News / Economy

Oil Conference Discusses Price, Higher Demand

BP CEO Robert Dudley speaks to reporters at the IHS-CERA oil conference in Houston, Texas, March 9, 2011.
BP CEO Robert Dudley speaks to reporters at the IHS-CERA oil conference in Houston, Texas, March 9, 2011.
Greg Flakus

More than 2,000 representatives of world oil and gas companies, academics and industry experts are in Houston this week for the 30th annual conference sponsored by Cambridge Energy Research Associates, or IHS-CERA. With prices rising, partly in response to unrest in North Africa and the Middle East, discussions have centered on maintaining supply and expanding production, while also avoiding accidents like last year's spill in the Gulf of Mexico.

Talk at this year's CERA WEEK conference has centered on two topics - the rapid rise of the price of crude oil and the need to venture into ever more challenging environments in order to keep up with world demand.

The risks involved became glaringly apparent to the world last year when a platform operated by BP in the Gulf of Mexico exploded and then leaked nearly five million barrels of crude oil into the water.

BP CEO Robert Dudley, making his first appearance at an international industry event since last year's accident,  stressed his London-based company's commitment to compensating those harmed by the spill in US Gulf Coast states. He told reporters BP has learned to manage risk much more carefully.

“We have begun to look at what is the very, very low probability but high consequence risks that in the past we may not have thought through and that has changed our view of everything we do," he said.

Dudley says BP now has measures in place to deal with a well blowout, whether on land or deep water, anywhere in the world. “We will not drill a well unless we have the ability to cap the well - we have the equipment and we have the people to do it and we have an emergency response organization in place," he said.

Dudley says the energy industry as a whole needs to develop such safety measures as companies venture into ever-more risky environments. BP is currently working with a Russian company to develop a project in the Arctic and owns the majority stake in the first deep-water operation in the Gulf of Mexico to receive a permit since last year's accident.

The BP CEO stressed the need to produce more petroleum in the next two decades, as world demand is expected to grow by 40 percent.

The current price for crude oil is well above $100 a barrel, partly because of unrest in the North Africa-Middle East region that produces 40 percent of the world's supply.

Robert Dudley says he is maintaining a cautious attitude about the current situation. “We are going to watch it very carefully. Having been through three up-and-down cycles in my career, you do not want to draw any conclusions too quickly," he said.

Representatives from North Africa and the Middle East attending the conference say unrest is likely to continue and could spread, but the impact on oil production is harder to gauge.

The chairman of IHS-CERA, Daniel Yergin, says the International Energy Agency's Emergency Response Program can handle any significant short-term disruptions. “We have a well-worked out emergency system that grew out of the 1970s, the whole purpose of which is to deal with disruption and it provides a kind of coordination and collaboration among consumers and to have the emergency machinery in place," he said.

So far there has been no shortage in world production and the Organization of Petroleum Exporting Countries is considering a special meeting to study an output increase, if it becomes necessary.

But even if stability returns to Libya and other nations in that area, growing demand in developing nations like India and China will put pressure on energy companies to find and produce more oil in the years ahead.

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