Locations where we have supply shale. Bp made a bet in july 2018 , buying assets for 10 and a the global fleet has about 2000 half billion dollars. Scrubbers as well, so they will not run the low sulfur oil and i think the number will continue the increase their foothold in to grow. There will be demand for both the permian and elsewhere, that products. Came with 1. 66 billion barrels of resources. Alix youve been on this job for a year now. All at low cost. Bp now wants to spend 2. 5 you were a downstreamer. What were your takeaways . Million in u. S. Shale and youre also one of a handful of increased rig count to 1525 in women executives in the oil the next two years. Industry. Susan its a really exciting how do you develop that at 60 time to be in the industry. Oil when shareholders only want the challenge ahead of us to capital discipline . Meet the needs some the energy demands, and do it at a low joining me is the chairman and Carbon Footprint is hugely president of bp america. Important for us today, tomorrow, generations ahead of us. It is an exciting time to be here. So great to talk to you today, in the u. S. , we are hitting on all cylinders. Thank you for joining us. It has been an exciting year. But i think theres a lot of important work to do and we are rolling up our sleeves and reducing emissions and improving our products and investing in your first tv interview. Low carbon businesses. It is great to be here. Alix great to talk to you, thank you so much. Alix north america and bp, how critical is north america to bp . Susan dio, president and chairman of bp america. Huge. Next, we will speak to orlando in terms of the 70 countries we alvarez, the head of natural gas do business income or footprint and Power Marketing and trading for north america. Is biggest here. We do everything here that we do globally. 40 of our stock is held here. This is commodities edge. It is immaterial part of our business. Alix and it will be a huge part of your shale business with the integration of bhp assets. How was the integration going . Susan it is going really well, in terms of just the integration itself. We took over operating the new assets on the first of march and it is going very well. I think we bring some fresh perspective on operating in a very efficient way, and we also bring more gas wells. They are world class in terms of the efficiencies of the gas wells. Were looking to deliver about 240 million in synergy this year alone, our first year. We are well on the way to deliver what we promised to deliver. It is an exciting business. Alix as you zoom out of the u. S. , where do you feel like the bottlenecks are . The pipeline in the permian is wellknown, but where you see the issues in the next three to five years . Susan i think pipelines will be key, but i also think the shipping infrastructure and making sure that ports are clear, channels are deepened, that we can actually move the product out. It will be something to watch. Alix we just have the headline of President Trump and the trade war, that as a backdrop, oil down 6 on that news. How do you structure a business that has a longterm view when you have volatility in oil prices and these macro headlines . Susan we are in this for the longterm. Certainly we watch very closely, but we are pretty good on longterm plan were not going to make quick reactions based on something today. Alix the other interesting part is the refining aspect. Where do you see margins going . What is the outlook . Susan margins were certainly up in the second quarter. It was a heavy turnaround season , and i think the turnarounds are largely done. I would expect them to come off a bit and remain healthy. The big thing for us, we have three Northern Tier refineries, its about having flexibility in the crude that we run, but also alix welcome back to a special having strong availability. Edition of commodities edge, live from bps headquarters in texas. No matter what the margins are, we will look at the largest natural gas Trading Floor. Ready to capture them, and we bp is huge, it has up, mid, and downstream businesses, makes can adjust how we operate the lubricants, has a capital on refinery for the most efficient targeting clean energy, and operation. Integrating supply and trading alix that ties into trading, too. Business. It serves 12,000 customers from u. S. Is long run it and china is independent Power Producers to short product, and china is ramping up refineries. Have you see the dynamic playing out as you build these complex refineries, particularly in the north . Utilities and it is 140 companies. It sells enough natural gas to heat every home in america for two years every day. It is the largest natural gas susan our refineries are cared trader in north america. To compete on a global basis. Argued to compete on a global bp moves gas on 180 pipelines basis. We will look at where the across the region from 3500 markets are best and we will customers like utilities or food redirect our trade flow. Alix a bigheew rules for tanker processing companies. Its also a top 10 providers and marketers of electricity. It is also one of three nonbank swap dealers to offer Financial Solutions come like if you wanted to hedge natural gas for the next five years. It also sells at markets its own natural