BP Case Study

Page 1

BP case study: An example of a TNC

Different stages in the company’s operations

Exploration

Exploration typically takes the form of an Operator seeking planning consent to drill a well, which will normally consist of a vertical well and potentially a small number of lateral extensions. These wells are designed to log and take samples of rock (‘core’) in order to acquire the geological data from the potential hydrocarbon layers of interest. Typically, operational activity at an exploration site spans two to four months. The site is normally vacated after that.

Production

Once consent has been given by the host country, drilling will begin and reserves will typically contain a number of vertical wells and associated underground laterals on a site, which would be about two hectares (five acres) in size. At this stage, associated equipment, such as pipelines and gas processing facilities, will be constructed, subject to additional planning applications. Once drilling is completed, surface activity will diminish significantly as wells start to produce gas.

Selling

Once the crude oil begins to flow through the pipes, it is transported to a refinery to be transformed into more useful products such as petrol, gasoline, kerosene, jet fuel, and diesel and fuel oils. Some modern day refineries produce 80,000 barrels of crude oil a day, costing $107USD (2014) per barrel.

2. Countries where the company is exploring and producing.

4 Oil refineries in the US incl. Alaska, 4 Offshore exploration and production rigs in the Gulf of Mexico, Biofuels, natural gas; 45 production fields, 33 platforms and 10 pipeline systems, plus an estimated 3 billion barrels of oil equivalent reserve potential in the North Sea portfolio => UK; Egypt => 15% countries total oil production, 40% of natural gas, offshore investments in gas field; Angola => major investment in offshore oil fields, 9 in total=30,000km2 ; South China Sea 2 offshore deepwater; India=> share in company w/ rights to 20 offshore oil and gas; Indonesia=> LNG; Iraq=> Rumaila oil field; Caspian Sea=> offshore oil and gas fields; oil refinery in Netherlands; Canada=> buys crude oil, owns tar sands, 4 offshore blocks, Trinidad largest oil and gas producers; Stakes in offshore exploration in Brazil, several biofuel production plant incl. ethanol.

3. Transport of oil by tanker and/or pipeline.

Transporting crude oil is done in two main ways: pipelines and shipping. Pipelines are used to move oil from a source to a refinery, then from a refinery to the people. Also its source to a terminal. Pipelines cover 1,760 kilometres of rugged terrain, with 1,500 river crossings.

The giant oil fields in the Middle East are too far from the consumptions in North America, Europe and Asia. A lot of the oil is moved in crude carriers. The ships can carry 300,000 tonnes or more of crude oil. Tankers used to transport crude oil and liquid natural gas. 1,250 seafarers and 400 staff onshore.

4. Major refineries

BP has refineries located in India, South Korea, Venezuela, Singapore, Texas, Saudi Arabia and Los Angeles

5.Final products: what brand names?

BP petrol first went on sale in Britain in the 1920s.the brand now covers Aral (germany, fuels and stations), Castrol (motor oils, purchased by Bp in 2000), ampm (convenience stores, western usa, bought in 2008) and Wild Bean Cafe. By 2008 BP's branding campaign had succeeded with the culmination of a 2007 Effie Award from by the American Marketing Association. BP have also created something called a gas/fuel card which allows the user to buy fuel without the need for cash by purchasing fuel/oil on credit.

7. Development of alternative energy sources

BP are investing in technologies that can make a difference to global energy supplies and help to reduce carbon emissions levels. In 2005 they made a commitment to invest $8 billion in alternative energy by 2015.

They are focused on investing in and developing low-cost, low-carbon biofuels that are either financially self-sustaining now or could be in the future.

They are keen on using wind farms to produce energy. They planned on selling the wind business in 2013, but concluded keeping them was more valuable and the better option.

Alternative Energy: Bioethanol in the UK, Biofuel in Brazil, Wind farms in the US

8. Issues

Violation of human rights

Child labour

Underpaying for labour

Bad workers rights

Cutting back on health and safety regulations

Tax avoidance

Environmental damage

BP Case study