Bp_magazine_issue_2_2009_centenary.pdf

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18 FAMILY AFFAIR

44 SHIP SHAPE

52 TIME TRAVEL

Five generations at Whiting

A century on the high seas

A timeline of pivotal moments

THE INTERNATIONAL MAGAZINE OF THE BP GROUP

ISSUE 2 2009

BPMAGAZINE CENTENARY SPECIAL

PIONEER SPIRIT

To celebrate BP’s centennial year this special edition of BP Magazine reports on key moments in the company’s history, including the discovery that began it all.

Welcome. So much of modern business is driven by a desire to move forward – to be better today than you were yesterday – that it is easy to forget the value in taking stock of what has gone before. Which is why anniversaries can offer a chance to reflect on standout moments that have made a company great. This year is BP’s 100th anniversary and throughout this issue, we look back at some of the people who have worked tirelessly on geographical, technical and political frontiers to meet global energy needs. In some instances, the geographical frontiers have not changed but the technical challenges have moved on. In others, the focus has been on creating long-lasting partnerships that enable resource development that benefits both business and community. What this proves is the key to longevity is in a company’s values. As group chief executive Tony Hayward says: “Values do not change with the year. They are probably the most enduring thing a company has.” In this issue, both he and chairman Peter Sutherland talk about what BP means to them. I hope you enjoy this centennial edition. Lisa Davison> Editor

contents / issue 2 2009 + Features 06 Centennial thoughts Group chief executive Tony Hayward reflects on the company’s history. Interview by Lisa Davison Photography by Richard Davies, Marc Morrison & Stuart Conway

Cover story

12 First frontier The search for oil in Persia was a long one, but when it came, it began a chain reaction of events that changed the industrial face of the Middle East forever, and led to the incorporation of a company that would endure for 100 years. By Vartan Amadouny & Amanda Breen

18 Generation game The family and the refinery that have grown up together. By Paula Kolmar Photography Marc Morrison 24 Historic launch How BP Shipping has navigated the waterways of the world for almost a century. By Ian Valentine Photography by Barry Halton & Stuart Conway

32 Commercial break A whistle-stop tour of BP advertising. By Tim Wickham 38 Frozen assets The story of Alaska’s giant Prudhoe Bay field. By Frank Baker Photography by Marc Morrison

44 Technical evolution The technological advances that have changed the way the industry searches for oil and gas. By Nina Morgan Illustrations by Matt Herring

52 Memory lane Discover some of the key moments in BP’s history and its heritage companies in a special foldout timeline. 56 Best of British Thirty years since oil first flowed, BP’s North Sea business is planning a prosperous future. By Helen Campbell 62 North Star How the Forties field influenced a nation. By Professor A Kemp 64 Perfect match The partnerships that make BP distinctive. By Lisa Davison 70 Environmental experts Behind a speech on climate change lies more than 30 years of dedication to environmental issues. By Lisa Davison

74 Distribution network A visual look at some of the different ways oil and gas have been transported to market. 78 Growth opportunity The history behind some of BP’s largest mergers and acquisitions. By Lisa Davison

82 Silver screen Writer/director Nigel Williams talks about making his first corporate film. By Nev Pierce Photography by Steven Croston

BP MAGAZINE The international magazine of the BP Group – ISSUE 2 2009 BP Magazine is published quarterly for external readers around the world, as well as past and present BP employees. Its contents do not necessarily reflect official company views. The copyright for photographs and illustrations in BP Magazine is not always owned by BP. Please contact BP Photographic Services for details. managing editor Barbara Peen [email protected] editor Lisa Davison [email protected] distribution Carolyn Copland +44 (0) 20 7496 4340

© BP p.l.c., 2009

design Phil Steed – Steed Design [email protected] www.steeddesign.com print management Williams Lea image contributors BP Archive BP Imageshop Corbis Debut Art Heart Illustration Rex Features

86 Stop the press BP’s history as seen through the headlines of the day. By Hester Thomas Illustrations by Jason Ford 90 Profile An interview with BP chairman Peter Sutherland. By Martin Vander Weyer Photography by Graham Trott

+ Regulars 04 For the record A snapshot of global news from 1909. 11 BP Faces Meet some of the people – from chairmen to project engineers – who have helped shape BP. 36 Viewpoint The development of a socially responsible corporation. 68 Viewpoint The changing face of the energy industry in Azerbaijan. 96 Viewpoint The evolution of a brand. 98 Factfile The largest oil producers in 1909. 100 Parting shot 100 BP faces to celebrate 100 years.

52 Giant in the field The Thunder Horse platform in the Gulf of Mexico is the world’s largest floating platform. Learn more about it and other significant events in BP’s history in the timeline.

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51

74

For the record

Highlights from around the globe > Spring 1909

the century in numbers

900

Germany

US

The number of staff evacuated from BP’s Britannic House headquarters during the Second World War

1967 The year Mrs P Harris of the computer department became the first woman to reach a senior position in BP – as defined by joining the senior dining room

Belgium Northern Ireland England France

Persia (Iran)

Antarctica

Persia/England: Company incorporated A new company has been formed to progress development of a major oil discovery in Persia. The prospectus for the company – known as the AngloPersian Oil Company Limited (APOC) – was issued on 19th April 1909.

1978 The year BP removed the stipulation that directors had to be British

251.7 million The number of tonnes of crude and products transported by BP Shipping in 2006 04 Issue 2 2009 BP MAGAZINE

In writing: official documentation detailing the Persia concession.

The majority of its 1 million ordinary £1 shares have been purchased by Burmah Oil, with another 30,000 acquired by Lord Strathcona – APOC’s new chairman. Oil was struck in May last year, after years of searching in a concession acquired by

businessman William Knox D’Arcy in 1901. He has subsequently ploughed much of his fortune into that search. In 1904, D’Arcy turned to Burmah Oil for financial support and has since been made a director of the APOC board.

top performers France Channel flight Louis Blériot (below), a French inventor and engineer, has completed the first flight across the English Channel. The 37-minute flight began a little after 4.30am on 25th July 1909, at the break of dawn. Bad weather caused Blériot to lose sight of landmarks at one point and declare: “I am alone. I can see nothing at all. For 10 minutes, I am lost.” ■ In January 2005, the world’s largest passenger plane, the Airbus A380, was unveiled in France.

Northern Ireland Luxury liner Construction has begun on what is expected to be the world’s largest passenger steamship (above). Capable of carrying around 3,500 people, the White Star Line ocean liner is using some of the most advanced technology of our time, and is being described as ‘unsinkable’. ■ On the night of 14th April 1912, during her maiden voyage, Titanic hit an iceberg and sank, killing 1,517 people. US NAACP founded The National Association for the Advancement of Colored People has been founded. Appalled at the violence committed against African-Americans, a group of white liberals issued a call for a meeting to discuss racial justice. Some 60 people signed the call, which was released on the centennial of Abraham Lincoln’s birth. ■ NAACP is the oldest civil rights organisation in the US. In 2009, Barack Obama was elected the first AfricanAmerican president of the US.

US Instant success An Anglo-Belgian inventor living in the US has begun selling his newly-devised instant coffee. Although not the inventor of the process, George Washington is the first to manufacture it commercially. It is said he was inspired by seeing dried powder on the edge of a silver coffee pot while in Guatemala. ■ During its height in the 1970s, almost a third of the roasted coffee in the US was converted into an instant product. Belgium Plastic invented Belgian chemist Leo Baekeland (below) has announced his creation of ‘Bakelite’, the first fully synthetic resin – or plastic – to become commercially successful, at a meeting of

the New York section of the American Chemical Society. ■ Early radios and telephones were made of Bakelite because of its properties of insulation and heat resistance. Germany Nobel cause Wilhelm Ostwald has received the Nobel Prize in Chemistry for his work on catalysis, chemical equilibria and reaction velocities. He is recognised as almost single-handedly establishing physical chemistry as an academic discipline. ■ Today, catalysts are used throughout the oil and gas and petrochemical industries.

Antarctica Pole position Anglo-Irish explorer Ernest Shackleton (below right) has received a knighthood from King Edward VII. It follows his return from the Antarctic, where he led an expedition to within 156 kilometres (97 miles) of the South Pole – the closest convergence on either pole in exploration history. ■ In 1911, Norwegian explorer Roald Amundsen reached the South Pole. Three years later, Shackleton made his third trip on the Endurance, which became trapped in ice and sank. Incredibly no one died.

Top 10 Largest oil fields in history with BP involvement 1. Burgan, Kuwait 2. Rumaila, Iraq/Kuwait 3. Ahwaz, Iran 4. Kirkuk, Iraq 5. Marun, Iran 6. Gach Saran, Iran 7. Agha Jari, Iran 8. Prudhoe Bay, US 9. Zakum, Abu Dhabi 10. Bu Hasa, Abu Dhabi

■ If you have any comments about BP Magazine,

please send them to: [email protected] or BP Magazine, Bldg 200, Chertsey Road, Sunbury-on-Thames, Middlesex, TW16 7LN, UK

BP MAGAZINE Issue 2 2009 05

AN INTERVIEW WITH BP’S CEO

TONY

HAYWARD As BP’s group chief executive in its centennial year, Tony Hayward takes time to reflect on the importance of the company’s history, values and pioneering spirit.

6 Issue 2 2009 BP MAGAZINE

Interview> Lisa Davison Photography> Richard Davies/Stuart Conway/Marc Morrison

➔ view fro m th e to p

Leadership skills: since becoming group chief executive, Tony Hayward has made it his business to get out into the BP world to talk to employees, whether it’s at an office ‘townhall’ shortly after results day or at an operational site.

BP MAGAZINE Issue 2 2009 7

Interview> Tony Hayward

Why do you think it is important for a company to celebrate its history?

People and companies are as much about where they come from as where they are going, and I think the DNA of a company is forged by the experiences it has been through. I think it is important to recognise that you are standing on the shoulders of giants. Do you think there is a certain BP characteristic that its employees demonstrate?

If I look back through our history, I think the company and its people have a pioneering spirit. We were the first to go to

8 Issue 2 2009 BP MAGAZINE

the Middle East, the first to find oil there, the company that led the development of Alaska and the North Sea, one of the first to move into deepwater exploration, the company that led the industry to recognise climate change.

reservoirs, heavy oil and gas. You can think in terms of new forms of energy: solar, wind, biofuels. Advanced conversion is another frontier: how do you translate coal into something more useful and not have lots of carbon dioxide associated with it?

Being a pioneer often means working on a frontier. Where do you think the new frontiers are for BP in the future?

During your BP career, was there a defining moment when you felt part of a team doing something different?

You can think of frontiers in different ways. There are physical ones, so deeper water or underneath the ice, or you can think of them in terms of the nature of the resources that we are developing, for instance, more challenging and complex

There are three or four moments. The formulation of the new exploration strategy in the early 1990s, which moved into very deep water and new geopolitical areas; the debate we had at the top of the company in 1997 when we took a stand on

“I think the DNA of a company is forged by the experiences it has been through. It is important to recognise you are standing on the shoulders of giants.”

climate change; the decision to go ahead and merge with Amoco, and then with ARCO. The decision to take a big step into Russia was one that I was very intimately associated with. Has there been a development during your time at BP that you never thought you’d witness when you set out as a young geologist?

I think the most obvious one is the deep water. When I started, deep water was a few hundred metres. The fact that we are today producing oil and gas in up to 2,000 metres (6,500 feet) of water and exploring in 3,000 metres (9,800 feet) of water, and that technology is as advanced as anything that goes into space – in terms of the pressures and temperatures – is astonishing. How do you think the BP of the past links with the BP of today?

The best way to look at it is through our four values – progressive, responsible, innovative and performance-driven, and I would say that you can trace them all back into our history. We’ve only started to articulate them in the past 10 years, but I think their roots go back a long way. Unless you perform as a company, you cannot persist for 100 years. The conversation we

“The role of the international company is to do the very tough stuff, the stuff that others cannot, or choose not to, do because of the risk involved. That means we have to work on the frontiers.”

just had about deep water is a great example of innovation. Progressive is about our relationships with each other, our partners and customers, based on mutual advantage. We operate in many places that are in transition, which provides additional challenge in managing relationships and encouraging those societies to develop. That was no different 100 years ago in Persia [now Iran] from some of the challenges we have today. Many see corporate responsibility as a new concept, but you’re saying it’s something BP has been doing for a very long time…

Absolutely. It sometimes has a different form, but absolutely. The final thing is about being a responsible operator. We have talked about being green in the past, but I think it is more than that. It is about the safety and development of our people and the communities and societies in which we operate, as well as being environmentally responsible. Values do not change with the year. They are probably the most enduring thing that a company has. The role of international oil companies has changed over the past 100 years. What do you think their role is in the 21st century?

I think if you look back over the history of the industry, you would say there was a fundamental change in the late 1960s, early 1970s with the arrival of OPEC and the establishment of national oil companies, which chose, quite reasonably, to develop their own resources. The role of the international oil company is to do the very tough stuff, the stuff that others cannot, or choose not to, do because of the » BP MAGAZINE Issue 2 2009 9

Interview> Tony Hayward

risk involved. That means we have to work on the frontiers. When we went to Persia, it was the frontier of its day. When we went to the North Sea and Alaska, they were the frontiers. The deep water and the Caspian were the frontiers of the 1990s. Today, they are under the ice, in ever deeper water and more difficult reservoirs. I think the role of the international oil companies has always been to live on the frontier and to do that, we have to have the world’s best technology. How much of a role do you think the energy industry played in shaping the 20th century?

We need to be modest in our assertions, but we clearly played a part by providing a reliable, affordable form of energy globally. BP has played an important part in making that market work and, because we are present in so many countries and participate in the world’s energy infrastructure in such an holistic way, by our very presence we have an influence. We provide the light, heat and mobility that people want, and it’s our responsibility to continue to do that in a way that makes a difference in the world. 10 Issue 2 2009 BP MAGAZINE

Do you think BP might exist in another 100 years’ time?

I do not see why not, if we continue to perform and innovate and are engaged with society. We have to earn the right to be here in 100 years’ time – but provided we offer something that people want and are prepared to pay for, then as a commercial enterprise, we will be here. I do believe that it is not really the person at the top that creates the sustainable nature of the company; it is each and every one of our people around the world who works for, and is connected to, BP. ■

“We provide the light, heat and mobility that people want, and it’s our responsibility to continue to do that in a way that makes a difference in the world.”

Photography> BP Archive

BP Faces

NEW VENTURES William Knox D’Arcy / Businessman May 1908 represented last chance saloon for businessman and oil prospector William Knox D’Arcy. Down to his last $15,000, his mansion on the market, and with a personal overdraft of some $700,000 (equating to roughly $50 million in modern terms), Knox D’Arcy needed some good news. Having made his fortune in Australian gold, he acquired exclusive rights to search for oil in southwest Persia in 1901, and ploughed his life’s fortune into the venture. By 1905, a new injection of capital was required, so Knox D’Arcy formed the Concessions Syndicate Ltd with Burmah Oil, which took over management of the firm. Three years later, however, Burmah was threatening to abandon operations. Knox D’Arcy never visited Persia himself, but on 31st May, 1908, he received a telegram at dinner in London. He reportedly read the notice, placed it under his water glass and waited until the meal was over. He then told the butler to open the champagne: “They have struck,” he declared. Oil had been discovered five days earlier at Masjid-i-Suleiman, eight years after the search had first begun. ■ BP MAGAZINE Issue 2 2009 11

➔ oil discovery

Early days> BP in the Middle East

First strike: engineer George Reynolds first struck oil on 26th May 1908 (right). Above, 1,000 local labourers worked to lay the 220 kilometres (130 mile) pipeline from Masjid-i-Suleiman to Abadan.

It is sometimes difficult to prise apart truth and romance when it comes to history, but in BP’s case what is clear is that the journey to first oil in 1908 and the incorporation of the Anglo-Persian Oil Company a year later pushed the frontiers of technology, knowledge, patience and human spirit. But it was an endeavour that would yield riches far beyond financial gain.

DRAMATIC PROSPECTS

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Report> Amanda Breen / Vartan Amadouny Photography> BP Archive

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Early days> BP in the Middle East

B

old and insightful. Just two adjectives used to describe one businessman’s move to secure an exclusive oil concession in Persia (now Iran) at the turn of the 20th century. William Knox D’Arcy’s speculative gamble almost bankrupted him, but it would unlock the country’s riches and from these risky beginnings emerged a new oil company. Knox D’Arcy was a capitalist, through and through, investing his wealth, first in gold and later oil. He was not particularly interested in the projects themselves, only in the return on investment he might make. But the Englishman was forced to be patient for that return. Years passed and no pay-off came, forcing him to enter into business in 1905 with Burmah Oil, forming the Concessions Syndicate Ltd. A further three fruitless years passed, and the drilling of two holes near Masjid-iSuleiman was viewed as the syndicate’s last chance. Over the years, Knox D’Arcy’s man on the ground – engineer George Reynolds – faced a string of interruptions to exploration: bad weather, sickness and breakages, not to mention variable relations with the local indigenous communities. This bad luck did not change with the final two wells – torrential rains washed away four months’ work on a link road and a drill bit fell off the first well, losing the operation a precious 10 days in recovery. Finally, in the early hours of 26th May, 1908, Reynolds and his team struck oil,

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IRAN

Pip

Riv er Ka ru

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Masjid-i-Suleiman oil field

Tigris

KUWAIT

Abadan

PERSIAN GULF

AREA ENLARGED

Kuwait 14 Issue 2 2009 BP MAGAZINE

km

75

an extent that on the day its stock opened for trading in London and Glasgow, people stood more than five deep in front of cashiers in one Scottish bank. Anticipation of success was rife, but at the time Britain lacked expertise in petroleum exploration and development. The Middle East would become the place where the company, and increasingly British employees, learned the techniques of operating in diverse, difficult conditions. At Masjid-i-Suleiman that meant building an infrastructure in which a

BP profile: George Bernard Reynolds

Mou nta ins

Tembi

Basra IRAQ

discovering an enormous field of around 1.5 billion barrels of oil equivalent. Its significance could not be over-estimated for a country, a region and an industry. The formation of the Anglo-Persian Oil Company (APOC) – later BP – came hot on the heels of this discovery. Knox D’Arcy’s concession had started it all, but besides a seat on the board and some shares in the company, his involvement had become increasingly limited over the years. Meanwhile, the British press talked up this new company’s vast potential to such

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Born in the mid-19th century, possibly at sea, Reynolds (below left) graduated from the Royal Indian Engineering College and worked as an engineer in Sumatra for Royal Dutch before being engaged by William Knox D’Arcy to search for oil in Persia. Although often tetchy with his superiors, Reynolds laid the foundations for the Iranian oil industry. He was patient and persuasive in handling his staff of different nationalities, sustaining their endeavours through rains and searing heat and inspiring those depressed by lack of success and homesickness with his assuredness and determination to strike oil.

In the search for a job and better life, many people moved to Abadan.” Cyrus Rezaei

workforce could live and operate in its rugged territory. Just six months after striking oil, Daily Telegraph correspondent Percy Landon reported of well-built drillers’ houses, rough-and-ready workshops, offices and stables, as well as ‘sardabs’ or ‘shabadans’ cut into hillsides, providing shelter from the searing summer heat. Medical needs were attended to by Dr Morris Young, who had joined the expedition in 1907. He established a free healthcare service and practised from a stone dispensary, treating both injured

workers and sickly locals. Dr Young would become APOC’s chief physician and a local legend, developing a network of clinics and hospitals across Persia. As well as facilities for employees, a pipeline and refinery were urgently required. Scottish engineer Charles Ritchie led the challenge to lay a 220km (130-mile) pipeline over remote hillsides to the site of the first refinery at Abadan, on the edge of the Persian Gulf. More than 6,000 mules dragged pipe over steep gradients to reach the route, with a special team of 37 engineers » New development: local people were drawn to jobs, electricity and clean drinking water at Abadan refinery (below and left), and between 1936 and 1950, BP built some 21,000 homes for employees.

