Fourth Response to BP

BP is careful to respond to letters from the public and strongly presents its point of view. We welcome this public debate, which in the case of Northstar has taken the form of at least four separate form letter responses over the last year, each tailored to a different stage in the Greenpeace campaign against Northstar. BP's most recent form letter was written after a Greenpeace-backed resolution against Northstar and for solar power at the BP Annual General Meeting (AGM) on 13 April 2000 was backed by shareholders holding almost 1.5 billion BP shares. Here is our response. Our responses to some of BP's other form letters can be found here, here and here.

BP Form Letter		Greenpeace Response
Dear Greenpeace Supporter, Thank you for your enquiry. As you may be aware, a three-part resolution calling on BP Amoco to (a) cancel all plans to explore and develop in the coastal plain of the Arctic National Wildlife Refuge and the Arctic Refuge, (b) stop the Northstar development in the Beaufort Sea and (c) channel the resultant savings into our solar business was voted on by our shareholders at our Annual General Meeting in April. Greenpeace representatives and Trillium Asset Management Corporation were invited to propose the resolution at the AGM and we provided them with two booths to deal with shareholder questions concerning the resolution. Shareholders had the opportunity to pose questions to our Board of Directors and at the end of a lengthy debate decided by 83% to 13% (with 4% abstaining) to reject the resolution.		BP is attempting to play down the significance of the vote at their AGM. Shareholders holding 1.491 billion BP shares, worth about $US 13.5 billion, voted to support the Greenpeace resolution against the Northstar offshore oil project. This is an astonishing result for a board-opposed resolution, which typically get 3-5% support. This is an historic result for an environmental resolution opposed by the company board and one of the highest votes for such a resolution achieved anywhere in the world. BP cannot ignore this message: it comes from its own investors as well as environmentalists. As the news agency Reuters reported on 10 May 2000, inside BP the impact of the resolution has indeed been significant: ... BP was shaken by the scale of the revolt, and is not ignoring the strength of feeling, senior executives confirmed this week. "It was a big vote. We are talking with shareholders about these issues," Deputy Chief Executive Rodney Chase told Reuters. The BP Board must now outline a strategy to shareholders on how it will make the transition from fossil fuels to renewable energy.
To recap our position briefly on each of the three parts of the defeated resolution: a) The coastal plain of the Arctic National Wildlife Refuge (ANWR) is not currently open for oil and gas exploration or development and therefore we have no plans to explore or develop there. The Alaskan people together with the rest of the American public, through their elected representatives, will decide whether or not development is allowed on the coastal plain of the Refuge. Our view is that there are no environmental or technical reasons for dismissing the possibility, because exploration and production, done to the highest standards, has minimal environmental impact and takes place in harmony with healthy wildlife populations.		BP continues to push to open the Arctic National Wildlife Refuge through the lobby group Arctic Power. BP representatives sit on the Board of Directors of this industry front group which states that its main purpose is to open the Arctic Refuge to oil and gas exploration and development. BP also provides $50,000 per year in funding to Arctic Power. These efforts go against the wishes of a vast majority of the American public. The most recent polls indicate that about ¾ of the American public would like to see the coastal plain of the Arctic Refuge designated a Wilderness Area and put permanently off-limits to oil companies. This sentiment is shared by a large number of BP's own investors as well. The main reason for this strong support for wilderness designation of the Arctic Refuge stems from the reports from the US Fish and Wildlife Service which state that oil development on the coastal plain of the Arctic Refuge would have dramatic negative impacts on the caribou herd that comes there to calve every spring. The scientists who have been studying this herd for years believe that oil development on the coastal plain could reduce the size of the herd by up to 40%. Obviously caribou are not the only species threatened, polar bears, musk ox, and hundreds of thousands of migratory birds are also threatened by oil development.
b) The impression is being given that Northstar moves us into Alaskan territory for the first time. In fact, we have been exploring or operating responsibly there for more than forty years during which nearly 13 billion barrels of oil have been safely produced from the North Slope. Our Northstar project is located off the northern coast of Alaska, about six miles into the Arctic Ocean. It is in fact our second offshore development, following Endicott which is attached to the shore by a specially-constructed causeway. In total it is our 15th Alaskan field in far-north Alaska.		Northstar does indeed mark a new effort in Alaska. This will be the first offshore oil development in the Arctic Ocean that is not connected to the mainland (Endicott). This development relies on unproved technology to bring the oil ashore. BP already is having great difficulty in proving to the state of Alaska that it is able to meet even the most basic requirements for operation in this offshore environment. BP has had difficulty with each of the two oil spill response and clean-up drills that it has had to perform as part of the Northstar development permits. The Alaska State agencies are so concerned that they have imposed season drilling restrictions until BP can prove that they can meet even basic standards. It is ironic that BP mention the Endicott development as an example of their ability to develop oil in an environmentally responsible manner. Just last year BP was forced to pay one of the highest environmental fines ever, 22 million dollars in criminal and civil penalties for illegal dumping of hazardous waste at the Endicott facility.
