BP 2009 Annual Report Download - page 32

30
BP Annual Report and Accounts 2009
Business review
Canada
In Canada, BP operates in five provinces and two territories, exploring for,
developing, producing and processing natural gas and heavy crude oil.
We also hold an interest in an oil sands joint venture with Husky Energy
Inc., we market natural gas and we are the largest marketer of natural
gas liquids.
• In 2009, BP conducted a successful 3D seismic programme over the
primary area of interest on the exploration licences acquired in 2008
in the Canadian Beaufort Sea. The programme was the most
northerly 3D seismic programme ever conducted, with approximately
1,600 square kilometres of 3D data acquired. The project also had the
largest array of towed marine streamers deployed in the high Arctic.
BP has 2,392,101 acres (968,049 hectares) of significant discovery
licences and exploration licences in the Beaufort Sea.
South America
Venezuela
BP has been in Venezuela since 1994 and currently participates in three
equity-accounted entities.
• In 2009, production cuts due to OPEC quota restrictions were
assigned to the Petromonagas and Petroperija entities.
Petromonagas’s OPEC quota restrictions resulted in a complete
production shutdown until 12 July 2009. There is uncertainty
regarding the duration of the quota restrictions in Petroperija.
Colombia
Our main activity in Colombia is concentrated on operating a producing
field complex in the Casanare region. In addition, we operate four
principal processing plants and own pipeline interests. BP also holds
exploration rights over two blocks off Colombia’s northern coast in the
Caribbean Sea.
• During 2009, seismic data processing and interpretation was carried
out at the RC4 and RC5 Caribbean offshore blocks (BP 40.6%) in
order to determine potential prospects. A decision whether to drill a
well is expected to be taken in 2010.
• During 2009, the strategy and detailed plan for the termination of the
Santiago de las Atalayas field contract by June 2010, and its
subsequent operation by Ecopetrol, was designed and implemented.
Argentina, Bolivia and Chile
BP conducts activity in the Southern Cone region of South America
(Argentina, Bolivia and Chile) through Pan American Energy (PAE), a joint
venture company in which BP holds a 60% interest. As the venture is
jointly controlled with Bridas Corporation, it is accounted for using the
equity method of accounting. Most of the PAE production comes from
the Cerro Dragon field in the provinces of Chubut and Santa Cruz.
• The Cerro Dragon field is now producing at its highest level since the
licence was granted in 1958, and further expansion programmes are
planned. PAE also has other gas and liquids producing assets in the
Argentine provinces of Salta, Neuquen and Tierra del Fuego, and in
Bolivia. PAE also has interests in exploration areas, pipelines, and
other midstream infrastructure assets, primarily in Argentina.
• On 26 November 2008, the Argentine government issued a decree by
which a new regime on oil and by-products exports, called Petróleo
Plus was put in place. This programme provides fiscal relief in the
form of fiscal credit certificates, which can be used to offset export
tariffs on oil, LPG and by-products. The goal is to incentivize
investment to increase oil production and reserves. As PAE achieved
the targets for both reserves replacement and production growth
stipulated in the programme, it has obtained and applied fiscal credit
certificates since January 2009.
• On 23 January 2009, the president of Bolivia issued a decree
nationalizing PAE’s investment in 8,049,660 shares of Chaco. The
decree establishes a compensation value per share, which represents
a total amount of $233 million (BP share $140 million), subject to
eventual adjustments. The partners assert that this is not an adequate
compensation for the nationalized shares. PAE will pursue an
adequate compensation for the nationalized assets.
• On 28 January and 22 May 2009, PAE entered into two agreements
with the Neuquen province in Argentina that provide for the extension
of concession terms related to the exploration and development of
the Aguada Pichana and San Roque blocks and of the Lindero
Atravesado block, respectively.
Trinidad & Tobago
BP holds exploration and production licences covering 904,000 acres
offshore of the east coast. Facilities include 12 offshore platforms and
one onshore processing facility. Production is comprised of oil, gas and
NGLs.
• On 27 October 2009, the Savonette offshore field development
began production on a normally unmanned installation platform (NUI).
Savonette is located in 290 feet (88 metres) of water approximately
50 miles off Trinidad’s south-east coast. Production from the platform
is tied in to BP Trinidad and Tobago’s Mahogany B platform and will
supply the Trinidad domestic market as well as Atlantic LNG’s
liquefaction plant for export as LNG to international markets. The
Savonette platform, installed in February 2009, is the fourth in a
series of NUIs designed and constructed locally in Trinidad using a
standardized ‘clone’ concept. The first three NUIs were Cannonball,
Mango and Cashima.
Europe
United Kingdom
We are the largest producer of oil, the second largest producer of gas
and the largest overall producer of hydrocarbons in the UK. Key aspects
of our activities in the North Sea include a focus on in-field drilling and
selected new field developments. Our development expenditure
(excluding midstream) in the UK was $751 million in 2009, compared
with $907 million in 2008 and $804 million in 2007. BP operates one NGL
plant in the UK.
Significant events were:
• On 31 August 2009, the exchange of assets between BP and BG
Group was formally completed. The exchange is expected to
strengthen BP’s position as a major operator in the southern North
Sea and to facilitate development activity and investment in the UK
Continental Shelf. BP acquired BG’s 24.2% interest in the BP-
operated Amethyst field and all its interests in the Easington
Catchment Area fields, including a 73.3% interest in the Mercury
field, a 79% interest in the Neptune field, a 65% interest in the
Minerva, Apollo and Artemis fields and BG’s 30.8% interest in the
BP-operated Whittle and Wollaston fields. In return, BG Group
acquired BP’s interest and operatorship in the Everest (BP 21.1%)
and Lomond (BP 22.2%) fields, BP’s 18.2% interest in the BG-
operated Armada field and 32% of the Chevron-operated Erskine field
(BP retained 18% equity in Erskine).
• Drilling performance moved from fourth quartile in 2007 to first
quartile in 2008a, and generated additional drilling capital efficiencies
in 2009.
aSource: BP Drilling and Completions Global Benchmarking.