BP MAGAZINE Issue 2 2009 15

Early days> BP in the Middle East

Did you know? ■ The Anglo-Persian Oil Company made

its first trading profit in 1915 and paid its first dividend to ordinary shareholders two years later. ■ The original oil concession signed in

1901 for a term of 60 years was cancelled in 1932 by His Imperial Majesty Reza Shah, who threw the company file in the fire. A new revised concession came into effect from 1933, covering a reduced area of 260,000 square kilometres (100,000 square miles), chosen by the company.

and 1,000 local labourers working on the project. When he got bored inspecting the pipeline on horseback, Ritchie bought an aeroplane, the first in Persia. It nearly cost him his life, though, when he later crashed it. Remote conditions and basic apparatus characterised exploration work during the early years. Before seismic reconnaissance became the industry norm, early geologists rode through Iran on donkeys, with knapsacks and hammers, ‘reading the landscape’ with their eyes to find the places where geological anticlines and seepages indicated the presence of oil. Chief geologist for BP by 1955 Norman Falcon, recalled how camping in the wilderness brought unwelcome guests. “Occasionally, somebody had a gramophone and we would have [it] on, and suddenly in front of my tent there was a terrific shindig because three or four jackals had come and heard the sound, and were screaming away.” The growth of the oil industry – slow at first but accelerating in the 1950s as demand grew in the industrialised world – opened up new opportunities, not only in Iran, but other parts of the Middle East and North Africa, where BP became a major player. In Iran, Iraq, Kuwait and Qatar, BP 16 Issue 2 2009 BP MAGAZINE

explored frontiers where there were no facilities until the company created them. These frontiers became a laboratory of ideas and experience. Metalled roads for access to fields, pipelines to carry the oil, modern port facilities for shipping products around the world were just some of the physical infrastructure BP and partners had to create in order to function. These came alongside telecommunications, housing and ancillary services in medicine, education and housing, all of which were previously nonexistent in most areas. Between 1936 and 1950, BP built some 21,000 homes around its refinery at Abadan, the first and, for many years, the world’s largest oil processing plant. Job opportunities, electricity and treated water drew people from across the country’s southern provinces. One employee, Cyrus Rezaei, born in Abadan to the indigenous Bakhtiari tribe, describes how the place developed “a cosmopolitan culture, where you found mixed tribes, dialects and languages. You could have the local indigenous Arab population, lots from the Bakhtiari tribes; from the Southern Province who were living around Shoushtar and Masjid-i-Suleiman. In the search for a job and better life, they all moved to Abadan.” Imbalance of revenue Nationalism came to threaten the stability of these operations and lifestyle. In the late 1940s, resentment emerged at the imbalance of revenue shared between the company and the Iranian government, leading to the nationalisation of the country’s oil in 1951, along with the evacuation of employees and the closure of Abadan refinery. By October that year, chief chemist Monty Sawyer was one of four remaining staff at the colossal refinery. “It was very strange but we kept going. We got the staff out, stayed on and quite frankly, it was not unpleasant. But the day came – we were escorted out…with many of my Iranian graduates in tears, they never thought it would happen.”

Local talent: the Anglo-Persian Oil Company provided young Persians with industry training (left). Above, the pipeline between Masjid-iSuleiman and Abadan refinery crossed rugged territory.

It took three years for staff to return and production to resume, albeit under different terms by which the company, now BP, would work in partnership with other international oil companies. Nationalism would come to rise again, though, firstly in Libya under Muammar alGhaddafi, who nationalised BP’s interests in the country in 1971. Iraq and other Arab states soon followed suit, as did Iran in 1979. Although the wave of nationalisation that swept BP out of its prolific Middle Eastern states changed the character of the company, the links to the region were never entirely severed. BP continued to lift oil from Abu Dhabi, UAE, in a service agreement with its government, and by 1974, had entered Egypt, where its primary focus was the country’s gas reserves. Indeed, gas became a new departure in a region dominated by oil. One hundred years after entering the Middle East, BP is still there, pumping oil in Abu Dhabi and developing oil and gas in Egypt, along with gas production in Algeria and a return to Libya and Oman, where technology and expertise developed in some of its ‘newer’ businesses are now being applied for the first time in the region where it all began for BP. A certain amount of luck and judgement prompted Reynolds and his men to position that last ditch well at the right spot in Masjid-I-Suleiman in 1908. It was a discovery with an impact far beyond rescuing Knox D’Arcy’s bank balance. The strike in Persia would turn Britain into a major player in the energy industry, shape the Middle East’s politics, economy and society. And it would be the catalyst that would eventually create a company that has endured for one hundred years. ■

Photography> BP Archive

BP Faces

EXPLORATION EARTH Norman Falcon / Chief geologist “It was all fairly civilised as far as possible,” recalled Norman Falcon of conditions on Persian reconnaissance missions during his early career with the Anglo-Persian Oil Company. The Cambridge graduate served his apprenticeship from 1927 on a well-site in Persia, before joining the Bakhtiari Mountains survey. Working in rugged, roadless, mountain terrain was of little hardship, Falcon said in an interview in 1991, geologists even managed a daily bath with “not hot, but warm” water. Falcon and others mapped some 230,000 square kilometres (90, 000 square miles) at a 1:250,000 scale – work recognised as one of the greatest feats of geological exploration in the 20th century. As BP’s chief geologist from 1955, Falcon saw the company through a period of transition following the nationalisation of the Iranian oil industry and the company’s expulsion from Iran. A decade in the role saw Falcon mastermind an exploration programme, which produced a series of major discoveries at a time when the company needed to replace lost reserves. His contribution to petroleum geology was honoured in 1963 by the Royal Geographical Society’s Murchison Award. ■ BP MAGAZINE Issue 2 2009 17

➔ r e fi n i n g

Generations> The Warzyniak family

WE ARE FAMILY Over the years BP has grown into a global giant, but at operational sites such as Whiting refinery – an Amoco heritage site – a sense of family remains. Just ask the Warzyniaks, who have worked at the refinery for five generations. 18 Issue 2 2009 BP MAGAZINE

Interview> Paula Kolmar Photography> Marc Morrison / Whiting Archive

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Generations> The Warzyniak family

‘B

e back home when the whistle blows,” Dolores Warzyniak calls from the porch, as her two young sons run out to play with friends on a warm, sunny summer day in the 1960s, in a small US town near Lake Michigan. She might have told them to take their shoes off before playing in the water sprinklers, and then gone inside to make a pot of coffee with water from the tap, while planning to sort the laundry for washing. Whistle, water sprinkler, coffee, laundry – all of these brought the nearby Whiting refinery into their daily lives, as it did for all of the citizens of Whiting, Indiana. Everyday at 4.30pm, the whistle blew, signalling the end of the 8am day shift; the piercing pitch could be heard throughout the town. Everyone knew when it was 4.30pm. Water for drinking, washing and watering the flower beds came from the 20 Issue 2 2009 BP MAGAZINE

refinery’s pumping system that pumped from Lake Michigan into the plant for various purposes. The system also served to provide the city of Whiting with its water source for purification and storage and distribution to homes, along with the fire department and businesses. And since 1889, when the refinery was built by John D. Rockefeller’s Standard Oil Company, the plant has been a workplace of huge importance for Whiting and its families. For at least five generations and counting, that’s certainly been the case for the Warzyniak family. What was the refining business like in the US a century ago? Stories and traditions passed down from Warzyniak fathers to sons over 10 decades tell us it has changed dramatically, from the refinery products and economy, to technology, safety and environmental responsibility. What hasn’t changed, however, is what makes a refinery strong enough to stay in production for more than a century: responding to energy demands, making a positive impact on the community and building pride in work – often based on family heritage. In the 1880s, Joseph Wawrzyniak (the extra ‘w’ was later dropped) came to the US

from Poland, and found his way to the fastgrowing area that is now Whiting. Born in the 1860s, Joseph would have been in his mid-30s at the time of the refinery’s construction. Near a major water source and railroad, the sparsely populated area was a prime site for a refinery. This was long before technology streamlined refining, which meant many strong backs were necessary to handle crude oil processing. Prosperous refinery Whiting – not even a city until 1903 – had 115 citizens, according to the Census Bureau count of 1880. Success found the refinery and, as it prospered, it brought more workers, who, with their paychecks, built houses and raised families. Refinery and community share deep roots and have grown together. Joseph chose to start his family there. Though records from that time are scarce, Joseph would have been among the first generation of Whiting employees. One of the vital jobs in his day was that of a greaser or oiler. Whiting made grease and oil to sell as machinery lubricants; the machinery at the plant was no exception

Family fortunes: opposite l-r, son and father Bob and Ray Warzyniak, Andrew Kuiper (Bob’s stepson) and Jake Warzyniak in the family home. This page, historical snapshots of Whiting refinery.

and needed constant greasing to prevent it from seizing and wearing down parts. Men carried it around in buckets, applying it where needed. It was this job that gave the Whiting High School sports teams their name: The Oilers. Whiting, with other refineries across the country, made a profit by producing kerosene rather than gasoline. Beeswax and asphalt, too, would eventually be top-sellers. Joseph’s son, Steve Wawrzyniak, was a new employee at Whiting in 1934, when the deep depression made jobs a rare commodity in the US. By that time, and over the next few decades, cars and trucks began to fill the new asphalt roads criss-crossing the country, and finally gasoline and asphalt became important refinery products. Gasoline’s demand vaulted when the US joined the Second World War, making the 1940s a period of fuelling military vehicles and airplanes for refineries. Raymond Warzyniak, Steve’s son, was next to carry on the family tradition at Whiting, working there for four years, before joining the Marines. After Ray – now 81 – retired from a long career in Whiting’s police department, he returned to the refinery to become a security guard in

1976, later promoted to captain, before retiring from the plant in 1990. No longer part of the Standard Oil Company – which broke up under anti-trust laws in 1911 – Whiting’s refinery was an Amoco business and security jobs were given to employees, not outsourced as most are today. It was also the period when the Occupational Health and Safety Administration and the US Environmental Protection Agency (EPA) began oversight on behalf of workers, the environment and citizens. Regulations slowly changed the way industries and companies ran their businesses; refineries got a lot of attention.

Golden anniversary: poster celebrating the joint 50th birthday of Whiting as a city and refinery.

Long service Remember the two boys who ran home ‘when the whistle blew’? Bob and Steve Warzyniak are 51 and 54 now, and have been working for the refinery for 28 and 29 years, respectively. Raymond is ‘Dad’. Steve, who joined in 1981, knows a lot about EPA regulations. In his job as an optimisation engineer, he is closely involved in the water quality and pumping facility at Whiting. “I started as a technician in the lab, where I also met my » wife, Cheryl, who is a lab supervisor,” he BP MAGAZINE Issue 2 2009 21

Generations> The Warzyniak family Young love: Steve Warzyniak and his wife Cheryl work together at Whiting refinery.

notes. “But as the importance of water quality grew in the 1980s and 90s, the refinery added jobs that were focused entirely on making certain the water we put back into Lake Michigan was as clean, or cleaner, than when we pumped it out.” High expectations So in 1997, a year before Amoco became part of BP, Steve entered his current position and says, “Lake Michigan’s water is cleaner today than it has ever been, largely because of what the EPA requires of industries, but more so because the communities in the area depend on that water. They have high expectations regarding our environmental performance, and we want the water we return to Lake Michigan to be pristine.” Just consider that relationship and you can see how family heritage and pride in work keeps the refinery strong. “My wife, my brother and nephew, Jake, and perhaps even my son, Bradley, after graduation, are part of the ongoing family history at Whiting refinery. We’re not the only family with heritage here, but we are very proud to be one of the long-term names in Whiting’s history.” Bob, his son, Jake, and stepson, Andrew Kuiper, share the sentiment: “When your family name echoes back to you from a century ago, you feel a sense of honour to 22 Issue 2 2009 BP MAGAZINE

uphold in a way. Warzyniaks have been at this refinery a long time and since my son joined the plant as a machinist’s apprentice two years ago, it looks like our name will go on far into the 21st century.” Indeed, the Warzyniak family name may have crossed three centuries of the refinery’s history. In his work as a hydroprocessing longterm asset coordinator, Bob – with the refinery since 1980 – is responsible for longterm asset coordination, which involves scheduling turnarounds, complex budget planning, ensuring reliability and necessary long-term maintenance. “I’ve seen the safety culture change in big ways. Over the past 20plus years, employees and contractors have come to take personal safety very seriously, and it’s made a big difference in the way we work and the way we make decisions,” he says. “Safety is not optional or just a good thing to do.” He also points out the impact of computers. “They are efficient and improve quality, but they are so integral to my group’s work that if the system is down, we can’t perform our jobs.” No whistle blows at shift change in 2009 – that’s low-tech – but the young boys who came home when the whistle once blew, remember it. Refining has changed a lot since the 1800s and continues to change at Whiting. But it still processes crude oil, still has an impact on communities and still has enduring families. ■

WHITING TIMELINE 1870: Standard Oil Company (SOC) formed 1890: The first shipment of finished petroleum product, 125 tank cars of kerosene, is shipped from Whiting refinery. (Gasoline was considered a waste product and was often discarded) 1903: Whiting is incorporated as a city of Indiana 1911: SOC dissolved, Whiting refinery becomes part of the American Oil Company (Amoco) 1918: For the First World War effort, US gas production rises to 12 million barrels, compared with 2 million in 1914 1941: During the Second World War, Whiting researchers developed new allweather, heavy-duty motor oil 1977: Whiting establishes an all-time production record for the refinery by processing 504,000 barrels of crude oil in a 24-hour period 1980-81: Bob and Steve Warzyniak become the family’s fourth generation working at Whiting refinery 1998: Amoco and BP merge.

BP Faces

Highlights from history

Trawl through the archives of BP’s long and distinguished history and you’ll find no shortage of key moments that helped shape the company we know today. But what do the organisation’s previous leaders feel were the highlights of their tenure at the top? What single event or activity stands out for them as the defining moment of their leadership?

SIR PETER WALTERS Chairman 1981-1990 “My pinnacle moment as chairman of BP was the outright purchase of Standard Oil of Ohio [Sohio] in 1987. We’d had a 55% stake in Sohio since the 1970s, but it had remained under the control of local management, apart from two BP nonexecutive directors. By 1986, however, it was clear that around $6 billion of revenue had been squandered on a series of useless projects, so I wrote to the chairman and chief executive, asking for his resignation and saying I would be in Cleveland with my deputy chairman, Roger Bexon, the next day. He didn’t really put up a fight, and all the Sohio directors accepted our proposal to put Bob Horton and John Browne in charge. All, that is, except one non-executive – a lady who was principal of the Wharton School of Finance. She told me: ‘This is not the way we do business in this country… I need to give Al a big hug!’ The decision was clearly right, though. The following year, we bought the remaining 45% of Sohio shares, and if we hadn’t done that, it would not have been easy to buy Amoco and ARCO later. I sat next to that lady non-exec on a flight the following year. She apologised for misjudging me, and said that since Bob and John had been in charge, she had seen what good management was all about!” ■ Interview: Nick Reed Illustration> James Carey

BP MAGAZINE Issue 2 2009 23

➔ business fo cus

British flagship: launched in 1924, the British Aviator was the 60th member of the APOC fleet and the most powerful singlescrew motor ship in the world.

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BP Shipping> A century at sea

Report> Ian Valentine Photography> BP Archive / Barry Halton / Stuart Conway

BP’s shipping business is almost as old as the company itself, with its first ship delivered in 1916. Since then, its fleet has navigated oceans, politics and economics, all with a steady hand and a determination to be a leading force in the transportation industry.

TAKE A BOW

A CENTURY OF SUCCESS ON THE OCEANS BP MAGAZINE Issue 3 2008 25

BP Shipping> A century at sea

L

Launch party: the British Premier was launched at Jarrow on Tyne on 25th August 1922 (top). Middle, the British Victory leaves the fitting-out wharf, and right, British Fame, Merlin and Reliance in the ice channel into the port of Stockholm, Sweden, during severe weather conditions.

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ooking back across the economic, political and military struggles that rocked Europe and the Middle East in the 20th century, it is hard to believe that a shipping company could have delivered crude oil uninterrupted in that arena for the past 95 years. Yet BP Shipping has not only navigated the choppy waters of change, but has motored into the new millennium as a leading force in the global oil transportation industry. The maritime arm of BP can trace its roots back to the early days of the AngloPersian Oil Company (APOC), the precursor to today’s BP. As soon as oil had been struck in Persia, now Iran, the need to ship it back to Britain arose. This was primarily undertaken by contractors, until one of the directors of APOC, a visionary Scotsman named Sir Charles Greenway, saw that a modern petrochemicals business ought to be vertically integrated: able to find, extract, refine and market the oil itself. In 1915, the British Tanker Company Limited (BTC) was formed with a budget of $144,000 to build seven steam-powered tankers. All those ships and later additions to the fleet would bear the prefix ‘British’. Over the next decade, as the need for oil in the developed world gathered pace, the BTC grew to meet this demand. By just 1924, the fleet numbered 60, with the 60th being the flagship, 10,762 deadweight tonnes (dwt), British Aviator. It was APOC’s first diesel engine oil tanker, the most powerful single-screw motor ship in the world. Weathering the storm The good times were about to end, however, with the onset of the Great Depression in the early 1930s. Rising unemployment within the merchant navy meant it was not unknown for fully qualified masters to take jobs as deck hands, while work was scarce for apprentices and cadet officers. But, through a policy of strategic mergers, as well as the continued support of the Shah of Iran, APOC weathered the storm, strengthening its position within the industry. In 1939, the British government chartered the whole fleet of 93 vessels to supply fuel for its forces during the Second World War. “Our seamen were just doing

their jobs, which they delivered with great ability under severe pressure,” says Dave Williamson, vice president for Fleet Operations, who arrived at the company as a cadet 37 years ago. Within a year of peace in 1945, the BTC fleet had returned to its pre-war total of 93 ships. The recovery was further bolstered by an order for 57 new tankers, each 12,000 dwt, which would increase the tonnage of oil transported from Abadan refinery in Iran, but remain light enough for the tankers to pass through the shallow waters of the Suez Canal. Lessons learnt In 1951, however, this arrangement was changed by the nationalisation of the Iranian oil industry. APOC removed its staff from the country. This sudden shortage left it over a barrel, and although oil would again flow west from the Iranian oil fields, the lessons were quickly learnt. The newly-renamed British Petroleum Company duly recognised the need to widen its network of suppliers and refineries, in particular forging alliances with Kuwait and Bahrain. In the early 1950s, it also increased the size of deep-sea ships, building 13 so-called supertankers at more than 30,000 dwt. These bigger ships were particularly useful in 1956, when the first Suez Crisis closed the Suez Canal, forcing ships to travel around the South African Cape, adding more than 9,000 nautical miles to the journey. The crisis lasted a year, but again alerted the company to the changing nature of world politics and the need to build ever-larger ships. By the end of the decade, the BP Tanker Company numbered 146 vessels, including mammoth tankers of 42-, 50- and 60,000 dwt, with plans already being drawn up for 100,000 dwt tankers, which could hold more than 25 million gallons of crude oil. In 1967, when the canal was again blocked, this time by the wreckage of sunken warships during the Six-Day War, BP’s tankers were once more routed around the Cape. This challenge demanded bigger tankers, including the first of the very large crude carriers (VLCC), one of which was the British Explorer, which was launched in Japan, with a capacity of 215,000 dwt of » cargo. By now, BP had struck oil in the

EXPERIENCE MATTERS

E

ntering the BP Shipping headquarters at Sunbury-on-Thames, the history of the company is unavoidable. A model of one of the tankers from yesteryear sits in the main atrium, while memorabilia from the list of global destinations serviced by BP hang on the walls. I put this to John Ridgway, who joined BP as a 16-year-old officer cadet in 1971. Thirty-seven years later, he is now chief executive of BP Shipping, while many of his fellow senior executives have also worked in the company for more than 35 years. “Shipping is steeped in tradition, whether it is part of the language or the culture. We have a fantastic reputation for safety and professionalism that has been built up over many decades. BP Shipping has had a clear purpose for almost 100 years, to safely transport the oil and gas of the BP Group to its customers worldwide. We all need to play a part in continuing the traditions and continually improving what we do, as others have done for the past 95 years.” Chief marine incident investigator Bob Fleming arrived at the same time as Ridgway, and served alongside seamen who experienced the war. “There is a sense of history within BP Shipping,” he says. “Yet, being a seafarer transcends nationalities and politics. You are a seaman first and foremost, governed by the laws of the oceans. But we must not forget the past, otherwise we cannot understand the journey of how we arrived at the company we are today.” Indeed, BP Shipping seems to have as many ‘lifers’ in its ranks as other parts of the company. There are officers who have been serving more than 40 years. Ridgway adds: “We also have a vibrant pensioners club who keep in touch with colleagues long after they have left. At sea, you live, eat, work and play together. You learn each other’s strengths and weaknesses, and you learn tolerance. Colleagues become lifelong friends. At sea, it is very simple: you need to rely on every member of the team to succeed.” The 95-year history of BP Shipping is part of the cultural history to which every employee can relate. “We are very proud of our unrivalled ethos of professionalism,” says Ridgway. It was instilled by those who worked for BP Shipping before us, and it is continued by those who work for her now as we continue to perform for the company.”

