BP Refines Post-Spill Drilling Strategy

CEO Robert Dudley apologizes for company's role in Gulf disaster.

HOUSTON -- BP Plc CEO Robert Dudley outlined required safety measures the company must meet before drilling future deepwater reservoirs and discussed actions it has taken to prevent other potential safety issues in a speech March 8.

Dudley, speaking at the IHS CERAWeek conference in Houston, also said he's sorry for the Macondo well blowout on April 20 that resulted in 11 deaths and spewed millions of gallons of oil into the Gulf. Dudley said the gathering was his first opportunity to speak about the incident in front of a large group of people.

BP won't drill a deepwater well unless the company knows it can seal it, drill a relief well and launch an emergency response, said Dudley. As examples of the company's cultural shift toward safety first, Dudley cited the shutdown of a field in Azerbaijan because the fire water systems at the facility could not respond to the company's desired capacity.

The company repaired the problem and the platform. BP stopped production at another platform in the Gulf of Mexico because the company discovered fasteners weren't up to internal standards so it's in the process of replacing them, said Dudley who succeeded Tony Hayward as CEO in October.

"This is exactly what we want to see happening at BP," Dudley told reporters after his speech. "When we see a problem, we want to be able to stop operations. We sent that message through our organization that when people see something, raise their hand, highlight it."

He also remarked that production shutdowns are costly, but "safety is good business."

"There is extra cost, but overall it's not going to change the fundamental economics," he said." It will change possibly some of the development concepts that you knew that might be more expensive but longer lasting."

The company will take the same approach when exploring new opportunities in environmentally sensitive regions, such as the Arctic, Dudley said. Arctic exploration will take time as the industry develops next-generation equipment that lessens risk, Dudley said.

But that doesn't mean current drilling equipment is unsafe, he said. Rather, the industry is placing more emphasis on eliminating low-probability, high-consequence risks that it may not have considered in the past.

As for resuming operations in the Gulf, Dudley said the company has received notification that the company can resume work on its production wells.

BP co-owns with Noble Energy Inc. the well that on Feb. 28 received the first deepwater drilling permit since the disaster.

"I think it's just a matter of time," Dudley said. "The system is moving. It's taking time for regulators to be comfortable that the industry can get back to work."

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