WEBVTT - BP: Breaking Promises? 0:00:03.360 --> 0:00:06.560 Join us. Right now is Bernard Luna, his VPS CEO. Bernard, 0:00:06.880 --> 0:00:09.040 let's walk through what the future there looks like. The 0:00:09.080 --> 0:00:11.800 business is doing well and at the same time we're 0:00:11.960 --> 0:00:15.280 leaning into the transition and investing in the VP of tomorrow. 0:00:15.360 --> 0:00:18.000 Performing while transforming, that's what we call it here. This 0:00:18.079 --> 0:00:21.480 is fundamental change, where ahead of the game. I think 0:00:21.480 --> 0:00:24.920 this direction is unstoppable. I think it's an enormous opportunity. 0:00:24.960 --> 0:00:28.360 We are a good company with good people. I can 0:00:28.400 --> 0:00:32.440 assure you it is not greenwashing. Performing while transforming. I 0:00:32.479 --> 0:00:34.720 know I sound like a broken record that we're preparing 0:00:34.800 --> 0:00:37.919 VP for tomorrow. I think a few people will question 0:00:38.640 --> 0:00:50.320 are resolved to do that? Welcome to calling Bullshit the 0:00:50.440 --> 0:00:54.680 podcast about purpose washing, the gap between what companies say 0:00:54.720 --> 0:00:58.080 they stand for and what they actually do, and what 0:00:58.200 --> 0:01:00.840 they would need to change to practice us what they preach. 0:01:01.560 --> 0:01:04.800 I'm your host time Ontogue, and I've spent over a 0:01:04.880 --> 0:01:08.759 decade helping companies define what they stand for, their purpose 0:01:09.319 --> 0:01:11.600 and then help them to use that purpose to drive 0:01:11.640 --> 0:01:17.039 transformation throughout their business. Unfortunately, at a lot of organizations today, 0:01:17.040 --> 0:01:21.000 there's still a pretty wide gap between word. Indeed, that 0:01:21.080 --> 0:01:26.200 gap has a name. We call it bullshit, But, and 0:01:26.280 --> 0:01:30.080 this is important, we believe that bullshit is a treatable disease. 0:01:30.600 --> 0:01:33.080 So when the BS detector lights up, we're going to 0:01:33.200 --> 0:01:36.440 explore things that a company should do to fix it. 0:01:43.959 --> 0:01:49.480 In this episode, we're gonna look at oil company BP. Recently, 0:01:49.600 --> 0:01:54.880 BP CEO Bernard Looney announced a new purpose to reimagine 0:01:54.960 --> 0:01:58.440 energy for people and our planet. We want to help 0:01:58.520 --> 0:02:03.120 the world reach net zero and improve people's lives. That's 0:02:03.120 --> 0:02:06.400 a pretty big shift for one of the largest current 0:02:06.560 --> 0:02:10.880 and historical producers of c O two in the world. 0:02:11.840 --> 0:02:15.440 But the interesting thing about this story is it's not 0:02:15.560 --> 0:02:18.920 the first time that BP has made a bold claim 0:02:19.080 --> 0:02:25.560 about reimagining energy. Is it possible to drive a car 0:02:25.639 --> 0:02:29.919 and still have a clean environment. We think so. And 0:02:30.000 --> 0:02:33.640 now BP, Amaco Aco and Castrol have come together to 0:02:33.720 --> 0:02:39.440 try Beyond Petroleum BP. That's a commercial from way back 0:02:39.480 --> 0:02:42.000 in two thousand and one that was part of then 0:02:42.080 --> 0:02:47.080 CEO John Brown's bold rebranding of the company, claiming that 0:02:47.120 --> 0:02:51.480 the initials BP would henceforth stand not for British Petroleum 0:02:51.680 --> 0:02:57.200 but for Beyond Petroleum. To understand just how significant the 0:02:57.280 --> 0:03:01.320 idea of beyond petroleum was, we need to take a 0:03:01.400 --> 0:03:06.000 quick trip back in time. B P was born in 0:03:06.120 --> 0:03:09.960 nineteen o eight as the Anglo Persian Oil Company. The 0:03:10.000 --> 0:03:13.120 company first staked claims on oil wells in what is 0:03:13.200 --> 0:03:17.840 now Iran. In the decades to follow, b P expanded 0:03:17.840 --> 0:03:21.880 their oil operations throughout the Middle East, Africa, Latin America, 0:03:22.080 --> 0:03:26.480 Europe and Russia. Along the way, they developed their own 0:03:26.520 --> 0:03:31.000 distinct cowboy culture. B P played hard, and they played 0:03:31.000 --> 0:03:35.600 for keeps. For instance, a struggle for control of the 0:03:35.680 --> 0:03:39.560 company with the government of Iran resulted in the