LONDON—BP PLC’s new Chief Executive Bob Dudley on Monday launched a robust defense of his company’s response to the Gulf of Mexico oil spill this summer, accusing the media and some people in the oil industry of fear-mongering and a rush to judgment that exacerbated the crisis.
Mr. Dudley also reaffirmed that BP won’t quit its businesses in the U.S. and intends to keep drilling in deep water in the Gulf of Mexico despite the damage to its reputation.
BP’s new boss, giving his first speech on the company’s home soil, said he was shocked by the “protracted media and political firestorm” the oil spill ignited, which at its height “threatened the very existence of our company.
“[There was] a great rush to judgment by a fair number of observers before the full facts could possibly be known,” he said. “I watched graphic projections of oil swirling around the Gulf, around Florida, across and around Bermuda to England,” he said, none of which came to pass.
Notably, Mr. Dudley singled out for criticism “some in our industry” who joined the clamor against BP. Many other major oil companies operating in the Gulf of Mexico—ExxonMobil Corp., Royal Dutch Shell PLC and Chevron Corp.—have sought to distance themselves from BP and criticized the design used in the Macondo well that triggered the disaster. BP’s internal investigation concluded that well design played no part in the Macondo blowout.
“I hope for everyone’s sake that over the next months and years we can reach a balanced and informed judgment about what happened,” Mr. Dudley told the annual conference of the Confederation of British Industry in London, adding he was confident BP can win back the trust of people in the U.S.
“I didn’t become chief executive of BP in order to walk away from the U.S. BP won’t be quitting America. There is too much at stake, both for BP and the U.S.” BP’s relationship with the U.S. authorities has already started to improve, he said. “The scale of our response, much of it going beyond the demands of legal compliance, has not gone unnoticed,” he said.
Mr. Dudley acknowledged the risks of deep-water drilling can never be fully eliminated, but said operations can continue safely and BP should remain a part of the industry. “Deep waters are becoming an increasingly important source of energy to fuel the global economy,” he said. “We are one of only a handful of companies with the financial and technological strengths to undertake developments in these difficult geographies.
“Until this incident, over 5,000 wells had been drilled in over 1,000 feet of water with no serious incident. BP had drilled safely in deep waters of the Gulf of Mexico for 20 years … there are difficult balances to strike, but we cannot afford to shy away from risk.”
Mr. Dudley acknowledged mistakes and a lack of preparedness. “A subsea blowout of the kind that happened was seen by us and the entire industry as a very low-probability event. We thought we had the appropriate mitigations in place,” he said.
However, BP has learned a tremendous amount from the Gulf of Mexico disaster that can enhance safety in the future, he said.
“The silver lining of the event is the significant and sustained advance in industry preparedness,” he said. BP aims to become the best in the oil industry at managing risk and has been consulting with experts from the nuclear and chemical industries to improve BP’s approach to safety, he said.
Meanwhile, BP also announced Monday it will sell four producing deep-water oil and gas fields in the Gulf of Mexico to Marubeni Oil and Gas for $650 million. The asset disposal could be completed by early 2011, BP said in a statement. Marubeni Oil and Gas is a unit of Japan’s Marubeni Corp.
BP acquired the interests in the fields to be sold to Marubeni—Magnolia, Merganser, Nansen and Zia—from Devon Energy earlier this year. BP’s net production from these fields is about 15,000 barrels of oil equivalent a day. The four fields “did not fit well with the rest of our business in the region,” BP said.
Marubeni expects to complete the purchases by early next year unless an existing partner of the four wells exercises its pre-emptive right, the company said in a statement. A Marubeni spokeswoman declined to give details on pre-emptive right situations.
After the acquisition, Marubeni’s production interests will total about 50,000 barrels a day of crude oil equivalent, up from about 35,000 barrels a day currently, the spokeswoman said. Marubeni doesn’t plan on buying more BP production stakes for the time being, she added.