November 16, 2001 --- Vol. 7, No. 144November 2001

BP Alaska frontier exploration to be managed out of Houston

BP Exploration (Alaska) Inc. will no longer manage frontier Alaska exploration from Alaska. That activity will be managed out of Houston.

Steve Marshall, president of BP Exploration (Alaska), told employees in a Nov. 16 email that the focus in Alaska will be on prospects adjacent to existing fields — accumulations which can be produced through existing facilities, lowering development costs and shortening the time between exploration and production.

“The North American Exploration Business Unit out of Houston will manage future frontier exploration strategy in Alaska,” Marshall said. Infrastructure-focused exploration in Alaska will be handled by a small exploration team focused on satellite or infrastructure-led exploration, he said.

BP Exploration (Alaska) spokesman Ronnie Chappell told PNA Nov. 16 that there are currently 30-35 people in exploration and land in Alaska. Marshall told employees that the company “will work to minimize the impact of this change in focus by finding jobs for as many BP staff as possible within Alaska or elsewhere in BP.”

The “new and more focused Alaska strategy” is being developed, Marshall said, “to create a long and sustainable future for our company on the North Slope. …

“We must spend and invest wisely. That means extending the life of existing infrastructure by improving the way we maintain our production facilities and investing in system upgrades when necessary. … Next year, it means investing more than $700 million in existing fields, on satellite field development and on facility upgrades and tanker construction. It means continuing support for the effort to move North Slope natural gas to market.”

Chappell said BP expects to increase net production from Alaska by 10 percent next year.

In a separate email Marshall addressed the subject of “rumors that BP is considering the sale of its Alaska assets.” He said BP “does not comment on rumors relating to the acquisition or sale of assets anywhere in the world even when those rumors are unfounded,” reminding employees, “Alaska is a large and material piece of BP's global business, accounting for about 10 percent of the company's worldwide production.”

Marshall said over the next 5 years, BP “will spend more than $800 million to build four new double hull tankers to move BP's Alaska production to market. We have options on two additional ships. As a result of the PBU alignment agreement, we reduced our PBU lifting costs by half. As a result, our Alaska business is in better shape today than it was 2 years ago.”

The company’s goal, he said, “is to convert BP's huge North Slope resource base of more than 7 billion barrels of oil equivalent into 30 or 40 years of production by managing our costs and investing wisely.”

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