overthrow 0:03:39.760 --> 0:03:45.760 of democratically elected President Mosadek in nineteen fifty three. They 0:03:45.800 --> 0:03:48.640 also became known as the company that took the biggest 0:03:48.720 --> 0:03:53.800 extraction risks and then reaped the biggest financial rewards. As 0:03:53.840 --> 0:03:57.600 a result, they left a trail of environmental and safety 0:03:57.720 --> 0:04:01.560 catastrophes in their wake. At nine p three a m. 0:04:01.600 --> 0:04:05.080 On Saturday, March the eighteenth, the Torry Canyon, one of 0:04:05.120 --> 0:04:07.800 the biggest tank as yet built, was turning the sea 0:04:07.920 --> 0:04:12.600 purple with a fatal cargo. A massive explosion and fire 0:04:12.880 --> 0:04:16.839 erupted at the VP refinery in Texas City, Texas. The 0:04:16.920 --> 0:04:20.480 explosion killed fifteen workers and injured one hundred eighty others, 0:04:20.920 --> 0:04:24.960 many of them seriously. When CEO John Brown took over 0:04:24.960 --> 0:04:28.520 the company in nineteen ninety five, he inherited the biggest 0:04:28.560 --> 0:04:32.080 polluter with the worst safety record of the seven largest 0:04:32.080 --> 0:04:35.880 oil companies in the world, known as the Super Majors. 0:04:36.480 --> 0:04:39.320 But John Brown was a little different from his predecessors 0:04:39.320 --> 0:04:43.560 and peers. A visionary in his own way. He saw 0:04:43.640 --> 0:04:46.760 the perils of climate change, and he understood the oil 0:04:46.800 --> 0:04:51.960 industry's culpability. I believe we've come to an important moment 0:04:52.400 --> 0:04:55.800 in our consideration of the environment. We need to go 0:04:56.040 --> 0:05:01.039 beyond analysis and to seek solutions and to take action. 0:05:01.600 --> 0:05:11.520 It is a moment for change and for rethinking corporate responsibility. 0:05:10.480 --> 0:05:16.720 BPS new CEO had become a vocal advocate for clean energy. 0:05:17.320 --> 0:05:21.039 He committed to reducing the company's greenhouse gas emissions and 0:05:21.160 --> 0:05:26.479 invested in solar power and other alternative energy. Under Brown's watch, 0:05:26.560 --> 0:05:30.760 BP also broke ranks and exited the Global Climate Coalition, 0:05:31.040 --> 0:05:34.640 an oil industry lobbying group of businesses that opposed action 0:05:34.760 --> 0:05:40.040 to reducing greenhouse gas emissions in oil industry terms. BP 0:05:40.360 --> 0:05:45.240 had gone renegade. They had a new progressive story, and 0:05:45.279 --> 0:05:48.440 they had started to make that story real through bold action, 0:05:50.120 --> 0:05:55.040 but bold change in the oil industry makes enemies, in 0:05:55.120 --> 0:05:59.600 some cases, really powerful enemies. In two thousand and six, 0:05:59.760 --> 0:06:04.159 these enemies began a whisper campaign about John Brown's private life. 0:06:05.080 --> 0:06:08.080 Well uh. In two thousand and seven, I was outed 0:06:08.200 --> 0:06:12.039 by the Mail on Sunday as gay, and that was 0:06:12.200 --> 0:06:14.960 a big shock, I think in the way it was done, 0:06:15.440 --> 0:06:20.599 not least to me. The press was relentless and fearing 0:06:20.640 --> 0:06:25.160 being outed, Brown lied under oath about his sexuality and 0:06:25.240 --> 0:06:29.680 was charged with perjury. On May one, two thousand and seven, 0:06:30.080 --> 0:06:35.080 John Brown resigned as CEO. It's sad looking back on 0:06:35.120 --> 0:06:39.720 this from had John taken over only a decade later, 0:06:40.120 --> 0:06:46.080 being gay wouldn't have even been an issue. After Brown's departure, 0:06:46.560 --> 0:06:50.800 the head of oil exploration and Production, Tony Hayward, became 0:06:50.839 --> 0:06:54.920 the new CEO. The company divested itself of its alternative 0:06:55.000 --> 0:07:00.560 energy holdings and diverted that money to radically experimental deep 0:07:00.600 --> 0:07:06.159 water drilling methods, and then on April two thousand and ten, 0:07:07.200 --> 0:07:11.120 disaster struck. You have information now that this this rig 0:07:11.160 --> 0:07:14.480 has gone under, It has gone onto the surface. Overnight, 0:07:14.520 --> 0:07:18.560 a powerful explosion rocked a giant oil rig igniting a 0:07:18.720 --> 0:07:21.640 fire and launching a day long search for eleven work 0:07:21.680 --> 0:07:25.000 early is a mess today because the winds shifted direction, 0:07:25.120 --> 0:07:30.120 blowing this oil, this sludge into the Bayous of southeastern Louisiana. 