An Investigative Report:

Refining British Protroleum’s Operations

2010

Jake Poterbin
Hollie Farrahi
Michelle Hankins
Peter Soto

www.bp.com
Table of Contents
Company Profile 2- 5

Industry Trends 6-7

Competitive Landscape 8 - 10

Consumer information 11

Analysis 12

References/citations 13 - 14
www.bp.com

1
 Company Profile
Company: BP p.l.c.

Headquarters:
1 st. James Sq., London, SW1Y 4PD, United Kingdom
Tel: (442) 07496400
www.bp.com

NAICS codes:
211111 – Crude Petroleum and Natural Gas Extraction
324110 – Petroleum Refineries

British Petroleum and the U.S.-based Amoco merged in 1998 to form BP Amoco PLC, one of the
chief global integrated oil companies worldwide. In 2000, the company became just BP p.l.c.,
the name it holds today. The merger added substantially to the company’s oil operations, but
more significantly, positioned BP as a leader in the natural gas exploration. Upon merging, BP
shareholders owned 60 percent of the company.

Officers:
Tony Hayward - Chief Executive Officer
Byron E. Grote - Chief Financial Officer
Iain Conn - Chief Marketing Officer
Sally Bott - Director of Human Resources
Rupert Bondy - General Counsel

Employing an estimated 92,000 workers, its revenues reached $239 billion in 2009, according
to its 10-K Form. The largest oil and gas producer in the U.S., BP processes 4 million barrels of
crude oil per day.

2
!
Some of BP’s well-known company brands include: BP, Castrol, Arco and Aral. Its three core
business ventures include oil exploration and production; oil refining and marketing and
chemicals.

Product Line
BP Gasoline with Invigorate
Amoco Ultimate
BP Diesel
Brand Image

Following the name change in 2000, BP created a new logo and adopted its current colors
of green and yellow arranged in the Helios sunburst. Industry analysts speculated that the
company made changes with the intent to move away from its longstanding identity as an “oil
company” and reposition itself as an “energy company,” one with operations in oil, natural gas
and solar power.

The BP Brand: “beyond petroleum”

BP offers quality gasoline, transport fuels, chemicals and alternative sources of energy such as
wind, solar and biofuels.

Mission Statement:
“We help the world meet its growing need for heat, light and mobility, and strive to do so
by producing energy that is affordable, secure and doesn’t damage the environment. BP
is progressive, responsible, innovative and performance driven. Our logo – the Helios -
symbolises these values. Named after the Greek sun god, the Helios represents energy in its
many forms”

Evolution of a Logo:

!
In light of the April 20, 2010 oil spill in the Gulf of Mexico, BP’s brand image took a major hit,
with hundreds of thousands of people around the world boycotting the company.

At the consumer contact level, individuals boycott single gas stations and convenience stores
with the BP name or logo. However, according to a June 2010 article in the New York Times, “BP
owns only a handful of the 11,000 stations that bear its brand” (Lieber). This can be misleading,
leaving independent convenience store owners to deal with the effects of the boycotts. The
article goes on to state that oftentimes, the gas in pumps at a station bearing the BP name
may contain just trace amounts of BP additives, after undergoing a lengthy extraction and
refinement process completely removed from BP’s influence. The article quotes Jeff Lenard, a
spokesman for NACS, who says, ‘“What BP gets from this is probably a rounding error in terms
of overall revenues or profits.”’
3
 Recent Challenges
2005
March: An explosion at the company’s Texas City refinery in the United States, considered to be one
of the nation’s worst refinery disasters, resulted in 15 deaths and 170 injuries; by 2007 BP settled
approximately 1,350 lawsuits surrounding the refinery disaster in Texas City

2006
Two oil spills in Prudhoe Bay, Alaska, results of corroded pipelines; significant deals in 2006 included the
$1.3 billion sale of producing properties on the Gulf of Mexico’s Outer Continental Shelf to Apache Corp.