“Shipping is steeped in tradition, whether it is part of the language or the culture. We have a fantastic reputation for safety and professionalism that has been built up over many decades.” John Ridgway BP MAGAZINE Issue 2 2009 27

BP Shipping> A century at sea

Did you know? ■ The Anglo-Persian Oil Company’s first

tanker was the British Emperor, which launched in 1916 ■ In 1983, BP Shipping transported just

500,000 tonnes of oil from the Middle East, compared with 140 million tonnes less than a decade earlier ■ BP’s Trader-class liquified gas carriers

were the first to be ordered for general trading purposes rather than on a contract basis ■ BP’s first very large crude carrier was

the 215,000 tonne British Explorer, built in 1969.

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Vast vessel: the inside of the gas storage unit on the British Merchant, one third of BP’s Trader-class fleet. It is a double hulled LNG tanker.

BP MAGAZINE Issue 2 2009 29

BP Shipping> A century at sea

North Sea and was also exporting oil from Nigeria. It was soon to find oil in Alaska, further lessening its dependence on the Middle East. The 1960s were a time of prosperity and expansion, but the economic bubble burst in 1973 when the Organisation of the Petroleum Exporting Countries (OPEC) caused the price of crude oil to increase from $3 to $12 overnight. The high prices at the pumps led to a drop in consumer demand. BP’s maritime arm stopped building and began to shrink. A further oil crisis in 1979 pushed the price of crude from $13 to a high of $35 a barrel, which again caused new orders to be cancelled and condemned old ships to the breaker’s yard.

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In 1982, BP Shipping, as it was now known, was again drawn into the British military effort, this time the Falklands War in the South Atlantic. Eleven tankers were requisitioned from trade to provide fuel for warships to support the government effort. Throughout the 1980s and the first half of the 1990s, BP Shipping underwent a period of consolidation. At one stage, the company had just 22 BP ships. Yet, the Exxon Valdez incident of 1989, which heralded the building of ships with double hulls, had forced the company to grow more capability to actively manage marine risk. In 1999, following merger with Amoco and the subsequent acquisition of ARCO, BP decided to embark on an ambitious

strategy of expansion that has resulted in the growth of its operated fleet to its current size of 54 ships, out of a total of more than 300 required daily for BP business. BP Shipping can boast one of the most modern and sophisticated fleets in the world. Even Sir Charles Greenway would might have been impressed. ■

Historic fleet: built in 1922, the British Workman (top) was one of the first 60 ships to be constructed for the British Tanker Company. Middle, the British Courage launched in 1928. Bottom, the British Ruby is one quarter of the new Gem-class LNG fleet.

BP Faces Highlights from history

SIR ROBERT HORTON Chairman & chief executive 1990-1992 “I had been working on a major cultural change programme at BP for a couple of years before I became chairman, so I was able to announce it as ‘Project 1990’ immediately after I took office. The programme was all about reducing the complexity and extraordinary bureaucracy that had built up within the company, and it called for greater openness, accountability and responsibility, in much the same way as Tony Hayward’s current ‘forward agenda’ does today. It hinged on the assumption that information confers responsibility, not power. I knew at its launch that Project 1990 would be important, one way or another. Looking back, I think it is now generally acknowledged that it transformed BP quite a lot, and the company wouldn’t have been the same without it. All the other major oil companies went through the same process, but later than BP. But trying to convince the media that it wasn’t some cynical exercise to reduce staff numbers during a time of deep recession meant it took a lot longer to implement. It also left me tagged as ‘Horton the Hatchet’, which was something I would rather not have following me around. But there were so many happier things to compensate and the media do like their tags.” ■ Interview: Nick Reed Illustration> James Carey

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➔ brand

Advertising> Distinctive campaigns

Report> Tim Wickham Photography> BP Archive

THE ART OF ADVERTISING

Since the 1920s, BP has been creating iconic and memorable advertising. From posters to television campaigns, it is famous for its distinctive approach. As a result, BP adverts are instantly recognisable. “With most print advertising, for example, only around 15% of people can correctly identify the company if you remove its brand and logo. With BP, the recall rate is nearer 60%,” says director of brand Duncan Blake. “The public recognises the look and feel of our advertising.” Such influential advertising has always given BP a strong competitive advantage. The challenge is to stay ahead. Today, the message is that BP leads the way in securing dependable energy by investing in both conventional and alternative sources. Advertising today is a more complicated and competitive business than ever. “You have to be far more sophisticated and respond quickly to changing conditions, which makes it a real challenge,” says Blake. “BP’s brand communication is particularly effective and often cited as a good case study. It’s a tradition we intend to uphold.” Over the next few pages, BP Magazine highlights three great eras of BP advertising. 32 Issue 2 2009 BP MAGAZINE

Iconic imagery: adverts such as this one (bottom), designed by Clement Cowles in 1933, were used on lorries, often regarded as travelling art galleries. Wit and humour were used, as well as visual impact, to entertain the customer. Above, a poster promoting BP Super was produced by distinguished French poster artist Savignac. BP Super was to become the first product to be featured in simultaneous print and television campaigns.

Proud sponsor: BP sponsored many speed record and flight attempts, including those made by Captain George Eyston (above). Like other sponsors, BP took any opportunity to advertise the fact that drivers and pilots had used its products in their pursuit of glory. Below, Edward McKnight Kauffer created one of the first artistic adverts, using the recently opened Whipsnade Zoo as a theme.

1930s/1940s/1950s > Art of advertising This classic period of brand promotion saw BP inspire in the art of advertising. It was spearheaded from the 1930s by the newly formed Shell-Mex and BP (SMBP) – a joint marketing venture. Only wealthier people could afford cars, so advertising appeared mainly in the quality press. SMBP publicity manager Jack Beddington was a patron of the arts who encouraged young unknown artists, as well as famous names, to design adverts. The Whipsnade Zoo advert by commercial artist Edward McKnight Kauffer was one of the first to be commissioned. Adverts were humorous and witty, with strong visual impact. Links to racing wins and speed records achieved with BP products were promoted, including Malcolm Campbell, holder of many land and water world speed records, and racing legend Stirling Moss, who was the first BP ‘Superman’. The reintroduction of branded petrol in the 1950s triggered new advertising opportunities as garages began to sell single brands. Garages became brighter and more modern, with consistent advertising to strengthen the brand image. BP burst on to TV screens in 1957 with BP Super. BP MAGAZINE Issue 2 2009 33

Advertising> Distinctive campaigns

1980s/90s > On the move During the 1980s, the focus shifted from print to television. The 1980s began with BP at its best. One of the most memorable, in 1984, showed BP as a successful British company with diverse activities. By the end of the decade, BP launched the For all our tomorrows campaign, highlighting how it was working to solve tomorrow’s problems through technical expertise, social responsibility and environmental care. By 1992, it developed BP on the Move, with planes, trains and trucks bearing down on a service station. This period marked a renewed emphasis on marketing activities. Centralised global brand development ensured greater consistency and higher quality in its advertising. Just as earlier advertising called on the skills of great artists, this period saw BP enlist Hollywood’s creative geniuses. Ridley Scott (Alien, Blade Runner) directed For all our tomorrows and Industrial Light and Magic – George Lucas’s (Star Wars) company – created an advert showing oil pouring over Rodin’s sculpture, The Thinker. Meanwhile Elevator – in which a pizza delivery boy visits the different BP departments – was directed by Steven Spielberg, with music by John Williams. 34 Issue 2 2009 BP MAGAZINE

Hollywood glamour: by the 1990s, BP was using television advertising – and sometimes Hollywood directors – to promote its messages. Above, the BP on the move campaign showed the range of transportation using BP products. Left, Elevator was directed by Steven Spielberg and was designed to showcase the different types of business BP was in. Below, the For all our tomorrows campaign highlighted the company’s early efforts to diversify its energy mix.

2000- > The new BP The new century began with a new brand and ‘beyond petroleum’. It signalled BP’s arrival as a global energy company. The new brand was quickly established and it provided BP with a positive image that helped the company stand out from the competition Last year, it was once again time to refresh the advertising message. “Generally speaking, every four or five years we need to think about where to go next,” says Blake. “Like many things in business, you can’t stand still for too long; you have to move on, or your competitors will catch up. Having said that, the best brands evolve slowly over time.” The icons used in the current advertising represent oil, gas, wind, solar and biofuels. “They are proving very effective at getting across how we invest in a combination of hydrocarbons and low carbons to provide for a dependable energy future. They are all important,” says Blake. New media and changes to traditional media have transformed the way companies advertise. Online activity can account for nearly half BP’s advertising budget in some campaigns. “Online advertising enables us to be more targeted, to focus on niche websites and develop deeper relationships with consumers. You can link them to our website and measure how many people interact and click through.” ■

New look: a new brand required new advertising (above) to promote BP’s global scope and scale. Since then, its campaigns have increasingly focused on its ability to provide energy diversity to benefit the environment and provide security of supply (below). Specific product advertising is still used, such as the recent BP Ultimate campaign promoting ‘more performance, less pollution’.

BP MAGAZINE Issue 2 2009 35

Viewpoint> Mutual advantage

United Kingdom

Persia

Indonesia

Responsible operations BP’s license to operate is founded on the principle of mutual advantage – seeking to act in a manner that benefits both company and community. Over time, this concept has meant many things. In the early 20th century, it meant constructing houses, schools and clinics to ensure its refinery staff in both Persia and Wales had access to living quarters, education, social activities and healthcare – in Persia, Dr Morris Young developed a fully-fledged hospital to help improve the health of local communities. In 1968, it meant the creation of the UK Schools Link programme – still going strong today – and more recently the creation of the A+ for Energy programme in the US, both designed to encourage schoolchildren to study science. More recently, BP has sought to build local content and participation in its operations, by developing skills and businesses relevant to the energy industry, through initiatives such as the Azerbaijan Enterprise Centre. In countries such as Angola and Trinidad & Tobago, it means providing local technical training, to develop national skills. Responsibility also means working harmoniously and positively with communities nearest to its operations. In Indonesia that meant the successful relocation of a village – complete with housing and healthcare programmes – in order to develop the country’s gas reserves, while in Alaska, it means working with indigenous communities and supporting efforts such as the Alaska Native Heritage Center. In wider development-related issues, BP supports several initiatives designed to promote the effectiveness of economic development in countries rich in natural resources. It has also embedded its commitment to respect human rights through various policies and practices, as well as in several significant investment agreements. REPORT: LISA DAVISON / PHOTOGRAPHY: BP ARCHIVE / BP IMAGESHOP

36 Issue 2 2009 BP MAGAZINE

Azerbaijan

US

Trinidad & Tobago

United Kingdom

Alaska

Angola Fully prepared: safety training at the ESSA facility in Angola is compulsory for all BP staff. Part of that training includes advanced fire-fighting techniques.

BP MAGAZINE Issue 2 2009 37

➔ ex ploration + production

Extreme frontiers> Alaska

NORTHERN EXPOSURE

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Report> Frank Baker Photography> Marc Morrison / BP Archive

BP’s relationship with Alaska stretches back 50 years to a time when the company had lost its dominance in the Middle East and was desperate to find the next big thing. The searing heat of Persia was swapped for the arctic wilds of Alaska’s North Slope and the discovery of North America’s largest oil field.

Barren landscape: geologists probe the foothills of Alaska’s Brooks Mountain Range (above). Middle, the Trans-Alaska Pipeline snakes south from the North Slope. Below, the BP-operated Northstar field in the Beaufort Sea.

BP MAGAZINE Issue 2 2009 39

Extreme frontiers> Alaska

Alaskan explorer: geologist Roger Herrera (above left), on a BP field survey in 1960 and in 2009 (opposite).

Silence. That was the first thing Roger Herrera noticed after a small helicopter had set down himself and four other BP geologists in the foothills of Alaska’s Brooks Mountain Range, hundreds of kilometres north of the Arctic Circle, and far removed from civilization. It was the summer of 1960, and Herrera was a member of BP’s first geological field survey team in Alaska, which only a year earlier had become America’s 49th state. The company’s exploration manager, Peter Cox, had flown over the northern reaches in 1959 and recognised large surface formations, such as anticlines, similar to those of Iran’s Zagros Mountains. At Cox’s recommendation, BP sent geologists to explore this remote region. In 1959, BP opened its first office in downtown Anchorage to support this ambitious effort. “My geology professor at Oxford University was good friends with BP’s chief geologist, Norman Falcon,” recalls Herrera. “Falcon asked my professor if he would recommend a student to go on the survey, and I was the lucky one.” Born and raised in the UK, Herrera had been fully steeped in the epic lore of the country’s renowned explorers, including 40 Issue 2 2009 BP MAGAZINE

Captain James Cook and Ernest Shackleton – who had journeyed to the far ends of the earth. Yet, aged 24, Herrera had only travelled to tropical climes. The silence didn’t last. It was soon interrupted by the high-pitched drone of mosquitoes. Clouds of them. Through the rest of the summer, only a gust of wind or a persistent breeze kept the insects at bay as the team set out each morning to gather rock samples and collect other geological data. “We were as prepared as anyone can be, with head nets, repellent and netting in our tents,” says Herrera. “But it definitely took some getting used to.” Bears were also a concern, but Herrera says they had very few problems, as long as they were careful about food storage and disposal. They never carried high-powered rifles for protection. “By the end of the day, they were too heavy, bearing in mind we always had a rucksack full of rock

samples,” he recalls. Sometimes, food itself became a problem if the airplane couldn’t get to their camp for resupply. “Fog and other bad weather sometimes kept the supply plane away for a week or longer,” says Herrera. “When we ran out of food, we’d eat fish caught in the streams and lakes. On reflection, it seems like we spent quite a bit of time looking at the sky, listening for airplanes or helicopters.” First maps Herrera says that by using aerial photographs and information gathered from the ground, the team began drafting the area’s first maps. But geological evidence soon prompted BP’s explorers to look farther north, towards the Arctic’s coastal plain. After drilling a series of unsuccessful wells in the foothills region and the Colville River Delta, to the west of Prudhoe Bay, BP shifted its attention to the east and began seismic reflection surveying around the present-day Prudhoe Bay. Through these surveys, BP gained sufficient confidence to bid in three state lease sales in the 1960s – and gained a strong acreage position in the area now known as Prudhoe Bay. Atlantic Richfield (ARCO), one of BP’s heritage companies, was also actively exploring the area. In March 1968, ARCO

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Colville Pipeline

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“Fog and other bad weather sometimes kept the supply plane away for a week or longer. When we ran out of food, we’d eat fish caught in the streams and lakes.” Roger Herrera announced a major strike at Prudhoe Bay. BP continued drilling, and on 13th March, 1969 made announcements that it too had discovered oil – confirming ARCO’s discovery. While ARCO captured newspaper headlines, and reaped the glory of Prudhoe’s discovery, BP would later prove that its acreage held more than half the field’s recoverable oil – then estimated at around 9.6 billion barrels, along with around 26 trillion cubic feet of natural gas. The three-year construction of the $8 billion, 1,300km (800-mile) TransAlaska Pipeline (TAPS) from Prudhoe Bay to Valdez, on Alaska’s southern coast, is still considered one of the greatest engineering and construction feats. Requiring around 30,000 workers from 1974-77, the 120cm (48-inch) diameter pipeline crosses three mountain ranges, 600 streams and rivers and the Denali fault – an area known to be seismically active. Designed and built to transport up to 2 million barrels of oil per day to tanker ships at the Valdez terminal, the pipeline received its first oil on the morning of 20th June 1977. BP’s Lowry Brott, then a member of the commissioning team at the first facility to send Prudhoe Bay oil to the pipeline, says he remembers intense months leading up to

first oil. “We had 24 oil wells. Some of these were Saudi-sized monsters capable of producing more than 25,000 barrels per day, with enormous pressures. We had to be careful how we opened the chokes, or valves, on those big producers. All the controls, feeder pipelines and related equipment had to be tested and retested. There was definitely a learning curve as those first barrels of oil flowed into the pipeline.” Before joining BP in 1977, Brott worked at Texas National Chemical Co and, like

Historic moment: journalists, dignitaries and others huddle around the Alaska pipeline during the 1977 startup.

several others on the team, had a strong background in process engineering. “Collectively, we had the right mix of people to troubleshoot and get the bugs out of the new equipment and systems,” says Brott, now an operations support manager at the BP-operated Northstar field. Plateau rate Within months, oil production ramped up to 250,000 barrels per day, and by the following year, with the second gathering centre operational, oil production reached 1 million barrels per day. The 1.5 million barrel plateau rate was achieved in 1981 and sustained until 1989, when the field began its gradual, but predicted, decline. Jim Barrett, currently North Slope safety team leader, arrived on the Slope in 1974 to help get a critical facility – the central power station (CPS) – up and running. In a few years, it would become one of the largest power stations in Alaska, capable of providing power for a city of around 80,000. To this day, it is the sole source of electric power for Prudhoe Bay production operations, and plans call for its expansion. “When we flew into Prudhoe Bay for the very first time in 74, there were very few lights,” he recalls. “Our camp was a small trailer unit, and electrical power came from » BP MAGAZINE Issue 2 2009 41

Extreme frontiers> Alaska a small diesel generator. It was a bootstrap operation to get the CPS operational to provide that first power to the field.” TAPS – designed and built by Alyeska Pipeline Service Co, a consortium of oil industry majors, including BP – grabbed most of the headlines in the 1970s and 1980s. But development of Prudhoe Bay oil field facilities and continued expansion of the field’s infrastructure, such as the power station, gathering centres and flow stations, and drilling of hundreds of oil wells, was a significant undertaking, requiring an investment of more than $30 billion by BP and its partners. Development of other oil fields over succeeding years – some 24 in all – required billions more in investment. Today, BP operates 13 of those fields. Through the advancement of drilling technology, enhanced recovery techniques and improved reservoir management, Prudhoe and some of the other larger North Slope oil fields have yielded many more barrels than experts predicted. Prudhoe alone, in which BP has a 26% interest, has produced more than 11 billion barrels, and it is widely believed 2 billion more barrels are recoverable. This is roughly 60%

Did you know? ■ It took 38 days for the first supply of

oil from Prudhoe Bay to travel through the 1,300km (800-mile) Trans-Alaska Pipeline to the terminal at Valdez. The first oil left Prudhoe Bay on 20th June 1977 ■ At the time of its construction in the

1970s, the Trans-Alaska Pipeline was the most expensive private construction project in American history.

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recovery of the oil in place – which experts say is unheard of for super-giant oil fields throughout the world. The success of BP and its partners in optimising North Slope oil production over the past three decades spurred an economic bonanza in Alaska that has also benefited the nation, providing a significant portion of the country’s domestic oil production for more than 25 years. Royalties and taxes University of Alaska, Anchorage economist Scott Goldsmith calculates that since North Slope oil production began in 1977, around $77 billion has been paid by petroleum producers to the state treasury in oil royalties and taxes. Around $64 billion has been paid by the industry over the same period into the private economy through payrolls and purchase of goods and services. Oil revenues also help build Alaska’s savings account – its Permanent Fund – which until the recent US economic downturn, had peaked at more than $40 billion. Once a year, all Alaska residents take a share of the fund in the form of a substantial dividend cheque. Over the past half century, Alaska has grown as a state and the lives of its citizens have improved dramatically, from the most northern community

of Barrow to other population centres across the state. “It is clear to me now that Alaska may well not have survived as a state had not oil been found and produced,” notes Willie Hensley, a native Alaska leader, former member of the Alaska Legislature and recently published author. “Oil revenues have enabled Alaskans to have a lifestyle comparable to many states in the lower 48 states, if not better.” Former Alaska governor Bill Sheffield adds: “From healthcare to education to social issues, oil benefits every resident of this state. Oil provides around 85% of the state operating budget, and this money affects the entire state and its people.”

