Kemp: BP Acknowledges US Shale Is Different
Developing a shale play, in contrast, is more like a manufacturing process in which automation, standardisation and exceptional cost control are critical to success.
BP's exploration and production business can identify accumulations and sink wells 20,000 feet below the seabed with stunning precision.
But running a successful shale operation requires the skills and mindset of a Henry Ford.
BP has now recognised the problem. The company's press statement referred to the "unique characteristics" of U.S. onshore production.
It repeatedly emphasises the need to run the onshore business very differently. It will have a separate management team, at a separate location with "separate governance, processes and systems designed to address the unique competitive and operating environment in the U.S. Lower 48 onshore".
The focus throughout the announcement is on the need to operate differently from the rest of the world and even offshore.
The engineering, financial and environmental risks in the rest of the business are an order of magnitude higher than U.S. onshore oil and gas production. Consequently, they need strict, hierarchical control mechanisms by engineers and managers.
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