The Major British Petroleum Activities, Its Sustainable Policies and Future Projects - Case Study Example

 BP (British petroleum) - Design & Sustainability 1. Introduction Learning by the BP example, it is possible to evaluate the significance of sustainable development in business. The paper examines the major company’s activities, its sustainable policies and future projects, and provides some ideas for the future development. Considering the broad range of the BP production, ideas of sustainable management are discussed very briefly. 2. Background British Petroleum is a global energy group, the core business of which is extraction of natural gas and oil, making fuels and products and then selling these products. The company employs over 80,000 people and operates in over 100 countries worldwide (British Petroleum, Who We Are, n.d.). Great Britain, being a place of BP’s corporate headquarters, is a centre for trading, legal, financial and other mainstream business operations (British Petroleum, Where We Operate, n.d.). Mapping the business activity of BP geographically, it has been summarized that exploration and production activity: in Africa is mainly focused on Egypt, Angola and Algeria; in Asia – Indonesia, China, Pakistan and Vietnam; in Australasia – Australia; also in Columbia and Venezuela (British Petroleum, Where We Operate, n.d.). In China, BP holds a leadership position in Liquefied Natural Gas and in India the BP Solar has a manufacturing plant. Additionally, major retail operations on oil products and lubricants take place in these two Asian countries (British Petroleum, Where We Operate, n.d.). In Russia, BP has a joint venture through its 50% ownership of TNK-BP. In the United States, the British Petroleum group is considered to be both one of the largest gas and oil producer and one of the largest gasoline retailers (British Petroleum, Where We Operate, n.d.). In Canada, company’s activities are focused on the natural gas production and derivatives; in Trinidad and Tobago, BP is a major local producer (British Petroleum, Where We Operate, n.d.). 3. Basic processes The company’s primary business is comprised of few basic procedures: finding, extracting and moving natural oil and gas; making fuels and products, selling these fuels and products; and generating low carbon energy (British Petroleum, What We Do, n.d.). 3.1. Oil and gas exploration To find oil and gas under the earth’s surface, British Petroleum Company uses sophisticated technologies and applies tried-and-true techniques (British Petroleum, n.d.). Before putting drill to the seabed or soil, the BP uses different tools, including typographical maps, sound waves, aerial photography, 3D projections and others. Appliance of these tools enables BP explorers to form an educated guess about the shape, size and consistency of the natural gas or oil that lies underneath (British Petroleum, n.d.). BP states that the most powerful tool available to the company is the acoustic survey, which requires usage of air guns to fire acoustic pulses down through the rock (British Petroleum, n.d.). In result of these procedures, the sound waves bounce back like echoes and thus help to reveal different depths and layers (British Petroleum, n.d.). British Petroleum management claims that “this sort of seismic study is a lot less damaging to the environment than random drilling” (British Petroleum, n.d.). However, there are some significant risks that can threaten environment. To avoid these risks, BP looks thoroughly at any environmental issues and delay resource exploration if necessary. Such necessity can be caused in result of animal feeding times, breeding periods, migrating seasons, etc (British Petroleum, n.d.). Depending on the deepwater situations, the company applies three types of rigs: called a jack-up unit, semi-submersible drilling rig and the drill ship (British Petroleum, n.d.). 3.2. Extracting of oil and gas After the BP team established large quantities of gas, oil or both at a drilling location, it begins to plan and build a production facility, considering the aspects of environmental, social and logistical factors (British Petroleum, n.d.). Out at sea, BP builds oil/gas platforms that should cope with the required workload and environmental factors. Geologists, engineers, geophysicists, and other staff plan a production facility, trying to predict the best locations for the wells and the speed of oil/gas flow (British Petroleum, n.d.). To extract the oil and gas into tanks or a pipeline, there is positioned a motorized pump on land (British Petroleum, n.d.). At sea, everything is done on land has to perch on top of a platform hundreds of meters above the sea floor (British Petroleum, n.d.). Considering the fact that production platforms can remain active for more than 40 years, it is crucially to keep the platform