BP 2012 Annual Report Download - page 46

Business review: BP in more depth
BP Annual Report and Form 20-F 2012
44
Drilling and production – these activities require high levels of
investment and are subject to natural hazards and other
uncertainties. Activities in challenging environments heighten many
of the drilling and production risks including those of integrity
failures, which could lead to curtailment, delay or cancellation of
drilling operations, or inadequate returns from exploration
expenditure.
Exploration and production require high levels of investment and are subject
to natural hazards and other uncertainties, including those relating to the
physical characteristics of an oil or natural gas field. Our exploration and
production activities are often conducted in extremely challenging
environments, which heighten the risks of technical integrity failure and
natural disasters discussed above. The cost of drilling, completing or
operating wells is often uncertain. We may be required to curtail, delay or
cancel drilling operations because of a variety of factors, including
unexpected drilling conditions, pressure or irregularities in geological
formations, equipment failures or accidents, adverse weather conditions and
compliance with governmental requirements. In addition, exploration
expenditure may not yield adequate returns, for example in the case of
unproductive wells or discoveries that prove uneconomic to develop. The
Gulf of Mexico oil spill illustrates the risks we face in our drilling and
production activities.
Transportation – all modes of transportation of hydrocarbons involve
inherent and significant risks.
All modes of transportation of hydrocarbons involve inherent risks. An
explosion or fire or loss of containment of hydrocarbons or other hazardous
material could occur during transportation by road, rail, sea or pipeline. This is
a significant risk due to the potential impact of a release on people and the
environment and given the high volumes potentially involved.