Project engineer Anna Horstkoetter is part of a team that is embarking on a multi-billion dollar project to renew and update Prudhoe Bay infrastructure. Like many BP newcomers, she is optimistic about the company’s future in Alaska. “People talk a lot about the past, but with the company’s plans moving forward to develop light and heavy oil, and commercialise the Slope’s natural gas, I can see a promising 50-year future.” BP Alaska’s new president, John Mingé, is also bullish about the company’s long-term position in the state, and its plans for the future. “We have built a strong and diverse workforce and are making the large investments necessary to create a sustainable, long-term future,” he says. Workforce growth Over the past two years, the company’s workforce has grown by more than 40%, to almost 2,000 employees, and its contractor workforce has risen to more than 6,000 jobs. The last time the Slope’s workforce reached this level was in the 1970s and early 1980s when the Prudhoe Bay field was in development. “BP Alaska has invested around $30 billion over the past decade to manage the light oil decline,” says Mingé. Most agree that with 20 billion barrels of heavy oil in place and trillions of cubic

Logistics support: when it is not cold enough for ice roads, hovercraft are used to transport workers and material at Northstar Island.

feet of natural gas waiting to be developed, the next 50 years could be as rewarding as the previous 50. Mingé adds that BP Alaska’s Liberty project, currently underway, will push the limits of extended reach drilling technology to tap an offshore field that contains an estimated 100 million barrels of recoverable oil. Production is expected to begin in 2011. Liberty will require a special drilling rig that is currently being constructed in the lower 48. It will be the largest land rig ever used on the North Slope. Roger Herrera retired from the company in 1993. For the better part of his career with BP and afterwards, he has worked relentlessly as an industry lobbyist,

championing drilling in the Arctic National Wildlife Refuge (ANWR) in northeastern Alaska, which geologists believe contains billions of barrels of oil. “There were more than 20 votes taken in US Congress over 25 years, and only two of those votes failed,” he says. “But, inevitably, legislation got blocked at the President’s desk or in the Senate,” he says. Herrera says that after the Prince William Sound oil spill in 1989, industry never gained enough momentum to convince Congress that ANWR could be developed in an environmentally responsible manner, as was clearly demonstrated over the years at Prudhoe Bay and other North Slope oil fields. “However daunting the task, you never give up,” Herrera says with a sage smile. “That was part of my training as a young geology student back at Oxford.” On a popular hiking trail near Alaska’s largest city, Anchorage, Herrera, now 73, looks up at the wind-scoured mountain peaks, studying their relatively young geologic features. There’s a distant look in his eyes reminiscent of his early days as a field geologist for BP, half a century ago, when he spent a lot of time peering at the horizon, listening to the silence, or perhaps, the sound of an airplane or a helicopter. ■

“All the controls, feeder pipelines and related equipment had to be tested and retested. There was definitely a learning curve as those first barrels of oil flowed into the pipeline.” Lowry Brott

BP veteran: Lowry Brott was on the North Slope when first oil production began in 1977. He is currently Northstar operations support manager.

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➔ evolving te c h n olo g y

Report> Nina Morgan Illustration> Matt Herring

FROM

SCIENCE FICTION TO SCIENCE FACT From satellites to seismic, many of the familiar technologies used in the energy industry today were once just a gleam in a science fiction writer’s eye. Nina Morgan talks to BP’s science and technology gurus to explore the company’s technology past and to peer into the future.

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Spotlight> Technology evolution

A

group of geologists gather in one of BP’s interactive environments to explore for hydrocarbons. By moving a computer mouse, they are able to manipulate three-dimensional seismic data to allow them to take a detailed look inside a potentially interesting structure located many kilometres below the surface in a previously unexplored area. After examining the structure closely from all angles and considering all the evidence, they recommend drilling. Some months later, their predictions are verified when the well encounters oil. Then, a long and detailed process of appraisal and development of the find begins. But it wasn’t always like this. In the early 20th century, a career in oil exploration was a very tough option. “I was lucky that my colleagues in the Anglo-Persian Oil Company [APOC] found exploration as exciting as I did,” recalled Dr John Vernon Harrison in 1961, in his acceptance speech on receipt of the prestigious Lyell Medal

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from the Geological Society of London. Harrison, who joined the APOC – the forerunner of BP – as a geologist in 1918, carried out exploration work for the company in Honduras, Mexico, British North Borneo, Peru, Jamaica, Venezuela, Trinidad and Colombia, as well as in Persia (now Iran), before resigning in 1938 to become a lecturer in geology at Oxford University, UK. Harrison’s description of his exploration days as ‘exciting’ was something of an understatement. In his day, exploration fieldwork was carried out on foot and horseback, and geologists camped out under the stars while mapping vast swathes of unexplored territory in their search for promising oil seeps, anticlines (dome-shaped structures) and other promising leads. In the same speech, Harrison recalls ‘strolling’ about the Zagros Mountains in Iran with a colleague for almost eight years while “we mapped upon the clean paper on our plane-tables the topography and geology of some 155,000

“BP has a track record of applying technology in developments on a significant scale in very difficult places.” David Eyton

square kilometres (60,000 square miles) of southwest Iran as we saw it on the ground.” He and his colleagues regarded office and laboratory work as soft options; and the number of mules who died in Harrison’s service became a byword among the APOC staff. Yesterday, today and tomorrow In Harrison’s day, onshore surface geological mapping was still the only way to extrapolate – or ‘see’ – the geology and identify potential hydrocarbon-bearing structures below the ground. Before the widespread adoption of rotary drilling techniques, it was only possible to drill wells to test prospects located at relatively shallow depths. These days, offshore exploration is common. The oil industry routinely drills to great depths – wells that penetrate over 9,100 metres (30,000 feet) are not unusual – and takes advantage of sophisticated

technologies that the early explorers would have found difficult to imagine. “By and large, the development of new exploration, drilling and production technologies over the past century and a half have enabled people to understand the provenance of oil and gas in the world – how it’s made and how it’s trapped – and to begin to push into new frontiers in a number of ways,” explains David Eyton, BP’s head of research and technology. The big breakthroughs, Eyton notes, range from the development of seismic technology, which makes it possible for geologists to ‘see’ underground more accurately than ever before; to rotary drilling, that allows faster and more targeted drilling to greater and greater depths. These developments, in turn, have made it possible for the industry to move into new and challenging frontiers, both offshore and in harsh terrains, and to exploit the more difficult-to-produce

hydrocarbons, such as heavy, viscous oils, or very tight gas, which is contained in reservoirs where the permeability is extremely low. “BP has a track record of applying technology in developments on a significant scale in very difficult places,” says Eyton. “It doesn’t matter whether it’s Azerbaijan or Alaska, the deepwater Gulf of Mexico or the middle of the rainforest in Colombia, we consistently undertake developments at the frontier.” And, he adds, “I would not underestimate the extent to which technology is going to march forward and continue to change our industry.” Predicting what these future developments will be is far from simple. “If you think of the accelerating pace of technology today, I think it now makes it even more difficult to project 100 years into the future than it would have been when APOC was founded in 1909,” says Steve Koonin, BP’s chief scientist. But, nevertheless both Eyton and Koonin are » able to spot a few trends.

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Spotlight> Technology evolution

“We are starting to understand the elements that make up life, how those elements fit together into functioning systems and how they change.” Steve Koonin

The most predictable developments, notes Koonin, are evolutionary ones – advances that build on existing technologies (see right: evolutionary developments that could change the world). These include improvements in seismic, electro-magnetic and gravity measurements, and satellite imaging techniques to enhance exploration and development; as well as the development of smaller and more sensitive sensing devices to see inside wells, and improved chemical and physical technologies to assist in development and to improve oil recovery. New technologies to make it possible to exploit unconventional resources such as tar sands and heavy oil more efficiently and in an environmentally friendly way, along with methods to economically make use of extensive reserves of methane hydrate, or methane ice – a solid form of water that contains a large amount of methane within its crystal – also look to be on the cards. Further

Thinking small Just imagine this, says David Eyton. Thanks to developments in nanotechnology, in a 100 years we could look forward to: ■ Nano-sensors, to obtain information where current technology cannot penetrate, such as deep in oil and gas reservoirs. ■ Nano-sorting machines, which could make it possible to feed in a mixture of gases and separate out the CO2 for subsequent sequestration and long-term storage. ■ Nano-structures, for converting energy from one form to another, for example to turn sunlight into electricity more cost-effectively than today’s silicon-wafer-based photovoltaic cells. ■ Nano-materials, capable of storing and releasing energy more efficiently than existing batteries. 48 Issue 2 2009 BP MAGAZINE

developments in environmental technologies, such as carbon capture and storage, are already taking place. But, Koonin and Eyton argue, the real revolutionary developments – the sorts of things that now excite the imaginations of science fiction writers – are more likely to emerge from unexpected areas. Some of the most important, says Eyton, may well spring from nanotechnology, or molecularscale engineering. “You can imagine that nanotechnology could enable you to create nano-bots – tiny devices that can go off and do whatever you want them to do in environments that humans cannot reach,” he muses. “The ability to design structures and materials that function at the nanoscale could have a vast range of applications in the energy industry (see left: thinking small). There are areas of nanotechnology that could literally change the energy landscape.” Life changing Even more speculative and exciting, say Eyton and Koonin, will be the application of biosciences – biology and the life sciences – to the energy industry. “We are starting to understand the elements that make up life, how those elements fit together into functioning systems and how they change,” says Koonin. A key link between biology and the energy industry, he points out, is carbon. “Living things are mostly composed of carbon,” he explains, “so you might expect that there will be powerful synergies between our ability to understand and manipulate life, and our ability to manage carbon, either by producing it in the form of hydrocarbons, or controlling its release, in the form of carbon dioxide (CO2), into the environment.” Eyton agrees. “The sophistication of biological processes, such as photosynthesis, which have evolved naturally, is way in advance of the physical and chemical processes we currently use in our industry.” For a start, he points out, no one has yet managed to create a method for converting sunlight into hydrocarbons as »

Evolutionary developments that could change the world Finding more energy and protecting the environment will be the key drivers for technology developments in the next 100 years, predicts Steve Koonin. The game-changing energy technologies we can look forward to include: ■ Battery-powered electric vehicles.

These are already under development by some companies ■ Low-cost and efficient photovoltaics. BP and other manufacturers are now working together to bring down costs and improve efficiency to make solar cells available for more widespread use ■ Small nuclear fission reactors that operate on scales of a 10th of a gigawatt. BP is not involved in this area ■ Carbon capture and storage. This is an area where BP is heavily involved. “You could argue whether this is evolutionary or revolutionary,” says Koonin. “But the ability to really practise carbon capture and storage on a large scale would really change the game.” ■ Finding biological or chemical means to suck CO2 out of the atmosphere. “A wild idea,” admits Koonin, and not one that BP is working on. But, he adds, “you never know!” ■ Nuclear fusion. “If we could develop working fusion reactors a 10th of the scale of reactors such as the International Thermonuclear Experimental Reactor, this,” says Koonin, “would change the game.” ■ Superconducting electricity transmission lines. An area where BP is not involved, but one, notes Koonin, that could really change the energy scene by making it possible to move huge amounts of electricity around over vast areas.

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Spotlight> Technology evolution

“One hundred years from now, I would imagine that we will have a remarkably sophisticated understanding of the application of biological, chemical and physical processes.” David Eyton efficiently as plants have. Thanks to advances in biology, it’s now possible to map the genome of a living form to gain a better understanding of how it works naturally. This knowledge, could, he predicts be adapted for different purposes. For the energy industry, the possibilities are many and exciting. Today’s biofuels – liquid hydrocarbon fuels that contain energy captured recently from the sun by plants – are just the start. “But imagine a plant designed to capture sunlight and engineered to make whatever you want – be it plastics or fuels,” says Eyton. Microbes, too, he predicts, have capabilities that may prove very useful. Microbes that move around in the subsurface could, perhaps, be induced to create chemicals or changes in the environment to make oil flow more easily, and thus enhance oil recovery. Or it may prove possible to draw on the skills of bacteria that are capable of converting coal or heavy oil underground into hydrocarbons that can flow. Since plants

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and microbes are both capable of taking CO2 out of the atmosphere, they could, in theory, prove to be powerful environmental allies when it comes to tackling the CO2 problem. These possibilities, and more, are currently being explored by scientists working in the BPfunded Energy Biosciences Institute (see right: Energy Biosciences Institute). “One hundred years from now, I would imagine that we will have a remarkably sophisticated understanding of the application of biological, chemical and physical processes,” says Eyton. “And by then, I hope we will be able to use this understanding to supply effective, reliable, secure energy and energy products that are non-damaging to the environment.” Koonin agrees. “Whatever the future holds, thanks to our growing understanding of biological and physical processes, we can certainly look forward to great opportunities for optimism and improvement.” ■

Energy Biosciences Institute The Energy Biosciences Institute, a partnership between BP, the University of California, Berkeley, the Lawrence Berkeley National Laboratory, and the University of Illinois, was established in November 2007. The Institute, which is solely funded by BP, carries out research in all areas of biology related to energy. This ranges from genetics, to the agronomy of feedstocks, the conversion of ligno-cellulose material into sugars, and the conversion of sugars into fuel molecules. “Our mission,” says Institute director Dr Chris Somerville, “is to harness the potential of bioenergy, to make discoveries and commercialise realities out of these, which could benefit the world.” For more information, visit: www.energybiosciencesinstitute.org

BP Faces Photography> Marc Morrison

“We knew that polyester was a key synthetic fibre but we didn’t have a clue that demand for it would grow at the rate it did.”

LIFE CHANGING Del Meyer / PTA chemist Many would agree that the 1960s were incredible: man landing on the moon, the hippie movement and the discovery that made polyester an enduring part of our lives. You can thank Delbert Meyer, retired Amoco chemist, for the bottle of water at your side. It’s made from a raw material derived from crude oil processing: purified terephthalic acid (PTA). So is most, if not all products, using any form of polyester. In 1963, Meyer discovered the process that changed our lives. “We knew that polyester was a key synthetic fibre, but we didn’t have a clue that demand for it would grow at the rate it did,” he says. “Our customers were anxious to move into this fast-growing market and really put the heat on Amoco to produce a lot of PTA.” They did, and today BP is a leader in PTA production, with a global market share of 21% on an equity basis. So look for the PET mark (PTA is in most PET) on your bottle of water and give a nod to this innovative scientist. ■ BP MAGAZINE Issue 2 2009 51

Special feature> 100-year timeline

1909

A century of adventure 52 Issue 2 2009 BP MAGAZINE

1866

1870

1874

1898

1899

1901

The Atlantic Petroleum Company, the ‘A’ in ARCO, is formed in Philadelphia to store and ship oil products.

Atlantic begins refining oil.

Atlantic joins Rockefeller’s Standard Oil Trust.

Thirteen German mining companies form an association to find uses for benzene – a waste product from the coal coking process. Most people called the association BV – short for BenzolVerband.

Charles ‘Cheers’ Wakefield founds CC Wakefield and Company, supplying lubricating oils to the railways in Britain.

English businessman William Knox D’Arcy gets exclusive rights to search for oil in southwest Persia. His entire fortune will go into the hunt.

Standard Oil of Ohio – later Sohio – is incorporated, kickstarting John D Rockefeller’s oil empire.

1889 Rockefeller forms Standard Oil of Indiana, which will later become Amoco.

1907 A medical doctor, Morris Young, joins Reynold’s exploration team in Persia. He will go on to develop a network of clinics and become a legend in the region.

1970

1965 BP discovers the West Sole field. It is the UK’s first gas discovery, and is the beginning of the North Sea as a hydrocarbons province.

To almost everyone’s surprise, BP discovers oil under the North Sea. “There won’t be oil there,” Sir Eric Drake, BP’s chairman, tells Reuters in April. Six months later, crews find the Forties field, which will eventually produce 400,000 barrels of crude oil a day. Five years later, Queen Elizabeth II will symbolically start the flow of oil from Forties.

1965

1966

1967

1968

1969

1970

BP opens the UK’s first self-service station.

Atlantic Refining merges with Richfield Oil to form Atlantic Richfield. The company adopts a bold new symbol, the ARCO spark.

BP unveils the world’s first allplastic service station in England.

ARCO and its partner Exxon, discover the largest oilfield ever found on US soil, in northern Alaska, prompting rival BP to get back to its own search nearby.

BP discovers oil under Alaska’s North Slope. The company has no infrastructure in the US, so one year later, takes a 25% stake in Sohio in order to refine and market its Alaskan crude. In 1971, BP becomes the majority Sohio shareholder.

Like most oil companies, BP responds to industry uncertainty during the 1970s by diversifying its business and BP Proteins is launched. Over the next decade, BP develops interests in coal, gold, telecommunications and computing. Many will be sold off by the early 1990s.

Castrol Ltd is acquired by the Burmah Oil Company.

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Castrol GTX is launched. It will become the most famous motor oil ever made.

1903

1908

Sohio oil lubricates the four-cylinder engine that keeps the Wright Brothers’ plane aloft during their first flight.

Knox D’Arcy’s explorer, George Reynolds, and his team strike oil. “If this is true, all our troubles are over,” Knox D’Arcy beams when he hears the news.

1905 Richfield Oil, the ‘R’ in ARCO, is founded on the US west coast. It quickly grows to be one of the region’s leading gasoline marketers.

1909 THE ANGLO-PERSIAN OIL COMPANY – LATER BP – IS FORMED.

CC Wakefield develops lubricants for cars and airplanes. Wakefield researchers make a signature discovery. A measure of castor oil – a vegetable oil made from castor beans – makes a motor oil of superior consistency. They call it Castrol.

1911

1914

The US Supreme Court dismantles the Standard Oil Trust. The flow of oil into Atlantic’s refineries abruptly stops. In near desperation, Atlantic’s president is said to have urged his employees to ‘go find the company some crude.’

The British government becomes a major shareholder in Anglo-Persian, following a speech by First Lord of the Admiralty Winston Churchill urging Britain to secure a dedicated oil supply to protect its global interests.

1914 Castrol begins its sponsorship of the world land speed record, sponsoring big name drivers, such as Major Henry Seagrave, Captain George Eyston and Sir Malcolm Campbell. Between 1922 and 1939, the world land speed record is broken 23 times, 18 of them with Castrol in the engine. BP sponsors similar record attempts.

1978 Smurf mania hits Britain. BP has been giving away Smurf figurines in its European stations since the 1960s, and their arrival in Britain has families queuing at the pumps.

1970

1971

1974

1979

1981

1983

Amoco launches the first unleaded regular gasoline to be marketed across the whole of the US, four years before a new federal law requires it. Amoco spends more than $100 million modifying its refineries and service station equipment to process the fuel.

Colonel Ghaddafi nationalises BP’s interests in Libya. By the end of the decade, almost all Middle Eastern oil will be nationalised.

Stimulated by oil supply vulnerability, an active programme of research is underway at several BP research sites to investigate single-cell photosynthetic plant cultures as biomass sources for protein and fuel. The same year, BP Coal is formed.

Iran’s oil industry is fully nationalised, effectively ending BP’s association with the country.

BP Photovoltaics is incorporated as a wholly owned subsidiary of BP International Ltd. By 1997, BP Solar will be one of the top five solar manufacturers.

South Atlantic battle honours are awarded to some of the BP ships chartered by the Ministry of Defence during the Falklands War.

1917

1924

1925

1926

1930

1935

Anglo-Persian buys British Petroleum – the subsidiary of a German company confiscated early in the First World War.

Gasoline was in short supply in Germany during the First World War, so BV chemist Walter Oswald spends the next decade combining benzene and gasoline to create a new fuel. He names it Aral, taking the ‘Ar’ from aromatic (benzene’s chemical grouping) and the ‘al’ from aliphatic (gasoline’s group).

Standard Oil of Indiana purchases an interest in the American Oil Company, which markets under the Amoco trademark in the eastern US.

