Oil Bust Pushes Producers Together To Make Cost Cutting Count

BP CEO Bob Dudley says the industry can do a better-than-expected job of keeping costs low.

The company’s Mad Dog Phase 2 project in the U.S. Gulf of Mexico is now expected to costs less than $9 billion compared with an estimate of $10 billion last year and $20 billion four years ago, Dudley said. Rig-rental rates are likely to stay down because of an oversupply, while low steel prices are reducing the cost of other equipment, he said.

“That’s too pessimistic” to say that most savings will be lost when the industry rebounds from the downturn, he said in an interview in St. Petersburg, Russia, on June 17. “For our organization, we believe we can capture 75 percent of the cost reduction and keep them there.”

To contact the reporter on this story: Rakteem Katakey in London at rkatakey@bloomberg.net To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net Dan Stets