We began discussions on Northstar with the local Inupiat people of Barrow, Nuiqsut and Kaktovik in May 1995. Eventually, the project was approved unanimously by the Planning Commission of the local government body, the North Slope Borough, comprising of individuals from each North Slope village; a vote which was then confirmed by the North Slope Borough Assembly by a majority vote.		BP is attempting to give the impression here that there is widespread support for the Northstar project among North Slope inhabitants, and this is simply not true. In a letter dated March 10, 1999, Mayor Leonard Lampe of Nuiqsut, the closest community to the Northstar project, said: "The City of Nuiqsut is opposed to this nearshore/ offshore project. The City feels that this project will open all other prospects along the Beaufort Sea meaning even more impact on the village and its subsistence resources. The ocean is a very sensitive environment, because of the cold climate here in our region, therefore making it impossible due to mother nature's acts to clean up any potential oil spill that will occur on this project." The Alaska Eskimo Whaling Commission (AEWC), made up of many of the most respected traditional community leaders in the North Slope, has expressed strong doubts about the adequacy of Northstar's final environmental impact assessment (FEIS). In a letter also dated March 10, 1999, to the U.S. Army Corps of Engineers, the AEWC said: "The AEWC is not convinced that the risk of oil spill from the Northstar project has been sufficiently mitigated. Based on their experience with arctic sea ice, even in shallow waters, our subsistence whaling captains are very concerned that the proposed depth of the Northstar pipeline trench is not sufficient to protect against ice keel damage. The potential harm to our subsistence communities from an oil spill is substantial. In the FEIS, the Corps has minimized the impression of the degree of seriousness presented by a large oil spill in our arctic waters, by relying upon their assessment of low probability of the harm occurring and proposed mitigation measures... The AEWC subsistence whale hunters fear that the risk of oil spill from a sub-sea pipeline rupture are greater than indicated by the Corp's discussion of oil spill probabilities...."
It is inaccurate to portray the US Army Corps of Engineers' Final Environmental Impact Statement on Northstar as predicting a 1 in 4 chance of a major (equal to or greater than 1,000 barrels) spill over the life of the project. If such a risk were real we would never proceed on this basis, either in Alaska or anywhere else. In fact, the Statement reports the risk that would exist if we did not address concerns such as trauma (via ice gouges and strudel scours), corrosion and construction. We have, of course, addressed these concerns by using extremely thick pipes which we bury deep below the ocean-floor, implementing aggressive inspection programs and by installing three state-of-the-art, independent leak detection systems. One of them is capable of detecting leaks as small as a barrel per day.		In fact, the Northstar Final Environmental Impact Statement (FEIS) projects a range of probabilities for a large oil spill,during the lifetime of the Northstar project: from 11 percent to 24 percent. The FEIS does not state that these probabilities are calculated in the absence of mitigation measures. BP is misrepresenting the statement. On page 117 of the Executive Summary of the FEIS, it says: "Each action alternative presents a risk of 11%/12% to 24% (any cause) over the 15-year project life of an oil spill greater than 1,000 barrels." Hence the statement in Greenpeace materials that the odds are "up to 1 in 4". BP is being misleading when citing the past North Slope oil spill record. In fact, no one has ever built an offshore project in the Arctic Ocean before, and therefore the information required to suggest that there are no risks simply isn't there. As the Army Corps states in the draft EIS: "A properly developed and validated database is required for the calculation of an oil spill probability. Ideally, the database employed should include a wide range of spill volumes from oil developments resembling the prospective project for which the spill probability is required. Because there are no oil developments offshore in the Arctic, no database matches the Northstar project in engineering scope or location..." [p. 8.38]
Our environmental record over the past thirty years in Alaska, during which nearly 13 billion barrels of oil have been safely produced from the North Slope, is witness to the care we take in this whole area. c)It is to misunderstand the nature of our commercial decisions to suggest that somehow our investment in Solar is held back at the expense of our operations in Alaska. Our solar photo-voltaic company is the biggest in the world. We are committed to increasing the size of our solar business tenfold by 2007, making it a $1 billion enterprise. It is not shortage of funds, but issues of market size, opportunity and technology, as well as government policy, which dictate the pace at which this happens. We believe BP Solarex is moving as fast as it is practical and sensible to do so. What is true, however, is that it is the profitability of our company as a whole which, ultimately, determines our ability to invest in anything. Hence, a denial of the opportunity to create wealth in one sector can have an adverse impact upon another.		There is an inconsistency in this response. On the one hand the company states that the solar division is not constrained by investment funds, and on the other its states that its ability to invest is dependant upon the company as a whole. The claim that it is not a choice between Northstar and Solar is worthy of a clear explanation. Clearly BP's core business at the moment is oil. What we want to know is where the future of the company lies... the only way assess this is via its investments. Northstar is not delivering oil now, so it is not paying for any other investments, rather it is drawing on limited investment capital itself. Yet, the company is justifying its investment in Northstar by saying that the solar development depends on this core business. But by including Northstar in this argument is to imply that its FUTURE development of solar will also depend upon selling more oil. If this is true then BP cannot be part of the climate solution. We need to phase out fossil fuels, and these will need to be replaced by renewable derived energy and fuels. If BP has to keep selling more oil to pay for its renewables then it will never be part of the move out of fossil fuels. Thankfully BP's major rivals in the solar race do not seem to need to boil the planet as they provide technology to save it.
