BP 2012 Annual Report Download - page 72

Business review: BP in more depth
BP Annual Report and Form 20-F 2012
70
BP is currently conducting exploration and appraisal programmes in Jordan
and Oman.
In Abu Dhabi, we have equity interests of 9.5% and 14.67% in onshore
and offshore concessions respectively. The Abu Dhabi onshore
concession expires in January 2014 with a consequent production impact
of approximately 140mb/d.
In India, BP has a 30% interest in nine oil and gas PSAs operated by
Reliance Industries Limited (RIL), a 50% interest in one operated PSA,
and is a partner with RIL in a 50:50 joint venture for the sourcing and
marketing of gas in India.
t In 2011, BP acquired from RIL a 30% interest in 21 oil and gas PSAs
in India operated by RIL. As part of continued evaluation to high grade
the portfolio and focus our efforts, 12 of the blocks acquired were
relinquished in 2012.
t During 2012 progress continued toward the anticipated ramp-up of
drilling and project activity in 2013. Activities to arrest the decline in
production on Block KG D6 fields were approved by the relevant
authorities and execution planning has commenced. The government
also approved the submitted Field Development Plan (FDP) of Satellite I
discoveries, declaration of commerciality of R-Series discoveries and
appraisal plan of the Cauvery basin block discovery. Site survey and
engineering studies have been undertaken to progress already
discovered resources in the KG D6 and NEC 25 blocks. The final
investment decisions on these projects are subject to completion of
appraisal and engineering work, obtaining regulatory approvals and
determining gas pricing. Exploration drilling is scheduled to commence
in early 2013.
In Iraq, BP holds a 38% working interest and is the lead contractor in the
Rumaila technical service contract. Rumaila is one of the world’s largest
oilfields and was discovered by BP, as part of a consortium, in 1953 and
comprises five producing reservoirs.
Australasia
In Australasia, we are active in Australia and Eastern Indonesia.
In Australia, BP is one of seven partners in the North West Shelf (NWS)
venture, which has been producing LNG, pipeline gas, condensate, LPG
and oil since the 1980s. Six partners (including BP) hold an equal 16.67%
interest in the gas infrastructure and an equal 15.78% interest in the gas
and condensate reserves, with a seventh partner owning the remaining
5.32%. BP also has a 16.67% interest in some of the NWS oil reserves
and related infrastructure. The NWS venture is currently the principal
supplier to the domestic market in Western Australia and one of the
largest LNG export projects in Asia with five LNG trainsa in operation. BP
also holds a 5.375% interest in the Jansz-lo field and 12.5% interests in
the Geryon, Orthrus and Maenad fields which are part of the Greater
Gorgon project. In May 2012 the 3D seismic survey of the four deepwater
offshore exploration blocks in the Ceduna Sub Basin (BP 100%) awarded
in 2011 was completed. The survey covered approximately 12,500km2.
Following interpretation of the seismic survey, BP will drill four deepwater
wells in this frontier exploration basin, located within the Great Australian
Bight off the coast of southern Australia.
In Eastern Indonesia, BP has a 100% interest in the North Arafura PSA,
located on the coast of the Arafura Sea, 480 kilometres south east of our
Tangguh LNG plant (BP 37.16% and operator). In addition, BP owns a 32%
interest in the Chevron-operated West Papua I and Ill PSAs, located
120 kilometres to the south of the Tangguh LNG plant (see Liquefied
natural gas on pages 70-71). BP also has 100% interests in two
deepwater PSAs; West Aru I and II. The PSAs are located 500 kilometres
south west of the North Arafura PSA and 200 kilometres west of the Aru
island group.
a An LNG train is a processing facility used to liquefy and purify natural gas in the formation of
LNG.
Midstream activities
Midstream activities involve the ownership and management of crude oil
and natural gas pipelines, processing facilities and export terminals, LNG
processing facilities and transportation, and our natural gas liquids (NGLs)
extraction business.
