination tied to the gasoline additive MTBE, a chemical that was once a key gasoline ingredient. Leaked from storage tanks, MTBE has been found in several water systems across the United States. The plaintiffs maintain that the industry knew about the environmental dangers but that they used it instead of other possible alternatives because it was less expensive. The companies will also be required to pay 70 percent of cleanup costs for any wells newly affected at any time over the next 30 years.[328][329]

BP has one of the worst safety records of any major oil company that operates in the United States. Between 2007 and 2010, BP refineries in Ohio and Texas accounted for 97 percent of "egregious, willful" violations handed out by the U.S. Occupational Safety and Health Administration (OSHA). BP had 760 "egregious, willful" violations during that period, while Sunoco and Conoco-Phillips each had eight, Citgo two and Exxon had one.[330] The deputy assistant secretary of labour at OSHA, said "The only thing you can conclude is that BP has a serious, systemic safety problem in their company."[331]

A report in ProPublica, published in the Washington Post in 2010, found that over a decade of internal investigations of BP's Alaska operations during the 2000s warned senior BP managers that the company repeatedly disregarded safety and environmental rules and risked a serious accident if it did not change its ways. ProPublica found that "Taken together, these documents portray a company that systemically ignored its own safety policies across its North American operations -- from Alaska to the Gulf of Mexico to California and Texas. Executives were not held accountable for the failures, and some were promoted despite them."[332]

The Project On Government Oversight, an independent non-profit organization in the United States which investigates and seeks to expose corruption and other misconduct, lists BP as number one on their listing of the 100 worst corporations based on instances of misconduct.[333]

1965 Sea Gem offshore oil rig disaster

Main article: Sea Gem

In December 1965, Britain's first oil rig, Sea Gem, capsized when two of the legs collapsed during an operation to move it to a new location. The oil rig had been hastily converted in an effort to quickly start drilling operations after the North Sea was opened for exploration. Thirteen crew members were killed. No hydrocarbons were released in the accident.[334][335]

Texas City Refinery explosion


In March 2005, the Texas City Refinery, one of the largest refineries owned then by BP, exploded causing 15 deaths, injuring 180 people and forcing thousands of nearby residents to remain sheltered in their homes.[336] A 20-foot (6.1 m) column filled with hydrocarbon overflowed to form a vapour cloud, which ignited. The explosion caused all the casualties and substantial damage to the rest of the plant.[337] The incident came as the culmination of a series of less serious accidents at the refinery, and the engineering problems were not addressed by the management. Maintenance and safety at the plant had been cut as a cost-saving measure, the responsibility ultimately resting with executives in London.[338]

The fallout from the accident clouded BP's corporate image because of the mismanagement at the plant. There had been several investigations of the disaster, the most recent being that from the US Chemical Safety and Hazard Investigation Board[339] which "offered a scathing assessment of the company." OSHA found "organizational and safety deficiencies at all levels of the BP Corporation" and said management failures could be traced from Texas to London.[336] The company pleaded guilty to a felony violation of the Clean Air Act, was fined $50 million, the largest ever assessed under the Clean Air Act, and sentenced to three years probation.[340]

On 30 October 2009, the US Occupational Safety and Health Administration (OSHA) fined BP an additional $87 million, the largest fine in OSHA history, for failing to correct safety hazards documented in the 2005 explosion. Inspectors found 270 safety violations that had been previously cited but not fixed and 439 new violations. BP appealed the fine.[336][341] In July 2012, the company agreed to pay $13 million to settle the new violations. At that time OSHA found "no imminent dangers" at the Texas plant. Thirty violations remained under discussion.[342] In March 2012, US Department of Justice officials said the company had met all of its obligations and subsequently ended the probationary period.[343] In November 2011, BP agreed to pay the state of Texas $50 million for violating state emissions standards at its Texas City refinery during and after the 2005 explosion at the refinery. The state Attorney General said BP was responsible for 72 separate pollutant emissions that have been occurring every few months since March 2005. It was the largest fine ever imposed under the Texas Clean Air Act.[344][345]

Prudhoe Bay

Main article: Prudhoe Bay oil spill


In March 2006, corrosion of a BP Exploration Alaska (BPXA) oil transit pipeline in Prudhoe Bay transporting oil to the Trans-Alaska Pipeline led to a five-day leak and the largest oil spill on Alaska's North Slope.[20] According to the Alaska Department of Environmental Conservation (ADEC), a total of 212,252 US gallons (5,053.6 bbl; 803.46 m3) of oil was spilled, covering 2 acres (0.81 ha) of the North Slope.[346] BP admitted that cost cutting measures had resulted in a lapse in monitoring and maintenance of the pipeline and the consequent leak. At the moment of the leak, pipeline inspection gauges (known as "pigs") had not been run through the pipeline since 1998.[347][348][349][350] BP completed the clean-up of the spill by May 2006, including removal of contaminated gravel and vegetation, which was replaced with new material from the Arctic tundra.[346][351]