2007
The Department of Justice investigated BP concerning alleged gasoline trading irregularities, as well
as the aforementioned Alaskan oil spills; BP agreed to pay $373 million in restitution and fines to the
Department of Justice in October 2007. BP’s annual profits had fallen 22 percent in 2007, reaching $17.3
billion

2008
5,000 job cuts in early 2008

2009
April 14, 2009: 100th anniversary
In early 2009 the State of Alaska, the Justice Department, the U.S. Environmental Protection Agency and
the U.S. Department of Transportation filed civil lawsuits against the company’s BP Exploration business
in connection with the oil spills in Prudhoe Bay.

2010
The company’s reputation took a major hit in 2010 when one of its deepwater rigs, working less than 50
miles south of Louisiana, exploded and killed 11 workers. Millions of gallons of crude gushed into the
Gulf of Mexico for months

http://chart.finance.yahoo.com/z?s=BP&t=1y&q=&l=&z=l&p=s&a=v&p=s&lang=en-US&region=US
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5
 Industry Trends
Crude Oil in the United States
The American crude oil industry has a long history of volatility. This is especially apparent
during the last 40 years where the industry has seen multiple double-digit price
fluctuations. Between July of 2008 and January of 2009, crude oil prices dropped from
$137.11 a barrel to $34.57 a barrel. The most recent complete information on crude oil
prices was collected for October 15, 2010 and shows crude oil prices recovering to $80.88
per barrel.

As of 2008, the year for which there is the most complete data, crude oil consumption
topped 19,498,000 barrels a day in the United States. This accounted for almost 23 percent
of the total consumption for the entire world. If current consumption rates continue and
pricing stays somewhat level, consumers in the United States are projected to spend more
than $1,617,600,000 a day, or about $590,424,000,000 a year on crude oil. When expanded
to include the rest of the world, crude oil consumption tops 86 million barrels a day at a
value of $2,538,823,200,000 per year.

It is important at this time to remember that this market has a history of volatile price
fluctuations and any projections made by the International Energy Agency, U.S. Energy
Information Administration or any other body should be reviewed on a regular basis.

Crude oil prices in the United States are subject to geopolitical issues. Extreme price
fluctuations occurred in the early 1970s when OPEC placed an embargo on the United
States, because the United States backed Israel during the Yom Kippur War. In the early
1980s, the war between Iran and Iraq caused oil production to drop and prices to more
than double in three years from $14 a barrel to $35 dollars a barrel. Crude oil prices were
driven up again during the early 1990s when Iraq invaded Kuwait and began the Gulf War.
Price fluctuations began again in the early 2000s with the beginning of the U.S. invasion
of Iraq in 2003.These are just a few examples of how crude oil production and pricing can
change drastically in a short period of time.

In the short run, oil expenditures in the United States saw historic highs in 2008, triple-digit
drops in 2009 and have recovered to double in 2010.

Globally, this industry has the potential to top three trillion dollars a year, though this may
not last with the emergence of alternative energy (namely the introduction of ethanol) and
green energy industries.

6
www.bp.com

www.bp.com 7
 Competitive Landscapes
ExxonMobil
Background
ExxonMobil is the product of the 1999 merger, the largest merger in US history, between two oil companies,
Exxon and Mobil and forming the largest company in the world. Both companies are descendants of
Standard Oil, a company established in 1870 by John D. Rockefellar. In 1911, the Supreme Court of the
United States ruled that Standard Oil was a monopoly and had to be dissolved. Thirty-four companies were
created from the split-up, two being Exxon and Mobil. Exxon’s largest public relations slump was in 1989,
when an oil tanker spilled more than 11 million gallons of crude oil and at the time, the second largest oil
spill in US history. In 2008 ExxonMobil announced it was exiting the retail fuel business because of difficulty
running gas stations while crude oil costs were rising.

Today
The headquarters are located in Irving, Texas. The multinational oil and gas company is the largest
refiner in the world and is included in the six oil “supermajors” and has been in the top five largest publicly
traded companies in the world for the past five years. The company operates in three segments: the
upstream, downstream and chemical functions. It is a major manufacturer and marketer of commodity
petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a wide variety of
specialty products. The industry giant had just over 310 billion dollars in revenue the 2009 fiscal year. The
company also had nearly 20 billion dollars in earnings the same year and spent roughly 50 million dollars
expenditures, such as advertising. The company has also seen recent critical remarks accusing ExxonMobil
of funding nearly 16 million dollars since 1998 towards advocacy groups that dispute the impact of global
warming. The chairman and CEO of the company is Rex W. Tillerson and has been since 2006.