0:07:30.600 --> 0:07:34.000 The explosion was caused by a natural gas blowout a 0:07:34.080 --> 0:07:38.040 mile down on the seafloor. The fail safe mechanism designed 0:07:38.080 --> 0:07:41.760 to stop the flow malfunctioned, and the equipment needed to 0:07:41.800 --> 0:07:45.120 solve the problem was on the other side of the world. 0:07:45.840 --> 0:07:49.480 Eleven people died and millions of gallons of oil were 0:07:49.520 --> 0:07:52.960 now gushing into the Gulf of Mexico. It was the 0:07:53.000 --> 0:07:57.760 worst oil spill in history, and BP was wildly unprepared 0:07:57.800 --> 0:08:03.080 to respond and to make matters worse, if you can 0:08:03.120 --> 0:08:06.800 imagine that was even possible. BP was actively trying to 0:08:06.840 --> 0:08:10.640 play things down and play the victim. Chairman Tony Hayward, 0:08:10.680 --> 0:08:14.760 speaking to Britain Sky News, I think the environmental impact 0:08:14.760 --> 0:08:18.280 of this disaster is likely to be very modest, and 0:08:18.320 --> 0:08:21.200 a week ago this there's no one who wants this 0:08:21.280 --> 0:08:23.160 thing over more than I have. You know a lot 0:08:23.200 --> 0:08:27.480 my life. Back Crisis managers cringed when they heard that comment. 0:08:28.840 --> 0:08:31.800 Any oil company would have suffered in this situation. But 0:08:31.960 --> 0:08:36.120 there was a special outrage reserve for BP because they 0:08:36.200 --> 0:08:39.280 claimed to be a green energy company and then wound 0:08:39.360 --> 0:08:43.880 up as the culprit in the worst environmental disaster in history. 0:08:44.240 --> 0:08:51.440 Trust in BP was shattered. In retrospect, I'm guessing the 0:08:51.520 --> 0:08:55.840 new CEO, Bernard Looney wishes that John Brown's Beyond Petroleum 0:08:55.880 --> 0:08:59.400 plan had been implemented, BP would have had a twenty 0:08:59.480 --> 0:09:02.840 year head start on their competitors, all of whom have 0:09:03.000 --> 0:09:06.560 recently announced ambitious plans to make their own transitions to 0:09:06.679 --> 0:09:11.720 low carbon sustainable energy. Instead, like the rest of big oil, 0:09:12.200 --> 0:09:18.560 Looney has to make this transition fast, so folks. That 0:09:18.679 --> 0:09:22.199 brings us to the main question. VP is once again 0:09:22.280 --> 0:09:25.480 saying that their purpose is to reimagine energy for people 0:09:25.920 --> 0:09:31.000 and our planet. Is this finally true or is it 0:09:31.280 --> 0:09:36.160 still a bunch of bullshit? Get out your BS detector 0:09:36.320 --> 0:09:40.000 and join me as we drove for answers right after 0:09:40.040 --> 0:09:44.360 this before you head to the break, we'd love to 0:09:44.400 --> 0:09:47.000 hear what you think about the show. Maybe you were 0:09:47.040 --> 0:09:51.000 inspired to take action, maybe you disagree with today's bullshit rating. 0:09:51.280 --> 0:09:54.200 Either way, we want to hear about it. Leave us 0:09:54.200 --> 0:09:58.199 a message at two one two five oh five five 0:09:58.720 --> 0:10:01.600 or send a voice memo to CBS podcast at co 0:10:01.600 --> 0:10:05.079 collective dot com. You might even be featured on an 0:10:05.120 --> 0:10:17.680 upcoming episode Welcome back. To help me get to the 0:10:17.720 --> 0:10:21.040 bottom of BP's renude commitment to cleaner energy for people 0:10:21.040 --> 0:10:24.960 in the planet, I first spoke with Tyson Slocum, an 0:10:25.080 --> 0:10:32.160 expert in the world of petroleum, natural gas, and power markets. Tyson, 0:10:32.440 --> 0:10:35.440 welcome to Calling Bullshit. We're very excited to have you 0:10:35.480 --> 0:10:38.520 on the show. It's my pleasure to be here. I'd 0:10:38.559 --> 0:10:41.200 love it if you could start out by telling us 0:10:41.200 --> 0:10:43.520 a little bit about your background and the work that 0:10:43.559 --> 0:10:47.360 you do. Yes, I'm the Energy program director at Public Citizen. 