BP 2008 Annual Report Download - page 25

BP Annual Report and Accounts 2008
Performance review
the project at the BP-operated Endicott oilfield. BP drilled the Liberty
discovery well in 1997, and is the operator and sole owner of the field.
• In August 2008, BP successfully tested Cold Heavy Oil Production
with Sand (CHOPS) technology for the first time in Alaska, initiating a
four-well production test programme during the period from August
2008 until the end of 2009. This first test at Milne Point S Pad brought
oil and sand to the surface, where it was processed using temporary
field facilities, combined with other light oil production, and shipped
down the Trans-Alaska Pipeline System (TAPS). The CHOPS well tests
are part of a multi-year programme to determine the technical and
commercial feasibility of a large scale heavy oil development project
on the North Slope using existing cold and thermal technologies.
• During 2008, all four of the Prudhoe Bay Oil Transit Line segments
that were targeted for replacement in response to the oil spills in the
Prudhoe Bay field in March and August 2006 were completed and
placed in service.
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. In 2008, total
liquids production was 173mb/d, a 14% decrease on 2007, and gas
production was 759mmcf/d, a 1% decrease on 2007. This decrease in
production was driven by natural decline. 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 $907 million in 2008, compared with $804 million in 2007
and $794 million in 2006. BP operates one NGL plant in the UK.
Significant events in 2008 were:
• In February 2008, BP and its partner, Marathon Petroleum West of
Shetlands Ltd, announced a new oil discovery in UK Continental Shelf
Block 204/23 (BP 72%), following drilling on the South West Foinaven
prospect. BP, together with its partner, is evaluating the discovery and
the potential for a two-well subsea development, tied back to the
Foinaven Floating Production Storage and Offloading vessel (FPSO).
• In May 2008, BP and its co-venturers made an oil discovery in North
Sea Block 16/23s (BP 77.07%), named Kinnoull. The Kinnoull
discovery and potential development options, including a subsea
development tied back to BP’s Andrew field, are being evaluated.
• During the third quarter, the first phase of offshore removal activity
for the North West Hutton platform decommissioning programme
was completed. This is BP’s biggest decommissioning project so far
in the North Sea and has seen the removal of 22 separate topsides
modules, which were then taken away by barges to the Able UK yard
on Teesside for recycling and disposal. It is estimated that around
97% of the material recovered will be recycled and/or reused.
• In December 2008, BP and BG Group agreed to exchange a package
of North Sea assets. This 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
agreed to acquire BG’s 24.2% interest in the BP-operated Amethyst
field and all its interests in the Easington Catchment Area (ECA)
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. BG Group agreed to acquire 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 will retain 18% equity in
Erskine). The deal is subject to government, regulatory and partner
approvals and completion is expected in the second quarter of 2009.
Rest of Europe
Our activities in the Rest of Europe are now centred on Norway. Until
February 2007, we also held exploration and production and gas
infrastructure interests in the Netherlands. Development expenditure
(excluding midstream) in the Rest of Europe was $695 million, compared
with $443 million in 2007 and $214 million in 2006. In 2008, our total
production in Norway was 47mboe/d, a 16% decrease on 2007. This
decrease in production was driven by natural decline. In Norway, progress
continued as planned on the Skarv and Valhall Redevelopment projects.
Rest of World
Development expenditure in Rest of World (excluding midstream) was
$5,251 million in 2008, compared with $5,045 million in 2007 and
$4,522 million in 2006.
Rest of Americas
Canada
• In Canada, our natural gas and liquids production was 51mboe/d in
2008, a decrease of 1% compared with 2007. The year-on-year
decrease in production is mainly due to natural field decline.
• On 31 March 2008, BP and Husky Energy Inc. (Husky) completed a
deal to create an integrated North American oil sands business by
means of two separate 50:50 joint ventures, BP-Husky Refinery LLC,
operated by BP, and the Sunrise Oil Sands Partnership (SOSP),
operated by Husky. BP’s capital expenditure in respect of the creation
of SOSP amounted to $2.8 billion.
• In June 2008, BP successfully acquired three of five exploration
licences on offer in the Canadian section of the Beaufort Sea through
a Call for Bids process issued by The Department of Indian and
Northern Affairs of Canada. The leases awarded to BP cover about
611,000 hectares of the Beaufort seabed, north of Tuktoyaktuk,
Northwest Territories. These are in addition to the 15 significant
discovery licences that BP currently holds in the Beaufort Sea, and
two exploration licences currently in moratorium. The term for
exploration licences issued from this Call for Bids is nine years
consisting of two consecutive periods. There is a $300 million work
obligation associated with acquiring these exploration licences.
Trinidad
• In Trinidad, natural gas production volumes increased from
420mboe/d in 2007 to 422mboe/d in 2008. The increase was a result
of improved operating efficiency on the Atlantic LNG Trains combined
with increased demand from the domestic market and full ramp-up of
two new fields, Mango and Cashima. Liquids production increased by
7mb/d (23%) to 37mb/d in 2008 from 30mb/d in 2007 as a result of
an increase in NGLs associated with higher throughput for the Trains,
increased crude and condensate from the two new fields and liquid
optimization activities.
• In December 2008, a new oil export pipeline was commissioned
to transport liquids from offshore fields to onshore delivery points.
BP owns 100% of the capacity of the pipeline.
• Progress on Savonette, BP’s next field development in Trinidad,
continued throughout the year and first gas is expected to be
delivered in 2009.
• In 2008, the Day Away from Work Case injury frequency (per 200,000
work hours) has been reduced from 0.12 in 2003 to zero in 2008 and
the recordable injury frequency has more than halved in the same
period. This has come about through the development and
implementation of a comprehensive multi-year safety plan, focused
on coaching safety leaders, workforce communication, standard
implementation and continuous learning.
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