CERAWeek: BP CEO says don’t expect wave of energy mergers yet

HOUSTON — BP CEO Bob Dudley says he doubts there will be a surge of corporate consolidation in the energy industry — effectively a repeat of the mega deals in late-1990s bust that created mammoth oil firms — unless oil prices stay low for long.

“We’ve got a good portfolio, we like our portfolio, we work hard to get our portfolio in the right shape; we’ll see,” Dudley told energy executives Tuesday during the weeklong IHS CERAWeek energy conference at the Hilton Americas-Houston. “I don’t actually see the forces at work for lots of consolidation unless the oil price stays down for quite some time.”

Responding to a series of questions from IHS vice chairman Daniel Yergin, Dudley said the mid-1980s might be a closer analogy to the current downturn than the late-1990s. Oil prices took years to recover after the crash of 1986. Dudley said the industry may be in for another long downturn.

“We’re in quite a bit of surplus right now,” he said. It will probably take “quite a bit of time to work off” the high levels of U.S. crude inventories at Cushing, Oklahoma and other oil hubs. And if sanctions against Iran were lifted, it wouldn’t take too long for the country to add half a million barrels of oil a day to the global market, he said. “There might be floating storage already in Iran that might be turned on.”

BP, like its peers, has sliced spending levels amid the downturn. Dudley said if oil prices stay low for long, BP may need to adjust its cost structure even at its four prized operating hubs in the deep waters of the Gulf of Mexico, a region the company has held onto even after five “really tough” years after the Deepwater Horizon disaster.

In a speech just before Yergin’s interview, Dudley said five years of scientific data since the Gulf of Mexico oil spill show the worst fears about environmental damage in the region haven’t been realized. He also swung at critics who say it’s too early to declare the Gulf healed of its wounds because the U.S. government’s studies of how the spill affected the Gulf are still ongoing.

“Five years on, I believe the results are encouraging,” Dudley said. “While the spill did have an impact on many species and habitats, most of the impact was of relatively short duration, primarily in 2010 and generally occurring in areas near the wellhead and along beaches and marshes. We have seen no data indicating a population-level impact on any species.”

Monday marked the fifth anniversary of the April 20, 2010 disaster off the coast of Louisiana that killed 11 workers, destroyed Transocean’s Deepwater Horizon production platform and spewed more oil into the ocean than any other spill in U.S. history.

Even as Dudley touted BP’s $44 billion effort to restore the Gulf and pay damage claims to local residents and businesses, a federal judge in New Orleans is weighing how much BP should have to pay for the environmental wreckage it caused in the region.

The company could be charged up to $13.7 billion in environmental penalties for its role in the spill. U.S. District Judge Carl Barbier could rule on the fines as early as late April, after BP and the U.S. government file reply briefs with the New Orleans court, closing out post-trial arguments in the long-running civil case.