0:10:47.840 --> 0:10:52.000 Public Citizen is a national consumer advocacy group based in Washington, 0:10:52.080 --> 0:10:55.600 d C. I run all of our energy policy related 0:10:55.600 --> 0:10:59.559 work and that mainly focuses on the oversight and regulation 0:11:00.160 --> 0:11:04.959 of petroleum, natural gas, and electric power markets. Our goal 0:11:05.000 --> 0:11:11.319 at Public Citizen is to promote those policies that provide affordable, reliable, 0:11:11.440 --> 0:11:16.600 and sustainable energy for working families. Fantastic. I love that. 0:11:17.000 --> 0:11:20.960 So let's get into BP. The topic of today is 0:11:21.000 --> 0:11:25.120 their energy transition goals and so just a kind of 0:11:25.240 --> 0:11:29.240 level set how much c O two is BP putting 0:11:29.240 --> 0:11:32.880 into the atmosphere in say an average year, a heck 0:11:32.920 --> 0:11:36.240 of a lot. It's difficult to quantify, but they're one 0:11:36.280 --> 0:11:40.880 of the largest individual emitters just because the scope of 0:11:40.920 --> 0:11:45.000 their operations. They literally have a presence on every single continent. 0:11:45.120 --> 0:11:48.720 They have a massive carbon footprint. And then what's what's 0:11:48.720 --> 0:11:52.959 important here ties also they are a large historical emitter 0:11:53.160 --> 0:11:55.720 because the company has been around for such a long 0:11:55.800 --> 0:12:00.079 time that when you look at its entire leg you 0:12:00.240 --> 0:12:04.440 see footprint it's even larger, and it's going to be 0:12:04.480 --> 0:12:09.840 one of the largest single contributors to climate change. From 0:12:09.840 --> 0:12:13.760 a corporate standpoint, and because of climate change, most of 0:12:13.800 --> 0:12:17.920 these companies have now announced their plans for so called 0:12:18.040 --> 0:12:23.120 energy transition. Your opinion, how serious do you think these 0:12:23.120 --> 0:12:26.600 companies are about making that transition. I think they're very 0:12:26.640 --> 0:12:30.600 serious about it from a public relations standpoint, But when 0:12:30.679 --> 0:12:34.440 you look at the day to day operation and even 0:12:34.520 --> 0:12:38.040 look at their capital expenditure plan going forward the next 0:12:38.080 --> 0:12:41.520 five years, it is dominated by oil and gas. And 0:12:41.520 --> 0:12:45.679 it's important to note here that in BP's own financial results, 0:12:46.080 --> 0:12:52.520 they classify their natural gas production activity in with renewables, 0:12:52.520 --> 0:12:56.920 so they consider natural gas to be a clean source 0:12:56.960 --> 0:13:00.560 of energy when you know it is absolutely not. I 0:13:00.640 --> 0:13:03.840 did not realize that that's crazy. Yeah, so so that's 0:13:03.920 --> 0:13:08.360 the problem. You know, BP isn't alone here, but BP 0:13:08.800 --> 0:13:15.600 is desperately trying to reclassify itself as a clean energy company. 0:13:15.760 --> 0:13:18.480 And again tied, this isn't new. I mean it started 0:13:18.520 --> 0:13:22.040 twenty years ago when they came up with this advertising 0:13:22.080 --> 0:13:26.240 plan to be on petroleum exactly. Yeah. So BP has 0:13:26.280 --> 0:13:29.800 been in this process of reinventing itself from a public 0:13:29.840 --> 0:13:33.640 relations standpoint for a very long time. But in terms 0:13:33.720 --> 0:13:40.840 of its operational standpoint, BP is an oil and gas company. Period. Yeah. So, 0:13:41.080 --> 0:13:44.800 within two weeks of taking the reins as CEO at 0:13:44.840 --> 0:13:49.080 BP in February of Bernard Luny outlined a whole new 0:13:49.160 --> 0:13:53.360 purpose for BP. He says, it is to reimagine energy 0:13:53.440 --> 0:13:56.120 for people and our planet. We want to help the 0:13:56.160 --> 0:14:00.320 world reach net zero and improve people's lives. And then 0:14:00.600 --> 0:14:04.320 down in the details he lays out specific goals for 0:14:04.360 --> 0:14:08.440 getting BP to net zero. He calls them aims, which 0:14:08.720 --> 0:14:12.520 I find kind of a weasily word. How about commitments, Bernard? 0:14:12.720 --> 0:14:20.040 But okay, so he says, our first goal is net 0:14:20.160 --> 0:14:23.920 zero operations are aim one is to be net zero 0:14:24.080 --> 0:14:29.040 across our entire operations on an absolute basis by or sooner. 