gas. And this is where it all happens. Joining me now is the man a that business, orlando alvarez. He has been with bp over 20 years. You have seen a lot. Take a big step back for me. Where re i orlando immediately people go of natural gas. You go back 10 years, 55 billion cubic feet a day of gas. Today, we are close to 90. The abundance of natural gas in the u. S. Has been transformational. I would also say, so has the demand. Over that 10 years, whether it is mexico pulling more gas, no w you have lng exporting 6 billion cubic feet a day. 10 years ago we were importing. You know we have cleaner bring natural gas taking the place of coal, that is over 11. It has been a balance. We have abundant supply the demand is there as well. Alix recently, the ability to export has been a game changer in terms of energy surplus. Can the rest of the world be up our natural gas . Orlando we continue to seek as going to south america, europe, even china. China is a lot about displacement, but yeah, we are seeing volatility even in global markets. The u. S. Gas business has become global. You can put it on the water come water, get an asian price, european price, and it is a very different market than in the past. Alix if we wind up seeing lower global metro gas prices, what is your understanding of the feedback loop . Our u. S. Producers going to have to throttling production . Orlando youre starting to hear, and this rhetoric is an around for a couple of years now. The lower prices have been here a while. Youve seen some u. S. Producers have said capital discipline, we will pull back. You havent really seen that, threequarter earnings reports we have seen, youre seeing investors push harder for this being about value and not so much about growth, and we will see what happens. Again, the market works. If we see production curtailing, that should control demand as well. But lets was see with producer the producer response in the next couple of years. Alix low volatility in natural gas prices, henry have cannot get a break. What does that do to your trading business . Orlando we are marketing into trading organization. We have over 3500 customers we serve. These prices are good for our consumers. They want stability of price, certainty of rice. Price. At the end of the day, we still have some volatility. You are referencing the nymex, but the curve is flat. Again, you also have volatility when you put it on the water. Volatility is still around. Alix thats a great point, in part of that is the pipeline issue, theres not enough takeaway capacity. Another part is theres not enough export capacity. You see that developing . Orlando if you take the permian, you have projects, its mostly associated gas, but right now you have a bottleneck situation. Gas will be coming on, flowing to the gulf, that will alleviate some of volatility. The infrastructure is a key. We must continue to develop the infrastructure timely. Alix does bp need to play a bigger role in that or different role in that Going Forward . Orlando for our own assets, obviously we are looking at solutions to get our oil and gas out. I think what i would reference is a lot of the regulatory policy still in play. So infrastructure, youve seen a couple of states that have blocked or delayed some of the pipelines hitting build, primarily in the northeast and midatlantic. We need to make sure we get clarity around, once these pipelines are permitted by the ferc, we can get them going. Alix gimme perspective on prices. What is going to be the contract . Will it be linked to oil . Orlando historically, lng has been priced offering for years. What you are seeing now that it was priced off of henry hub, now you are seeing jake a. M. , the asian marker jkm, the asian marker. Alix does that create more or less stability . The asian marker jkm, the you have a bigger spot market, how does that play out . Orlando i am seeing less longerterm contracts and a lot of lng players in the u. S. Being in the market, in the spot market, and pricing out tgf and hub related. That creates volatility and is a good thing. Alix if we wrap into a natural gas, the other things you trade. Propane and ngl. What is clean energy and other products that in . What will you be trading and in 1015 years . Orlando i will stay on gas for a minute. There is a big you hear renewables and renewables. Its not a race to renewables. It is a race to lower carbon. Natural gas has a play in that. I think natural gas is here to stay. We have 86 gigawatts of nuclear and coal that natural gas has replaced. We cant do it all with renewables. We need natural gas to be the intermittent supplier. I think it has a role in clean energy in the u. S. Alix thank you for letting us come on your Trading Floor today. Orlando alvarez, bps head of natural gas and Power Marketing and trading from north america. Coming up on the program, we will hear from the bp cfo. They are having the biggest transaction for the company in 20 years. What does it mean for that kind of development . Thats next. Alix im alix steel, this is commodities edge, live from bps natural gas trading for in houston. One thing that has stood out for bp is Free Cash Flow. If you look at a Free Cash Flow for some of the majors, it was a bright spot compared to its peers. Bp was held by an