BP Strategy Recommendations

ShortShort-run and long-run longapproaches to a carboncarbonconstrained future.

The Present Environment

High and increasing demand for oil.  Dwindling rates of oil production.  Instability in Middle East  Iraq

 Demand

for Energy Independency  Threat of Terrorism



Increasing profile of anthropocentric climate change.

Recent New York Times Headlines:



Global warming to bring heavier rains, snow, October 14th, 2005. As Polar Ice Turns to Water, Dreams of Treasure Abound, October 10th, 2005. In a Melting Trend, Less Arctic Ice to Go Around, September 29th, 2005. Time to Connect the Dots, September 28th, 2005.

The Future Environment



Sharpened salience of global warming issue and demand for carbon abatement.

Emissions restrictions on CO2 and capcapandand-trade mechanisms will create value for CO2.

Strategy
 

Increase capacity for producing innovation in energy technologies. Position to take full advantage of this capacity by actively entering the enhanced oil recovery (EOR) and carbon capture markets as interim strategies Influencing the agenda by manipulating the pace, shape, and direction in which carbon abatement will be pursued in the U.S. Focus is on taking profitable actions in the shortshortrun which will facilitate a long-run agenda setting longstrategy.

Increase Capacity


Heavy investment in R&D.

 Technology  Infrastructure  Processes

Develop and invest in relationships with key decision makers and players.

Strategy
 

Increase capacity for producing innovation in energy technologies. Position to take full advantage of this capacity by actively entering the enhanced oil recovery (EOR) and carbon capture markets as interim strategies Influencing the agenda by manipulating the pace, shape, and direction in which carbon abatement will be pursued in the U.S. Focus is on taking profitable actions in the shortrun which will facilitate a long-run agenda setting strategy.

Positioning


Target and acquire mature oil fields in proximity to BP owned point sources of CO2 in Gulf Coast region of Texas. Pursue federal and state funding for BP owned CO2 pipeline and monitoring infrastructure. Capture CO2 from point sources and use for EOR.

Strategy
 

Increase capacity for producing innovation in energy technologies. Position to take full advantage of this capacity by actively entering the enhanced oil recovery (EOR) and carbon capture markets as interim strategies Influencing the agenda by manipulating the pace, shape, and direction in which carbon abatement will be pursued in the U.S. Focus is on taking profitable actions in the shortrun which will facilitate a long-run agenda setting strategy.

CO2 Cap-and-Trade Cap-andWhat is it and how does it work?

Influencing the Agenda

Target public raise profile of global warming.  Provide info to relevant Congressional players.  Invest in relationships with key leaders.  Establish a PAC to support candidates  Build alliances with industry partners and NGOs.


Strategy
 

Increase capacity for producing innovation in energy technologies. Position to take full advantage of this capacity by actively entering the enhanced oil recovery (EOR) and carbon capture markets as interim strategies Influencing the agenda by manipulating the pace, shape, and direction in which carbon abatement will be pursued in the U.S. Focus is on taking profitable actions in the shortshortrun which will facilitate a long-run agenda setting longstrategy.

Players


Allies Short run

 Mid

sized oil companies, chemical plants, refineries.  Industry groups like Gulf Coast Carbon Center  NGO allies  Texas public, governor, and many congressional leaders.


Allies Long run

Utilities can be convinced to invest in IGCC, which reduces cost of carbon capture.  Public and increasing number of representatives.  Foreign industrialized countries


Players


Opponents Short run

 Older

coalcoal-burning utities  Taxpayers in other states  Pork Barrel alarmists.

Opponents Long run

 Oil

companies without CO2 transportation capacity

A final word


Short term and long term strategies to be kept separate: Public outreach and work with NGOs High profile EOR and pipeline subsidies, as well as push for carbon cap-and-trade cap-andLow profile