0:14:29.840 --> 0:14:33.080 This aim relates to Scope one and t G h 0:14:33.320 --> 0:14:36.920 G emissions. So first of all, what does that mean? 0:14:37.400 --> 0:14:40.920 So that just means the emissions footprint of BP and 0:14:40.960 --> 0:14:46.120 its operations, not of how it's fuels are going to 0:14:46.200 --> 0:14:49.680 be consumed and therefore add to climate change. And so 0:14:50.320 --> 0:14:55.160 you know, just from the very get go, their definitions 0:14:55.280 --> 0:15:00.880 of reaching net zero have a massive flaw. Exactly. Okay, 0:15:00.920 --> 0:15:04.080 So so just to to school me up, let's move 0:15:04.120 --> 0:15:06.880 to their aim to our aim too, is to be 0:15:07.000 --> 0:15:10.200 net zero on an absolute basis across the carbon in 0:15:10.280 --> 0:15:14.440 our oil and gas production by sooner. This is our 0:15:14.440 --> 0:15:18.040 Scope three aim and is on a BP equity share 0:15:18.040 --> 0:15:23.240 basis excluding holdings in Rosineft, the Russian company run by 0:15:23.280 --> 0:15:25.880 Putin's number two guy, that they just announced they were 0:15:25.880 --> 0:15:29.280 going to divest of. But staying with what's on their website, 0:15:29.880 --> 0:15:33.040 that Net two goal to be net zero on an 0:15:33.040 --> 0:15:36.160 absolute basis across the carbon and our upstream oil and 0:15:36.200 --> 0:15:40.840 gas production by sooner. What does that mean? So they're 0:15:40.880 --> 0:15:44.120 they're talking about Scope three emissions for their oil and 0:15:44.160 --> 0:15:48.480 gas operations, which appears to be more comprehensive. But still 0:15:48.520 --> 0:15:55.040 this is a goal by and that isn't really that ambitious. 0:15:55.160 --> 0:16:00.800 We're looking at another generation or more of signifigant oil 0:16:00.840 --> 0:16:05.240 and gas extraction opportunities for BP, and so in terms 0:16:05.280 --> 0:16:11.080 of meaningful action to address the climate crisis, I don't 0:16:11.120 --> 0:16:15.040 see the ambition in this, you know, net zero goal 0:16:15.120 --> 0:16:20.600 by as being relevant. So you don't think it's enough 0:16:21.000 --> 0:16:23.520 and and and the timeline is too long? Is that 0:16:23.920 --> 0:16:26.920 sort of your take? Absolutely? And this is this is 0:16:26.920 --> 0:16:30.160 the challenge, right. It seems sort of silly for an 0:16:30.160 --> 0:16:32.880 oil and gas company, especially one as large as VP, 0:16:33.520 --> 0:16:37.640 to be talking about getting to real, meaningful net zero, 0:16:37.960 --> 0:16:41.960 whether we're talking about five years or forty years, because 0:16:42.400 --> 0:16:46.280 you're going to have to transform the fundamentals of the company. 0:16:46.320 --> 0:16:50.360 And I don't see where that is happening yet at BP. 0:16:50.920 --> 0:16:54.600 You know, we're talking about sort of nebulous goals far 0:16:54.640 --> 0:16:57.560 off in the future. I don't see how those long 0:16:57.680 --> 0:17:02.840 term goals are affecting to days operational priorities at BP. 0:17:03.040 --> 0:17:08.240 I still see capital being first and foremost allocated to 0:17:08.920 --> 0:17:13.200 continued oil and gas development and and that's the big challenge. 0:17:13.359 --> 0:17:17.359 And for any large oil major tie there's going to 0:17:17.440 --> 0:17:24.720 be a market challenge to doing a real transition to renewables, 0:17:24.720 --> 0:17:29.479 for example, because during that transition, let's say BP has 0:17:29.520 --> 0:17:32.040 a real meaningful plan which I don't see but just 0:17:32.160 --> 0:17:39.680 for conversation purposes to transition off of oil and towards renewables. 0:17:40.240 --> 0:17:42.919 The market is just gonna want to see BP split 0:17:42.960 --> 0:17:48.440 into separate companies because the market value of a pure 0:17:48.520 --> 0:17:52.920 renewable play is going to be dragged down by the 0:17:53.000 --> 0:17:56.840 continued operations of oil and gas, which the market is 0:17:56.880 --> 0:17:59.719 not going to see as having enough growth. And so 0:17:59.800 --> 0:18:03.760 as long as BP remains an integrated company that is 0:18:03.840 --> 0:18:07.080 trying to get into renewables while still primarily being an 0:18:07.119 --> 0:18:10.440 oil and gas company, those oil and gas operations are 0:18:10.600 --> 0:18:15.960 always going to drag on the value of the renewable investments. 