BP’s US boss says Washington’s new climate law will put his green plans in the US ‘on steroids’, even as the oil supermajor says it will expand its shale oil and gas business in the country.
Dave Lawler, the head of BP’s US operations, said in an interview with the Financial Times that the British oil producer was “very supportive of the IRA and what the Biden administration was looking to accomplish” on the shows, saying reference to the recently adopted reduction in inflation. Law.
The new climate law, passed by Democrats in Congress in August, aims to funnel hundreds of billions of dollars into green projects such as wind and solar, hydrogen, biofuels and capture and storage carbon, and angered some in the oil industry.
BP has been one of the most aggressive oil majors in its commitment to shift spending from fossil fuels to projects aimed at reducing emissions, saying it plans to cut its oil production by 40% by 2030, compared to 2020 production.
“We had our new strategy in place before the IRA was passed, so what it did was just put our strategy on steroids,” he said.
BP acquired Texas-based Archaea, which produces so-called renewable natural gas from landfills, for $4.1 billion last month, its biggest low-carbon acquisition to date.
Lawler said new incentives for carbon capture and storage in particular were “interesting”, saying they would allow BP to work with industry players to sequester carbon dioxide at petrochemical or other facilities before it is emitted into the atmosphere and permanently stored in the ground.
The new climate law offers an $85 per ton subsidy for permanently stored carbon dioxide, which is seen as making many other CCS projects economically viable as the sector struggles to get off the ground.
“We can make a profit and they can clean up their business,” Lawler said of potential new CCS ventures, adding that the company is moving forward with initial work on a project on the Texas Gulf Coast with the chemical producer Linde to capture and store. emissions from a hydrogen plant.
Still, Lawler said the company remains committed to expanding its oil and gas business in the United States, particularly its operations in the Permian Basin, a huge oilfield in West Texas and New Mexico, where the company has vast land holdings that will require tens of billions of dollars to expand. .
“We are going to increase production. . . We consider that a brand asset, the wells are very strong,” Lawler said, adding that he has enough drilling opportunities in the Permian to “keep you busy for 40 years.”
The company plans to increase spending at its onshore U.S. oil and gas business, primarily in Texas, from $1.7 billion this year to $2.4 billion next year. It pumps about 350,000 barrels of oil equivalent per day from its US onshore fields, an increase of about 8% from last year.
BP and other oil producers have been criticized by environmental activists for not acting quickly enough to cut fossil fuel production in the face of the threat of climate change.
Still, US President Joe Biden has pushed oil producers to increase production to help curb high fuel prices this year, while tightening environmental rules, including new regulations and fines for methane emissions from oilfields, a potent greenhouse gas.
Lawler said BP was “very supportive” of the new methane regulations, which have divided the industry, and that it “[does not] have any concerns” that he will have to pay fines under new rules that will penalize companies for exceeding minimum levels of methane pollution.
A study by the Environmental Defense Fund last year found that BP’s Permian assets were among the worst performers in metrics taken between September 2019 and October 2021, higher than other regional supermajors such as ExxonMobil. and Chevron.
Lawler said the company has spent about $500 million cleaning up its Permian wells and will eventually spend more than $1.3 billion to electrify its operations and install new processing infrastructure to “significantly reduce emissions” and put an end to gas flaring on its sites. He pointed to more recent data from Kairos Aerospace, which measures methane emissions using satellites, showing that BP emissions have more recently fallen well below industry averages from previous years when they were significantly higher.
“We are perfectly aligned on the fact that the [methane] the emissions have to stop, the flaring has to stop,” Lawler added.
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