London, UK | – British multinational oil and gas company, BP plc today announced that it has established a new $100m fund for supporting projects that can deliver greenhouse gas emissions reductions from its Upstream oil and gas activities.
Just days after reported suggested the company had controversially lobbied against US rules to curb upstream methane emissions, the oil giant said it was on track to meet its internal methane intensity targets and is now stepping up investment in pursuit of further emissions savings.
The new Upstream Carbon Fund will make up to $100m available over the next three years to support new projects across BP’s Upstream division that will generate additional greenhouse gas emission reductions. The company said businesses and employees throughout BP’s Upstream operating businesses are being invited to come up with ideas and propose projects for the new funding.
The company said the new investment would build on progress made since it announced a range of near-term and specific targets last April, including a goal to achieve 3.5 million tonnes of sustainable greenhouse gas emissions reductions across the BP Group from 2016 to 2025 and deliver a methane intensity across its operations of 0.2 per cent.
In an update released today BP said that in the past year its total direct greenhouse gas emissions fell by 1.7 million tonnes CO2 equivalent, despite a three per cent growth in Upstream oil and gas production on the same basis. It added that its methane intensity in 2018 was 0.2 per cent, meaning it was already in line with the new target.
“A year ago we challenged everyone at BP to reduce emissions in our operations and they have responded overwhelmingly,” said Upstream chief executive Bernard Looney. “This $100m investment is designed to build on that momentum. It will fund ideas both big and small because everything counts in our transition to a lower carbon future and everyone at BP has a role to play.”
BP stressed that the new fund is part of a wider green investment push and comes in addition to the $500m the firm invests in low carbon activities each year, including investment in venturing activities and its expanding alternative energy business. The fund will also support the Oil and Gas Climate Initiative (OGCI), which brings together 13 oil majors to invest up to $1bn in tackling methane emissions.
However, like the OGCI the new fund is likely to spark criticism from environmental campaigners, who will highlight how the promise of $100m of investment over three years remains a fraction of BP’s planned capital expenditure in continued fossil fuel extraction.
The announcement also came as BP’s head of North Sea development Ariel Flores reportedly talked up the company’s plans to step up investment in the region. Describing the North Sea as the “crown jewel” for the company, and insisting that the company has “high expectations” for the basin.
“One thing that continues to surprise me when I speak to colleagues and others outside the industry in the North Sea is this belief that this region is past its best or that it is on its way out,” he said. “The fact remains that there’s a lot of work to be done around cost-effectiveness, getting our operating efficiency to the right levels as many of our assets get older, but there is still massive potential in this basin. We have been part of new projects recently coming on stream and we’re really embarking on innovative technologies and ways of working to open new doors to a very competitive business outlook with a very favourable environment.”
The moves come just days after BP’s vice president for strategic planning Dominic Emery said the company was introducing greater flexibility into its investment plans as it looks to ensure that it can respond to rapidly evolving clean technology, emissions regulations, and decarbonisation trends.
“The amount of exploration activity that we do now compared to seven or eight years ago has been reduced quite dramatically, so we spend far less on it,” he told the Economist Sustainability Summit in London last week. “We also have a set of reserves, some of which are booked effectively on part of our valuation of the company, but also we have what we call resources, which are not booked and don’t form part of our valuation of the company. There’s no doubt that both globally and within our portfolio, a lot of that oil and gas [from the resources side] won’t come out of the ground. We do continue to do some exploration, but most of it is much more conservative than we did previously.”
He added that the company was positioned so that it could adapt its portfolio and use its strong capital efficiency to make significant investment in the future of the business. “That gives us a huge amount of flexibility for the future, which includes new business models and tightening our exploration in the future,” he explained.
The latest news comes in the same week as Shell continued its own diversification strategy with the rebranding of its subsidiary First Utility as Shell Energy and the announcement it was switching 700,000 domestic customers to renewable electricity supplies.
However, BP and the wider oil sector continues to face intense pressure from campaigners and some investors for firms to come forward with much more ambitious decarbonisation plans that show how they can deliver deeper emissions reductions that bring their entire value chains into line with the Paris Agreement.
Meanwhile, the Public Accounts Committee (PAC) of MPs today published a new report warning there is “significant uncertainty over costs to taxpayers of decommissioning offshore oil and gas assets”, as well as a “poor understanding” within government of the potential liabilities associated with decommissioning fracking assets.
The report calls for a clearer strategy from government to minimise decommissioning costs, establish the UK as a global hub for offshore decommissioning expertise, and take steps to ensure taxpayers do not “pick up a hefty bill” to decommission fracking infrastructure.
