Back to petroleum? Oil majors aren't buying into threat from renewables

Two decades ago, BP set out to transcend oil, adopting a sunburst logo to convey its plans to pour $8 billion over a decade into renewable technologies, even promising to power its gas stations with the sun.

That transformation - marketed as "Beyond Petroleum" - led to manufacturing solar panels in Australia, Spain and the United States and erecting wind farms in the United States and the Netherlands.

Today, BP might be more aptly branded "Back to Petroleum" after exiting or scaling back its renewable energy investments. Lower-cost Chinese components upended its solar panel business, which the firm shed in 2011. A year later, BP tried to sell its U.S. wind power business but couldn't get a buyer.

"We made very big bets in the past," BP Chief Executive Bob Dudley told Reuters in an interview. "A lot of those didn't work. We're not sure yet what will be commercially acceptable."

The costly lesson of the biggest foray yet by an oil major into renewable energy was not lost on rival firms.

Even as governments and environmentalists forecast a peak in oil demand within a generation - and China and India say they may eventually ban gasoline and diesel vehicles - leaders of the world's biggest oil firms are not buying the argument that their traditional business faces any imminent threat.

A Reuters analysis of clean energy investments and forecasts by oil majors, along with exclusive interviews with top oil executives, reveal mostly token investments in alternative energy. Today, renewable power projects get about 3 percent of $100 billion in combined annual spending by the five biggest oil firms, according to energy consultancy Wood Mackenzie.
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Oil firms learn to move an ancient product with new-age tech

BP’s troubleshooters here received a call for help from colleagues in Azerbaijan. Sand was invading oil wells from the rocks outside. To avoid damage, the operators were choking the wells back, reducing revenues.

Two tech-savvy specialists, Prad Thiruvenkatanathan, a research scientist, and Tommy Langnes, a sand expert, came up with a novel fix. They used fiber-optic cable to gather the sounds coming from the wells deep in the earth. Inspired by apps like Shazam that recognize the voices of pop stars, they figured how to distinguish the sonic signature of sand from other sounds, like flowing oil. They also installed computers on the production platforms to sift staggering volumes of data coming from the wells down to manageable levels.

Using these tools, BP can identify where sand is coming in and patch the breaches instead of choking down the whole well. The flows from one well have already increased by nearly 50 percent, potentially a huge gain if the technology is rolled out through BP’s global network, where sand is a common problem. They are already using a similar tool to detect leaks and other potential hazards.

“It is just like your iPhone,” Mr. Langnes said. “We have built the phone. We have a couple of apps installed. Now the R&D team is working on new apps to install on the digital platform.”

The oil industry has long been of two minds when it comes to high technology. Oil companies like BP and Italy’s Eni use powerful supercomputers to crunch data from sound waves into images of petroleum deposits in the ground. Yet the industry has been resistant to change in other areas, like the process of producing oil.
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British energy firm BP files for IPO of US pipeline assets

British energy company BP on Monday filed for an initial public offering of its US pipeline assets.

BP Midstream Partners LP, the master limited partnership (MLP) formed by BP's US pipeline unit, said in a regulatory filing it plans to list on the New York Stock Exchange under the symbol "BPMP".

An MLP is a tax-advantaged structure often used by pipeline and other capital intensive companies. They do not pay corporate income tax on distributions, or earnings, to partners.

The offering comes nearly two months after BP laid out plans to spin off some of its US Midwest and Gulf Coast pipeline assets in an IPO to raise cash.

The IPO revives a plan first broached internally about five years ago before slumping crude oil prices caused BP to put the idea on hold, a source told Reuters in July.

Other energy companies that have spun off their pipeline assets include Royal Dutch Shell, which in 2014 raised nearly $1 billion in the largest master limited partnership IPO to date and refiners such as Valero Energy Corp, Tesoro Corp and Marathon Petroleum Corp.

Citigroup, Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse and JPMorgan are among underwriters for BP Midstream Partners' IPO.

BP Midstream said it intends to raise up to $100 million in the IPO.

The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.
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