BP 2014 Annual Report Download - page 32

t (VMGPG.FYJDPo we made a new discovery – Guadalupe – and were
awarded 51 blocks in the March and August Gulf of Mexico lease sales.
At the end of the year we had 10 rigs operating. Following our strategic
divestment programme, we now have a focused portfolio with growth
potential around four operated and three non-operated hubs.
Development expenditure of subsidiaries incurred in 2014, excluding
midstream activities, was $15.1 billion (2013 $13.6 billion, 2012
$12.6 billion).
Production
Our oil and natural gas production assets are located onshore and offshore
and include wells, gathering centres, in-field flow lines, processing
facilities, storage facilities, offshore platforms, export systems (e.g. transit
lines), pipelines and LNG plant facilities. It includes production from
conventional and unconventional (coalbed methane, shale) assets. The
principal areas of production are Angola, Argentina, Australia, Azerbaijan,
Egypt, Trinidad, the UAE, the UK and the US.
Production (net of royalties)a
2014 2013 2012
Liquids thousand barrels per day
Crude oil
Subsidiaries 844 789 795
Equity-accounted entities 163 294 281
1,007 1,083 1,076
Natural gas liquids
Subsidiaries 91 86 96
Equity-accounted entities 787
99 94 103
Total liquidsb
Subsidiaries 936 874 891
Equity-accounted entities 170 302 288
1,106 1,176 1,179
Natural gas million cubic feet per day
Subsidiaries 5,585 5,845 6,193
Equity-accounted entities 431 415 416
6,016 6,259 6,609
Total hydrocarbonsbthousand barrels of oil equivalent per day
Subsidiaries 1,898 1,882 1,959
Equity-accounted entities 245 374 360
2,143 2,256 2,319
a Includes BP’s share of production of equity-accounted entities in the Upstream segment.
Because of rounding, some totals may not agree exactly with the sum of their component parts.
b A minor amendment has been made to the split between subsidiaries and equity-accounted
entities for the comparative periods.
Our total hydrocarbon production for the segment in 2014 was 5% lower
compared with 2013. The decrease comprised a 1% increase (7% increase
for liquids and 4% decrease for gas) for subsidiaries and a 35% decrease
(44% decrease for liquids and 4% increase for gas) for equity-accounted
entities compared with 2013. Divestments in 2014 accounted for 2% of
the year-on-year production decrease. For more information on production
see Oil and gas disclosures for the group on page 219.
In aggregate, after adjusting for the impact of price movements on our
entitlement to production in our PSAs and the effect of acquisitions and
disposals, underlying production was 2.2% higher compared with 2013.
This primarily reflects strong Gulf of Mexico performance that was not
impacted by weather, higher entitlements from lower oil prices and ADMA
offshore concession (BP 14.67%) benefiting from higher OPEC nomination
for Abu Dhabi.
The group and its equity-accounted entities have numerous long-term
sales commitments in their various business activities, all of which are
expected to be sourced from supplies available to the group that are not
subject to priorities, curtailments or other restrictions. No single contract or
group of related contracts is material to the group.
Gas marketing and trading activities
We market and trade natural gas (including liquefied natural gas (LNG)),
power and natural gas liquids (NGLs). This provides us with routes into
liquid markets for the gas we produce. It also generates margins and fees
from selling physical products and derivatives to third parties, together with
income from asset optimization and trading. The integrated supply and
trading function manages our trading activities in natural gas, power and
NGLs. This means we have a single interface with the gas trading markets
and one consistent set of trading compliance and risk management
processes, systems and controls.
Gas and power marketing and trading activity is undertaken primarily in the
US, Canada and Europe to market both BP production and third-party
natural gas, support group LNG activities, and to manage market price risk
and create incremental trading opportunities through the use of commodity
derivative contracts. This activity also enhances margins and generates fee
income from sources such as the management of price risk on behalf of
third-party customers.
The group’s risk governance framework seeks to manage and oversee the
financial risks associated with this trading activity, as described in Financial
statements – Note 27.
The group uses a range of commodity derivative contracts, storage and
transport contracts in connection with its trading activities. The range of
contracts that the group enters into is described in Glossary – commodity
trading contracts on page 252.
Extending the life of the North Sea
This year marked 50 years since we were awarded our first licence in
the UK North Sea. And now, after producing more than 5 billion
barrels of oil equivalent, we are not only finding more oil and gas, but
also extending the life of our existing fields.
Our latest discovery in the Central North Sea – called Vorlich –
demonstrates the basin’s ongoing potential. The find was made
jointly with GDF SUEZ E&P, underlining the benefits increased
collaboration can bring to a mature basin. Vorlich spans two adjacent
but separately operated blocks – one by BP and one by GDF SUEZ.
It has been tested to a flow rate of 5,350 barrels a day.
We identified Vorlich through analysis of existing wells in the area,
along with detailed mapping of high-quality seismic data, and are
now looking at options to develop it. These options range from a
simple subsea tie back into existing infrastructure, through to
possibly introducing new infrastructure that could also serve to
unlock additional undeveloped resources in the area.
We continue to grow our exploration position using our
leading subsurface capabilities.
For an analysis of our upstream business by geographic region
and key events in 2014, see page 213.
BP Annual Report and Form 20-F 201428