Anglo-Persian launches the BP Aviation Service, supplying fuel to the fledgling airline business.

Standard Oil finds a large discovery in east Texas. Four years later, a second field near Houston is found.

Persia changes its name to Iran and Anglo-Persian does the same.

1915 The British Tanker Company Limited is formed to carry products for Anglo-Persian. A year later, it takes delivery of the British Emperor, the first oil tanker built to the company’s specifications.

1987

1998

The British government sells its shares in BP. Despite the fanfare, it is terrible timing as stock markets crash on Black Monday. BP acquires full ownership of Sohio.

BP and Amoco merge. At the time, it is the largest-ever industrial merger.

1985

1988

1991

1994

1997

2000

Standard Oil of Indiana is renamed Amoco, after its major brand.

ARCO introduces America’s first environmentallyengineered gasoline, EC-1 Regular. Within three years, ARCO’s cleaner fuels are credited with removing 100 million pounds of pollutants from the southern California air.

BP Nutrition is one of the company’s four main businesses, and is the largest supplier of animal feed in the world, leading animal breeder and major feed supplier for the fish farming industry. Three years later, the whole division will have been sold off.

The ‘contract of the century’ is signed between the Azerbaijani government and an oil consortium, headed by BP, to develop Azerbaijan’s offshore hydrocarbon resources.

During a speech at Stanford University, BP group chief executive Lord Browne accepts the link between human activity and climate change. It is considered by many to be the first public acknowledgment of this connection.

ARCO and BurmahCastrol become part of the BP group. BP decides it is time for a new look. After 70 years, the BP shield is retired and in its place a sunburst of green, yellow and white is born.

Veba Oel acquires Aral. Two years later, BP will buy Veba Oel.

1951

1954

1955

1960

1962

1963

Iran nationalises its oil. Anglo-Iranian workers evacuate and Abadan refinery closes.

Production resumes at Abadan but on different terms. Now, just one of several companies in Iran, Anglo-Iranian becomes British Petroleum.

Operations begin at Kwinana refinery in Australia. It will become the country’s largest refinery with a capacity of 137,000 barrels of crude oil per day and supply most of western Australia’s fuel needs.

The Castrol brand is so well known that CC Wakefield & Co changes its name to Castrol Ltd.

BV renames itself Aral AG.

Amoco scientist Del Meyer invents purified terephthalic acid – the base chemical for polyester.

1939 Second World War. Gasoline is a rationed commodity, all brands are suspended and oil is ‘pooled’. Anglo-Persian boosts oil production at an onshore field in Nottingham, England, which is eventually described as one of the war’s best-kept secrets. Some 44 company tankers are sunk during the war.

2008 BP announces it will be the oil and gas partner at the London 2012 Olympic Games.

2001

2003

2005

2006

2007

2008

BP becomes a sponsor and technical partner of the Ford World Rally Championship team. Using BP fuel and Castrol lubricants, the team will win 27 races, rack up 1,024 points and clinch two constructors’ titles over the next eight years.

BP becomes a major player in the Russian oil industry through the joint venture, TNK-BP.

Alternative Energy is launched, bringing BP’s renewable energy businesses together.

The Baku-TbilisiCeyhan pipeline begins transporting Caspian oil to world markets. It is one of the longest pipelines in the world.

BP signs two exploration and production-sharing agreements: one with the Libyan Investment Authority and Libya’s National Oil Company; and a second with the Government of Oman. The agreements mark a resurgence in BP’s connections with the Middle East.

Oil and gas production begins at Thunder Horse, in the deepwater Gulf of Mexico. With a topside area equivalent to three football fields, it is the world’s largest floating platform. Its reservoir lies five kilometres (three miles) beneath mud, rock and salt, topped by 1.6km (one mile) of ocean.

Kwinana refinery, Australia, launches Opal, a low aromatic fuel designed to help reduce petrol sniffing – a serious issue for many remote indigenous communities.

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2009

The founders of the Anglo-Persian Oil Company – the forerunner to BP – lived in a world without plastics, central heating and mass transportation. A century later, they’d be hard pressed to recognise the world around them, including the company they created. One thing that wouldn’t surprise them, though, is the impact oil has had. And while BP may have changed beyond recognition, its dedication to pushing the frontiers of discovery to bring energy to market has not. BP MAGAZINE Issue 2 2009 55

➔ ex ploration + production

Elder statesman: BP’s Magnus oil field celebrated its 25th anniversary in 2008. Thanks to enhanced oil recovery techniques, its life has been extended by 15 years.

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Significant discoveries> North Sea

Report> Helen Campbell Photography> BP Archive

BACKYARD DISCOVERIES Viewed through a sparkling new window across a car park, BP’s former Aberdeen office is soon to be demolished, just like the belief of some commentators in the 1990s that the North Sea was finished. Reflected in its new building is BP’s new North Sea vision and plan for a solid future, one that sees oil and gas production sustained for the next decade and beyond.

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Significant discoveries> North Sea

The North Sea story began in 1965 with BP’s West Sole gas find. Industry expectations for oil were low, until the 1969 Ekofisk discovery off Stavanger, Norway, saw a surge of interest in the UK, leading BP to discover the Forties field off Scotland’s east coast in 1970. Onstream five years later, to a national sigh of relief that the UK was not going to be reliant on Middle East oil, Forties at its peak met a fifth of UK oil demand, and was the backbone of North Sea production for many years.

Field profile: Norway BP, through Amoco, has had a presence in the Norwegian North Sea since 1965 and currently operates four fields – Valhall, Ula, Hod and Tambar. Discovered in 1969 and onstream in 1982, Valhall (below) is the eldest of the four fields. It produces 50-60,000 barrels of oil per day and is likely to continue producing until 2050. A helicopter trip to Valhall is longer than to any other field in the Norwegian sector.

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But as it and other fields matured, and new and exotic frontiers enticed operators, including BP, industry doomsayers all but signed the North Sea’s death warrant, repeatedly predicting the majors’ departure. But BP is in the North Sea to stay. With a new confidence about how to achieve it, BP has a clear vision to become the best operator in the region. “We want people to know that we are not leaving, and we intend to be here when the last drop of oil is recovered from the North Sea,” says Bernard Looney, the new head of BP’s North Sea business. “We are investing more today than we were five years ago, and undertaking a broader range of activities, everything from licence acquisition and exploration – the latter not something necessarily associated with the

North Sea today – to development and production, and decommissioning. “Our vision is very simple. We are going to be the best oil and gas company in the North Sea, and we have every intention of being here for the long run. There is commitment to the North Sea all the way up through BP Group leadership. We have fantastic people here; people who remain as excited about what they’re doing today as they did in the beginning.” Sustainable output BP’s North Sea oil and gas production – UK and Norway – is expected to be about 320,000 barrels of oil equivalent per day (boepd) in 2009, from 350,000 boepd in 2008 and 600,000 boepd five years ago. The company is confident of sustaining output

THEN + NOW MORTY DENHOLM> Head of wells “Joining the sector in 1977 aged 22, after a month in the nuclear industry, was a leap of faith. Advice back then was that oil and gas was risky, a flash in the pan. Obviously with hindsight, making the move was a good decision. In the early days, contact with the beach [onshore] was via ship-to-shore radio, there was no email. You booked a call at a certain time, went to the radio room and waited in a queue for all the different rigs calling in, and you heard everyone’s conversations. Now rigs have satellite and fibre optic links and people can use the phone and email freely. Accommodation was in six-man rooms, unless you were the boss, and we had communal showers. Now, it’s virtually all two-man rooms, and with day and night shifts, you almost have a room to yourself. Do the guys these days have it easy? Absolutely!”

at around 300,000 boepd for the next decade and well beyond, and is applying strategies to manage and optimise its regional portfolio. These include a complete study of North Sea potential that will result in a new drilling programme in 2011. A main focus of the North Sea business is the ‘hub strategy’, which involves BP consolidating its position around its key field groupings, or hubs, and maximising the value of its extensive infrastructure. This largely involves ‘tiebacks’ or satellites – linking a new well or field to an existing platform to handle production – or mutually beneficial arrangements with third parties. The Ula platform offshore Norway, for example, is now expected to be onstream until 2028, with reserves recovery augmented by the injection of gas procured from a nearby third-party operator. And the Andrew platform, a small field that began producing offshore UK in the mid-1990s, will process oil from the 25 million barrel Kinnoull discovery, made in 2008.

“These things epitomise BP’s hub strategy,” says Looney. “It is a question not just of looking down, but of looking out and making the most of the positions that we have. It has allowed us to see things that we have not seen before, and we want to do much more of this.”

Modern means: like most other aspects of life offshore, technology has changed over the years (top). Above, BP’s new office in Aberdeen.

“We have fantastic people here; people who remain as excited about what they’re doing today as they did in the beginning.” Bernard Looney

Technical breakthroughs Also crucial are technological developments. One such example is the 5 billion barrel Clair field, discovered in 1977 and yet undeveloped for 30 years until technical breakthroughs enabled BP and its partners to develop it. “Clair is a huge complex and highly fractured reservoir, so the difficulty with the field has always been to understand, once you start drilling and producing, how much you are going to be able to recover,” says Dave Wall, head of operations, Clair and Magnus. “Clair needed more analysis and risk assessment than most fields before we could justify a case for development of the reserves.” Clair has been onstream for three years and just 1% of its 5 billion barrels of oil in place have been produced to date. A 1% change in the recovery rate means 50 million barrels and, Looney adds, a 50 million-barrel discovery in the North Sea today “would make all sorts of headlines.” » BP MAGAZINE Issue 2 2009 59

Significant discoveries> North Sea

Over three decades, what’s changed? For new graduate engineers, working in the North Sea meant a steep learning curve. The vital support service infrastructure that has sprung up in Aberdeen and Stavanger over the past three decades was not there in the early days, meaning that BP and other operators carried out almost everything, from drilling and inspection, to catering and helicopter provision, themselves. Hours and roles were less regulated in the 1970s and 1980s, and everyone mucked in. People speak fondly of the strong camaraderie that characterised the early days, with communal TV rooms, makeshift cinemas and limited contact with the outside world. There was even an industry-standard two-cansa-day beer allowance. Although life offshore has changed dramatically, for many of the people who’ve been around since the beginning, the North Sea has never lost its appeal. A number of BP offshore personnel even have their children working offshore, sometimes on the same platform. And the food apparently remains as good as ever, with the steaks and traditional Boxing Day seafood buffets receiving particular accolades. 60 Issue 2 2009 BP MAGAZINE

One of BP’s North Sea veterans is Magnus, which celebrated its 25th anniversary in 2008. According to original estimates, that anniversary would have seen the end of its operational life, but enhanced oil recovery – injecting gas into the reservoir to push the deeper oil out – is giving Magnus at least a further 15 years of production. Greater clarity Additionally, advances in seismic technology have allowed greater clarity in reservoir mapping and, consequently, the drilling of previously unknown parts of fields. BP also has an advanced technology programme analysing the opportunities for further improvement. “The Foinaven field initially had a 10year life that should have ended in 2007,” says Dave Lynch, head of resources. “We have repeated seismic surveys every two years to build up a clearer picture of the reservoir changing over time and, in doing so, have identified additional barrels that we couldn’t see before, doubling resources since sanction to around 400 million barrels, and extending field life to 2021. Seismic improvements have also allowed us to identify new prospects on other fields such as Machar East, where we drilled a new well in the third quarter of 2008, the

Flying high: the Bruce field lies 340km (210 miles) northeast of Aberdeen, in the northern North Sea. It came onstream in 1994.

“The sector will continue as long as there is oil in the ground, providing a future for our children and grandchildren.” Elzbieta Kaliszuk

THEN + NOW ELZBIETA KALISZUK> Offshore installation manager, Valhall and Hod (Norway) “When I first went offshore in the 1980s, I didn’t meet a single other female on the rigs in technical professions. Particularly over the past four or five years, things have changed and now there are a lot of women in these positions offshore Norway. Our safety culture has also changed a lot since the early 2000s, when the sector had a lot of high-potential incidents. We have clearer roles, responsibilities and rules about how long people can work out on the platform in noise-exposed areas, and so on. This is a great place to work. Valhall has the reserves to be producing until 2050 and, from the perspective of those offshore, the sector will continue as long as there is oil in the ground, providing a future for our children and grandchildren.”

Leading the way: the Andrew jacket leaving Nigg Bay, Scotland in April 1996.

results of which have opened up even more opportunities for us to pursue.” BP is also seeking to drive down costs through supply chain efficiencies and working at scale where possible. Different parts of the business can learn a lot from each other and a new functional organisation has been designed to reshape the way the business works, allow more communication and exchange of ideas and optimise staff allocation. Aligning people “This is all about having one North Sea organisation,” says Looney. “We have restructured into a functional organisation so, instead of having different teams working on their own areas, we are aligning people up on a discipline basis. We want to make sure that we don’t compete against each other, do things with a common lens and maximise our human resources. “And for the first time, we have one hopper of reserves opportunities instead of the 13 we had before, making it easier to step back and look at the whole picture.” That ‘one hopper, one North Sea’ ethos is apparent in the new building the moment people walk in. The 1,200- strong ‘human resource’ now arrives through one door only, fostering contact and information exchange between individuals on different

teams. And to complement the wealth of experience gained by the people who have worked in the North Sea for three decades, the business offers great opportunities for new entrants to the sector. “We are going to be here for decades yet and we have to renew the organisation,” says Looney. “People ask if there are exciting opportunities for young people here, and we have lots. Here, you get to experience a whole swathe of activities from the very beginning, right through to the very end. It’s the perfect place for a young person to come and learn.” The majority of BP’s projects today were not in the plan 10 years ago, but access to new technology can transform everything. Since its first horizontal well 15 years ago, BP has developed Andrew, Harding, Clair, Foinaven, Schiehallion and others, all with horizontal wells. Oil prices go up and down, major banks disappear and much of the world is in financial turmoil. But oil and gas reserves that have been in the ground for millions of years are not going to disappear overnight. All it takes is for technology to catch up to reveal new opportunities; the ‘impossible’ becomes possible and the entire picture changes. Who knows what the future of the North Sea will look like 20 years from now? ■

JOHN CAMPBELL> Offshore installation manager, Magnus “There were around 1,500 people on Magnus for the offshore hook-up, and it was pretty congested. For several years after, we were finding old mattresses and sleeping bags in strange areas, because there were so many people and less control than we have now. We had fourman cabins, and people on night shift were always finding someone new in their room when they woke up. I’ve worked in maintenance, as an operations engineer, and now as offshore installation manager, and my son has worked on Magnus recently. I’ve always stayed on Magnus, and never got bored because of the sheer size of it, and because there’s always been something happening.”

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➔ profile

The Forties field

M

any individual events can claim to be landmarks in the history of North Sea oil and gas, but perhaps the strongest is the discovery of the Forties field, which had farreaching consequences for the development of the UK Continental Shelf (UKCS) and the wider national economy. When exploration of the UKCS began in 1964, industry interest was restricted to the southern North Sea, despite numerous blocks on offer in the central and northern regions. When the second licensing round took place in 1965, moderate interest was shown in these blocks. Initially lukewarm, BP decided to apply. Industry reluctance to conduct exploration continued, but everything changed with the discovery of the giant Ekofisk field in the Norwegian sector, in 1969. In the summer of 1970, BP commenced drilling in Block 21/10, and in October, the Forties field was discovered, ushering in a new era. Forties lay below 120 metres (400 feet) of water in an area subject to high winds and large waves. Field development in such an environment pushed the frontiers of existing knowledge. A much heavier ‘jacket’ was required and innovative stress relief equipment was developed to reduce the chance of brittle fractures, which could occur at low temperatures. The size of the field necessitated the deployment of four large platforms, and two construction yards were identified, including Nigg in Easter Ross, which, at its peak, generated direct employment for around 3,000 people. A major housing shortage necessitated the deployment of two ships in Nigg Bay as living quarters. The float-out and installation of the platforms were nerve-wracking, given the size of the jackets and the vagaries of the weather. A particularly critical episode was the so-called ‘crash dive’ period, when there

Forties statistic By 2000, initial recoverable oil reserves were estimated at 347 million tonnes, making it the largest oil field in the UKCS. 62 Issue 2 2009 BP MAGAZINE

Report> Professor Alexander Kemp

THE ROARING

FORTIES

GIANT DISCOVERY THAT CHANGED A NATION

was a risk regarding the stability of the whole structure. In the event, all went well and valuable lessons were learned for the installation of future jackets. The cost of the development required the use of substantial external finance and resulted in the innovative Forties loan – arranged in 1972 through a syndicate of 66 banks. It was the first North Sea projectbased financing scheme. More accurately, it was a production lending arrangement whereby the revenues from field production were used to service and repay the loan. At the time, the oil price was $2.50. Loan repayment A further feature was the incorporation of a forward sale agreement involving a vehicle company, which used the loan to buy oil forward from the operator who had a corresponding obligation to produce enough oil to repay the loan. These features were subsequently repeated in several other North Sea deals. Production from Forties commenced in November 1975. Initial estimates put recoverable oil reserves at 240 million tonnes, with plateau production of 400,000 barrels per day (b/d). Both turned out to be considerable underestimates. By 2000, initial recoverable oil reserves were estimated at 347 million tonnes, making it the largest oil field in the UKCS. The plateau production

rate was around 500,000 b/d. In the early days, this was a mixed national blessing. Detailed depletion policy arrangements were in place, which involved phased approvals of development and production. The unexpectedly prolific behaviour of Forties meant BP had to obtain permission to exceed its approved production rate, causing lively debate within government, with some concern about the consequential substantial oil exports. In the event, the so-called ‘upward profile variation’ was approved, principally because of the pressing need for further tax revenues from the North Sea. By 1981, the top marginal rate of tax on Forties production exceeded 90%, with BP making a tax payment of almost $860 million (in money-of-the-day terms), essentially based on the revenues from Forties that same year. The field also proved important to the wider development of the UKCS. Facilities and the associated pipeline became a magnet for new fields. Over the years, more were connected to the Forties Charlie platform or the Unity Riser platform and some 70 fields are currently tied in, with throughput at around 45% of current oil production. Today, while no longer a part of the BP portfolio, Forties remains a substantial producer and it is arguable that in its absence, further exploration of the region would have been considerably slower. ■

Illustration> James Carey Interview: Nick Reed

BP Faces Libya> Business profile Highlights from history

LORD ASHBURTON Chairman 1992-1995 “My most important moment came while I was the senior non-executive director at BP, and was discussing the future executive leadership of the company with my nonexecutive colleagues. It was decided that the position of chairman and chief executive should be split – a completely new idea for BP, because the two roles had always been identical. I was in total agreement with the decision. But then, out of the blue, I was invited to become chairman! Never in my wildest dreams had I seen this coming, and my immediate reaction was to say ‘no’. On reflection, however, I concluded that my background and experience in the City made it a logical step. I also knew and liked David Simon, who was to become chief executive, and I was confident that we could make the new arrangement work. Having discussed the idea with my wife and family, who were as surprised as me, I agreed to become chairman for three years and moved my office into Finsbury Circus, on the same floor as David Simon. As to the effect it had on the company, I leave it to others to judge. I enjoyed my time as chairman immensely, and will always be grateful to David and his executive colleagues for accepting the change, and for the friendly and helpful way in which they treated me throughout my three years as chairman.” ■

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➔ bu s in e s s p a rtn e rs h i p

Strategic co-operation> Case studies

UNITED WITH THE BEST Throughout its history, BP has worked in partnership with a variety of different businesses, communities, non-governmental organisations, government bodies, competitors and academic institutions, all with a single aim – to deliver heat, light and mobility to customers around the world. The key to a successful partnership is one that delivers mutual advantage to all parties, and in this BP believes it is distinctive. Whether it is pushing the boundaries of technology with the very best scientists to develop cleaner energy, working with local communities to create sustainable business development opportunities, or testing the latest fuel or lubricant and engine advances with car manufacturers, BP uses its partnerships to look beyond traditional ways of doing business to create new possibilities. Its 100-year history is dotted with examples of this in action and over the next few pages, BP Magazine showcases just a few of them. Report> Lisa Davison Photography> BP Archive / Corbis / Rex / SPL

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Shell-Mex and BP There aren’t many business partnerships that can say they endured for 44 years, especially ones between arch rivals. And yet, in 1932 – a time when availability of oil was high and the price was low – the Anglo-Persian Oil Company and Shell took the decision to join forces and create Shell-Mex and BP (SMBP), a joint UKbased marketing business designed to create some order in the market, and protect the businesses from a tough economic climate. Shortly after its birth, the Second World War broke out, which led to the ‘pooling’ of all oil companies’ supplies and a ban on branded fuels. Its staff played a key role in the wartime Petroleum Board and the company emerged in the post-war period as a marketing tour de force. It grew to handle a staggering 40 million tonnes of oil per year through the combined use of refineries, pipelines, transportation and service stations. “It had a market share at one stage of about 50%,” remembers Mike McMonagle, former SMBP employee and editor of the 44 Club News. Meanwhile, one of its most imaginative achievements, says Charles Madge, secretary of the 44 Club, was the creation of the central heating market in the UK. “It was a brilliant marketing stroke. Because of the post-war increase in demand for petrol, there was a surplus of gasoil and kerosene. We created a desire in householders to install central heating – of which most people knew nothing – using these fuels. Initially, the futuristic Mrs 1970 advertising campaign vigorously promoted this wonderful new product, supported by a network of fuel distributors and installers.” Although disbanded in 1976, SMBP’s legacy continues to this day with around 4,000 former employees belonging to the 44 Club more than 30 years after its breakup. “There was an atmosphere about the company,” says McMonagle. “It encouraged a team spirit and people looked out for each other.”

