American set to take over at BP faces big task

LOS ANGELES — The man widely expected to take the helm of oil giant BP as early as Tuesday would be the first American to become chief executive of the 101-year-old British company.

Robert Dudley has a lot going for him as he prepares to tackle the most daunting challenge of his long career. And he'll need the experience he's gained over the last 31 years in the oil business, industry experts said.

Dudley's task is to rescue BP. To do that, he has to repair a lot of damage: the physical and economic wreckage from the oil spill, the backlash against his company, mounting legal woes and internal grumbling about a Yankee — a former executive of onetime rival Amoco, to boot — taking over the top spot.

The ousting of the much-maligned Tony Hayward and naming of Dudley as his replacement is expected to be announced along with quarterly earnings Tuesday in London.

The changing of the guard comes as the company struggles to salvage its reputation and its future in North America, which represented 40 percent of its $246.1 billion in sales last year. Dudley's ascension may also herald an important cultural shift within a company that has had to deal with a number of recent accidents.

It pleaded guilty to a felony Clean Air Act violation in 2007 and paid a $50 million fine for its role in a 2005 Texas oil refinery explosion that killed 15 workers. It shut down its Alaskan oil fields in 2006 because of severe corrosion of its pipelines. And it agreed in 2007 to pay $20 million in criminal fines and restitution to Alaska and the National Fish and Wildlife Foundation for pipeline leaks and spills at Prudhoe Bay, the nation's largest oil field.

Some question whether Dudley is the right person for the job, figuring the company would have been best served by picking an outsider to ease concerns about whether BP's management problems ran a lot deeper than Hayward.

But Brian Youngberg, an analyst at Edward Jones & Co., said that BP would have struggled to find a top outsider.

"You might attract some good people, but to really have a pool of the best candidates, you would need a little more certainty about the company's future," Youngberg said.

Since 1998, when BP acquired Amoco, there has been internal tension over how to manage the company.

"The BP people have had the upper hand," said Joe Hahn, a former oil-industry executive and business professor at Pepperdine University.

But with Dudley at the helm, Hahn said, that could all change.

In the wake of the Deepwater Horizon rig explosion, which killed 11 workers, BP's leadership change seemed almost inevitable.

From the earliest days of the environmental catastrophe, Dudley emerged in stark contrast to what was widely seen as the insensitive Hayward — a man whom even British reporters dubbed "Captain Clueless."

Long before BP officially put Dudley in charge of containing the spill June 23, he had traveled across the country, meeting with politicians, reassuring residents, talking to reporters and inspecting the on-the-ground emergency response efforts.

Hayward was seen far less frequently in public and was vilified for sailing on his yacht and dodging questions from members of Congress. Those who know Dudley say there was never any doubt he took the spill and its ripple effects seriously. He was born in the Queens borough of New York City, and his father, who served in the Navy, and his mother later moved the family south to Hattiesburg, Miss., 110 miles northeast of New Orleans.

He earned a bachelor's degree in chemical engineering from the University of Illinois and master's degrees from Southern Methodist University.

For some of Hayward's most vocal critics, Dudley's ties to the Gulf Coast were more important than his track record of handling some of BP's most difficult ventures.

"We want someone who's an American, who understands Americans and can speak in a way that understands and identifies with the people here," said Rep. Cliff Stearns, R-Fla., who sparred with Hayward during a recent congressional hearing. "I doubt he would ever say, 'I want my life back' (as Hayward did) in the midst of all this."

From that standpoint, what Dudley managed to accomplish in Russia may emerge as his most important asset.

In 2003, Dudley was named president and chief executive of a joint venture called TNK-BP, the third-largest oil and gas company in Russia. Analysts said that Dudley endured raids on his offices by Russian authorities, incredible amounts of red tape and other problems before he was forced by the government to leave the country.

"Under his leadership, TNK-BP became the best-run energy company in Russia, operationally and financially," said Fadel Gheit, a senior energy analyst at Oppenheimer & Co.

As for Hayward, his own future could be chilly: BP is reportedly planning to send the 53-year-old executive to Russia, where BP also holds a stake in an oil field in Siberia.