BP's Browne Sees Energy Prices Stabilizing and Even
Falling Long Term Intelligence Press
Tuesday, November 29, 2005
World energy demand will continue to grow, but new oil and natural
gas discoveries ramping up across the globe will likely lead to
stabilized prices and perhaps even a dip in the long term, the CEO
of BP plc said Tuesday.
John Browne spoke to the Brookings Institute in Washington, DC, to
tout BP Alternative Energy, a low-carbon power business that was
launched on Monday.
However, the BP chief touched on a lot of energy subjects at the
The energy industry needs to plan for the future, he said, but added
there remained plenty of new opportunities for exploration and
production, pointing to recently discovered oil and gas deposits in
the Caspian Sea, Angola, Russia and "here in the U.S. from the
deepwater of the Gulf of Mexico," he added.
"Across the industry, investment which has gone in over a period of
years is leading to new production. And beyond those projects which
are already under way there is more to come -- not least here in the
U.S the development of gas in the Rockies, where we announced a
$2 billion investment plan a few weeks ago, and the major long-term
development of the 35 Tcf of natural gas in Alaska, which will add a
whole new source of supply to the U.S. market. That's why despite
continued growth in world demand we see the prospect of prices
stabilizing and perhaps even falling back to a lower level."
Browne acknowledged that "things could happen. But the increase in
output from diverse sources of supply begins to restore the cushion
Today's high oil prices "are unlikely to be sustainable and should
drop to average $40/bbl in the medium term,"
and longer term, prices could return to a range of $20-25/bbl, he
said. Browne did not comment on gas prices, which traditionally have
traded at a 6:1 ratio with oil; however, he said recovery of shut in
Gulf production following the 3Q hurricanes is expected to pressure
prices lower, and "I wonder what will happen when it all comes on."
The CEO also updated the status of BP's deepwater semisubmersible
Thunder Horse platform, originally scheduled to ramp up this year.
The $1 billion platform, in which ExxonMobil Corp. holds a 25%
stake, will process up to about 250,000 boe/d, but a defective
ballast system caused it to begin listing after Hurricane Dennis
crossed the Gulf in July. The ramp up was delayed into 2006, and
production likely will begin next summer.
"Thunder Horse is fine," Browne told reporters following his
speech. "The problem is, of course, the weather has been so bad we
can't connect it up to the wells on the seabed...We do expect to do
this next year, and we expect it to be on stream in the second half
of next year, probably in the earlier part of the second half."
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