safe and functioning as it should be. 3.3. Moving oil and gas BP builds and maintains pipelines and operates a fleet of large tankers and ships that transport gas and oil globally (British Petroleum, n.d.). Crude oil can be transported in two main ways: shipping and pipelines. Before taking a decision by which type of transport it is better to move oil/gas, there are taken into account logistics, location, economics and environmental considerations (British Petroleum, n.d.). BP Pipeline. Pipeline is made from plastic or steel tubes and can be built under water, under land, or above land; its size can vary from hundreds to several thousand kilometers (British Petroleum, n.d.). The gas and oil in a pipeline is kept in motion by a system of pump stations that are built along it (British Petroleum, n.d.). British Petroleum has built the Baku-Tibilisi-Ceyhan, a pipeline which spans 1,760 kilometers of rugged terrain, with 1,500 river crossing along the way from Azerbaijan to Turkey (British Petroleum, n.d.). BP Shipping. Transport by sea is the only practical option when oil and gas fields are many thousands of kilometers from the places of demand on these resources. Due to the large crude carriers, ships capable to carry 300,000 and more tones of crude oil, such continents as North America, Asia and Europe are enabled to consume the resources of the Middle East (British Petroleum, n.d.). Thus, using either BP owned or chartered vessels, the company transports its products along waterways, around coastlines and across oceans (British Petroleum, n.d.). BP Shipping operates an international fleet of crude oil tankers, product tankers and LNG (liquefied natural gas) carriers, transporting these energy products all over the world (British Petroleum, n.d.). 3.4. Making fuels and products BP refines and processes crude oil into usable products, including the chemicals used in everyday items, and high-quality gasoline (British Petroleum, n.d.).To receive any real value from crude oil, BP processes it into such products as gasoline, bitumen, motor oils and chemicals at its own refineries (British Petroleum, n.d.). To better understand the refinery process and fractional distillation, take a look at the scheme, presented below: In the refinery, British Petroleum Company removes such substances as sulphur, nitrogen, oxygen, water and others and then disposes of them safely (British Petroleum, n.d.). To separate oil into useful products it is necessary to heat it first to about 350˚ Celsius and then pump into a fractioning tower. BP continues to describe the process of crude oil vaporizing, stating that “the vaporized oil rises up the tower through trays with holes in them; as the gas cools, its components condense back into several distinct liquids; lighter liquids like kerosene and naptha, a product used in chemicals processing, collect near the top of the tower, while heavier ones like lubricants and waxes fall through weirs to trays at the bottom” (British Petroleum, n.d.). After the process of distillation, gasoline and other engine fuels are workable in the further refinery. Along with the gasoline, there are other BP refined products, namely: liquefied petroleum gas, kerosene (paraffin), lubricating oils, heavy fuel oils, bitumen, and waxes (British Petroleum, n.d.). Also the list of refined BP products consists of chemical products that after processing are sold to the companies, making various commodities, including food, clothing, etc. 3.5. Selling of fuels and products BP provides a growing range of fuels for sale, including automotive fuels and oils, cleaner fuels (petrol and diesel with an advanced mix of detergents), biofuels, liquefied petroleum gas, compressed natural gas, fuels for sea and air, and many others (British Petroleum, n.d.). The final consumers of BP production can be met at the fuel service stations. 4. Sustainable principles/projects British Petroleum defines sustainable development as the capacity to endure as a group by: renewing assets; creating and delivering better services and products that meet the evolving needs of society, contributing to a sustainable development, attracting successive generations o employees, and retaining the trust and support of all stakeholders, including communities in which they operate (BP Sustainability review 2009). To meet current and future energy demand sustainably and address the issue of climate change BP believes that the best sustainable alternative is to develop: a broad and diverse energy mix, which includes fossil fuels and renewables, efficiently used and produced; innovation in technology and partnerships at the frontiers of the industry (BP Sustainability review 2009). BP makes its operations more energy efficient and creates products that help to lower customers’ carbon footprints (BP Sustainability review 2009, p.15). For