The BP Whiting Refinery's $4.2 billion modernization project is now paying off for the London-based energy company.
BP said in its annual report that it "achieved record crude throughput levels at the Whiting refinery" in 2017. BP's Downstream segment, which includes refineries like the 430,000-barrel-a-day BP Whiting Refinery, posted a replacement cost profit before interest and taxes of $7.2 billion last year, up more than 38 percent from $5.2 billion in 2016.
It was a record profit for BP's Downstream segment, which counts the former Standard Oil Refinery that sprawls across Whiting, East Chicago and Hammond on Lake Michigan's shoreline as the largest refinery in its global system.
"Underlying RC profit before interest and tax for our fuels business was higher compared with 2016, reflecting stronger refining performance and growth in fuels marketing, partially offset by a weaker contribution from supply and trading," BP said in its annual report. "Compared with 2015, the 2016 result was lower, reflecting a significantly weaker refining environment and the impact from a particularly large turnaround at our Whiting refinery."
But the BP Whiting Refinery was back in full force in 2017, which the company describes as "one of the best year's in BP's recent history." The company posted an underlying profit of $6.2 billion, boosted upstream production by 12 percent and had its most successful year for exploration since 2004.
"2017 was a year which saw delivery and growth across all our businesses," BP Chairman Carl-Henric Svanberg said. "The company is in a great position to grow and has a clear strategy for the energy transition."
Last year, BP benefited from crude oil prices, which rose to $60 per barrel, the most since 2013.
"But that only tells part of the story. 2017 was a year where we again maintained our improved trend in safety performance for most of our main personal and process safety metrics, although we have seen a slight increase in our tier 1 events," CEO Bob Dudley said in the annual report.
"Better safety and improved operational reliability, combined with strong discipline in our cash and capital costs, fed through into our financial performance," he continued. "In a complex and uncertain world this may seem like a simple equation — safe and reliable operations plus cost discipline is good for the bottom line. But it works and the numbers prove this."
Over the next five years, BP aims to continue to provide affordable energy but while reducing emissions because of a societal desire for less pollution.
"The key to this dual challenge is to recognize that this is not just a race to renewables, it’s a race to lower greenhouse gas emissions," Dudley said in the report. "So, while we are fully committed to the energy transition that is underway, we also see a lot of uncertainty around the pace and path of how this will unfold. That means in the Upstream we are focused on growing oil and gas in a way that offers us advantages in terms of margin and value, with the reduced emissions in mind. In the Downstream we continue to develop advantaged manufacturing and marketing businesses that can create value from existing, new and emerging markets."