Bob Dudley, the quiet American who is the chief executive of BP, took charge of the London-based company when it was struggling to survive after the 2010 explosion of the Deepwater Horizon oil rig in the Gulf of Mexico. Eight years later, BP has largely regained its footing, and Dudley has emerged as a calm leader among the international oil chiefs. For instance, he is the chairman of the chief executive steering committee of the Oil and Gas Climate Initiative, an industry group focused on reducing carbon dioxide emissions.
BP owns the Cherry Point Refinery in Whatcom County.
Dudley recently talked about the oil industry, climate change pressures and technology. The conversation has been edited and condensed.
Q: The last few years have put the oil industry through a wringer. Do you think it has changed or learned something?
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A: It’s a good question. I think the industry is restructuring itself now to be more disciplined on capital and cost.
Q: Even though the price has risen?
A: Well, you’ll always get some inflation when prices move up, some deflation when they go down. There’s another wave of transformation happening now that I think is really going to make it different. And that’s the technology, and the new technologies that allow you to do a lot more for a dollar of capital spending or operating cost.
Q: Where does technology really make a difference?
A: It is in the big things and the little things, and it’s everywhere. So you start out in the exploration side, the ability to evaluate seismic data, process it, make decisions much faster. If you look at the sensors placed in the wells, in the equipment, there are huge amounts of data now that allow engineers and operations people to make faster, more informed decisions.
You take the worker in a petrochemical plant or a refinery, and they can wear goggles with heads-up displays to look at all the data coming through in the equipment. That way people work better. And I think people will actually enjoy it more.
Q: How big a threat to the industry are climate-change pressures?
A: It’s obviously a huge problem in the world. The reality is the world will need nearly a third more energy by 2040. The planet may have as many as 2 billion more people. And so all forms of energy are going to be needed. And yet we need to reduce emissions by half.
Natural gas to me is going to play a huge role in this. I don’t really want to say anything negative about the coal industry, but the reality is, if you can detect, find and keep it in the pipes and burn it really efficiently, natural gas has got to be the most significant fuel. Because it’s at scale. And renewables are good; they’re absolutely fantastic. But they can’t carry the base loads of where the power industry is going to go for such a long time.
So – and this is a threat. It will change some of the areas of our business, but it will also create enormous opportunities.
Q: But are you doing enough?
A: If somebody came and said, “$10 billion, spend it on renewables and low-carbon energy,” I’m not sure we would know how to spend that in a way that our shareholders could say we’re stewarding capital well. They want us to be involved, certainly, and we are moving fast on lots of fronts.
The big issues to me on climate change – you have to look at Southeast Asia. From India all the way up to China, Indonesia, that’s where the big difference is going to have to happen on emissions. And it is going to be, I think, the oil and gas companies and the energy companies who are going to develop new technologies at scale.
Q: BP owns nearly 20 percent of Rosneft, the Russian national oil company, and you are on the board.What’s the future there?
A: Obviously I will be, and am, incredibly careful around sanctions and being able to work there, and BP will abide by those. You have enormous resources in the United States, in Russia, in Saudi Arabia; just those three. So Russia’s role in the energy mix is firmly going to be here for decades. It’s not feasible to just stop production in Russia. Think about what that would do to Europe. A third of Europe’s natural gas comes from Russia and probably a quarter of Europe’s oil comes from Russia.
Q: Are the rollbacks on various environmental measures being pushed by the Trump administration helpful to the oil industry?
A: It’s not changing one thing we’re doing in terms of environment or safety. We’re still going to reduce and try to eliminate all leakage of methane, or down to a very low level.
I think the rollback of things we’ve seen in the U.S. around regulation is quite material to the energy industry. What has happened is the speed of decision-making is much faster. So you can request a permit. It might be approved, it might not be approved, but it doesn’t just sit there for years.
Q: BP recently agreed to buy BHP’s shale assets in the U.S. for $10.5 billion. Is the quick payoff offered by shale part of the appeal?
A: I think it’s capital that you can spend efficiently, and you can pace it differently, depending on economic conditions. So, yes. For us there was a gap in our portfolio. It’s primarily a natural gas portfolio in the lower 48. And if they can take those technologies and that mindset and put it into liquids, you know, the margins, the economics of our U.S. business will change materially.
Q: Has BP put the Gulf of Mexico disaster behind it?
A: Well, we still have obligations that will go out to 2032, some fines and penalties. Total cost is $66 billion, which is the wealth of nations. There’ll always be a long tail of things in the legal system in the United States, but we would not have had the confidence to do the BHP deal, for example, if this was not really behind us as a company.