Following the spill, the company was ordered by regulators to inspect the 35 kilometres (22 mi) of pipelines in Prudhoe Bay using "smart pigs".[352] In late July 2006, the "smart pigs" monitoring the pipelines found 16 places where corrosion had thinned pipeline walls. A BP crew sent to inspect the pipe in early August discovered a leak and small spill,[352][353] following which, BP announced that the eastern portion of the Alaskan field would be shut down for repairs on the pipeline,[353][354] with approval from the Department of Transportation. The shutdown resulted in a reduction of 200,000 barrels per day (32,000 m3/d) until work began to bring the eastern field to full production on 2 October 2006.[355] In total, 23 barrels (3.7 m3) of oil were spilled and 176 barrels (28.0 m3) were "contained and recovered", according to ADEC. The spill was cleaned up and there was no impact upon wildlife.[356]

After the shutdown, BP pledged to replace 26 kilometres (16 mi) of its Alaskan oil transit pipelines[357][358] and the company completed work on the 16 miles (26 km) of new pipeline by the end of 2008.[359] In November 2007, BP Exploration, Alaska pled guilty to negligent discharge of oil, a misdemeanor under the federal Clean Water Act and was fined US$20 million.[360] There was no charge brought for the smaller spill in August 2006 due to BP's quick response and clean-up.[347] On 16 October 2007, ADEC officials reported a "toxic spill" from a BP pipeline in Prudhoe Bay comprising 2,000 US gallons (7,600 l; 1,700 imp gal) of primarily methanol (methyl alcohol) mixed with crude oil and water, which spilled onto a gravel pad and frozen tundra pond.[361]

In the settlement of a civil suit, in July 2011 investigators from the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration determined that the 2006 spills were a result of BPXA’s failure to properly inspect and maintain the pipeline to prevent corrosion. The government issued a Corrective Action Order to BP XA that addressed the pipeline’s risks and ordered pipeline repair or replacement. The U.S. Environmental Protection Agency had investigated the extent of the oil spills and oversaw BPXA’s cleanup. When BP XA did not fully comply with the terms of the corrective action, a complaint was filed in March 2009 alleging violations of the Clean Water Act, the Clean Air Act and the Pipeline Safety Act. In July 2011, the U.S. District Court for the District of Alaska entered a consent decree between the United States and BPXA resolving the government’s claims. Under the consent decree, BPXA paid a $25 million civil penalty, the largest per-barrel penalty at that time for an oil spill, and agreed to take measures to significantly improve inspection and maintenance of its pipeline infrastructure on the North Slope to reduce the threat of additional oil spills.[362][363]

2008 Caspian Sea gas leak and blowout

On 17 September 2008, a gas leak was discovered and one gas-injection well blown out in the area of the Central Azeri platform at the Azeri oilfield, a part of the Azeri–Chirag–Guneshli (ACG) project, in the Azerbaijan sector of Caspian Sea.[364][365][366] The platform was shut down and the staff was evacuated.[364][365] As the Western Azeri Platform was being powered by a cable from the Central Azeri Platform, it was also shut down.[367] Production at the Western Azeri Platform resumed on 9 October 2008 and at the Central Azeri Platform in December 2008.[368][369] According to leaked US Embassy cables, BP had been "exceptionally circumspect in disseminating information" and showed that BP thought the cause for the blowout was a bad cement job. The cables further said that some of BP's ACG partners complained that the company was so secretive that it was withholding information even from them.[366][370][371]

2010 Texas City Chemical leak

BP has admitted that malfunctioning equipment lead to the release of over 530,000 pounds (240,000 kg) of chemicals into the air of Texas City and surrounding areas from 6 April to 16 May 2010. The leak included 17,000 pounds (7,700 kg) of benzene, 37,000 pounds (17,000 kg) of nitrogen oxides, and 186,000 pounds (84,000 kg) of carbon monoxide.[372][373] In June 2012, over 50,000 Texas City residents joined a class-action suit against BP, alleging they got sick in 2010 from the 41-day emissions release from the refinery. Texas has also sued BP over the release of emissions. BP says the release harmed no one.[374]

In October 2013, a jury found that BP was negligent in the case, but lacking substantial evidence linking illness to the emissions, decided the company would be absolved of any wrongdoing.[375][376]

