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BP and Shell will keep (some of) it in the ground


One of the biggest liabilities on the world’s climate balance sheet right now is all of the oil, gas, and coal sitting in the ground, discovered, but not yet dug up. For more than a decade, environmentalists and scientists have argued that we’re going to need to practice some restraint and keep those fossil fuels buried if we want a livable planet.

Now, the “keep it in the ground” movement may be getting its most significant victory to date. In recent weeks, BP and Shell, two of the biggest fossil fuel companies in the world, indicated they plan to lower the official value of their assets by several billion dollars due to declining oil and gas prices. That means these companies are looking at their reserves, looking at the price of oil and the state of the world, and saying, this is not worth nearly as much as it was before. And the economics of digging it up are changing.

BP was the first, announcing in mid-June that it expects to write down up to $17.5 billion of its oil and gas holdings in its next quarterly report, a 12 percent drop from the previous valuation. Playing into that is the expectation that oil prices, currently deeply depressed from the global economic slowdown caused by the pandemic, may never fully rebound as some countries, including the entire E.U., prioritize a “green recovery.” Previously, BP assumed its oil was worth $70 per barrel, but now the British multinational has lowered that estimate to $55.

The move renders some of BP’s assets completely worthless. Sources told Reuters the company would be writing off reserves in the Canadian oil sands and ultra-deepwater wells off Angola because they are too expensive to develop.

Shell joined the club on Tuesday, saying it would write down between $15 billion and $22 billion of its assets next quarter. The Dutch-British corporation, the world’s largest non-state owned oil and gas company, had a slightly different outlook than BP on oil prices, saying it was dropping its expectations to $35 a barrel this year, with a slight rebound to $40 next year, and a long-term recovery to $60.

Charlie Cray, political and business strategist for Greenpeace USA, which has long been a major voice in the “keep it in the ground” movement, said in an email that BP and Shell are late to the party. “Both companies are playing catch up to what activists and economists have been warning for years: the climate emergency is going to make oil worth less,” he told Grist. Cray warned that we shouldn’t rely on the oil and gas industry, which he said “is predicated on reckless and never-ending expansion,” to usher in the energy transition. “Volatility in the market is not a substitute for robust federal policy to permanently phase out fossil fuels, hold climate polluters accountable, and begin a just transition for workers and impacted communities.” A week before disclosing the write-down, BP said it would lay off 10,000 workers.

Meanwhile, ExxonMobil is resisting pressure to acknowledge economic realities and write down its own assets. Several oil and gas accounting experts have filed complaints with the Securities and Exchange Commission alleging that the American company’s inaction amounts to arrogance … and potentially accounting fraud.

The European/American divide, with BP and Shell on one side and Exxon on the other, echoes those companies’ recognition of their responsibility when it comes to climate change. Indeed, the write-downs reflect not just the current economic slowdown, but also the larger shift these companies are undergoing to make sure they are still relevant in a low-carbon economy. “Both are in this unique position of trying to figure out what is the next 20 to 30 years for our business and our business model, while also trying to navigate in a world that’s clearly heading towards a low-carbon future,” said Michelle Manion, lead senior economist at the World Resources Institute, a global research nonprofit. “But at the same time being beholden to these quarterly expectations about making profit. It’s a pretty tough spot to be in.”

Both Shell and BP pledged earlier this year to become net-zero companies by 2050. However, their plans are still light on the details and have been scrutinized for not being in line with the goals of the Paris Agreement. In a statement about BP’s write-down, CEO Bernard Looney said it was “rooted in our net zero ambition and reaffirmed by the pandemic.” BP is expected to release a clearer roadmap for reducing its emissions later this year. Manion told Grist that the World Resources Institute has been working with Shell on its greenhouse gas accounting and that the company is starting to think seriously about a portfolio that includes low-carbon assets.

The same pandemic-induced price dynamics pressuring oil majors to write down their assets are also leading to outright bankruptcies. The latest to go under is Chesapeake Energy, which led the fracking boom in the U.S. a decade ago. The New York Times estimated that roughly 20 American oil and gas producers have filed for bankruptcy so far this year.


