HOUSTON -- The CEO of the oil and gas supermajor behind the largest oil spill in U.S. history says the experience has changed his company forever and will soon completely change his industry.
Robert Dudley of BP PLC says his company is now built around a safety-first structure that is already leading to work stoppages and delays in the company's global operations and its contractors.
"We are taking what had been a fairly decentralized 80,000-person global organization and making it into a more systematic and standardized one, where decisions are taken at the right levels and everyone understands exactly what standards apply to them," Dudley told his industry peers at IHS Cambridge Energy Research Associates' CERA Week conference here.
Dudley also apologized to Gulf Coast communities and industries affected by the spill, which spurred a federal moratorium on offshore drilling whose impacts are felt still. BP shares responsibility, he added, with its partners in the ill-fated Macondo well, Halliburton Co. and Transocean Ltd.
Dudley's speech at the annual energy gathering was his first before a large gathering of oil and gas executives since the Deepwater Horizon offshore rig exploded and started the Gulf of Mexico spill last April.
"We now have a very strong emphasis on having independent third-party verification of blowout preventers," said Dudley, referring to the technology failure that investigators concluded was one of the main causes of the spill. "And we have obtained confirmation from our contractors that they have enhanced the processes they use to check that the maintenance of well control equipment is up-to-date and has been verified by a third party."
BP now has 500 employees committed to upholding new safety and integrity standards globally, led at the executive level by Mark Bly, who led BP's internal investigation of last year's spill, Dudley said. He also said BP has rearranged its compensation and rewards system "emphasizing quality over quantity and value over volume."
Dudley said new performance reviews led BP to shut down a production platform to repair water pumps that extinguish fires. Two more were shut down for concerns about faulty equipment and to allow work on a pipeline to proceed.
BP has also tightened its standards for offshore drilling rigs. Transocean owned the Deepwater Horizon rig that exploded and sank off Louisiana, killing 11 workers and starting the spill.
"We have decided we will not take rigs that do not conform to our standards, and there are a number of cases where we have either turned away rigs or are negotiating for modifications, which could bring the rig up to our standards," Dudley said.
In the wake of the disaster, BP posted an annual loss $41 billion and its executives rethought growth strategies. The firm plans to divest itself of half of its U.S. oil refining capacity and seek partnerships with large national oil companies, reflected in the recent deal BP announced with the Russian oil and gas giant Rosneft to explore the Arctic.
Changes are in store for everyone else in the industry, Dudley said.
Because companies have to reach further offshore and into deeper formations to meet the burgeoning energy demand, "the industry faces an unprecedented risk profile in the coming decades," he warned.
With the best prospects now in deeper continental shelf areas and the Arctic, the industry must form more strategic partnerships and approach future energy challenges in a much more coordinated way, he said.
Companies replacing declining onshore basins with new deepwater reserves would be wise to follow BP as it remakes itself, he said, demanding the highest safety standards and best equipment and carefully planning for emergency responses.
"Anyone who does not believe there will be industry-level changes after the Deepwater Horizon accident is, I think, being unrealistic," Dudley said.