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Distinctive partnerships> Case studies

Azerbaijan In 1994, Azerbaijan’s government signed a deal – known as the ‘contract of the century’ with a consortium of 11 companies, headed up by BP. Since then, $25 billion has been invested in the country, helping develop infrastructure to bring offshore oil and gas to international markets. This multinational support was crucial, but local participation lay at the development’s heart, and so BP and its partners in the Azerbaijan International Operating Company, the BakuTbilisi-Ceyhan Pipeline Company (BTC) and Shah Deniz gas project have supported a range of initiatives – from developing Azerbaijani professionals; to the Azerbaijan Enterprise Centre, which helps local companies develop their businesses; to the Caspian Technical Training Centre to train Azerbaijani technicians; plus countless initiatives aimed at supporting sustainable community development, construction yards, pump stations and the Sangachal terminal. At the launch of the BTC pipeline in 2005, President Ilham Aliyev, spoke of the “effective teamwork and co-operation” and described BP as having become “an integral part of Azerbaijani society.”

Original equipment manufacturers Of all BP’s relationships, the one that has changed most dramatically is that with automotive original equipment manufacturers (OEMs). BP has moved from being simply a supplier of fuel and engine oil to a more integrated partner, delivering cleaner, more efficient, longer-lasting vehicles. Using its knowledge of fuels, lubricants, solar, wind and carbon management, BP also provides progressive, sustainable options to develop more efficient manufacturing processes. “By working in partnership, we are helping OEMs enhance and commercialise technology to meet our mutual consumers’ demands for more efficient and responsible personal transport,” says Bertrand Boulin, BP’s strategic account manager for Ford. Technical innovation is key and has led to the creation of performance fuels and lubricants specifically tested on the latest engines. “The difference today is we very often think and operate as integrated teams. That way, we can make a difference to an automaker’s performance and add longlasting value to both parties. It’s a powerful combination that requires expertise, trust and commitment.” 66 Issue 2 2009 BP MAGAZINE

FedEx “It demonstrates the strategic value of a ‘one’ BP,” says Richard Bartlett, accountable for leading BP’s strategic co-operation with FedEx. As one of the world’s largest delivery companies, FedEx is a major consumer of energy. In the past, it only bought some jet fuel and lubricants from Air BP. But thanks to strong executive-level relationships and differentiated offers, a partnership has developed in which BP and FedEx are working to implement wide-ranging supply, efficiency, alternative energy, marketing and logistics plans. As well as increases in the amount of fuels and lubricants BP supplies FedEx, BP is helping it reduce its carbon footprint through solar projects, fuelefficient lubricants and bio-diesel. In return, FedEx is BP’s global courier and business reprographics provider. This integrated approach was rewarded in 2007 with the partnership award in BP’s internal recognition programme, as well as a 2008 ‘best supplier’ award in FedEx’s equivalent scheme. “We provide security of supply, total cost of ownership and differentiated, quality brands, products and services,” says Bartlett. “We customise solutions to help each other do business in a smarter, more efficient way.”

GE For the past four years, BP and GE have developed a strong relationship to help deliver commercial growth and operational efficiency, access and commercialise new technologies and advance environmentally-sensitive, commercially-robust products and services. “As well as us selling products to each other, we develop solutions that enhance the experience and cost efficiencies of our mutual customers,” says Marcell Ulrichs, BP strategic account manager, GE. The co-operation spans the breadth of BP’s businesses across a variety of industry sectors and includes preferential wind turbine procurement agreements and an upstream joint technology programme to identify mutually beneficial opportunities – for example, in electric subsea processing, water treatment or inspection technologies. “The BP/GE relationship has been transformed from non-strategic to very productive, delivering significant benefits to the two companies and our joint customers. This step change in quality and materiality is recognised at both corporations,” says Ulrichs. BP MAGAZINE Issue 2 2009 67

Viewpoint> Azerbaijan then and now

The reawakening giant Azerbaijan’s oil connections are long and illustrious, with written references stretching back as far as the 9th century. Almost 11 centuries later, the Swedish Nobel brothers kick-started the commercialisation of Azerbaijan’s black gold, drilling their first well in Balakhani, an oil-rich suburb of the capital city of Baku (see below). By the beginning of the 20th century, Azerbaijan was producing more than half the world’s supply of oil. During the Soviet era, Baku became the centre of platform construction for Russia. But independence in the mid-1990s brought a new lease of life to the country’s oil and gas industry, as its government signed the ‘contract of the century’ with a consortium of international energy companies, headed up by BP. The contract called for the development of the offshore Azeri-Chirag-Gunashli oil and Shah Deniz gas (main image) fields, located in the Caspian Sea, along with the construction of two major pipelines – the Baku-Tbilisi-Ceyhan oil pipeline and South Caucasus gas pipeline – to transport its hydrocarbons to international markets. With all elements now up and running, Azerbaijan’s status as an energy giant has been truly reaffirmed. ■ REPORT: LISA DAVISON / PHOTOGRAPHY: BP AZERBAIJAN ARCHIVE / SHAHIN ABASALIYEV

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BP MAGAZINE Issue 2 2009 69

➔ e n vi ro n m e n t

Historic focus> Responsible operations

Report> Lisa Davison Photography> BP Imageshop

DEDICATION TO THE CAUSE In 1997, BP took a stand on climate change with huge impact. But as the people who have dedicated their BP careers to managing environmental impact explain, it was just the tip of a long-standing iceberg. “If we are all to take responsibility for the future of the planet, then it falls on us to take precautionary action now.” That was the message delivered by former BP group chief executive Lord Browne in 1997 during a speech at Stanford University. It was a pinnacle moment regarded by many as the first time an oil company had accepted the link between human activity and climate change and made a pledge to play its part in dealing with the situation. Such was its significance, it caused one industry veteran to declare that BP had ‘left the church’. “It was a bold, significant move,” remembers Mike McMahon senior advisor, climate change, “people sat up and took notice.” But behind this is another quieter, but equally important, story. A story of people

actively joining an oil company decades earlier, with the belief that they could make a difference, and who chose BP because it already had the reputation for being the ‘greenest’ of the oil companies. People like Philip Chown, Refining & Marketing health, safety, security, environment compliance director. His passion for environmental issues developed after a holiday as a teenager in Germany’s Black Forest. A walk on a cloudy day left him with stinging eyes (caused by acid rain) and a desire to do something about it. A doctorate in chemistry was swiftly followed by a job offer from BP to become part of a research team looking at the impact of oil in water. “BP was one of the few with a reputation for trying to do something about its impact on the environment while still being considered ‘dirty’,” he remembers. “I saw it as an opportunity to make a difference.” He was not alone. Around the same time, Graham Bunch advisor, water management, joined BP working on better Pure shores: pollution control exercise taking place in Beaulieu River at Wytch Farm, UK, in June 1991.

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techniques to manage effluent water treatment. “In the mid-70s, teams didn’t have the word environment in them – that crept in later – but it was environmental management in its own way.” BP’s interest in environmental impact can be traced back to the early 1960s, when it formed an anti-pollution advisory group, looking at the causes and effects of pollution in cities. In 1966, it began studying air pollution, which led to the development of cleaner chimneys, including on large refineries. In 1970, it founded the Environmental Control Centre to explore the policy and science of environmental issues and commissioned The Shadow of Progress, a documentary exploring the way in which, in meeting the demands for a richer, fuller life, technology has polluted much of man’s environment, with a discussion of possible solutions. It was also during the 1970s that it began a process of environmental documentation – the precursor to today’s formal environmental impact assessments – to better mitigate its ‘footprint’. “They were pretty rigorous for their time,” says Chown. During the 1970s and early 80s, much of that focus was on water – either through spills or a plant’s waste water management. “BP was doing some cutting-edge work to protect the water resources around its facilities,” says Chown. “It was exciting to be part of that.” Part of that work found he and Bunch working on the development of waste water treatment at Grangemouth refinery in Scotland, a period of time that both men look back on with a sense of pride. “We built a state-of-the-art plant – one of the best in Europe – using pure oxygen and several new innovations,” says Chown. “Grangemouth used to have one of the » highest refinery discharge levels in

Aerial view: Furzey Island is part of BP’s Wytch Farm project and famous for its population of red squirrels that BP actively monitors.

“BP was one of the few with a reputation for trying to do something about its impact on the environment. I saw it as an opportunity to make a difference.” Philip Chown BP MAGAZINE Issue 2 2009 71

Historic focus> Responsible operations

Europe,” adds Bunch. “The new plant helped us put that right.” Thirty years later, BP handles more water than oil and its management remains a challenge. “Since the 1990s, there has been an additional emphasis on fresh water use,” says Bunch. “If you think about it, water and energy are inextricably linked. You need water to produce energy and water companies need energy to treat and move their product. Climate change is often about altering water patterns and new businesses, such as biofuels and heavy oil rely on sustainable water supplies.” At Bulwer and Kwinana refineries in Australia, teams have become more creative, using recycled municipal waste water for industrial processes. Over on Alaska’s North Slope, the upstream business has had to be conscious of its impact from day one and it is now one of the most intensely surveyed regions in North America. Onshore drilling sites and roads were elevated above the tundra on thick gravel pads, while ice road technology has reduced the number of gravel roads. Special burial of the Northstar field’s pipeline deep beneath the seafloor and a sophisticated leak detection system were both firsts in Arctic oil field technology. Large sections of the Trans-Alaska Pipeline were raised from the ground to prevent warm oil melting the permafrost and elevated over caribou crossings to avoid impact on migration. Indeed, the number of Central Arctic caribou moving through the Prudhoe Bay, Kuparuk and Alpine fields has increased from around 3,000 in 1972 to 32,000 today. “We learnt a lot from the experiences on the North Slope and Shetland’s Sullom Voe

Minimal impact: an operator removes floating sludge at Grangemouth’s effluent treatment plant (top left). Above, Wytch Farm pioneered certain technologies, such as extended reach wells.

oil terminal,” says Mike Mason advisor, environment. Having joined BP in 1985 as a specialist in oil pollution response, Mason was posted to Wytch Farm, UK – an environmentally sensitive area and the location of the largest onshore oilfield in western Europe – essentially to hide the operation of the oilfield from public view. Mason spent 17 years overseeing an environmental and planning team to develop detailed design, gain planning permission, construct and operate the oil field, including a host of drilling and production techniques designed to minimise BP’s impact on the area. “Wytch Farm is a special place. It’s reputation grew because it was designed to show BP could be a responsible operator. We used to host around 10 visits a month to show what we were doing and how.” In many ways, it was a model and test bed, developing principles of environmental management now common today, along with pioneering technologies such as extended reach drilling, which avoided construction of an offshore island and brought the field onstream a year ahead of schedule. That experience and approach has held BP in good stead as it develops other projects in equally sensitive areas, such as the Tangguh gas field in Indonesia. While all of this was being developed by people with a passion for their environment, officially it was still under BP’s policy of ‘no regrets’. In 1994, internal

“There are many people across the company who have dedicated their careers to ensuring BP delivers on its environmental commitments.” Graham Bunch 72 Issue 2 2009 BP MAGAZINE

debate began over whether that policy should move to one of precautionary action. Two years later, the switch was made and the Stanford speech was born. During the speech, Browne made a series of pledges: to control BP’s own emissions; to fund continuing scientific research; to work with others to limit and reduce net emissions of greenhouse gases; to develop alternative energies for the long term; and to contribute to the public policy debate. Through its work with associations such as the Carbon Mitigation Initiative at Princeton University, US, and the Chinese Academy of Sciences, along with a reduction in its emissions and the creation of Alternative Energy (AE) in 2005, all these pledges have been realised. BP continues to improve its environmental management practices and publishes information on its environmental performance externally. Meanwhile, AE is developing key areas, such as wind in North America and a new biofuels business in Brazil. Since Stanford, media coverage on climate change has gone through the roof and public knowledge is at an all-time high. But while that speech may have caused a sea change in the industry, it’s fair to say that for the scores of BP people who were environmentalists even before the phrase was coined it was simply a matter of doing the right thing all along. “Stanford was rightly a distinctive moment for BP,” says Bunch, “but in truth, there are many people right across the company who have spent the past decades creating a bedrock of responsibility – people who have dedicated their careers to ensuring BP delivers on its environmental commitments.” ■

Illustration> James Carey Interview: Nick Reed

BP Faces Highlights from history

LORD SIMON OF HIGHBURY Chief executive 1992-1995 Chairman 1995-1997 “When I took over as chief executive at short notice in 1992, I found myself sitting down on a sunny Sunday morning at my Norfolk cottage, wondering what I would say to the company and the investment community in the coming days; how I would articulate my mission and my management approach. The shares were wobbling, and I had the likes of Lord Hanson [one of the most influential British businessmen of the 20th century] and Larry Fuller at Amoco, calling to discuss giving BP ‘a helping hand’! So I knew I needed something motivating and memorable that would give people confidence going forward. I quickly settled on three simple words ‘peformance, reputation, teamwork’. I knew the acronym PRT would resonate with people, because it is the same as petroleum revenue tax! The idea was that we would focus on the efficiency of the company, rebuild its reputation and make every individual feel responsible for our success. We lived by these principles for three years, first through organic rehabilitation, then on towards strategic growth. John Ashburton, the chairman during this crucial period, and the entire executive team gave full support to the approach. I am convinced that PRT turned BP around at an extremely sensitive time. Without it, I believe the company could have found itself on the wrong end of a merger. After the recovery of 1992 to 1997, John Browne took the company forward with a professional growth strategy that had a strong foundation.” ■

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➔ t ra n s p o rtation

Product delivery> Modes of distribution

ON THE MOVE A CENTURY OF ENERGY TRANSPORTATION When it comes to moving oil and gas around the globe, modes of transport have changed immeasurably – mules are a pretty rare sight these days – but there’s no doubt that each form has done its bit to ensure BP delivers heat, light and mobility to its customers.

Top: branded horse-drawn tank wagons replaced barrel-laden carts in the 1880s. Above: motorised tankers became a much more common sight in the early 20th century, and came in all shapes and sizes. Right: BP had to construct a pipeline to transport oil from its first field – Masjid-i-Suleiman – to Abadan refinery on the coast of Iran. It was 220 kilometres (130 miles) long and required 1,000 people to construct it. By comparison, the Baku-Tbilisi-Ceyhan pipeline is 1,768 kilometres (1,098 miles) and, at its height, employed 21,000 people. Below: mule was the most common way to transport AngloPersian’s burning oil in Iran and Iraq. Left: rail transportation was common in Britain in the mid-20th century.

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Report> Lisa Davison Photography> BP Archive

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Product delivery> Modes of distribution

Above: gas has been transported as a liquid since the 1950s, with the Methane Pioneer carrying out the first transatlantic voyage in 1959. Right: the 1,300 kilometre (800 mile) Trans-Alaska Pipeline received its first oil in 1977. The pipeline zig-zags across Alaska’s North Slope so that movements caused by temperature changes and seismic activity can be absorbed. Below: road trains are a common sight in Australia, where long distances require large amounts of fuel to be transported at one time. The average length of a road train is around 54 metres (180 feet) and can transport up to 100,000 litres (22,000 gallons) in one go.

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BP Faces

Photography> David Gold

A LIFE OFFSHORE Jim Barr / Offshore installation manager When Jim Barr’s (left) school geography teacher told the class around 1966 that North Sea oil was going to transform the northeast of Scotland, they all thought she was dreaming. Jim joined BP 10 years later, and has since spent 32 years in the industry, primarily offshore. He recalls an early high level of responsibility in a fast-developing sector. “I was initially a trainee production engineer and worked on the Forties Pipeline System. For a pretty raw graduate, to be cutting into a major national asset like the Forties line was quite something.” Offshore, life was characterised by good food and good company, even if the entertainment options were limited. “Offshore is one of the worst places to be when you have nothing to do, but in operations that isn’t often the case. We had a ‘Super-8’ projector for watching films and got the reels sent out. Tired after our shifts, quite often we’d watch for half an hour and most of the room would be asleep. It wasn’t unusual to wake up and find the first reel flicking around and the screen empty, so the second reel was pretty much an optional extra!” ■ BP MAGAZINE Issue 2 2009 77

Proud history: during the late 1990s and early 21st century, BP’s mergers and acquisitions team was kept busy and distinguished brands, such as Amoco and ARCO in the US and Aral in Germany, joined BP, creating a super major with global scope and scale.

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Company evolution> Heritage businesses

➔ m e rg e rs + a c q u i s i ti o n s Report> Lisa Davison Photography> BP Archive

EXPANDING HORIZONS It took a mere 100 working days to complete and was kept a secret by conducting meetings in the British Airways Concorde lounge at John F Kennedy airport in New York. But the merger between BP and Amoco is just one chapter in a long story of acquisitions and mergers.

I Global reach: Founded in 1899, Castrol, formerly CC Wakefield and Co, was to become a global giant in the lubricants business. Its acquisition in 2000 gave BP a leading position in 50 countries.

t was, at the time, the largest-ever industrial merger, catapulting BP into the top three global oil and gas players. “It was a tremendous surprise to everyone,” says Lord Browne, former BP chief executive and architect of the BP Amoco merger in 1998. The numbers tell the story – it added 63% to BP’s existing oil and gas reserves, with another 63% on production. It became the largest gas producer in the US overnight and the top retail marketer east of the Rocky Mountains. It also transformed the industry landscape. Within months, Exxon and Mobil had joined forces, Total took on Fina and Elf – although not before Elf attempted a reverse takeover of Total – while Chevron and Texaco realised they were a match made in heaven. Consolidation was all the rage. For BP, Amoco was just the start. From 1999 to 2003, the company’s mergers and acquisitions (M&A) team, headed up by now retired Roger Skinner, oversaw a series of acquisitions, including ARCO, Castrol, Veba Oel, and the Russian joint venture – TNK-BP. In total, this activity added a staggering 157% to BP’s proven oil and gas reserves, 193% to its production and 111% to its refining capacity. The late 1990s was a tough period for the industry. Speaking at the time of the Amoco deal, Lord Browne said: “The merger gives us an edge in the very difficult

environment. But it is only an edge…[the] competition is and will remain intensive.” That difficult environment was largely a consequence of oil prices plummeting below $10 a barrel. Suddenly, size mattered. Speaking to the press at the time, Browne declared that “in such a climate, the best investment opportunities will go increasingly to companies that have the size and financial strength to take on those large-scale projects that offer a truly distinctive return.” Speaking to BP’s in-house magazine, Horizon, former Amoco chief executive Larry Fuller added his thoughts: “[It] gives us the upper hand in withstanding the current industry downturn and becoming one of the leaders in the industry. BP Amoco is the great competitor of the future.” Inside BP, there is still something quite special about the deal. “It changed the landscape for us and the industry,” says Skinner. Despite the record-breaking completion time, it was far from a whim. BP was the first oil company to set up its own dedicated M&A team in 1986, with the purpose of bringing more professionalism into acquisitions and divestments of non-core activities. In 1987, BP bought out the minority shareholding in Standard Oil of Ohio – Sohio – and in 1988, acquired Britoil, reinforcing its presence in both the US and the North Sea. By 1990, the team was reviewing new targets, and two names were in the frame – Mobil and Amoco. “Both were a good fit and gave us the potential to create scale and reach,” says Skinner. Five years later, BP and Mobil agreed a joint venture. “We were pushing the frontier,” says Skinner. “We had a meeting and said ‘look, we fit, we’re both too small » in the current climate, how about it?’” BP MAGAZINE Issue 2 2009 79

Company evolution> Heritage businesses It marked the first time any major oil company had publicly admitted it could not stand on its own. “It showed that two major companies could swallow their pride and share branded space,” says Skinner. It also demonstrated the benefits of regional scale in the European downstream business. But BP wanted global scale. And for that, it turned to Amoco. “I rang Larry Fuller one day and said, ‘I think I’d like to come and talk to you about the future,’” remembers Browne. “So, we agreed to meet in the Concorde lounge in JFK and we had our first discussion. The rest, as they say, is history.” It was a bold, opportunistic move, something Skinner believes is characteristic of BP as a company. “BP has been doing deals for a long time,” he says. “In the 1920s and 30s, we had a lot of crude oil in the Middle East, but no channels of our own through which to market that crude.” The quickest solution was to acquire distribution businesses, mainly in Europe. While not all deals lived up to their potential, some were transformational. Precisely 30 years before the Amoco deal, BP was busy creating another phoenix-like moment. In the late 1960s, BP produced around 4 million barrels of oil per day and, yet, refined and marketed barely half this amount.