23 Comments on "BP and Shell will keep (some of) it in the ground"

  1. Theedrich on Thu, 2nd Jul 2020 3:00 pm 

    Advice-seeking letter to Pelosi from a Dem lady:

    Dear Nancy Pelosi,

    I have two brothers.  One voted for Donald Trump in 2016, and the other was sent to the electric chair for rape.  My mother died in an insane asylum when I was six, and my father is a fentanyl pusher.  One sister is a prostitute, and the other is the common-law wife of a union steward.  Recently I met a man soon after his release from prison.  He served time for smothering his illegitimate baby.  We are in love and plan to marry.

    My problem is:  Should I tell him about my brother who voted for Trump?


  2. SocialRevolutionComing on Thu, 2nd Jul 2020 3:42 pm 

    LOL funny above

  3. SocialRevolutionComing on Thu, 2nd Jul 2020 5:09 pm 

    Fourth time I am reading the Theedrich comment. If you have some more, I will happy to read them.


  4. Brent georgeson on Thu, 2nd Jul 2020 6:02 pm 

    We are all clowns…

  5. makati1 on Thu, 2nd Jul 2020 6:36 pm 

    Theedrich, I laughed so hard, I could not talk. Thanks for the chuckle!

  6. Cloggo von Clogghopper on Thu, 2nd Jul 2020 6:52 pm 

    Dear Nancy


    My brothers name is Davy.

  7. Duncan Idaho on Thu, 2nd Jul 2020 6:53 pm 

    Numbers? Does anyone understand numbers?

  8. Duncan Idaho on Thu, 2nd Jul 2020 7:01 pm 

    Even Texass is getting the message:

  9. makati1 on Thu, 2nd Jul 2020 7:22 pm 

    Does ANYONE understand that if you test 10,000 and 5,000 test “positive”, you can increase the numbers by testing more people? Example: 1,000,000 new tests = 500,000 new cases, NOT deaths. The “explosion” in “cases” is no more than the explosion in testing.

    Before this ends EVERYONE will have been exposed and most will have had the flu, although, most will think it is a cold or have zero symptoms.

    Stupid, dumbed down Amerikan idiots don’t/cannot think for themselves. Sigh!!

    BTW: All I have read have questioned the tests as being accurate or even relevant. This is more than the flu. Be patient. The One World Government is almost in place.

  10. Duncan Idaho on Thu, 2nd Jul 2020 7:24 pm 

    “Sadly, we have nihilists like Paul, cynical incompetents like Ron DeSantis and narcissistic imbeciles like Trump running things. They are going to kill us.

    I wish I felt more optimistic about this.”

  11. rockman on Sun, 5th Jul 2020 2:32 pm 

    mak – Partly true: more tests = more positive cases. But also: more hospital beds with more Covid patients = more infected. In SE Texas (with Houston leading the way) we’ve seen a very dramatic increase in new cases filling up more beds since the start of the pandemic. Same for the state of Texas as well as many other states…with Florida and California also recording huge increases in new patients.

  12. makati1 on Sun, 5th Jul 2020 5:42 pm 

    rockman, and whose facts are you reacting to? USMSM or personal knowledge?

    Are they new “cases” of people who test positive but no symptoms or minor ones? Or actual, in hospital, cases with serious problems NOT caused by other, previous bad health, like heart problems or obesity?

    I have been reading many articles, NOT US MSM, that US hospitals are paid a lot extra ($10,000 – $30,000) for every patient that they can claim as having COVID-19, even if they are really there for another disease.

    Interesting that the Philippines, with ~107,000,000 people only have ~43,000 cases total, as of today, with ~1,200 deaths. But then they do not have the greedy, for profit, sick-care system the US does. The Filipinos call a spade a spade, not a shovel or backhoe.

  13. makati1 on Sun, 5th Jul 2020 5:49 pm 

    BTW: The higher percentage of actual Covid-19 deaths here are, like most places in the real world, the older, already “one foot in the grave” people. Or people with serious health problems that the virus just pushed along.