Board of Directors
- Michael Boskin, professor of economics Stanford University, director of Oracle Corporation, Shinsei Bank, and Vodafone Group
- Larry R. Faulkner, President, Houston Endowment; President Emeritus, the University of Texas at Austin
- William W. George, professor of management practice, Harvard Business School
- James R. Houghton, Chairman of the Board, Corning Incorporated
- Reatha Clark King, former chairman, Board of Trustees, General Mills Foundation
- Philip E. Lippincott, retired Chairman of the Board, Scott Paper Company and Campbell Soup Company
- Marilyn Carlson Nelson, Chairman and CEO, Carlson Companies
- Samuel J. Palmisano, Chairman of the Board, President and CEO, IBM Corporation
- Steven S Reinemund, retired Executive Chairman of the Board, PepsiCo
- Walter V. Shipley, retired Chairman of the Board, Chase Manhattan Corporation
- Rex Tillerson, Chairman of the Board and Chief Executive Officer, Exxon Mobil Corporation
- Joaquin Pelayo, Chairman of the Board and President, McGraw Hill.
- Edward E. Whitacre, retired Chairman of the Board and Chief Executive Officer, AT&TSlogans

Recent Criticism
In 2003, Greenpeace listed Exxon as #1 Climate Criminal. Exxon’s alleged crimes include the sabotage of
efforts to deal with climate change, the fraudulent manipulation of peer reviewed scientific studies and
organizations, misleading and outright lying to the population of the U.S., its government officials and the
global community in general.

8
ConocoPhillips
Background
Formed from a merger between Conoco and Phillips in 2003, the company has seen a rich history
dating back to the 1870s. Conoco Inc. was originally from the Utah based company Continental Oil
and Transportation Company. The company was a key supplier to the United States government
during World War II, which helped it grow to a global corporation. In the 1980s after the oil crisis of
the 70s, Conoco was bought by DuPont. Though, in 1998, DuPont dropped Conoco, which alllowed
Conoco, a private company, to go public, resulting in the largest IPO in history. This eventually lead
to Conoco acquiring Phillips in 2003.

Today
In 2009, ConocoPhillips had 30,000 employees and nearly 153 billion dollars in revenue. The com-
pany also saw roughly 5 billion dollars in earnings. Its expenditures were 60 million dollars and
advertised in several different media including, cable TV, co-op advertising, consumer magazines,
daily newspapers, point of purchase, special events marketing, spot TV and spot radio.

Board of Directors
- J. Mulva, Chairman, CEO and Chairman of Executive Committee
- R. Auchinleck, ConocoPhillips Canada Resources Corp.
- Ruth Harkin, ConocoPhillips
- James Copeland Jr., UBS AG
- William Wade Jr., ConocoPhillips
- Victoria Tschinkel, ConocoPhillips
- Kathryn Duberstein, The Travelers Companies, Inc.
- William Reilly J.D., Aqua International Partners
- Herald Norvik, Taylor Companies
- Harold McGraw III, The McGraw-Hill Companies, Inc.
- Richard Armitage, M.I.C. Industries, Inc.
- Bobby Shackouls, Burlington Resources Inc.
- Robert Niblock, Lowe’s Companies Inc.

Recent Criticism
ConocoPhillips was ranked 13th among U.S. corporations producing the most air pollution accord-
ing to the Political Economy Research Institute.

9
 Chevron
Background
Chevron is yet another company created by the anti-trust break up of Standard Oil by the Supreme
Court in 1911. At that time and for most of the 20th century the company was known as Standard Oil
of California, or SoCal, until it merged with Gulf Oil in 1984. At the time, the merger was the largest
in history, and formed the company name Chevron. Also, in 2001 Chevron acquired Texaco, another
American retail brand, forming ChevronTexaco, which would later return to Chevron after only a few
years. In 2010, Chevron began a similar process of the other competitors, by selling the majority of its
retail stores, focusing first Mid-Atlantic region and shedding nearly 1,100 stores.