more convenience, the BP’s programme of action toward sustainable development was summarized in the table, presented below: Sustainable Action Brief description Efficient operations BP maintains its efforts to manage greenhouse emissions from its operations through reductions in venting and flaring, energy efficiency projects (waste heat recovery, process optimization, etc.) (BP Sustainability review 2009). Efficient fuels and lubricants The company continues to improve an overall efficiency of use of its fuel and lubricant products. Improved fuel efficiency reduces carbon dioxide emissions (BP Sustainability review 2009). Low-carbon energy To develop sustainable alternative energy source, the BP Company develops a material renewable and low-carbon energy business: 1. Biofuels business Company is working to produce biofuels that are sustainable and scalable, low carbon and low cost (BP Sustainability review 2009, p.18).These include: sugar cane ethanol, cellulosic ethanol, biobutanol, wheat ethanol, and blending biofuels (BP Sustainability review 2009). 2. Wind power business 3. Solar photovoltaic systems 4. Carbon capture and storage BP plans to use Carbon capture and storage to create hydrogen, and then generate low-carbon-electricity from it (BP Sustainability review 2009). Also company continues to invest in alternative energy. Assessing carbon costs BP builds carbon pricing into its business planning, with a purpose to assess the economic value of the investment and to optimize the way of project engineering (BP Sustainability review 2009). Thus, BP strives to keep its investments competitive in a long-term perspective (BP Sustainability review 2009). Advocacy and outreach BP participates in the policy debate, calling for policy action to put a price on carbon and stimulate renewable and low-carbon energy Research programmes The company funds and participates in many different programmes on climate change and low carbon options for future (BP Sustainability review 2009). Also BP supports a number of public interest policy research and non-governmental organizations (BP Sustainability review 2009). The three main priorities of BP include safety, people and performance (BP Sustainability review 2009). Thus, the company’s sustainable development cannot do without the commitment to safe and reliable operations (BP Sustainability review 2009, p.21). In spite of the evidence of some accidents, the company’s achievements in safety and operational performance are very impressive (BP Sustainability review 2009, p.23). Another significant sustainable issue relates to the BP’s activity toward minimizing its environmental impact (BP Sustainability review 2009). The main activities, concerning these issues include: Identifying potential environmental and social impacts in new projects (BP Sustainability review 2009, p.24); Appliance of technology that minimizes the environmental impact of finding and production energy (BP Sustainability review 2009, p.24); Compliance with the current and emerging environmental regulations that affect the company (BP Sustainability review 2009, p.24); Using ecosystems service approach to help assess potential impacts from projects and operations (BP Sustainability review 2009, p.24); Reporting on air emissions, water and biodiversity, waste at a local level (BP Sustainability review 2009, p.24); Working sensitively around flora and fauna (BP Sustainability review 2009, p.24). Also the company provides a global forum for women “The BP Women’s International Network”; runs different programs to build the skills of businesses in places of company’s operating, from Indonesia and Azerbaijan to Trinidad & Tobago; supports education and other community needs in the areas of health, and livelihoods; shares technical expertise with local governments (BP Sustainability review 2009, p.31-32). 5. Ideas for sustainability – Life cycle analysis British Petroleum business activity is comprised of different sustainable techniques and alternatives, which make the company a global leader of sustainable development. However, after the recent oil spill in the Gulf of Mexico, BP has partially lost its status of the most sustainable company. It is very difficult to develop new sustainable ideas for the British company, because nothing new is possible to invent yet. To formulate a sustainable framework for the BP’s activity will be used the Life Cycle analysis. Life Cycle analysis is comprised of six main categories, including: design/conceptualization, production, transportation, retail, use and maintenance, and end of life (Design and Sustainability, 2010). 5.1. Design/conceptualization BP products do not depend as much on the design as on its quality and other characteristics (depends on product). BP’s products include a wide range of assortment which varies from biofuels, gas and petrol stations, gas and fuel cards, to aviation fuel and lubricants. Thus, while developing a design for all these products, BP designers and marketing staff should be focused on the environmental impacts. 