BP plc · LSE:BP.
BP — Investor Presentation (December 2022)
37 slides from BP's investor presentation, December 2022
Slide 1: The Oil Extraction Challenge
The Oil Extraction Challenge BP Schools Link
Slide 2: Your challenge
Your challenge Form an oil company and agree roles Stake your claim for what you think is the best oil field to develop Work as a team to invest in drilling and production Manage your company to make the best profit you can over 10 years BP Schools Link – Oil Extraction Challenge 2
Slide 3: Oil industry briefing
Oil industry briefing Welcome to the oil industry You’ll need this information to help you make the right decisions You’ll be given information, pictures and a video clip Watch and listen carefully! BP Schools Link – Oil Extraction Challenge 3
Slide 4: What is a reservoir?
What is a reservoir? The volume of underground rock where oil and gas are trapped Reservoirs aren’t empty caverns The oil is trapped in tiny spaces within porous rocks, like sandstones and shale BP Schools Link – Oil Extraction Challenge 4
Slide 5: How do we find oil and gas?
How do we find oil and gas? Drilling is the only way to find out if oil and gas is underground Prospectors 100 years ago dug where they saw oil seeping or bubbling to the surface Now we use seismic imaging to try to interpret what is down there Geologists send sounds through the ground and interpret
Slide 6: How big is an oil reservoir?
How big is an oil reservoir? Huge! Can be over a mile deep Could hold 1 million to several billion barrels 100 million barrels would fill Wembley Stadium 4 times! BP Schools Link – Oil Extraction Challenge 6
Slide 7: How do we get the oil out of the ground?
How do we get the oil out of the ground? The drilling team drills down through the rock with a diamond or tungsten drill bit ‘Mud’ (a mixture of water, clay and other additives) is pumped down to cool and lubricate the drill bit The oil, mud and bits of rock that come back up indicate if there is a
Slide 8: Reservoirs can be under land…
Reservoirs can be under land… On land all the equipment for drilling and production must be transported to the site which is often very remote, accessible only by helicopter A pump is positioned over the well to extract the oil and gas Also needed are: Storage and processing facilities Transportatio
Slide 9: or under the sea…
or under the sea… Off shore facilities cost billions of dollars and take years to build Some are anchored to the ground but in deeper water the floating structure is held in place with a combination of anchors and GPS-led thrusters The facilities must stand up to 100m waves and not move an inch! Som
Slide 10: Production facilities
Production facilities Most facilities include: Storage and separation tanks Pumps and pipelines Utilities (power/wate) Office space Monitoring equipment Facilities for the staff incl restaurant/gym/sleeping quarters A helipad BP Schools Link – Oil Extraction Challenge 1
Slide 11: Extracting oil with pressure
Extracting oil with pressure The oil is under pressure in the reservoir At first the pressure pushes it out easily Over time this natural pressure reduces By the time the pressure has equalized, only some of the oil has been extracted Oil under natural pressure gushing out of the first oil discovery
Slide 12: How can we extract more oil?
How can we extract more oil? Injecting water or gas into the reservoir sweeps the oil towards the well This pressure carries on pushing oil out of the reservoir allowing much more of the oil to be extracted Injection wells must be drilled in the right places to push oil towards the production wells
Slide 13: Sharing facilities
Sharing facilities Some smaller reservoirs don’t have their own production facilities. They ‘tie in’ to existing facilities on bigger fields To ‘tie in’, pipes are laid to transport the oil from the new wells to the existing production facility This cuts down operating costs, as there’s no need to i
Slide 14: Profit: the big picture
Profit: the big picture Oil companies are owned by their shareholders They must give shareholders a return on their investment in the company They must therefore seek the best return on their investments in new oil production The skills and decisions of scientists, technologists and engineers are vi
Slide 15: Form your oil company
Form your oil company Give your company a name Agree who will take on each role Read your Role Cards to find out Who you are What you must do You have 5 minutes to do this! BP Schools Link – Oil Extraction Challenge 1
Slide 16: Key business roles
Key business roles Chief Executive Officer Finance Director Facilities Manager Reservoir Engineer Risk Analyst BP Schools Link – Oil Extraction Challenge 1
Slide 17: Balancing risk and reward
Balancing risk and reward Every new development has risks which must be weighed against the rewards These may affect people, the environment or oil/gas production In planning a new development a detailed risk assessment is carried out and possible risks identified Steps are taken to reduce risks, bu
Slide 18: What types of risk are there?
What types of risk are there? Political Environmental Commercial BP Schools Link – Oil Extraction Challenge 1
Slide 19: What types of risk are there?