“Through its mergers and acquisitions, BP has combined the strengths of its heritage parts. BP became one global group with the capabilities to meet the challenges and opportunities of the future.” Roger Skinner

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Following the discovery of the Prudhoe Bay field in Alaska, BP realised it needed a presence in the US. One company stood out – Sohio, one of Rockefeller’s old guard. “It had very little debt and not much crude oil in relation to its marketing power,” says Skinner. “It was the ideal partner.” The deal was done in 1969, allowing BP to take an initial 25% of the company. Once so reliant on Middle Eastern oil, BP was now a big hitter in the US. “Developing and bringing Prudhoe Bay to market was a large commercial undertaking and provided us a lifeline. In the history of the company, it stands alongside Amoco in what it did for our future,” says Skinner. While that US future looked strong, the mid-1970s proved tough, with many Middle East and African concessions nationalised. “In response, BP, like the rest of its peers, looked for renewal opportunities through diversification,” says Skinner.

Diversification came in rather unusual forms and, as a consequence, BP became the owner of forests in New Zealand, prawn farms in Thailand and the world’s leader in silk screen printing inks. It was not alone. One oil company bought a department store chain, while another bid for a circus. By 1986, it was becoming clear that a lot of these deals were not turning out quite as the company had envisaged. The new M&A department was created and an intense phase of consolidation began, including, 12 months later, the decision to buy out the final 46% share in Sohio. It was the start of something big. Between 1997 and the end of 2004, BP engaged in M&A to the total value of $101 billion. Its merger with ARCO made it the leading US west coast retail marketer, gave the company coast-to-coast reach and a major gas position in Asia. Through the acquisition of Castrol in 2000, it inherited a leading lubricants position in 50 countries, while in 2002, Veba Oel made it the leading German oil marketer. And in 2003, the creation of TNK-BP turned BP into Russia’s largest foreign investor. BP as a company has transformed itself, and is not the same organisation that it was even 15 years ago. However, that transformation has only been possible thanks to an unswerving desire to stay ahead of the competition through innovation. “Through its mergers and acquisitions, BP has combined the strengths of its heritage parts,” says Skinner. “BP became one global group with the capabilities and resources to meet the challenges and opportunities of the future.” ■ Marketing giant: the merger with ARCO turned BP into the leading retail marketer on the US west coast.

Illustration> James Carey Interview: Nick Reed

BP Faces Highlights from history

LORD BROWNE OF MADINGLEY Chief executive 1995-2007 “There are two highlights from my time leading BP – the merger with Amoco in 1998, and the Stanford speech on climate change in1997. The Amoco deal came about after attempts to merge with Mobil. I called Larry Fuller, the chief executive at Amoco. He said a merger wasn’t on his agenda, but could we get together the next day. I caught a Concorde flight to New York, and set in train the events that led to what was, at the time, the world’s largest industrial merger. It was a hot August day, when the whole of the BP executive team, and a host of other colleagues, were waiting in the study at my house in Belgravia, waiting for Amoco’s decision. At least 250 BP people knew about the discussions, but not a word leaked out. That’s a real demonstration of a great team. The merger made BP more competitive, and allowed us to do things we had always dreamed of. It improved our technological capability: today’s seismic innovations are founded on Amoco research, for example. The Stanford speech was another industrychanging moment. We knew it would have a major impact. Some in the industry thought we were ludicrous, and there were many within BP who were extremely vocal in their opposition. But we knew this was a growing issue. We wanted a seat at the table when people were discussing our future. It has changed the way the industry does things today. There is more responsibility now. It showed we are prepared to do something about a situation with which we are inextricably linked.” ■

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➔ history on film

Documentary> Centenary: The BP Story Report> Nev Pierce Photography> Steven Croston

SLICK FLICK Adventure, daring and surprise… Centenary: The BP Story showcases a vivid, rich history that spans the 20th century and beyond. Writer/director Nigel Williams talks censorship fears and recreating a world-changing discovery.

Veteran storyteller: writer/director Nigel Williams (below) on set of the reconstruction of first oil at Masjid-i-Suleiman.

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S

ummer, 2006. Last orders have been and gone. Two men stumble from a bar, into the balmy west London night. Nigel Williams – writer, director, novelist and documentarian – has had a couple of drinks. And he’s having a couple of second thoughts, too, about his decision to make BP’s centenary film. “I’ve never made a corporate film!” he says, turning to Steven Croston, commissioning editor of BP TV. “I don’t think I should do this.” He takes a few steps into the street. Stops, thinks, says to himself: “If you get to the point you think it’s not right, you can always walk away…” Three years later, Williams has finally reached the point of walking away, but only because the film – Centenary: The BP Story – is finished. “I feel rather sad it’s all over,” he says. “Initially, I was worried I might be censored in some way. That proved absolutely not the case. In fact, I got less interference than I did from a lot of people at the BBC, where I worked for 30 years!” Williams, who used to run the BBC’s acclaimed arts documentary series Omnibus, is an industry veteran, whose screenwriting work includes the BAFTA and Golden Globe-winning Elizabeth I, starring Helen Mirren. By his own admission, he knew little about the oil industry when he fell in with independent production company Lone Star and pitched to write and direct the corporation’s centenary film. “My take on it was we should talk to everybody in the company, not just the bosses,” he says. “We had to talk to drillers and chemists and just ordinary guys, in so far as you can fit them into the story. BP seemed to like that approach.” “To begin with, Nigel wasn’t sure about it at all,” laughs Croston, who took quite a career-swerve when he joined BP in 1992, given he used to be a professional percussionist. “But he very quickly consumed a three-volume history of BP and said, ‘This is fascinating. I want to make this film.’” Croston’s enthusiasm for the company’s heritage is infectious – particularly its filmmaking. Since the 1920s, the company has recorded footage of key events – and » made documentaries to speak to its staff

Historic reconstruction: the moment that George Reynolds struck first oil was created by Williams and his team, with the Californian desert standing in for 1908 Persia.

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Cinematic history> Centenary: The BP Story and the world at large. Croston has made it his mission to recapture what he considers the finest period of BP’s in-house screen work, ‘the halcyon days of the 60s and 70s’. When considering how to mark the 100year anniversary of BP’s inception, he went to the company’s board with a proposal. “I said, ‘I’d like to make a film, not a video. And this is not going to be a corporate film: it’s going to be a film about a corporation.’” A proper film required a proper filmmaker, so Williams was in. Armed with Croston’s brief and the invaluable help of producer Elena Adams, who undertook extensive research, he viewed hours of BP’s own company films to discover its history. “It’s a riveting story,” says Williams, who also read voraciously about the subject. But Williams didn’t find his facts solely on paper. Instead, he sought out first-hand accounts from company employees, stretching back as far as possible. “We spoke to at least 40 people,” he says. “One person led to another… We tried to find people whose memories went back as early

“We tried to find people whose memories went back as early as possible. Their testimony is fantastic. The real tragedy is so much of it we haven’t been able to use, because we had hours and hours of material.” Nigel Williams as possible. We interviewed one guy, Peter Jones, who was a driller in Iran in the 30s – he’s died, sadly, since the interview. And another man, a wonderful old boy called Monty Sawyer, who was a chemist at Abadan refinery in the 40s and was there when Iran nationalised its oil industry in the 50s. Their testimony is fantastic. The real tragedy is so much of it we haven’t been able to use, because we had hours and hours of material!” The toughest challenge for Williams was, indeed, one of compression: taking 100 years of history and putting it into a manageable format. “That was the real struggle. I had to cut my way through the jungle, wade through the avalanche of facts.”

W

Well, well, well… Nigel Williams on his favourite oil movie. “I love There Will Be Blood. I thought it was brilliant. I worked with Daniel DayLewis once – he was in a play of mine, years ago. He’s probably forgotten. He’s a brilliant actor and I thought this was a superb picture of a complete lunatic, despotic tyrant. Of the kind I did not find in BP! One of the geologists – the guy who found the Forties field – said ‘it’s all teamwork’, which is a very British thing to say. But that kind of figure Day-Lewis was portraying was, I think, very true about the early days of American oil exploration…I loved the movie.”

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ith the final film clocking in at 83 minutes, Williams has succeeded in making the story digestible, and just hopes he’s done the subject justice. “It is a film of record,” he says. “One of the guys on the centenary committee said, ‘I expected something flashy, but it’s very erudite!’ I said, ‘you mean it’s boring!’ He said, ‘No no, dear boy, I just mean it’s erudite.’ But it’s a very complicated subject. You can’t do it in a simplistic way or talk down to people.” It is an immense subject to tackle. Oil, like cinema, straddles the 20th century. In many ways, it is the story of the 20th century. There isn’t an area it doesn’t touch – from central heating to journeying to the moon. “It’s a story of politics, a story of war, a story of peace,” says Williams. “The reason the British government became a majority shareholder in BP was because Churchill wanted a secure supply of fuel for the navy. “I don’t know if another oil company would be as interesting. BP had this fantastic, amazing, romantic origin of this massive find: billions and billions of barrels of oil at Masjid-i-Suleiman. It was still going in 1951, from being found in 1908! It’s unbelievable!” The discovery of the field that made BP very nearly didn’t happen. As Croston explains, “George Reynolds was out in the

desert, funded by William Knox D’Arcy. They had a notion there was a bit of oil out in southwest Persia… But they were burning cash. Finally, Reynolds was told ‘this is the last bite of the cherry: if you’ve drilled to 1,100 feet and haven’t found oil, abandon operations and come back!’ He struck oil. That was the birth of oil in the Middle East, and the spiritual birth of BP.” “It’s a very exciting thing,” says Williams. “As one of the geologists told me – this remark didn’t actually make it into the film – ‘outguessing the sub-surveys is a fascinating detective story.’ Because it’s very easy to miss even a big field. There are plenty of people in the business who never found any oil.” The Masjid-i-Suleiman find was a sequence reconstructed for the film, with Williams and co recreating the incident on location, with the Californian desert standing in for what is now Iran. “The principle was to use reconstruction only for sequences where we couldn’t find people to describe it in other terms,” says Williams. “It’s not dramatised in an ‘Oh, I say!’ way. As I work in drama, I’m very aware of those wooden, pseudo-historical representations. The production team did a wonderful job. The rest of the challenge was finding people and talking to them and compression, compression was the issue.” Boiling it down meant leaving out certain fascinating incidents and achievements. “The history created its own logic: it’s really about the things that made or broke the company in the time it’s been developing over the past 100 years. Centenary: The BP Story still includes more than its fair share of astonishing accomplishments, which will be appreciated by audiences at special screenings at The British Museum and the HQ of the British Academy of Film and Television Arts (BAFTA), in London, before being more widely screened elsewhere. For Williams, it’s been an immensely satisfying journey. “It’s fascinating: the whole of the oil business is just completely fascinating,” he says, and smiles. “Whether the film is, I don’t know, we’ll have to see!” ■

< Oscar glory BP has a long history of using film to document its work, stretching back more than 80 years. In that time, it has won numerous prizes for its filmmaking, but the pinnacle moment came in 1961 when Giuseppina (left) won the Oscar for best documentary, short subjects. The film, directed by James Hill, follows a young Italian girl who spends the day with her father meeting customers at his BP garage.

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➔ B P in the press

Media coverage> Through the ages

READ ALL ABOUT IT From the very beginning, BP and its forerunners have been in the public eye. The early decades provided scant, though tantalising details while the past 50 years have witnessed an exponential growth in media coverage. BP Magazine journeys through the archives and talks to Roland Gribben, a veteran writer on the energy industry.

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hat was to become a very public story, began in private. It came in a coded telegram, announcing an oil find in Persia (now Iran) and arrived after an eight-year search, funded largely by the English businessman William Knox D’Arcy. Both money and hope were almost fully spent. That discovery led to the establishment in 1909 of the Anglo-Persian Oil Company (APOC). By 26th July 1910, London’s The Times newspaper, reported the company’s first ordinary general meeting. The chairman, Lord Strathcona, recorded the sum of $325,500 – vast in those days –

spent on construction, the huge challenges of building in a remote and difficult terrain, as well as the need to maintain good relations with local tribal chiefs and national government. Four years later, APOC had plenty of oil but was almost bankrupt. With the country on the brink of war, Winston Churchill, First Lord of the Admiralty, came to the rescue. He believed the Royal Navy should switch from coal to oil-fuelled ships. The government injected £2 million of new capital into APOC in return for a majority shareholding. In addition, a contract was agreed for 40 million barrels of fuel oil to be delivered to the Admiralty over 20 years. It was a great coup for both government and company. The First World War provided APOC with an unexpected opportunity. It acquired the name that would, in due course, become one of the most famous in global corporate history. The antecedents of the British Petroleum Company, however, were not British at all. For this was the subsidiary of a German company, which, at the onset of war, had been placed in the hands of the Public Trustee for Enemy Property. Now owning a valuable distribution organisation, APOC made BP its brand name. While the brand grew more familiar as petrol pumps were built to fuel the

Report> Hester Thomas Illustration> Jason Ford

increasing number of cars, media coverage of APOC focussed principally on company meetings and share price reports. This was a different age, when newspapers were slim, business pages few and public interest limited. The style of reporting was very different, too. On 28th June 1935, The Times covered APOC’s 26th general meeting, not so much with a headline but with summary bullet points. These included notice that the company name was changing to AngloIranian Oil Company Limited, reflecting Persia’s change of country name. Curiously, the report also includes details of chairman Sir John Cadman’s tour of the company’s operations. This involved him travelling 65,000 kilometres (40,000 miles) and being away for four months – a prospect that any company chairman would now regard as corporate suicide. Come the Second World War, newspapers had bigger stories to tell than shifts in corporate fortunes. Yet, AngloIranian was among those that played a significant part in the war effort. Winston Churchill, now prime minister, called on

the company to give everything it could. Indeed, the refinery at Abadan in Iran played a major role in supplying Allied air forces, while Anglo-Iranian’s tanker fleet suffered heavy casualties carrying essential supplies. The untold story included one of the war’s best-kept secrets. Having recently found oil on mainland England, AngloIranian increased its crude oil production four-fold to 2,000 barrels a day, providing much-needed support to the home market. Post-war, the world changed rapidly as nations became increasingly dependent on oil to drive growth. Roland Gribben, former business editor at The Daily Telegraph and now semi-retired, covered the energy industry from 1967. He recalls this era as, “the glory days when oil was fuelling the world economy, oil companies were literally breaking new frontiers in discoveries and technology, the petrochemical industry was taking off and new products were being brought to market.” Fresh oil fields were sought, not only to meet greater demand but also because countries, such as Iran, were nationalising

oil assets. By 1954, Anglo-Iranian had become British Petroleum. It was no longer the owner and sole operator of the oil industry it had built in Iran, but a 40% share owner of the Iranian Oil Participants consortium. Needing to find new opportunities, by the late 1950s, BP had developed further interests in Nigeria, Kuwait, Iraq, Qatar and Libya. “Among journalists, BP was regarded as a company that could find oil but not sell it,” says Gribben, “while Shell couldn’t find oil but could sell it. This was the result of one company having good geologists and the other good marketers.” That situation changed for both companies as each improved its skills base. However, BP’s geologists proved their worth yet again when, in 1969, the company struck oil in Alaska. Despite The Times’ cautious reporting, this was thought to be a field containing up to 10,000 million barrels of oil – one of the largest found in North America at that point. This news was dwarfed, in UK media terms at least, by BP’s next major find – the » first substantial discovery of oil in the

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Media coverage> Through the ages

British sector of the North Sea. The Times splashed the story on its front page, while the nation celebrated at the prospect of owning liquid gold. “The Alaskan and North Sea finds propelled BP into the oil super-league,” notes Gribben. “They transformed its fortunes and, importantly, reduced its reliance on the Middle East.” By 1975, oil was flowing into the British economy at what The Times reported as a “rate of £28 a second.” Whatever the hyperbole, the news was undoubtedly good. “Almost at a stroke, tax from oil revenues ended Britain’s balance of payments deficit,” states Gribben. “This was the UK’s first new industry for many years and, for a short time, the nation was among the world’s top five oil producing countries.” However, there was no room for complacency. By the 1970s, the Organisation of the Petroleum Exporting Countries (OPEC) had stolen the lead from oil companies, by regulating both production and price. The first price shock came in 1973, when oil rose from $2.90 a barrel at midyear to $11.65 by year-end. As a result, oil exporters saw their wealth increase rapidly while the economies of oil-consuming nations were hit badly. “I was in Kuwait at the time,” recalls Gribben. “The Shah of Iran said, ‘the honeymoon is over.’ The stable price of oil – trading between $1 to $2 a barrel – had suddenly evaporated.” The 1970s and 1980s were a period of great change for BP. As well as developing

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non-OPEC oil fields, it also saw its major shareholder – the government – begin to withdraw. The final share sell-off came in 1987 and, as Gribben states tersely, “The British government got the sale disastrously wrong.” It was hailed as the biggest private share sale the Stock Exchange had ever seen, with the government selling its remaining 32% stake in BP. The offer price of 330p a share was set below the trading price to tempt investors with an instant profit. As the issue had been underwritten by a consortium of institutions, the government already had the £6 billion guaranteed proceeds from the sale. Three days later, share prices – including BP’s – collapsed. The underwriters, several fearing bankruptcy, pressed the government to shelve the issue. It declined. Spotting a bargain, the Kuwait Investment Office, acting on behalf of the Kuwait government, purchased 22% of BP. “Within days, BP found the Kuwait government rather than the British government as its biggest shareholder,” summarises Gribben. “It left the company in an extremely difficult political and commercial situation.” A resolution was found 18 months later, when BP bought back half the Kuwaiti-held shares and cancelled them, costing the company a cool £2.4 billion. The late 1990s saw BP involved in a remarkable period of takeovers and

acquisitions. ARCO, Castrol and Veba Oil all came into the fold, but the most spectacular acquisition was that of Amoco. This was the largest-ever industrial merger, creating Britain’s leading company and the world’s third largest oil company. “This major expansion in North America was the greatest achievement made by John Browne when he was chief executive,” says Gribben. “It also demonstrated the complete change in management culture and confidence. In my early days of covering BP, the management behaved as it if was an extension of the civil service.” The new millennium has seen BP launch a new global brand identity, become a major player in the Russian oil industry, through the joint venture TNK-BP, establish a renewable energy business, BP Alternative Energy, and complete the BakuTbilisi-Ceyhan pipeline carrying oil from the Caspian to the Mediterranean – of which the company is a major stakeholder. Oil price shocks have continued. The last in 2008 – when oil hit $147 a barrel, before tumbling back to around $50 – made all previous ones look trivial in comparison. Gribben shakes his head with a mixture of admiration and pity for oil industry managers who must plan in the face of such volatility. “To run an oil company today,” he notes, “senior managers need to know how to drive performance and gain efficiencies, while also being skilled politically and diplomatically. It’s hard work.” Lord Strathcona, were he to time-travel from 1909, might be inclined to agree. ■

Photography> Shahin Abasaliyev

BP Faces

MAJOR SCOOP Tamam Bayatly / Communications manager

“ACG has given the Azerbaijani nation power and confidence, while BTC has allowed the country to step onto the international stage. I’m really proud to be part of both projects through BP.”

