Bob Dudley's sudden rise to the top at BP PLC shows how the Gulf oil spill has dramatically changed the fortunes of people from local fishermen to corporate executives.
Seen as an unlikely candidate just a few months ago, Dudley is set to become the first American to lead the oil giant in its century long history. Dudley will become CEO on Oct. 1 and try to salvage the company's reputation and investments in the United States.
Dudley's standing within BP and along the Gulf Coast has risen since he took over response to the oil spill in June from current CEO Tony Hayward, who will be reassigned to Russia.
Though his words weren't all that different, Dudley delivered BP's message — don't worry, we're going to pay for all this — in a calm manner without Hayward's public impatience and occasional whininess. And serendipity was on Dudley's side: He was in charge when they finally capped the spewing well, shutting off the flow of oil until a relief well can finish the job.
BP is the largest producer of oil and gas in the United States, home to 40 percent of the company's assets and responsible for one-third of its worldwide oil and gas reserves. It has huge interests in Alaska and the Gulf, with vast tracts yet to be developed.
BP could lose access to those resources. The U.S. Congress is considering a proposal to block the awarding of any new offshore oil and gas leases to companies with bad safety records. BP would be targeted, the way the legislation is written. Also, BP's fuel contracts with the military, worth $2.2 billion last year, could be in jeopardy.
If BP is going to survive and grow, it must protect those assets, says Amy Myers Jaffe, an oil industry scholar at Houston's Rice University.
On Tuesday, the company said it plans to tell analysts that it will sell assets for up to $30 billion over the next 18 months.
In early April, nobody thought BP would soon need a new CEO. Under Hayward, the company was earning more than $20 billion a year until lower oil prices reduced earnings in 2009 to $16.6 billion. But on Tuesday, BP reported a record loss of $17 billion for the second quarter.
Globe-trotting Mr. Fix-it
Dudley, 54, was a longtime executive with Amoco before BP bought that company in 1998. He had run BP's joint venture in Russia, then turned into a globe-trotting Mr. Fix-it for his bosses in London. It was that last role that landed him back along the Gulf, near where he grew up in Mississippi, after the April rig explosion that killed 11 men and spawned the oil gusher.
In that thread of biography lie several factors that elevated him above other candidates to replace Hayward, including Britons with years more experience inside BP, according to analysts.
"The two aspects of Dudley's work that make him an optimal candidate for CEO are that he's not Tony Hayward and he speaks with an American accent," says Pavel Molchanov, an analyst with Raymond James. He says by making Dudley CEO, BP is sending a message that it cares greatly about its stake in America.
Phil Weiss, an analyst with Argus Research, views Dudley as a compromise between picking another BP lifer like Hayward and choosing an outsider to clean house. Weiss thinks BP should have gone outside its ranks for a CEO to shake up a company with a safety record marred by the 11 deaths in the Gulf and 15 more at a 2005 refinery explosion in Texas.
Dudley wasn't tied to BP's exploration and production division that oversaw drilling operations including the one aboard the Deepwater Horizon. As head of that division, Andy Inglis was once seen as a potential successor to Hayward, but his chances dimmed after the Gulf accident, analysts say.
Dudley also may have been helped by his background at Amoco, which was seen as an efficient, low-cost oil producer.
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Even some of Dudley's setbacks seem to have raised his profile. While running BP's Russian joint venture, he had to flee the country in 2008 amid a dispute with Russian partners and the Russian government. BP was replaced as the operating partners of the business, TNK-BP, but it retained its investment, which still makes money. Dudley ended up with a seat on BP's board London.
As head of BP's spill response, Dudley has mostly kept a low profile while shuttling between the Gulf Coast, Washington and London.
"I talk to Bob Dudley when I need to," says Thad Allen, the retired Coast Guard admiral now directing the federal response to the oil spill. "I woke him up on a number of occasions."
Dudley has adamantly defended BP's actions since the explosion. The company has pledged $20 billion to a cleanup and damages account, but said Tuesday that it has set aside $32.2 billion to cover the costs of the Gulf of Mexico oil spill.
Although a big part of Dudley's job will be looking out for the company's U.S. assets, that doesn't mean he should move to Washington, says Jaffe, the oil industry scholar.
"He needs to run the whole company," she says. "His first job is to convince people BP is going to come back and you better buy BP stock while it's cheap."
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