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The burning of fossil fuels affects the environment, leading to air pollution, global warming, severe climate changes, and health problems such as asthma. Alternative sources of energy may be more expensive or more difficult to obtain, but the negatives seem to pale in comparison to this generation's responsibility to ensure livable conditions on Earth for future generations.
Given the rocketing prices of gasoline and the prospect that oil and gas resources will be depleted within the foreseeable future, the search for alternative energy sources is indeed becoming an increasingly desperate enterprise (Woloski, 2005). In the meantime, companies competing in the oil and gas industry have enormous sums already invested -- and much more planned -- in a global infrastructure that will not be easily replaced and it is therefore vitally important that effective and timely strategies be developed that can make the most of these resources while the supply of fossil fuels exists while balancing the investment in alternative and renewable sources of energy for the future. Certainly, the changeover would involve a lot of new investment and this might be one way in which currently unemployed people could find work. The changeover might also provide more sustainable employment -- less threatened by the economic ups and downs resulting from, for example, oil price variations. Not surprisingly. trade unions have shown interest in such possibilities. Indeed, some trade union groups were in the vanguard of the notion of committed more resources to the changeover to "socially and environmentally appropriate production," as evidenced by the campaign mounted by trade unionists at Lucas Aerospace in the UK in the 1970s (Elliott, 1997). It was the position of these workers that instead of being forced to rely on defense-related production, they could achieve improved job security through a transition to products and system that were socially needed; in support of this goal, workers formulated their own version of an initiative that they wanted to pursue that included production of wind turbines, solar energy devices, and fuel cells (Elliott, 1997). A number of additional UK trade union groups developed comparable plans of their own in response, as well as their counterparts in the United States where workers likewise introduced their own "defense conversion" approaches to help American society while also benefiting themselves (Elliott, 1997).
Taken together, these initiatives and others being planned suggest that there are a number of benefits to be gained from investment in alternative energy sources, some of which may be realized later than sooner. For companies competing in the oil and gas industry today, the question arises concerning at what point the value of further investments in oil and gas infrastructure becomes prohibitive and investments in alternative energy sources provide superior returns. Strategic decisions made today will therefore have an inordinately pronounced impact in the future, with the right decision providing the outcome that will be needed to survive the energy environment of the future.
Scope of Study
Although the study's scope is global in nature and an examination of companies competing in the oil and gas industries in different countries are used, there is a specific focus on British Petroleum and the United Kingdom.
Rationale of Study
Time is running out and there is no longer room for false starts. The actions taken by oil and gas companies today to identify, secure and extract the remaining supplies of fossil fuels in the most efficient and environmentally responsible manner possible will have long-term effects on the global economy and the lives of billions of people in the future. Likewise, identifying at what point further investments in oil and gas extraction becomes less attractive than alternative energy sources just makes good business sense.
Overview of Study
This paper used a five-chapter format; chapter one introduced the topic under consideration, a statement of the problem, the purpose and importance of the study, as well as its scope and rationale. Chapter two provides a critical review of the relevant and peer-reviewed literature, and chapter three presents the study's methodology, a description of the study approach, the data-gathering method and the database of study consulted. Chapter four is comprised of an analysis of the data developed during the research process and chapter five presents the study's conclusions, a summary of the research and salient recommendations for the policymakers at British Petroleum.
CHAPTER 2: REVIEW OF THE RELATED LITERATURE
This chapter provides a review of the juried, scholarly and organizational (e.g., current company information and market analyses) concerning the oil and gas industry in general and British Petroleum in particular, how regulatory issues affect the strategic policy-making process, and the industry's current efforts to transition into alternative and renewable energy resources. A summary of the chapter is followed by Chapter 3 which describes more fully the methodology used by the study.
Background and Overview
BP p.l.c. (hereinafter alternatively "BP" or "the company") is a multinational corporation with significant interests in the Trans Alaska pipeline system, the Forties pipeline system, the Central Area transmission system pipeline, and Baku-Tbilisi-Ceyhan pipeline, as well as in LNG plants located in Trinidad, Indonesia, and Australia (BP company profile, 2009). This business unit delivers fuel that is used for transportation, energy supplies used for heating and lighting, retail services, as well as the entire range of petrochemicals products and by-products (BP company profile, 2009). In addition, the company has entered into a joint development agreement with Martek Biosciences Corp. For research into improved ways of producing microbial oils that are used for biofuels applications. The company was founded in 1889 and is headquartered in London (BP company profile, 2009).
The company competes through three business units as follows:
1. Exploration and Production. This business unit is responsible for finding, producing and transporting oil and gas products to market. This business unit is also responsible for oil and natural gas exploration, development, and production; in addition, Exploration and Production is tasked with marketing and trading of natural gas liquids, liquefied natural gas (LNG), and gas and power. This business unit features exploration and production activities located in a wide range of geographically diverse setting, including the United States, the United Kingdom, Angola, Azerbaijan, Canada, Egypt, the Russian Federation, and Trinidad and Tobago, as well as in the Asia Pacific, Latin America, and the Middle East (BP company profile, 2009). In addition Exploration and Production owns and manages crude oil and natural gas pipelines; processing and export terminals; and LNG processing facilities and transportation (BP company profile, 2009).
2. Refining and Marketing. This business unit is responsible for supply and trading, refining, marketing, and the transportation of crude oil, petroleum, and chemicals products that are destined for the company's wholesale and retail customers under the Amoco and BP brands (BP company profile, 2009).
3. Other Businesses and Corporate. This business unit produces and markets rolled aluminum products, as well as providing alternative energy through wind, solar, biofuels, hydrogen, and gas-fired sources (BP company profile, 2009).
Today, BP has operations in 29 countries and employs more than 20,000 people (BP company profile, 2009). The company's stated business strategy is to invest in ways that increase the company's production of energy more efficiently by:
1. Focusing on accessing, finding and developing the largest fields in the world's most prolific hydrocarbon basins.
2. Building leadership positions in these areas.
3. Using technology to improve productivity and support new access.
4. Managing the decline of existing producing assets (BP 2009 Strategy Presentation).
In order to extract oil and gas, it must first be located of course and the engineers and technicians at BP have enjoyed good success in recent years in this upstream activity; such activities involve oil and natural gas exploration and field development and production (BP 2009 Strategy Presentation, 2009). According to the company's most recent strategic policy announcement (2009), BP participated in three of the 14 major discoveries that were reported from around the world in 2008. In addition, BP improved its performance in several primary growth areas, including the Gulf of Mexico, Egypt and Angola. The company's success in oil and gas exploration was also responsible for identifying new sources in its maturing exploration zones, including two new discoveries in the UK North Sea (BP 2009 Strategy Presentation, 2009). The progressive development of these newly discovered fields will allow the company to continue to preserve its replacement record for exhausted reserve sources; further, these discoveries built on a previous record of major project start-ups, with nine new major projects coming onstream in 2008, including Thunder Horse in the Gulf of Mexico and its Deepwater Gunashli platform located in Azerbaijan (BP 2009 Strategy Presentation, 2009).
One of the company's biggest investments in terms of commitment of resources for the long-term involved TNK-BP, BP's Russian subsidiary. The company's initial strategy in 2003 for this business unit was to combine the Russian company's expertise in facilities operation with BP's technology and capability, a marriage that has proven particularly effective in the intervening years (BP 2009 Strategy…[continue]
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