5.2. Production As it has been already stated, production of BP varies broadly by its assortments. Considering the sustainable approach, the company should develop products that can produce fewer emissions and create less harmful emissions; more liquid fuels should be made from organic plant material, etc. 5.3. Transportation While considering transporting gas or oil through the pipeline, BP is better to bury the pipeline, if it (pipeline) is planned to run through the area close the population aggregate or environmentally sensitive area. Burying of the pipeline will minimize the impact and likelihood of potential accidents (British Petroleum, n.d.). 5.4. Retail Stations and shops of BP retail locations should have environmentally friendly features; they can be run on solar and wind power. This may appeal to customers who are worried about global warming (British Petroleum, n.d.). 5.5. Use and maintenance This category as well as the next one is very broad for analyzing the BP production, which includes not only fuels, biofuels, motor oil and lubricants but also gas and fuel cards, industrial and marine fuels lubricants, etc. (British Petroleum, Products and services n.d.). 5.6. End of Life See the previous category (5.5.). 6. Eco-tracking –the triple Bottom Line Being a sustainable company, it is necessary to consider three pillars of sustainability: economic, ecological and social responsibility (Design and Sustainability, 2010). Focusing on these pillars enables all interested parties to be a winner in any business situation. Below are given two examples, analysis of which might be a helpful tool in understanding these three pillars of sustainability and its logical connection. Idea Ecological responsibility Social responsibility Economic responsibility Burying the pipeline when transporting oil/gas This measure will minimize likelihood of an accident, and thus will not threaten environment as much as the upon-surface pipeline transporting does People, living close to the pipeline will not be endangered; children will be not able to come close to the pipeline, transporting oil or gas Even though burying the pipeline is less cost-effective procedure, the company’s treats of losses will be minimized. In case of accident, BP might incur more significant losses than costs for burying the pipelines. This sustainable solution might increase the shareholder’s and customer’s value, and thus increase its profits. Develop products that can produce fewer emissions and create less harmful emissions; produce more liquid fuels from organic plant material, etc. Development of these products will increase the company’s efforts to focus on environmental issues. Less emissions and gasses will not only minimize its effect on climate change but also will encourage other companies to follow BP example Social awareness about climate change and environmental issues grows constantly. More and more people are willing to consume environmentally-friendly products. The company will be able to increase its profits and increase its market share by developing new environmentally friendly products. While in a short term perspective this idea requires significant investments and innovations, in a long-term perspective the company can earn its profits under effective sustainable management Conclusions BP Company demonstrates significant efforts in moving toward sustainable development; it applies new technologies and innovations, and develops new products that minimize the negative effect on environment. Despite all these efforts, company’s management has to work hard toward getting back the sustainable reputation of the British Petroleum after the recent oil spill in the Gulf of Mexico. References: British Petroleum (n.d.). Product and services. Retrieved 28 Nov.2010 from http://www.bp.com/productsservices.do?categoryId=37&contentId=2007985 BP Sustainability review (2009). Operating at the energy frontiers, how a revitalized BP is driving innovative, efficient and responsible operations? Retrieved from http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/e_s_assets/e_s_assets_2009/downloads_pdfs/bp_sustainability_review_2009.pdf British Petroleum (n.d.). Who we are. Retrieved 28 Nov.2010 from http://www.bp.com/subsection.do?categoryId=4&contentId=2006741 British Petroleum (n.d.). What we do. Retrieved 28 Nov.2010 from http://www.bp.com/extendedsectiongenericarticle.do?categoryId=5&contentId=7044157 British Petroleum (n.d.). Where we operate. Retrieved 28 Nov.2010 from http://www.bp.com/sectiongenericarticle.do?categoryId=6&contentId=7019358 Design and Sustainability (2010). Lecture “Design and Sustainability”. Read More