What types of risk are there? Market risk Political risk Weather risk Environmental risk Technology failure BP Schools Link – Oil Extraction Challenge 1
Slide 20: Block options
Block options A ‘block’ is an area of land or sea Blocks don’t necessarily have oil underneath You must bid for ONE block: Block A and Block B: North Sea Block C and Block D: Middle East (desert) Block E and Block F: West Africa (offshore) BP Schools Link – Oil Extraction Challenge 2
Slide 21: Bid for a block
Bid for a block Review the information on the Block Data sheets Agree which block you’ll bid for, and why Submit your bid – first come, first served! BP Schools Link – Oil Extraction Challenge 2
Slide 22: Submit your development investment
Submit your development investment Read the detailed Block Data for your location and the four development options Discuss the pros and cons of each option Use calculators to help you calculate the possible profit for each option Remember that you’re taking a risk: your data are just the best predic
Slide 23: Development investment
Development investment BP Schools Link – Oil Extraction Challenge 2
Slide 24: Operation – what you will do
Operation – what you will do You will see news summaries for years 1 – 10 as well as the oil price Only some events will affect your company Adjust your spreadsheet with the new oil price Make note of any news that affects you Revise your financial forecast Submit your Annual Financial Report with y
Slide 25: Annual Financial Report
Annual Financial Report BP Schools Link – Oil Extraction Challenge 2
Slide 26: Oil price $130
Year 1 news Oil price $130 There is a nuclear power plant shutdown in the USA Oil is in demand Oil prices are higher than predicted BP Schools Link – Oil Extraction Challenge 2
Slide 27: Oil price $140
Year 2 news Oil price $140 China has shown a sharp increase in demand, pushing oil prices higher West Africa and North Sea: You have the option of investing in infill drilling to see if you can access more reserves This means investing another $50 million now Oil may or may not be found BP Schools L
Slide 28: Oil price $90
Year 3 news Oil price $90 Exploration in recent years in Brazil has started producing lots of new oil, so oil prices have fallen Additional information is available to Risks Analysts. Share this with your team after they have submitted their Year 3 Annual Financial Report BP Schools Link – Oil Extra
Slide 29: Oil price $70
Year 4 news Oil price $70 A quiet year Hijackers retreat from West African waters to regroup No further unexploded ordnance is discovered in the North Sea The political situation in the Middle East remains uncertain but there is no immediate threat BP Schools Link – Oil Extraction Challenge 2
Slide 30: Oil price $90
Year 5 news Oil price $90 The activists in the Middle East cause a political uprising There have been attacks on staff working at oil and gas producing facilities If you didn’t choose to relocate your employees to keep them safe you will have to do so now Negotiations will take a year, so no oil pro
Slide 31: Oil price $80
Year 6 news Oil price $80 Boom! A WW2 bomb in the North Sea explodes as the sea bed shifts If you didn’t choose to remove the bomb it blasts a hole in your pipeline which you have to repair. You won’t be able to produce oil this year because the pipeline must be mended BP Schools Link – Oil Extracti
Slide 32: Oil price $50
Year 7 news Oil price $50 Oil companies in the Middle East hit oil The wells drilled into the deeper reservoir discover a huge reserve of 100 million barrels and start production immediately This pushes the price of oil down BP Schools Link – Oil Extraction Challenge 3
Slide 33: Oil price $60
Year 8 news Oil price $60 Hijackers have re-launched their attacks on West African oil production facilities If you chose not to invest in protection, they could board your facility and damage it, so you must shut down for a year No oil production this year BP Schools Link – Oil Extraction Challenge
Slide 34: Oil price $80
Year 9 news Oil price $80 Infill drilling has accessed extra oil in the North Sea The reservoir size has increased by 5 million barrels This will increase yearly production totals from Year 9 onwards BP Schools Link – Oil Extraction Challenge 3
Slide 35: Oil price $100
Year 10 news Oil price $100 Infill drilling has accessed extra oil in the West African region The reservoir size has increased by 5 million barrels This will increase yearly production totals in Year 10 BP Schools Link – Oil Extraction Challenge 3
Slide 36: Final reports
Final reports Make sure you have made all the changes to your financial projections Submit your final Annual Financial Report showing your actual performance over 10 years Make sure you have responded to all events that affect you BP Schools Link – Oil Extraction Challenge 3
Slide 37: Winners
Winners Which company made the largest profit? Which events affected you the most? Which risks did you take and were they worth it? Which decisions would you change? BP Schools Link – Oil Extraction Challenge 3