Today
In 2009, Chevron had roughly 64,000 employees and 171.6 billion dollars in revenue. The company’s
earnings were also particularly high with 10.5 billion dollars. Its expenditures were around 55 million
dollars and advertised in several different media including, cable TV, internet, spot radio, consumer
magazines, daily newspapers and outdoors (posters, billboards).

Board of Directors
- John S. Watson, Chairman and CEO
- Samuel H. Armacost, (Lead Director) Retired Chairman, SRI International
- Robert J. Eaton, Retired Chairman of the Board of Management, DaimlerChrysler AG
- Franklyn G. Jenifer, President Emeritus, The University of Texas at Dallas
- Kevin W. Sharer, Chairman, CEO and President, Amgen, Inc.
- Ronald D. Sugar, Chairman Emeritus, Northrop Grumman Corp.
- George L. Kirkland, Vice Chairman and Executive Vice President of Global Upstream and Gas
- Linnet F. Deily, Former Deputy U.S. Trade Representative and U.S. Ambassador to the WTO
- Chuck Hagel, Distinguished Professor, Georgetwon University, University of Nebraska at Omaha
- Sam Nunn, Co-Chairman and CEO, Nuclear Threat Initiative
- Charles R. Shoemate, Retired Chairman, President and CEO, Bestfoods
- Carl Ware, Retired Executive Vice President, The Coca-Cola Company
- Robert E. Denham, Partner of Munger, Tolles & Olson LLP
- Enrique Hernandez Jr., Chairman, CEO and President, InterCon Security Systems, Inc.
- Donald B. Rice, President and CEO, Agensys, Inc.
- John G. Stumpf, Chairman, President and CEO, Wells Fargo & Company

Criticisms
Pollution from refineries in Richmond, California - Chevron’s refineries in Richmond, California, have been
fined over 500,000 thousand dollars for illegaly bypasssing waste water treatments. This has caused
Chevron to be listed as potentially causing 95 Superfund sites for the EPA to clean-up.

10
Consumer Information
In 2009, Americans used 378 million gallons of gasoline per, which breaks down to more than
one gallon of gasoline every day for each person in the United States per day (U.S. Energy
Information Administration)

Of the total amount of energy used in the U.S. each year, 28 percent of this is used in
transportation. The most common mode of transportation is personal vehicles such as cars,
motorcycles, and light trucks. There are 249 million of these types of consumer vehicles on
the road today. These vehicles use gasoline for fuel (as opposed to diesel), and consume
about 60 percent of the total energy used in transportation. Of this 60 percent, automobiles
consume 32 percent of energy, and light trucks consume 28 percent of that energy. (U.S.
Energy Information Administration)

There are 162,000 fueling stations that provide gasoline to these types of personal vehicles.
In 2009, Americans paid an average of $2.40 per gallon for gasoline. In 2008, the state of
California spent the most on motor gasoline: $49,584 million. The state of Alaska spent the
least. In 2008, Wyoming had the highest expenditures per person, as the average amount
that each person spent on motor gasoline for the year was $2,043 per year. (U.S. Energy
Information Administration)

In recent years, there has been a trend

toward using renewable energy -
between 2007 and 2008, renewable
energy consumption grew 10%. In 2009,
consumers bought 200,646 hybrid
vehicles. (HybridCar.com)

Overall, the consumers that would be

most likely to shop at BP retail stations
are those who drive personal vehicles.
Gasoline is still the most popular form
of fuel being used by these types of
consumers, but there has been a recent
trend toward hybrid cars, which is
reducing the amount of gasoline being
used by consumers.

11
 Analysis
BP is in the midst of undergoing certain business operations, including selling assets, which will
make up to $30 billion available to the company. The money will be put toward clean-up efforts,
essentially refining the company’s image and helping rebuild status and credibility with the general
public and its consumers (BBC News http://www.bbc.co.uk/news/business-11618528).