increase in production. Earlier, i spoke with brian joe gilvary and asked how long bb10 bp can produce these results when shale is coming in weaker. Brian i think it has become a large midcap gain. The model has changed. You saw the acquisition with bhp. We are focused on cash. We optimizing our wells in a way were optimizing our wells in a way where looks like we can generate cash out of the business rather than create a Value Proposition where you are looking to reduce production that will get your ratings up as a result of that and turn over those assets. Best not with a focus is around the cap and midcap. Alix do you feel like that shifted because guys like you and exxon and chevron decided to do capital income and a big way, or Operational Risk of too far, too fast . Brian i think it is Balance Sheet. The strength of the Balance Sheet and portfolio. If you look at the big companies, we came in relatively late, we had a gas business for a long time. But the focus on the ability across the portfolio has given us the ability to wrap activity up and take it down and substitute elsewhere in the portfolio. I think from a big cap perspective, its more portfolio gain. Alix how fast do you want to develop lower 48 . Brian at the end of march, weve picked up assets, in the permian, we have three rigs, eight in eagle. The model we operated and brought in with lawler and his team from sam rich is working well. Were getting 15 more efficiency out of the wells, 50 lower costs. Its working well right now. Synergy has come in at 340 million. The overall synergies of 350 are pretty well in the pen, and by the end of this year, i think we will look at a synergy number higher than that. From the value perspective and market perspective, it is working well. Alix do you worry about pushing too hard and too fast . Brian no. We are running three rigs in the permian right now and we will wrap that up to about six over the next couple of years. We will wait until takeaway capacity is in place, and in eagle first, we have interesting stuff handful of wells. We will Stephon Tuitt steadily and we will get 1 billion at a free cash out of this business from 4031. Alix how does natural gas help or hurt you in this . Brian the permian wells weve drilled, we thought a 50 cut in terms of oil, and looks more like 65 . We have less gas coming through. We will be selling off quite a chunk of our gas business to pay for the bhp acquisition. Today, 500,000 barrels a day of production in the lower 48 after bhp, and by 2035, back to 500,000 barrels a day to my having sold off very gas rich. If you look across the whole of the lower 48, 20 5 of the gas 25 of the gas is coming from lower production. It is a huge number. Alix when you have associated gas coming in and say dry gas, it puts a cap on any kind of use you will get from henry hub. Have you sell gas assets in that environment for price you want . Brian from our perspective, we will push transactions already done and announced, we are on a series of other packages to there is a lot of buyer interest, just taking longer to get them done. Theres a lot of private equity, and with private equity comes more work. Sometimes you end up in a position where you work with a different group. They are keen at the start but it takes a little time to get the transactions away. They are pretty well underpinned. Disposals will be 10 billion over the next two years. We have announced 1. 5. We will probably get four or five done this your, and the 10 billion overall looks good. We have about 13 billion sitting behind that of portfolio we could sell. Some of the gas assets here, we are not getting the prices we think we should beginning for the value, if you look at the forward curve behind us, and we can hold back and wait because we have other assets from the portfolio. Its not a fire sale but we will get it done in the next couple of years. Alix visibilitywise, do you think youre getting the prices you need to . Brian are looking at the forward curve. The extra gas coming from oil, we can see a glut of gas around the world, and lng projects coming on. I think we are bearish on gas prices at the moment. Alix here is what is on my commodity radar next week. A very busy week for earnings. On monday, you continental reporting, watch what they say about oklahoma. Tuesday, you have pioneer, devon, chesapeake, Diamondback Energy all reporting. Will they run into the same efficiency issues as their peers . Wednesday, glencore. Friday, the iea monthly report, it will be key in terms of supply and demand dynamics for the oil market. That does it for commodities edge, things for joining me on thanks for joining me on this special edition of on bps Trading Floor. Catch me every week on thursday. This is bloomberg commodities edge. Jonathan from new york city, audience worldwide im jonathan , ferro. Bloomberg real yield starts right now. Jonathan coming up, no drama in this months payroll report. The attention firmly elsewhere as the white house whipsaws wall street, announcing more tariffs on chinese imports, providing more fuel for global bond markets, driving the german yield curve below zero. Lets begin with the big issue. Is the fed prepared to underwrite the trade war . It is highly likely the trade issue will dominate a thinking at the fed