It has been suggested that if only we were prepared to invest in a 500 megawatt solar manufacturing plant, the resulting economies of scale would immediately close the gap on conventional fuels and lead to the "take off" of the solar market. However, in 1999, the total global solar market yielded 170 megawatts in sales. To build a 500 megawatt Solar plant is the equivalent of building a car plant three times larger than the current market for cars. There is also a significant risk of technology obsolescence: it is imprudent to put so much investment in one plant and then see a new technology developed that makes the plant's technology redundant. The reality is that a mega-sized solar manufacturing plant is a great idea, but only when the market is there to support it. And even then, it is only part of the story. By itself, such a facility would reduce system costs by some 10 per cent, which is much less than has been suggested. Reducing raw material unit costs and the costs of the additional components required to convert solar modules into working systems are as significant - if not more so. We want to expand our solar business as quickly as possible. We are committed to expanding all of our crystalline plants and will double current capacity in less than three years. Once we have completed a review of our thin film technologies, we will expand technology production in this sphere too. We are delighted that the cost of solar is decreasing, and we welcome any removal of government constraints and taxes which inhibit the growth of the solar market.		We fully agree with BP that it is not the single plant per se that will achieve cost competitive solar but the overall increase in production. The difference in view is about whether BP should sit back and let the market evolve slowly up to this level, or whether it should use its resources push open this market - like Ford did with the model T car, like Sony did with the Walkman, like Macintosh did with the personal computer. It's a standard business tactic, make it cheap and sell it in large volume. The two components that are required to break open a new market in this way are that the technology is ready, and that there is sufficient investment available. Even though BP is investigating future technologies they do not dispute that the current technology is ready for mass production, what they are repeatedly refusing to provide is the investment to commence this mass production. What this shows is that they are not interested in pushing the solar market open - even though they repeatedly state they have the resources to do it. Again, it raises valid questions about whether BP is really interested in being part of the solution, or is merely following trends and improving its brand.
But to repeat, the growth of our solar business is not constrained by our conventional business. On the contrary, it is the strength of our conventional business which will make the expansion of solar possible. We shall go as fast as we can. And we shall keep under constant review what this means in practice. We welcome our shareholders' interest in our activities. Resolutions such as the one put at our AGM will be faced by companies deemed worthy of investment by "socially conscious" mutual funds that care about human rights, the environment, etc. BP Amoco has chosen a challenging agenda and it is natural that we will face particular scrutiny as we work towards meeting our ambitious policy aspirations. These aspirations are to ensure that our activities neither harm people nor damage the environment. We are leaders in reducing our Greenhouse gas emissions in line with the Kyoto protocol. We have been investing in Solar Power for over twenty years, and have become one of the world's largest investors in, and users of, photovoltaics. Our clean fuels initiative will encompass forty cities by the end of this year. We report openly and fully on our overall environmental performance, verified by third parties.		BP Amoco has committed to reduce its direct greenhouse gas emissions 10% from 1990 levels by 2010. The company, however, a company announcement on Tuesday 11th July 2000 indicated that renewable energy would receive just 1% of the extra expenditure resulting from BP's enormous windfall from high oil prices. Oil and gas investment was increased by 40% resulting in 50 times more cash going to exploration and production of fossil fuels than to green energy.
We hope these points are helpful. These and others are covered in further detail on our website on Alaska whose address is: http://www.bpamoco.com/alaska. BP Solarex also has a website which is located at: http://www.bpsolarex.com. Yours sincerely, John Gore Group Vice President Government & Public Affairs		Please send a letter to BP expressing your opposition to Northstar. You can also contact us at stop.northstar@ams.greenpeace.org.