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Businessreview
Business review
RestofEurope
OuractivitiesintheRestofEuropeareinNorway.
• On9November2010,thedevelopmentoftheNorwegianoilandgas
eldSkarvreachedasignicantmilestonewiththenamingceremony
oftheSkarvFloatingProduction,StorageandOfoading(FPSO)unit.
TheceremonytookplaceinGeojeinSouthKorea.Thevesselwill
operateintheNorwegianSeaclosetotheArcticCircle,210kmoffthe
coastofNordland.ItisduetostartproductionattheSkarvoilandgas
eldintheautumnof2011.
• In2010,theValhallredevelopmentprojectpassedamajormilestone
withthecompletionoftheheavyliftprogramme.Themaindeckand
livingquartersweresuccessfullyinstalledoffshoreinJuly2010.The
livingquartersarescheduledtobereadyforhabitationinApril2011,
withproductionstart-upfromthenewfacilityscheduledforearly2012.
North America
UnitedStates
OuractivitieswithintheUStakeplaceinthreemainareas:deepwaterGulf
ofMexico,Lower48statesandAlaska.
Deepwater Gulf of Mexico
ForfurtherinformationontheimpactoftheGulfofMexicooilspillandBP’s
responsepleaseseepages34-39.Alsoseepage43underProduction.
• On31March2010,rstoilwasachievedfromtheGreatWhiteeld
(BP33.3%)locatedintheultra-deepwatersoftheGulfofMexico.
ProductionisprocessedbythePerdidoRegionalHostoating
productionfacility(BP27.5%),anintegratedsparanddrillingrig.The
developmentisoperatedbyShellonbehalfofBPandChevron.Great
WhitemarkstherstdevelopmentofaPaleogene(LowerTertiary)
reservoirintheGulfofMexicoandisexpectedtorepresent80%ofthe
estimatedtotalproductionthroughthePerdidoHost.
• InSeptember2010,thenalinvestmentdecisionwasmadeforthe
MarsB(BP28.5%)deepwaterdevelopment,locatedapproximately
130milessouthofNewOrleans,LouisianaintheGulfofMexico.
Thedevelopmentwillincludeasecondtension-legplatform,named
Olympus,toenhancerecoveryfromtheMarseld.TheMarsB
developmentwilldrawproductionfromeightMississippiCanyonblocks
–762,763,764,805,806,807,850and851.
• InMarch2010,BPparticipatedinleasesale213.Followingthissalewe
wereawarded18leases,11ofwhichhavenowbeenexecuted,a
furthersevenleaseswereawardedbuthavenotyetbeenexecuted.
Lower 48 states
OurNorthAmericaGasbusinessoperatesonshoreintheLower48states
producingnaturalgas,naturalgasliquidsandcoalbedmethaneacross
14states.In2010,wedrilledover200wellsasoperatoracrosstheUS,
includingstart-upoperationsintheEagleFordshale.Shalegasassetsare
becominganincreasinglyimportantpartofourNorthAmericaGasbusiness.
Wehavenotincludedanyprovedundevelopedreservesexpected
tocommencedevelopmentbeyondveyearsinourdisclosedvolumes,
althoughwearecommittedtodevelopmentbeyondveyearsin
manyelds.
Alaska
BPoperates15NorthSlopeoilelds(includingPrudhoeBay,Endicott,
Northstar,andMilnePoint)andfourNorthSlopepipelines,andownsa
signicantinterestinsixotherproducingelds.
TwokeyaspectsofBP’sbusinessstrategyinAlaskaare
commercializingthelargeundevelopednaturalgasresourcewithinour
26.4%interestinPrudhoeBayandunlockingthelargeundeveloped
viscousandheavyoilresourceswithinexistingNorthSlopeeldsthrough
theapplicationofadvancedtechnology.