Deepwater Horizon explosion and oil spill

Template:Deepwater Horizon oil spill series

External video

On 20 April 2010, the semi-submersible exploratory offshore drilling rig Deepwater Horizon located in the Macondo Prospect in the Gulf of Mexico exploded after a blowout, killing 11 people, injuring 16 others. After burning for two days, the rig sank and caused the largest accidental marine oil spill in the history of the petroleum industry, estimated to be between 8% and 31% larger in volume than the earlier Ixtoc I oil spill.[21][378] Before the well was capped on 15 July 2010, an estimated 4.9 million barrels (210 million US gal; 780,000 m3) of oil was leaked with plus or minus 10% uncertainty.[379] 810,000 barrels (34 million US gal; 129,000 m3) of oil was collected or burned while 4.1 million barrels (170 million US gal; 650,000 m3) entered the Gulf waters.[380][381][382] 1.8 million US gallons (6,800 m3) of Corexit dispersant was applied.[383][384]

The spill had a strong economic impact on both BP and the Gulf Coast's economy sectors such as fishing and tourism.[385] In late 2012 local fishermen reported that crab, shrimp, and oyster fishing operations had not yet recovered from the oil spill and many feared that the Gulf seafood industry will never recover.[386]

Environmental impact

Oil spills are known to cause both immediate and long-term harm to human health and ecosystems.[362] Research into the impacts of this spill is ongoing.[387] Studies in 2013 suggested that as much as one-third of the released oil remains in the gulf. Further research suggested that the oil on the bottom of the seafloor was not degrading.[388] Oil in affected coastal areas increased erosion due to the death of mangrove trees and marsh grass.[389][390][391] Researchers say the oil and dispersant mixture, including PAHs, permeated the food chain through zooplankton.[392][393][394] In 2013 it was reported that dolphins and other marine life continued to die in record numbers with infant dolphins dying at six times the normal rate.[395] In October 2013, Al Jazeera reported that the gulf ecosystem was "in crisis", citing a decline in seafood catches, as well as deformities and lesions found in fish.[396] In Louisiana, over 3 million pounds of oil was removed from the beaches in 2013, doubled from the amount collected in 2012. Oil continued to be found as far from the Macondo site as the Florida panhandle, where scientists said the oil and dispersant mixture is embedded in the sand.[397][398][399] Researchers looking at sediment, seawater, biota, and seafood found toxic compounds in high concentrations that they said was due to the added oil and dispersants.[400]

Health effects

Studies discussed at a 2013 conference found that a "significant percentage" of Gulf residents reported mental health problems such as anxiety, depression and PTSD. These studies also showed that the bodies of former spill cleanup workers carry biomarkers of many chemicals contained in the oil.[401] A study that investigated the health effects among children in Louisiana and Florida living less than 10 miles from the coast found that more than a third of the parents reported physical or mental health symptoms among their children.[401] Australia's "60 Minutes" reported that some people living along the gulf coast were becoming sick from the dispersants used to break up the oil during the clean-up process.[402]

Criminal prosecutions

On 11 March 2011, the US Department of Justice formed the "Deepwater Horizon Task Force" to consolidate several federal agencies' investigations into possible criminal charges stemming the explosion and spill.[403] On 14 November 2012, the DOJ announced that BP and the DOJ had reached a $4 billion settlement of all federal criminal charges related to the explosion and spill, the largest of its kind in US history. Under the settlement, BP agreed to plead guilty to 11 felony counts of manslaughter, two misdemeanors, and a felony count of lying to Congress and agreed to four years of government monitoring of its safety practices and ethics. BP also paid $525 million to settle civil charges by the Securities and Exchange Commission that it misled investors about the flow rate of oil from the well.[23][404] As part of the announcement of the settlement, BP said it was increasing its reserve for a trust fund to pay costs and claims related to the spill to about $42 billion.[23] On the same day, the US government filed criminal charges against three BP employees; two site managers were charged with manslaughter and negligence, and one former vice president with obstruction.[23] Near the end of November 2012, the U.S. Government temporarily banned BP from bidding any new federal contracts, citing the company’s “lack of business integrity.” [405] As of February 2013, criminal and civil settlements and payments to the trust fund had cost the company $42.2 billion.[406]

Civil proceedings

On 15 December 2010, The US Department of Justice filed a civil and criminal suit against BP and other defendants for violations under the Clean Water Act in the U.S. District Court for the Eastern District of Louisiana.[407][408]:70 The case was consolidated with about 200 others, including those brought by state governments, individuals, and companies under Multi-District Litigation docket MDL No. 2179, before U.S. District Judge Carl Barbier.[409][410] Judge Barbier is trying the case without a jury, as is normal in United States admiralty law.[411][412] The Justice Department contends that BP committed gross negligence and willful misconduct, which BP contests, and is seeking the stiffest penalties possible.[413] A ruling of gross negligence would result in a four-fold increase in Clean Water Act penalties, which would cause the penalties to reach approximately $17.6 billion, and would increase damages in the other suits as well.[26][27][28] Any fines from gross negligence would hit BP's bottom line very hard, because they would not be tax-deductible.[414] The company paid no federal income tax to the U.S. government in 2010 because of deductions related to the spill.[415]