“I have seen history in the making” says Tamam Bayatly of her 14 years as BP’s spokesperson in Azerbaijan. Sitting in on high-level negotiations for the huge Azeri-Chirag-Gunashli (ACG) offshore oil development, and subsequent BakuTbilisi-Ceyhan (BTC) pipeline, she has witnessed decisions that have shaped her country’s destiny. Back in September 1994, speeches in English at the signing ceremonies for the ‘contract of the century’ were the first indicator that change was afoot. But the Azerbaijani people were unsure what to expect of the country’s first deal with a foreign investor. “Only a few believed it would be a decisive step to turn us towards an independent future,” says Tamam, a former television news anchor, who joined BP in early 1995. “Luckily, the contract put the past behind us forever. ACG has given the Azerbaijani nation power and confidence, while BTC has allowed the country to step onto the international stage. I’m really proud to be part of both projects through BP.” ■ BP MAGAZINE Issue 2 2009 89

➔ profile

Interview> Martin Vander Weyer Photography> Graham Trott

AN INTERVIEW WITH BP’S CHAIRMAN

PETER SUTHERLAND With the hunt under way for his successor as chairman of BP, Peter Sutherland talks about his extraordinary career in business and public service – and what he’d like to do next.

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Profile> Peter Sutherland

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or the record, Peter Sutherland is not only the longest-serving chairman in the history of BP, but has also chaired the investment bank Goldman Sachs International in London since 1995. Yet perhaps the most remarkable thing about this formidable boardroom operator is that he never had any ambition to build a business career. He started out as a barrister in Dublin – when he wasn’t turning out as propforward for the Lansdowne club – and he might have stayed there, if other doors had not opened: “I would have been happy as a Rumpole figure. I loved impressing a jury. I often have to remind myself that had I come up through the corporate route, I would never have aspired to where I ended up. I was fortunate to be parachuted in. I could never have been a chief executive.” It certainly wasn’t business that drew Sutherland away from the bar: it was his appointment in 1981, at 35, as Ireland’s attorney-general, a role in which he served two short stints, before becoming a European Commissioner in 1985 and discovering what might have been his true mission. He has called the European Union (EU) “the most noble political ideal in European history” and he almost became part of its destiny when he was lined up to succeed Jacques Delors as president of the Commission, in 1995. An untimely change of Irish government put the mockers on that – but by then, the Sutherland career path had already found other directions. Back in Dublin, at the end of his Commission term in 1989, he returned to the bar – but only for one case. “No sooner had I done it, than

“The company has been through a period of enormous change. But I’ve always had the view that the role of the chairman is to run the board and not to manage the company.” 92 Issue 2 2009 BP MAGAZINE

someone stupidly asked me to become chairman of Allied Irish [Banks]. I’d never even been to a board meeting.” He also became a director of GPA – the aviation business – and in 1990, he was invited to join the board of BP – where he had made a powerful impression a few years earlier, when he slapped a fine on the company as EU competition commissioner.

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hus, Peter Sutherland the business titan we know today was launched. But there was still another direction to be followed: in 1993, he was asked to take over as director-general of the General Agreement on Tariffs and Trade (GATT), a seemingly interminable, Geneva-based global talking-shop, which everyone he consulted told him he’d be mad to take on. By sheer force of personality, he turned the job into a personal triumph – with the creation on 1st January 1995 of the World Trade Organisation (WTO) as GATT’s successor. Five months later, he returned to the business scene, rejoining BP as nonexecutive deputy chairman. Two years after that, when then chairman David Simon was recruited into Tony Blair’s government, Sutherland took over the chair. There’s no doubt he is immensely proud of BP and everything the company stands

for. But throughout our conversation, it is also obvious that what matters most to him, both in his past and in future possibilities, is public service. I ask him, for example, what he’s most proud of in his working life so far. The answer is, first, the creation of the WTO, and second, being part of the first Delors commission. Here, as commissioner for education, he proposed the Erasmus programme – as a result of which, 2 million students have to date, spent a year in a university outside their own home country. Third, “I did my best when I was attorneygeneral of my own country.” This is the wider Sutherland landscape, in which he places his tenure at BP as one important peak among many. “The company has been through a period of enormous change,” he says. “But I’ve always had the view that the role of the chairman is to run the board, and not to manage the company, so although I participated in these achievements, I don’t claim credit for them. I’ve worked with two chief executives, John Browne and Tony Hayward, who have been very effective in their different ways in transforming the company, and that transformation has been radical. It has been important not merely for BP, but for UK and European industry.” “When I came back in 1995, having participated in the GATT Uruguay round,

“We’ve also developed a robust committee structure for remuneration, audit, safety, ethics and the environment. I believe the whole area of corporate governance has been significantly advanced by BP.” which provided some of the building blocks of globalisation, it was particularly interesting to become involved in the practical implementation of that process – which required BP to develop a strategic vision of its place in an interdependent world. In response, we opened significant activities, both in China and Russia, the latter through TNK-BP. We’ve created a portfolio of exploration and production opportunities that spans the continents; and with the additions of ARCO and Amoco to our existing activities in Alaska and elsewhere, we have become the largest domestic US oil company. We’ve transformed BP from a medium-sized European company to a global company of major proportions.” BP has also transformed internally and in that respect, much credit does go to Sutherland. He is very clear about divisions of responsibility in a 21st-century public company: “The role of the chairman and the board is to develop the strategic issues, including merger activity, and to act as a check and balance to executive performance; to hire and fire chief

executives and to structure the board with a degree of knowledge and experience, which can augment the capacities of the executive in the analysis of difficult situations.” He thinks BP has created a good model – with a group secretariat, separate from the executive structure, which provides independent support to the chairman and other board members.

“W

e’ve also developed a robust committee structure for remuneration, audit, safety, ethics and the environment. I believe the whole area of corporate governance has been significantly advanced by BP. But I never saw the chairmanship as a very public role. I can’t recall giving one interview in my first eight years as chairman; I only became a public face of BP when it became inevitable.” The inevitable happened when internal tensions over the end-date of Lord Browne’s tenure as chief executive became very public indeed. With hindsight, does Sutherland think Browne’s profile had

become too high for the company’s good? “For a very long period of time, John’s profile was extremely good. He was consistently voted the best businessman in Britain. From BP’s point of view, that profile brought many positive effects, and pride within the company itself. It personalised leadership – and even if that gave something less than a full presentation of the way the company functioned, I’m not complaining about it. “I had some differences of view on strategic issues (but only very occasionally) with John, just as I might have from time to time with Tony,” Sutherland admits, “but that’s the way a balanced relationship should work. If the chairman automatically agrees with the chief executive, it wouldn’t do much for the checks and balances. There were moments of disagreement with John that became public, but both of us were big enough to continue working effectively together and to remain socially compatible. It never became a matter of such aggravation that we couldn’t communicate. And it was very » BP MAGAZINE Issue 2 2009 93

Profile> Peter Sutherland

“I plan to continue to be involved in international affairs: a great passion of my life is European integration, and I intend to pursue that vigorously.” temporary, given the long run of time that we worked together.” The last year of Browne’s tenure was certainly Sutherland’s most public moment at BP. Once that was over, and Hayward had settled in, another blew up with BP’s Russian partners in TNK-BP. Sutherland again played a decisive role in resolving the situation, and Tony Hayward referred to Sutherland as ‘the Irish tank at his back’. But it left open the big question of whether a combination of energy security issues and rising nationalism make it difficult to sustain the business model of an international oil company like BP.

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utherland dismisses that suggestion with the cheerful – if slightly intimidating – brusqueness he famously deploys from time to time. It is, he says, “palpable nonsense… The reality is that we bring enormous benefits in terms of our flexibility and skill-set, which cannot be duplicated by national oil companies. We bring global reach. I believe the model we have is extremely effective.” As for specific tensions in Russia, he is impeccably diplomatic: “We hope that’s now behind us. It was an unfortunate time, but not unique in joint ventures of this kind. The interdependence of the market economy means everybody has to play by a rule-based system, which provides reasonable assurance with regard to investment. That rule-based system is in everyone’s interest.” But if TNK-BP was the headline problem for 2008, this year’s is something much bigger and less susceptible to negotiation: an unprecedented global economic downturn. “We’re moving through a crisis

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the like of which has not been seen in our lifetime,” Sutherland says. “It would be hazardous to speculate how deep or how long it will be. I’m in the camp that sees this not as a short-term crisis, but one that is going to take a significant time to resolve, and that will bring serious economic damage. The implications for the oil industry are self-evident, because there is certain to be a period of weakness in oil prices – but I don’t believe that’s going to be prolonged because even in a malign scenario, the demand for oil will remain at high levels relative to supply. In the meantime, we’ll have to balance the supply projects we go into – in BP’s plans, we maintain enough flexibility to allow us to hold back when we need to.” What worries him about the current crisis is a lack of access to capital for businesses in the wake of the credit crunch. At least the oil industry is relatively secure in this respect, he says: “You have assets in the ground that will be used in the future, and which clearly have a significant value. I can’t see that the raising of capital should in any way be impaired, even by the severe lack of liquidity that prevails today.” So what is Peter Sutherland going to do after he steps down from the BP chair? “I have a continuing connection with Goldman Sachs, which I enjoy, and other avenues of activity that interest me: I’m chairman of the London School of Economics, where there’s plenty to do. I plan to continue to be involved in international affairs: a great passion of my life is European integration, and I intend to pursue that vigorously. I’m the special representative of the United Nations (UN) secretary general on migration and

development – I have a great interest in that, too – and an honorary ambassador of the UN Industrial Development Organisation, for which I’ve done very little over the past few years, but when I have more time, I’ll do more.” At 63, he’ll clearly have plenty of choices. And some of his countrymen have wondered aloud whether he might not choose to become a little less international – to return instead to national politics in Dublin, where he remains an influential figure. Does he secretly aspire to be Taoiseach or president, I wonder? Quite firmly, he says not – but adds that, despite living outside Ireland for the past 25 years or so, “most people still think I’m there,” and perhaps more significantly, “Ireland will always be big enough for me.”

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nd whatever he does next, you can be sure it will be done with the muscularity of grip and intolerance of waffle that has carried him this far. Even so, it requires quite some technique to manage such a diverse portfolio of commitments: how does he actually do it? “When it comes to technology, I’m appalling. I don’t have a BlackBerry. I just carry an antique mobile. But one skill I think I have is that I’m a good delegator. I surround myself with good people, I’ve done that all my life.” It takes more than a good support system to be as effective as Peter Sutherland, however. The real secret, he finally reveals, lies in something his father taught him: “If the ball is at your foot, he told me, kick it. Most of my life has been spent finding balls at my feet. And I’ve never been reluctant to give them a kick.” ■

Photography> Marc Morrison

BP Faces

ALL FIRED UP Greg Machado / Mechanical technician “I do feel responsible for the lives of my peers out in the deep waters of the Gulf of Mexico,” says Greg Machado, mechanical technician and member of the fire and rescue teams on BP’s Na Kika platform. At 97 kilometres (60 miles) offshore, in water depths of more than 1,770 metres (5,800 feet), the Na Kika platform is a floating town with a group of highly trained fire and rescue teams like any city. “Being part of the fire and rescue teams is voluntary, but I like the training and being prepared for anything out here.” Out at sea, with hydrocarbons all around, means that quick and effective action is needed should anything happen. “We train with different scenarios that simulate every possible event. This training is challenging and valuable, and it’s as useful at home as on the platform.” One never knows when Greg may come in handy. ■ BP MAGAZINE Issue 2 2009 95

Viewpoint> Evolution of a brand

1921-1922

1921 US President Warren Harding signs a joint Congressional resolution declaring an end to America’s state of war with Germany, Austria and Hungary; Albert Einstein is awarded the Nobel Prize in physics for his work with the photoelectric effect; the Communist Party of China is officially founded; just 13 spectators attend a football match between Leicester City and Stockport County, the lowest attendance in the Football League’s history. 96 Issue 2 2009 BP MAGAZINE

BRAND AND DELIVER A company’s brand is its shop window and usually the thing people remember most about a business. Like other longstanding brands, BP has developed a distinctive look and feel over the past century. But a great brand evolves with time and in 2000, after 70 years, the famous shield was retired. In its place, a new ‘sunburst’ logo was launched to reflect all forms of energy. Its multiple petals showed that many companies had merged to work together as BP. BP Magazine reflects on the seven eras of BP branding, and remembers some of the events taking place around the world as each change occurred.

1922-1930

1922 Mr AR Saunders from the purchasing department created the first BP mark, after winning an employee competition in 1920; the British Broadcasting Corporation is launched; in Egypt, British archaeologist Howard Carter finds the entrance to the pharaoh Tutankhamun’s tomb in the Valley of the Kings; the Barbary lion, Amur tiger and Californian grizzly bear all become extinct.

1930-47

1930 The Mickey Mouse comic strip makes its first appearance; Clyde Tombaugh discovers Pluto; Elm Farm Ollie becomes the first cow to fly in an airplane; the Chittagong Rebellion begins in India; Ellen Church becomes the first airline stewardess; sponsored by AngloPersian, Amy Johnson becomes the first woman to fly solo from England to Australia.

1947-1958

1958-1989

1989-2000

2000-

1947 Percival Prattis becomes the first African-American news correspondent allowed in the US House of Representatives and Senate press gallery; the International Monetary Fund begins operating; Miracle on 34th Street is released in cinemas; Princess Elizabeth marries Philip Mountbatten, Duke of Edinburgh; India gains independence from the British Empire.

1958 Sputnik 1 falls to Earth from its orbit; the US Army inducts Elvis Presley, transforming the ‘King’ into US private #53310761; Nikita Khrushchev becomes premier of the Soviet Union; US Congress formally creates the National Aeronautics and Space Administration (NASA); for the first time, total passengers carried by air exceeds total passengers carried by sea in transatlantic service; instant noodles go on sale.

1989 The Forties field enters the Guinness Book of World Records as the first oil field in western Europe to produce 2 billion barrels of oil; the Berlin Wall comes down; the first of 24 Global Positioning System satellites is placed into orbit; 12 European Community nations agree to ban the production of all chlorofluorocarbons (CFCs) by the end of the century; the first full-length episode of The Simpsons, premieres in the US.

2000 Y2K passes without serious computer failures; the final original Peanuts comic strip is published, following the death of its creator, Charles Schulz; Vladimir Putin is elected president of Russia; the billionth living person in India is born; the first resident crew enters the International Space Station; Republican governor of Texas, George Bush, defeats Democratic vice president Al Gore in the closest US election in history; BP launches a new brand. BP MAGAZINE Issue 2 2009 97

Factfile

Top

5 producers

The discovery of oil in Persia changed the Middle Eastern landscape, but in 1909 other – sometimes surprising – parts of the world were the key players in the industry.

Corbis

1

3

5

United States

Imperial Russia

Dutch East Indies

Burma

Romania

On 28th August 1859, George Bissell and Edwin L Drake made the first successful use of a drilling rig in the US to produce oil at a site on Oil Creek in Pennsylvania. In 1901, oil was struck at Spindletop (above), in south Beaumont, Texas, tripling US oil production overnight and kickstarting the modern Texan industry. By 1909, the main producing area was Oklahoma, followed by Texas.

At the beginning of the 20th century, Baku – the capital of Azerbaijan – was producing more than half the world’s oil supply from onshore fields first developed by the Swedish Nobel brothers. Meanwhile, in Galicia, Ignacy Łukasiewicz founded the first oil well in 1854 and, during the second half of the 19th and early 20th centuries, Galicia was consistently among the world’s top 10 producers.

Aeilko Jans Zijklert, a tobacco planter, moved to Sumatra’s east coast in 1880. During his travels around the island, he came across traces of oil, and by 1885, had drilled his first successful well. By the turn of the century, oil had been discovered in north and south Sumatra, central and eastern Java and east Kalimantan, much of which became a valuable resource for industrialising Europe.

The modern oil industry in Burma was largely developed by the Burmah Oil Company, founded in 1886 by the Scottish-born merchant, David Cargill. The company introduced new technology to the Burmese operations, including mechanical drilling. In 1909, its oil fields and refinery were connected by a 440 kilometre- (275 mile-) pipeline.

Like many parts of the oil-producing world, Romania’s connections stretch back centuries. However, the first well was drilled in 1861 to a depth of 150 metres (500 feet), using wooden rods and auger-type bits. Ploiesti, in south-central Romania, is the chief centre of the industry, and in the 19th century, was the largest oilproducing centre of southeast Europe.

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BP Faces

THE NEXT GENERATION Anna Horstkoetter / project engineer

“With the company’s plans to develop light and heavy oil and commercialise the Slope’s natural gas, I can clearly see a promising 50-year future.” Photography> Marc Morrison

Project engineer Anna Horstkoetter, who joined BP two years ago, is among a new generation of professionals who are preparing the company for a long-term future in Alaska. Anna’s father, John Horstkoetter, joined BP in 1979, and was involved in the design and construction of the field facilities in North America’s largest oilfield – Prudhoe Bay. Today, decades later, Anna is part of the Alaska North Slope renewal programme team that will upgrade and modernise that infrastructure. “With the company’s plans to develop light and heavy oil and commercialise the Slope’s natural gas, I can clearly see a promising 50-year future. These are very exciting times,” she says. A graduate of Stanford University, Anna holds a Master of Science degree in construction engineering and management. She is based at the company’s Anchorage headquarters. ■

BP MAGAZINE Issue 2 2009 99

Parting shots

“People who work for BP care deeply about the company; they have green and yellow blood in their veins and I think that’s because this is a company that tries to do the right thing.” Tony Hayward

100 Issue 2 2009 BP MAGAZINE

contributors>

NINA MORGAN worked as an exploration geologist for seven years before turning to freelance science writing. She now specialises in writing about all branches of science and technology.

FRANK BAKER is a lifetime Alaskan who retired from BP in 2007 with 29 years of service. He is currently a contract writer for the company.

NEV PIERCE is editor-at-large for Empire, the world’s biggest movie magazine. He has interviewed everyone from Christian Bale to Brad Pitt. His favourite film is Fight Club, when it’s not It’s A Wonderful Life.

HELEN CAMPBELL never gave the oil industry a thought as a ‘green-leaning’ languages graduate, until a two-year stint reporting on European oil markets required her language skills. She’s been hooked ever since.

MARTIN VANDER WEYER is the business editor and columnist of The Spectator, as well as editor of its monthly sister magazine, Spectator Business. He is also a regular contributor to the Daily Telegraph.

IAN VALENTINE is a freelance journalist, with a background in country and environmental issues, who lives in the Cotswolds. He has written for BP titles for the past eight years.

TIM WICKHAM is a business journalist with more than 15 years’ experience writing about the serious and humorous sides of corporate life.

ALEXANDER G. KEMP is professor of petroleum economics at the University of Aberdeen, and has been appointed by the British prime minister to write the official history of North Sea oil and gas.

HESTER THOMAS writes for and about FTSE companies. She’s particularly interested in the energy industry, marketing, corporate social responsibility and profiling people.

With special thanks to Bethan Thomas at the BP Archive and Vartan Amadouny of the BP History team.

The next edition of BP Magazine will be out in July 2009. BP Magazine was printed using vegetable based printing inks and low alcohol damping on press. The paper was manufactured using 50% de-inked post consumer waste fibre and 50% virgin fibre pulp sourced from well managed forests at a mill accredited for EMAS, ISO14001 and FSC.

50%

BP p.l.c Chertsey Road Sunbury-on-Thames Middlesex TW16 7LN United Kingdom web: www.bp.com/bpmagazine