• In2010,weprogressedthepreviouslyannounceddevelopment
activitiesfortheLibertyoileld,whichislocatedonfederalleases
aboutsixmilesoffshoreintheBeaufortSea,andeastofthePrudhoe
Bayoileld.Theplanneddevelopmentincludesuptosixultra-extended
reachwells,includingfourproducersandtwoinjectors,tobedrilled
fromexistinginfrastructureintheBP-operatedEndicotteldto
minimizetheonshoreandoffshoreenvironmentalfootprint.Aspartofa
continuousevaluationofprojectdesign,materials,andsystems,we
suspendedphysicalconstructionoftherigon-siteinthefourthquarter.
Followingareviewofengineeringanddesignelements,andresolution
ofanyissues,weplantocontinuerigconstruction.Asthisreview
movesforward,wewilldeveloparevisedprojectschedule.BPdrilled
theLibertydiscoverywellin1997,andistheoperatorandsoleowner
oftheeld.
• ThePointThomsonUnit(PTU)wasterminatedbyadministrative
decisionoftheStateofAlaskaDepartmentofNaturalResources(DNR)
inNovember2006(BP32%).ExxonMobil,theoperator,andtheother
unitowners,includingBP,appealedtheunitterminationintheAlaska
SuperiorCourt.Attheendof2006,basedontheDNR’sterminationof
theUnit,BPwroteoffallhistoricalcostsassociatedwiththePTU.In
January2009,ExxonMobilwasgrantedpermissionbytheDNR,under
aconditionalinterimdecision,toconductdrillingoperationsontwoof
the31leasescomprisingthePTU.On11January2010,theAlaska
SuperiorCourtreversedtheDNR’sadministrativedecisiontoterminate
theunit.TheDNRpetitionedtheStateofAlaskaSupremeCourtfor
limitedreview,andthepetitionwasgrantedinthesecondquarterof
2010.Asoftheendof2010,thecaseisstillpendingbeforethe
AlaskaSupremeCourt.ExxonMobilandtheStateofAlaskahave
alsoinformedtheotherunitowners,includingBP,thattheyare
negotiatingasettlementagreement.BPhasaskedtoparticipatein
thesettlementdiscussions.
Canada
InCanada,BPisfocusedononeoftheworld’slargestpetroleumresource
basins,Canada’soilsands,usingin-situtechnology.In-situtechnologyis
differenttomininginthatitlimitslanddisturbanceandrequiresnotailing
ponds.Thein-situtechnologythatBPCanadaplanstouseissteam-
assistedgravitydrainage(SAGD)whichusestheinjectionofsteamintothe
reservoirtowarmthebitumensothatitcanowtothesurfacethrough
recoverywells.BPholdsaninterestinseveraloilsandsleasesthroughthe
SunriseOilSandsandTerredeGraceOilSandspartnershipsandthePike
OilSandsjointventure.BPalsodevelopsandproducesnaturalgasand
naturalgasliquids,marketsnaturalgas,isthelargestmarketerinCanadaof
naturalgasliquidsandhassignicantexplorationinterestsintheCanadian
BeaufortSea.
• InNovember2010,phase1oftheSunriseoilsandsproject(BP50%)
wassanctioned.BPanditspartner,HuskyEnergyInc,havecommitted
fundingtobuildfacilities,drillwellsandcreatetheoperationalsystems
andresourcestobringSunrisephase1intoproduction.Firstproduction
ofbitumenisexpectedin2014,buildingto60,000barrelsperday
grosscapacityoverthesubsequent24months.Long-termdrillingand
facilitydevelopmentisplannedtocontinuethereafterinorderto
maintainthatratefor40yearsormore.Futureadditionalphasesof
Sunrisearebeingcontemplated.
• InJuly2010,BPsignedajointoperatingagreementwithExxonMobil
CanadaLimitedandImperialOilResourcesVenturesLimited,a
subsidiaryofExxonMobil,toexchange50%ofBP’sworkinginterestin
theEL449eldfor50%workinginterestinImperial/Exxon’sEL446
eld,bothintheCanadianBeaufortSea.Underthisagreement,
operatorshipwasassignedtoImperialwithBPremainingactively
involvedinmajorexplorationdecisions.
• In2010,interpretationofthe20093D-seismicsurveyoflicencesinthe
CanadianBeaufortSeacommencedandaccesstoseismicdataforthe
EL446licencewasacquired.
BPAnnualReportandForm20-F2010 45