0:18:16.000 --> 0:18:18.960 And so what you would see from Wall Street is 0:18:19.040 --> 0:18:23.040 they would say split up the company. Interestingly, a former CEO, 0:18:23.480 --> 0:18:27.000 John Brown, is recently on record saying he thinks that's 0:18:27.000 --> 0:18:30.600 a good idea to spin out the renewable energy assets 0:18:31.359 --> 0:18:35.359 as a separate company, essentially create BP Future, which is 0:18:35.720 --> 0:18:39.520 rapidly growing, less capital intensive, and valued at a premium 0:18:39.560 --> 0:18:44.160 by investors, and then by default create BP past, which 0:18:44.240 --> 0:18:47.320 is the oil and gas assets, capital intensive, unloved by 0:18:47.320 --> 0:18:50.000 the market, and in decline, and then just let the 0:18:50.040 --> 0:18:54.160 market decide. What do you think about that? I think 0:18:54.200 --> 0:18:56.520 that's how all of these oil and gas companies are 0:18:56.520 --> 0:18:57.879 going to have to go. If if you're going to 0:18:58.000 --> 0:19:01.200 remain a publicly traded company, off ring shares of the public, 0:19:01.720 --> 0:19:06.480 that's the only strategy that makes any sense. And the 0:19:06.560 --> 0:19:10.640 fact that BP hasn't done that split yet shows that 0:19:10.760 --> 0:19:16.080 their financial and capital commitments to renewables aren't yet meaningful 0:19:16.520 --> 0:19:20.040 enough to orchestrate that split. Yeah, Leoney doesn't like the 0:19:20.080 --> 0:19:23.840 idea of splitting up. He actually responded to Brown and 0:19:23.920 --> 0:19:26.680 he said he wants to use the cash of the 0:19:26.760 --> 0:19:30.640 high carbon business to fund the transition. He calls it, 0:19:31.600 --> 0:19:34.520 what is it? He's got a catchphrase for it, performing 0:19:34.720 --> 0:19:39.879 while transforming. That would be believable if that's what was 0:19:39.920 --> 0:19:42.560 actually happening. But when we look at the balance sheet, 0:19:43.080 --> 0:19:47.640 BP is still pouring billions of dollars every year from 0:19:47.680 --> 0:19:52.640 its earnings on oil and gas operations into more capital 0:19:52.640 --> 0:19:56.560 investment for additional oil and gas exploration and production, and 0:19:56.640 --> 0:20:00.840 into dividends. Because the way that these oil companies try 0:20:00.960 --> 0:20:05.320 and keep their stock price attractive because they're being eclipsed, 0:20:05.320 --> 0:20:09.639 all of them by companies like Tesla and renewable energy 0:20:09.680 --> 0:20:13.600 companies that just have way more growth potential. The way 0:20:13.720 --> 0:20:19.480 that BP markets itself to fund advisors and to other 0:20:19.480 --> 0:20:23.960 big institutional investors is the lucrative dividend that they pay 0:20:24.000 --> 0:20:27.640 out in cash every quarter, and so a bunch of 0:20:27.680 --> 0:20:31.479 the profits from their oil and gas operations are just 0:20:31.760 --> 0:20:35.080 going into pumping up their stock price to make it 0:20:35.119 --> 0:20:40.480 continually attractive. And so until we see a deviation from 0:20:40.640 --> 0:20:44.200 big capital investment in oil and gas and the big 0:20:44.240 --> 0:20:49.800 investment in dividends, this is inaccurate. They are not moving 0:20:49.840 --> 0:20:54.360 that profit from today's oil and gas operations into tomorrow's renewables. 0:20:54.720 --> 0:20:57.560 Sticking with the the aims that they have on their website, 0:20:57.600 --> 0:20:59.240 I just want to go through a couple more that, 0:20:59.400 --> 0:21:03.720 frankly I just don't understand. Aim three is to cut 0:21:03.760 --> 0:21:07.080 the carbon intensity of the products that we sell by 0:21:07.200 --> 0:21:10.960 by twenty fifty or sooner. What does carbon intensity? What 0:21:11.000 --> 0:21:14.600 does that mean? So this is talking about the relative 0:21:14.640 --> 0:21:18.520 carbon emissions for energy resources. So a lot of this 0:21:18.880 --> 0:21:22.520 is BP and some of the other majors like Chevron, 0:21:22.560 --> 0:21:27.080 and Shell have been increasing their investments into natural gas, 0:21:27.280 --> 0:21:30.600 and so the way that they measure it is gas 0:21:30.920 --> 0:21:36.240 