Oil and natural gas transportation
BP has direct or indirect interests in certain crude oil and natural gas
transportation systems. The following narrative details the significant
events that occurred during 2012 by geographical area.
BP’s onshore US crude oil and product pipelines and related transportation
assets are included in the Downstream segment (see page 77).
Europe
In the UK sector of the North Sea, BP operates the Forties Pipeline
System (FPS) (BP 100%), an integrated oil and NGLs transportation and
processing system that handles production from more than 80 fields in
the central North Sea. The system has a capacity of more than 1 million
barrels per day, with average throughput in 2012 of 390mboe/d. During
2012 FPS processed its 8 billionth barrel, having transported and
processed more than one third of the total UK North Sea oil produced
to date. BP also operates and has a 36% interest in the Central Area
Transmission System (CATS), a 400-kilometre natural gas pipeline system
in the central UK sector of the North Sea. The pipeline has a transportation
capacity of 293mboe/d to a natural gas terminal at Teesside in north-east
England. Average throughput in 2012 was 54mboe/d. CATS offers natural
gas transportation and processing services. In addition, BP operates the
Sullom Voe oil and gas terminal in Shetland. The Dimlington and Easington
terminals in Humberside form part of the southern gas assets, the sale of
which was completed in November 2012 (see Disposals on page 66).
North America
BP owns a 46.9% interest in the Trans-Alaska Pipeline System (TAPS).
The TAPS transports crude oil from Prudhoe Bay on the Alaska North
Slope to the port of Valdez in south-east Alaska.
t In April 2012 the two minority owners of TAPS, Koch (3.08%) and
Unocal (1.37%) gave notice to BP, ExxonMobil (20.4%) and
ConocoPhillips (28.2%) of their intentions to withdraw as an owner of
TAPS. The effect of these notifications and the resultant ownership
interest and abandonment obligations are still under discussion and
regulatory review.
t In September 2012 BP, ExxonMobil and ConocoPhillips entered into
two settlement agreements among themselves on the pooling of costs
on TAPS and the agreements are under review by the Federal Energy
Regulatory Commission.
Asia
BP, as operator, holds a 30.1% interest in and manages the Baku-Tbilisi-
Ceyhan (BTC) oil pipeline. The 1,768-kilometre pipeline transports oil from
the BP-operated ACG oilfield in the Caspian Sea, along with other
third-party oil, to the eastern Mediterranean port of Ceyhan and has a
capacity of 1.2 million barrels per day. Average throughput in 2012 was
673mboe/d. BP is technical operator of, and holds a 25.5% interest in, the
693-kilometre South Caucasus Pipeline, which takes gas from Azerbaijan
through Georgia to the Turkish border and has a capacity of 134mboe/d
with average throughput in 2012 of 67.8mboe/d. In addition, BP operates
the Western Export Route Pipeline between Azerbaijan and the Black Sea
coast of Georgia (as operator of Azerbaijan International Operating
Company).
Liquefied natural gas
Our LNG activities are located in Abu Dhabi, Angola, Australia, China,
Indonesia and Trinidad. In both the Atlantic and Asian regions, BP is
marketing LNG using BP LNG shipping and contractual rights to access
import terminal capacity in the liquid markets of the US (via Cove Point and
Elba Island), the UK (via the Isle of Grain) and Italy (Rovigo), and is supplying
Asian customers in Japan, South Korea and Taiwan.
In Abu Dhabi, we have a 10% equity shareholding in the Abu Dhabi Gas
Liquefaction Company, which in 2012 supplied 5.6 million tonnes of LNG
(289 billion cubic feet equivalent regasified).
In Angola, BP has a 13.6% share in the Angola LNG project, which is
expected to receive approximately 1 billion cubic feet of associated gas
per day from offshore producing blocks and to produce 5.2 million tonnes
per annum of LNG (gross), as well as related gas liquids products. The
Angola LNG plant is in the process of being commissioned and is
expected to start production in 2013.
In Australia, BP is one of seven partners in the NWS venture. The joint
venture operation covers offshore production platforms, trunklines,