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BP’s Road Forward: US Onshore Activity


BP Just posted their 2nd Quarter results for 2016, their first report since having “drawn a line under the material liabilities for Deepwater Horizon” spill in the Gulf of Mexico in 2010. Although they missed their target and profits are down for the quarter (due to the low price of oil and weak margins on their refining operations), their strong cash flow and plans for growth should keep them afloat for many years to come.

BP is a bona fide supermajor (in fact one of the original “Seven Sisters” that dominated up to 85% of global supply until 1973), with upstream and downstream operations in over 70 countries, around 80,000 employees, and a daily production output of around 3.3 million BOE. Since they have taken quite a beating in public opinion, but are newly optimistic that they can turn the corner now that the disaster liabilities are somewhat quantified, and they are planning to add another 800,000 BOE/day of production by the end of 2020 I thought it would be interesting to look at the impact and breadth of their current US Onshore operations.

First let’s look at their current US active production (having removed Alaska and Gulf of Mexico wells).

BP fig 1

The Wyoming production out of the Green River Basin appears to be fairly evenly matched. Further south in the San Juan Basin there appears to be a slight preference for gas output, particularly on the Colorado side of the state line. Kansas and the Western Oklahoma/Texas Panhandle portion of the Anadarko and Granite Wash seem fairly similar. The Eastern Oklahoma and Texas operations are clearly showing lots of gas.

What’s perhaps most striking about this map is not where BP has onshore US operations, but where it doesn’t. The modern unconventional basins – the Bakken, the Eagle Ford, the Marcellus – and even the mighty Permian Basin are not in their named operator portfolio. This is not to say that BP is a stranger to unconventionals – they have extensive non-ops, minority stakes and partnerships, like their partnership with Lewis Energy for 1400 wells in the gas window of the Eagle Ford. Their absence as a player of record in the unconventional basins does make sense when you take into account the PR nightmare they were dealing with during the bulk of the uncon build-up between 2010 and 2014 – they sold 400,000 Permian Basin acres to Apache as one of their first emergency efforts in 2010.

BP’s new Lower 48 chief David Lawler, calling upon his previous unconventionals experience at Sandridge, has already started putting plans into action to update BPs approach to E&P and harness the full stacked potential of the basins that they are established in with low-cost, high-frequency wells and are experimenting with multi-lateral wells. They are also taking a more forward view of the production life cycle with plans for refracturing and infill wells prepared alongside original plans.

Let’s take a quick spin through some of their activity. First, we see that, although occasionally spiky month to month, their past five years of permit activity has stayed within a fairly shallow range. Also, it is clear they are not very involved in the drilled and uncompleted wells game.

BP fig 2

Next, we see, in terms of first six-month production Archuleta County in Colorado is nudging just ahead of proven performer Coal County in Oklahoma, which goes to illustrate why Lawler is so bullish on the company position in the San Juan Basin.

BP fig 3

Finally, a quick snapshot of Cumulative Production over the past 5 years clearly exhibits the dominance of the Green River Basin in Wyoming in the company portfolio.

BP fig 4

BP Energy Outlook

Finally, one of my favorite things about BP is the annual Statistical Review of World Energy, a report they have been preparing for the past 65 years that is just chock full of information about the current state of the industry. Their establishment as both a major upstream and downstream player gives them a very good vantage point. Of course, I recommend you go read the whole thing for yourself, but here are a few of the interesting tidbits I pulled out of this year’s Review.

  • Global oil consumption grew by 1.9 million barrels per day (b/d)
  • Global oil production grew by 2.8 million b/d (strongest growth since 2004)
  • US refined products exports grew by 470,000 b/d
  • US net crude imports fell to 4.8 million b/d (lowest since 1985!)

Also, “Emissions of CO2 from energy consumption increased by only 0.1% in 2015. Other than the recession of 2009, this represented the lowest growth rate since 1992.”


BP is keen to put some distance between themselves and the Deepwater Horizon incident. In terms of US Onshore operations they have good acreage that they are excited to more fully explore with modern tech.

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Eric Roach

Eric Roach is the editor of Drillinginfo's blog, which was selected as the Top Oil & Gas Industry Blog based on visibility, engagement and relevance. He also prepares a weekly newsletter of top industry news for blog subscribers, and would be grateful if you would subscribe and tell your friends. (There's a box on the upper right of the page where you can subscribe).