has a lower carbon intensity than oil. It is not 0:21:36.440 --> 0:21:39.800 a clean resource, right, it is a fossil fuel, but 0:21:39.920 --> 0:21:42.679 compared to oil, and so a lot of this carbon 0:21:42.760 --> 0:21:47.439 intensity talk is really about a shift into natural gas. 0:21:47.560 --> 0:21:49.880 And you know, a lot of that is because they 0:21:49.920 --> 0:21:55.840 see continued market opportunities for gas in the power generation sector, 0:21:56.240 --> 0:21:59.560 in the industrial sector, and in the agricultural sector with 0:21:59.800 --> 0:22:02.920 for utilizers and so forth. So again, this is the challenge. 0:22:03.040 --> 0:22:06.879 They're using these words that sound like they're doing a 0:22:07.000 --> 0:22:11.840 serious pivot into renewables, but it's not. It's just putting 0:22:12.200 --> 0:22:16.280 slightly more investment into gas over oil, and they're able 0:22:16.359 --> 0:22:20.960 to count that as a lower carbon intensity going forward. 0:22:21.280 --> 0:22:23.760 It's not, you know, going to deliver us on a 0:22:23.800 --> 0:22:28.200 path to meaningfully addressing the climate crisis, right, Okay, So 0:22:28.400 --> 0:22:33.000 Aim four is to produce methane. It says our aim 0:22:33.040 --> 0:22:36.600 force to install methane measurement at all of our existing 0:22:36.640 --> 0:22:40.960 major oil and gas processing sites, by published the data, 0:22:41.040 --> 0:22:43.960 and then drive a fifty reduction in methane intensity of 0:22:43.960 --> 0:22:47.040 our operations. So, first of all, why is this important? 0:22:47.240 --> 0:22:52.199 What's special about methane. So, methane is a extremely powerful 0:22:52.760 --> 0:22:56.960 greenhouse gas. It is many many, many times more powerful 0:22:56.960 --> 0:23:00.160 than carbon dioxide. It doesn't last in the atmosphere as 0:23:00.200 --> 0:23:03.800 long as c O two, but methane, for the briefer 0:23:03.880 --> 0:23:06.960 time that it is in the atmosphere after being released, 0:23:07.480 --> 0:23:12.040 is far more potent. And so the Obama administration in 0:23:12.119 --> 0:23:19.000 two thousand twelve introduced sweeping requirements and mandates to control 0:23:19.280 --> 0:23:23.600 methane emissions from oil and gas operations, and BP and 0:23:23.640 --> 0:23:27.119 all the other oil companies successfully fought it off. Now 0:23:27.400 --> 0:23:29.919 we've had a change in heart, and really what what 0:23:30.160 --> 0:23:36.919 changed was in November, a energy company that is partly 0:23:36.920 --> 0:23:40.720 owned by the French government called Energy canceled a major 0:23:40.840 --> 0:23:45.359 liquefied natural gas export deal with a US based l 0:23:45.480 --> 0:23:50.359 en G exporter because of the lack of any meaningful 0:23:50.520 --> 0:23:55.600 methane regulations on US gas production or US gas exports. 0:23:56.160 --> 0:24:00.359 And that cancelation of that seven billion dollar deal was 0:24:00.400 --> 0:24:04.560 a wake up call for oil and gas producers everywhere 0:24:04.960 --> 0:24:09.040 that all of a sudden there was a emphasis on 0:24:09.160 --> 0:24:14.400 controlling and measuring the carbon content of natural gas production. 0:24:14.680 --> 0:24:17.680 And so we have now seen a total one eight 0:24:17.840 --> 0:24:23.000 where BP actually was sending out tweets in support of 0:24:23.200 --> 0:24:30.119 Biden administration efforts to revive federal regulation over methane emissions. 0:24:30.119 --> 0:24:33.080 And so this is BP trying to get out ahead 0:24:33.359 --> 0:24:38.719 of a market trend. Oil companies are uniformly against regulation 0:24:39.400 --> 0:24:45.000 unless that regulation can provide market access opportunities, and in 0:24:45.000 --> 0:24:50.320 this case, regulating methane emissions and documenting your ability to 0:24:50.480 --> 0:24:55.600 limit fugitive emissions is seen as a market opportunity because 0:24:55.640 --> 0:25:00.159 you're able to slap a label of clean methane on 0:25:00.280 --> 0:25:04.720 your natural gas and make it more desirable for export 0:25:04.800 --> 0:25:07.920 and consumption in global markets. So it would have been 0:25:07.960 --> 0:25:11.240 great if BP was making this announcement a decade ago. 0:25:11.560 --> 0:25:14.640 Another point that they make on the website to help 0:25:14.680 --> 0:25:18.640 the world get to net zero is aligning associations. Our 0:25:18.720 --> 0:25:22.400 aim is to set new expectations for our relationships with 0:25:22.600 --> 0:25:31.359 trade organizations around the globe. In September of September, in 0:25:31.680 --> 0:25:35.480 a publication called The Resilience, they point out that VP 0:25:35.720 --> 0:25:40.920 still supports eight anti climate lobbying groups as of that date. 0:25:41.080 --> 0:25:44.080 And you know that's eighteen months after Bernard Looney took 0:25:44.080 --> 0:25:47.280 his job, and they had plenty of time to clean 0:25:47.320 --> 0:25:52.080 that up by September. Are you aware of any issues 0:25:52.119 --> 0:25:55.960 there and what does that make you think about BP? Absolutely, 0:25:56.040 --> 0:25:59.160 this is a huge problem. And just for a second, 0:25:59.240 --> 0:26:01.800 let me just talk about trade associations in general, because 0:26:01.800 --> 0:26:05.400 it's sort of a fascinating, crazy situation that your listeners 0:26:05.600 --> 0:26:07.679 may not be familiar with. So what a trade association. 0:26:07.760 --> 0:26:11.240 Let's take the American Patrolum Institute, which is the largest 0:26:11.320 --> 0:26:15.720 and probably the most successful trade association lobbying group in 0:26:15.760 --> 0:26:19.000 the United States today. It's got an annual budget in 0:26:19.160 --> 0:26:23.080 excess of three million dollars a year. And so what 0:26:23.280 --> 0:26:27.879 API does is it collects dues from BP and Xon 0:26:27.960 --> 0:26:32.040 and all the other companies and allows them all to 0:26:32.359 --> 0:26:39.000 actively collaborate on influencing legislation and regulation. So, while oil 0:26:39.000 --> 0:26:43.280 companies compete in the marketplace, when it comes to influencing 0:26:43.680 --> 0:26:48.400 our politicians and our regulatory structures, they are actively colluding 0:26:48.480 --> 0:26:53.280 because they have a shared common interest. And so you're 0:26:53.280 --> 0:26:59.359 absolutely right that BPS stated commitment to only joining those 0:26:59.400 --> 0:27:03.399 trade associal stations that align with efforts to address the 0:27:03.400 --> 0:27:08.080 climate change do not meet reality because they continue to 0:27:08.200 --> 0:27:11.400 pay millions and millions of dollars in dues to trade 0:27:11.440 --> 0:27:17.600 associations that are actively fighting against climate solutions. Luney has 0:27:17.640 --> 0:27:20.880 also made a few subsequent promises after he rolled out 0:27:20.920 --> 0:27:25.080 this plan. One of them was in August he said 0:27:25.119 --> 0:27:28.600 to investors that VP will reduce oil and gas production 0:27:28.680 --> 0:27:32.600 by within a decade, and that was two years ago, 0:27:32.680 --> 0:27:35.520 so he's got eight years left, and that they would 0:27:35.600 --> 0:27:39.440 stop exploring for oil and gas fields in new countries 0:27:39.600 --> 0:27:43.719 in the same time frame. So I guess do you 0:27:44.840 --> 0:27:47.280 read from that that he's saying he's prepared to leave 0:27:47.359 --> 0:27:50.600 oil in the ground to make this transition work. I 0:27:50.800 --> 0:27:53.959 I don't think that he's realistic about those commitments. I mean, 0:27:54.000 --> 0:27:56.959 these are non binding commitments. First of all, they're just 0:27:57.240 --> 0:28:03.359 public announcements promises, um. So without a binding commitment, the 0:28:03.560 --> 0:28:07.560 company can make whatever adjustments and changes it wants. I 0:28:07.560 --> 0:28:10.920 don't see this as to be very honest and meaningful commitment. 0:28:11.119 --> 0:28:16.360 BP is still committing the vast majority of its capital 0:28:16.560 --> 0:28:21.040 investment into exploration and production, and and that tells me 0:28:21.119 --> 0:28:26.080 that BP remains an oil and gas company period. One 0:28:26.080 --> 0:28:28.960 of the things that we're exploring on this show is 0:28:29.080 --> 0:28:34.880 kind of a an evolved version of capitalism, let's call it. 0:28:35.119 --> 0:28:39.520 That includes some of the externalities that companies really like 0:28:39.720 --> 0:28:42.400