The consolidated trial's first phase began on 25 February 2013, to determine the liability of BP, Transocean, Halliburton, and other companies, and to determine whether the companies acted with gross negligence and willful misconduct.[416][417] [25] The second phase, scheduled in September 2013, will focus on the amount of oil spilled into the gulf and who was responsible for stopping it. The third phase will focus on all other liability that occurred in the process of oil spill cleanup and containment issues, including the use of dispersants.[418][419] Test jury trials will follow to determine actual damage amounts.[411]

Political influence

Release of Lockerbie bomber

BP lobbied the British government to conclude a prisoner-transfer agreement which the Libyan government had wanted to secure the release of Abdelbaset al-Megrahi, the only person convicted for the 1988 Lockerbie bombing over Scotland, which killed 270 people. BP stated that it pressed for the conclusion of prisoner transfer agreement amid fears that delays would damage its "commercial interests" and disrupt its £900 million offshore drilling operations in the region, but it said that it had not been involved in negotiations concerning the release of Megrahi.[420][421]

Political contributions and lobbying

According to the Center for Responsive Politics, BP was the United States' 136th-largest donor to political campaigns, having contributed more than US$6.6 million since 1989, 70% and 29% of which went to Republican and Democratic recipients, respectively.[422]

In February 2002, BP's then-chief executive, Lord Browne of Madingley, renounced the practice of corporate campaign contributions, saying: "That's why we've decided, as a global policy, that from now on we will make no political contributions from corporate funds anywhere in the world."[423] When the Washington Post reported in June 2010 that BP North America "donated at least $4.8 million in corporate contributions in the past seven years to political groups, partisan organizations and campaigns engaged in federal and state elections", mostly to oppose ballot measures in two states aiming to raise taxes on the oil industry, the company said that the commitment had only applied to contributions to individual candidates.[424]

During the 2008 US election cycle, BP employees contributed to various candidates, with Barack Obama receiving the largest amount of money,[425] broadly in line with contributions from Shell and Chevron, but significantly less than those of Exxon Mobil.[426]

In 2009 BP spent nearly $16 million lobbying the US Congress.[427] In 2011, BP spent a total of $8,430,000 on lobbying and hired 47 lobbyists.[428]

Market manipulation investigations and sanctions

The US Justice Department and the Commodity Futures Trading Commission filed charges against BP Products North America Inc. (subsidiary of BP plc) and several BP traders, alleging they conspired to raise the price of propane by seeking to corner the propane market in 2004.[429][430][431] In 2006, one former trader pleaded guilty.[430] In 2007, BP paid $303 million in restitution and fines as part of an agreement to defer prosecution.[432] BP was charged with cornering and manipulating the price of TET propane in 2003 and 2004. BP paid a $125 million civil monetary penalty to the CFTC, established a compliance and ethics program, and installed a monitor to oversee BP’s trading activities in the commodities markets. BP also paid $53 million BP into a restitution fund for victims, a $100 million criminal penalty, plus $25 million into a consumer fraud fund, as well as other payments.[433] Also in 2007, four other former traders were charged. These charges were dismissed by a US District Court in 2009 on the grounds that the transactions were exempt under the Commodities Exchange Act because they didn't occur in a marketplace but were negotiated contracts among sophisticated companies. The dismissal was upheld by the Court of Appeals for the 5th Circuit in 2011.[431]

In November 2010, US regulators FERC and CFTC began an investigation of BP for allegedly manipulating the gas market. The investigation relates to trading activity that occurred in October and November 2008.[434][435] At that time, CFTC Enforcement staff provided BP with a notice of intent to recommend charges of attempted market manipulation in violation of the Commodity Exchange Act. BP denied that it engaged in "any inappropriate or unlawful activity." In July 2011, the FERC staff issued a "Notice of Alleged Violations" saying it had preliminarily determined that several BP entities fraudulently traded physical natural gas in the Houston Ship Channel and Katy markets and trading points to increase the value of their financial swing spread positions.[436]

BP's London offices, along with those of Royal Dutch Shell and Statoil, were raided in May 2013 by regulators from the European Commission, beginning an investigation into allegations the companies reported distorted prices to the price reporting agency Platts, in order to "manipulate the published prices" for several oil and biofuel products. The EC is probing allegations the companies colluded to rig prices for more than a decade.[437][438][439][440][441][442]

See also

  • List of companies based in London

References

Bibliography

External links

  • BP's Corporate History
  • Template:OpenCorp
  • BP's Logo History

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