BP to form separate US onshore oil and gas business

BP has announced its intention to establish a separate business to manage its onshore oil and gas assets in the US Lower 48.

Improve competitiveness

The decision is expected to improve competitiveness, helping US Lower 48 onshore business remain at the forefront of innovation and development of technologies for unconventional resources.

The new US Lower 48 onshore oil and gas business will operate separately from the rest of BP and will be designed to adapt to the rapidly changing and hyper-competitive energy landscape in the region. This move will help unlock the significant value associated with BP's extensive resource position in the US Lower 48 onshore, which BP currently oversees through its Houston-based North America Gas group.

Unconventional resources

BP Upstream CEO, Lamar McKay, commented: "Over the last few years, we have fundamentally reshaped our North America gas portfolio." The company has done this by divesting non-core assets and focusing development in leading US unconventional plays such as the Eagle Ford Shale in South Texas.

"Now it's time to reshape the way we run the business – and we are very excited about this bold step forward," he added.

Unique environment

BP will own the new US Lower 48 onshore business, however it will be led by a separate management team and be housed at a new location in Houston. The business will have separate governance, processes and systems designed to address the unique competitive and operating environment in the US Lower 48 onshore. BP is expected to begin disclosing separate financials for the new business in 2015.

These changes are predominantly intended to improve competitiveness of the US Lower 48 onshore business through greater speed of innovation, faster decision-making and shorter cycle times from access through to production, together with more efficient cost management.

Sustainable business

"Our overriding goal is to build a stronger, more competitive and sustainable business that we expect will be a key component of BP's portfolio for years to come," McKay explained.

The changes to BP's US Lower 48 onshore business are consistent with the group's strategy of delivering value over volume. BP also believes these moves will enhance efforts to develop industry-leading technology that will be a critical part of BP's global strategy in unconventional oil and gas resources going forward.

BP upstream strategy

"Participating in the US Lower 48 onshore is key to our upstream strategy because we believe the region will remain at the forefront of innovation and drive global learning in unconventional resources," McKay said.

The approach BP intends to pursue for its US Lower 48 onshore business is specifically designed in response to the unique business environment in the region.

Adapted from press release by Katie Woodward

Read the article online at: https://www.oilfieldtechnology.com/exploration/04032014/bp_forms_separate_us_onshore_oil_and_gas_business_66/