    The lock-down now mostly pertains to the over 60 group, like me, not the younger people. Everyone will be exposed eventually, as in all flus. The lock-down was/is a planned event, not a health necessity.

  14. JuanP on Sun, 5th Jul 2020 5:54 pm 

    “BTW: The higher percentage of actual Covid-19 deaths here are, like most places in the real world, the older, already “one foot in the grave” people.”

    Mak, you may want to be more discrete when you talk about these things. You are pushing 80.

  15. makati1 on Sun, 5th Jul 2020 6:07 pm 

    “For people younger than 45, the infection fatality rate is almost 0%. For 45 to 70, it is probably about 0.05%-0.3%. For those above 70, it escalates substantially.”

    Ah, BUT, I am a healthy 75, not one who abused their body over their lifetime with bad health habits like smoking, drinking, over eating, slothfulness, drugs, etc. I have no fear of this virus. It is no worse then the others I lived thru like measles, polio, chickenpox, mumps, diphtheria, etc. Worry about yourself. You live in a locked down police state with certifiably insane people running your country.

  16. JuanP on Sun, 5th Jul 2020 6:24 pm 

    “You live in a locked down police state with certifiably insane people running your country.”

    I am ready to leave, Mak. I hate this place and hate Americans. You are so lucky to be in the eternal summer without the insanity.

  17. makati1 on Sun, 5th Jul 2020 7:02 pm 

    JuanP, I am sure you have millions of neighbors that think the same as you and want out. When things loosen up, and if they can, they will get out of the US before the gates slam shut again, as they surely will. We are finishing the 2nd floor of the farmhouse to accommodate any family that wants to relocate out of the city here or out of the US. Interesting times.

  18. More from the Ozarks Hillbilly Lunatic on Sun, 5th Jul 2020 7:36 pm 

    JuanP on Sun, 5th Jul 2020 5:54 pm

    JuanP on Sun, 5th Jul 2020 6:24 pm

  19. Amir Articles on Thu, 9th Jul 2020 7:10 am 

    JuanP, I am sure you have millions of neighbors that think the same as you and want out.

  20. Im proud and enjoy my bagging i practice for supremacist muzzies bag day feb12021 by bagging for MUZZ-19 CONVICT-19 gona kill us all that why i wear a used FACE-19 DIAPER-19 to help the environment no used diapers go unwasted it makes me aroused on Thu, 9th Jul 2020 8:20 am 

    i believe

    CONVICT-19 death rate is too much to type here per second and it will take out whitey supertards very soon

    please love supremaicst muzzies more

    RUSHMORE-19 whitey supertard president trump
    we stand tall and we only KNEEL-19 to (((supremetard)) and not some DARKIE-19

  21. RUSHMORE-19 whitey supertard president trump we stand tall and we only KNEEL-19 to (((supremetard)) and not some DARKIE-19 on Thu, 9th Jul 2020 8:22 am 

    Not even SAINT-19 JORGE-19 FLYOYD-19 the third

    Not even to SAINT-19 AHMAUD-19 “muzz” ARBERY-19

    No KNEEL-19

  22. only kneel to (((SUPREMETARD-19))) not some darkie no kneeling to DARKIE-19 SAINTS JORGE-19 FLOYD-19 and no kneeling to SAINT-19 AHMAUD-19 "muzz" ARBERY-19 no KNEEL-19 on Thu, 9th Jul 2020 8:25 am 

    please love supertards
    please love supremacist muzzies more

  23. agenouillez-vous seulement à (((SUPREMETARD-19))) pas un darkie pas agenouillé à DARKIE-19 SAINTS JORGE-19 FLOYD-19 et pas agenouillé à SAINT-19 AHMAUD-19 "muzz" ARBERY-19 non KNEEL-19 sur on Thu, 9th Jul 2020 8:28 am 

    s’il vous plaît aimez supertards
    s’il vous plaît aimer les muselières suprémacistes plus


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