"I thought I would pass on to the collective, if I may, what the general consensus was from global energy ministers, service supply company experts, offshore specialists, academics and respected offshore consultants who are gathering at an international oil show here in Calgary until Thursday.
"What was unfortunate now that we are passed 50 days was the remark from just about everyone on how little foresight, proper back up and non planning of essential equipment needed to undertake the offshore drilling program was in place by BP. The CEO has left matters, according to many and some respected foreign energy ministers 'too little too late' and most attendees from third world nations developing their resources have insisted and learned they will never allow majors to dictate terms and conditions to them without a full integrated plan much of what Mr. Brooks presents here. Many added they would like to see a stronger third party bond now attached to exploratory areas offshore where commercial development is sought.
"In my own experiences when we used to partner with BP anywhere in the North Sea, or with Statoil joint ventures in Norway and West Africa, this party was always the one who disputed the costs at every stage of the operations. It is ironic today, since the Amoco/Sohio mergers, that this is the same party who has tried to do the minimal with the least paying an exorbitant price in doing so off Louisiana. It is easy to be critical when a company is down, yet the current public relations position is as dogmatic as some of the middle managers in place making the same decisions the last 15 to 20 years that have long accelerated and seen the demise of BP in regions such as the North Sea (e.g. loss of Forties, divesting of marginal assets etc.) The firm has run out of ideas in playing catch up with majors and not scooped up juniors where appropriate in say the shale gas growth phase or geothermal branch having 35% of its ROI assets in the U.S. at sensible prices when oil fell back to the $40 range. At this rate, I'm certain it will only be a matter of time before it is merged with another entity as long as CALPERS and dividend holders can't stand the severe pain anymore at watching this spectacle play itself out.
"The good news is, as long as innovation improves, and yesterday we saw some new ideas with possibilities from firms in China to Columbia at the show, the industry is very healthy to develop the next stage of growth with economies of scale well taken into account. There are still good hydrocarbon provinces out there that can look after the requirements of global demand provided, like all good petroleum specialists, we manage the growth balancing environmental concerns with common sense orchestrating better technology acumen to run enterprises. A major CEO from Houston mentioned to me yesterday that he could not 'make money from the environment' when it came to looking for oil and gas. I remarked that the environment is really a source, and when we examine and look after the source in balance for all our needs, it is really a resource that we can develop with fortitude that costs little when we have a strong appreciation for it turning it into the required development asset. BP forgot this when they enacted their 'Beyond Petroleum' rebranding. Stakeholders in Louisiana and along the Gulf Coast certainly have issues with the company now because BP long lost its way from its mandate. When good planning is in place, what we are seeing now could easily have been averted.
"It is in times like this that the global SMEs and juniors are often the catalysts for this push rather then the majors anyway, if historicals are correct, as they have shown us in the past for future directional industry sector growth. The knowledge and care with diligence is present for offshore exploration and production. It is just at a hiccup stage for now in light of BP's practices and not indicative of the offshore industry as a whole that will come back even stronger."
Eoin Treacy's view Thank you for this informed commentary which I'm sure will be of interest to other subscribers. Also see the report from Parks Paton Hoepfl & Brown posted yesterday and referred to in the above email.