In addition to clean-up efforts, the company should focus its efforts more on producing affordable
alternative energy options. Consumer research shows an increased demand for hybrid cars and
the use of renewable energy to fuel personal vehicles, which coincides with the component of BP’s
mission statement identifying the production of affordable, secure and environmentally safe energy
options. If BP responds to this trend, it can redirect public attention away from recent occurrences
and toward the future of BP: a company concerned with the needs and wants of its consumers in
accordance with the state of the environment on a local, national and global level

www.bp.com

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Works Cited
Company Profile
http://galenet.galegroup.com.www2.lib.ku.edu:2048/servlet/BCRC?vrsn=unknown&locID=ksstate_
ukans&srchtp=glbc&cc=10&c=1&iType=naics&mode=i&ste=85&tbst=tsIS&cind=324110+-+Petroleum+Refineries&t
ab=1024&ccmp=BP+Oil+Co.&mst=BP&n=25&docNum=I2501400197&bConts=14113

http://www.hoovers.com/company/BP_plc/hxxkti-1.html

http://galenet.galegroup.com.www2.lib.ku.edu:2048/servlet/BCRC?vrsn=unknown&locID=ksstate_ukans&srchtp=gl
bc&cc=1&c=1&mode=c&ste=74&tbst=tsCM&tab=4&ccmp=BP+PLC&mst=BP+Amoco&n=25&docNum=I250131287
0&bConts=13119

http://www.bp.com/sectiongenericarticle.do?categoryId=9020655&contentId=7037996

http://www.bp.com/heliospower/sectiongenericarticle.do?categoryId=1000027&contentId=7051505

Business & Company Resource Center

http://galenet.galegroup.com.www2.lib.ku.edu:2048/servlet/BCRC?vrsn=unknown&locID=ksstate_ukans&srchtp=g
lbc&cc=1&c=1&mode=c&ste=60&tab=1&tbst=tsCM&ccmp=BP+PLC&mst=BP+Amoco&docNum=DC474177&bCont
s=3

Industry Trends
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WTOTWORLD&f=W

http://galenet.galegroup.com/servlet/BCRC?vrsn=unknown&locID=ksstate_ukans&srchtp=glbc&cc=1&c=1&iType=s
ic&mode=i&ste=85&tbst=tsIS&cind=2911-Petroleum+Refining&tab=1024&ccmp=BP+PLC&mst=British+Petroleum&
docNum=I2501400197&bConts=16163

http://www.eia.doe.gov/emeu/international/oilconsumption.html

Competitor Landscape
Images
http://www.boxturtlebulletin.com/btb/wp-content/uploads/2010/05/Logo_ExxonMobil.jpg
http://www.jacksonsfoodstores.com/Portals/1/Images/Logos/logo_chevron_300dpi.jpg
http://i.bnet.com/blogs/conocophillips_logo.jpg
ConocoPhillips
http://data.rtknet.org/tox100/
http://www.conocophillips.com/EN/Pages/index.aspx
http://money.cnn.com/magazines/fortune/fortune500/2009/full_list/
Chevron
http://yosemite.epa.gov/opa/admpress.nsf/34cef4854b892b8b8525645a004de9a4/fb476240c30ba96b852570d800
5e12e0!OpenDocument
http://www.chevron.com/about/leadership/
http://www.chevron.com/about/leadership/boardofdirectors/
ExxonMobil
http://www.exxonmobil.com/Corporate/about.aspx
http://news.bbc.co.uk/2/hi/business/4662474.stm
http://www.guardian.co.uk/environment/2009/jul/01/exxon-mobil-climate-change-sceptics-funding

13
 Consumer Landscapes
United States. Use of Gasoline. Washington DC: , Web. 20 Oct 2010. <http://www.eia.doe.gov/
energyexplained/index.cfm?page=gasoline_use>.

United States. Energy Use for Transportation. Washington DC: , Web. 20 Oct 2010. < http://www.
eia.doe.gov/energyexplained/index.cfm?page=us_energy_transportation#tab1>.

“Reporting August 2010 US Hybrid Car Sales.” Hybrid Car. N.p., 2010. Web. 22 Oct 2010. <http://
www.hybridcar.com/index.php?option=com_content&task=view&id=791&Itemid=45>.

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