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THE INDEPENDENTS 2003: AOGA president: Alaska on track
Steve Marshall AOGA President
Lewis and Clark. Rogers and Astaire. Montana and Rice. Ben and Jerry.
Each a premier performer in his or her own right … together, powerful combinations that have set the pace for all others in exploration, entertainment, sports … ice cream marketing.
Alaska’s oil and gas independents and majors.
Each has a distinct and vital role to play in maximizing reserves and recovery on the North Slope and in Cook Inlet … together, they hold the key to the state’s ability to realize its full potential as a world-class oil and gas province.
For the majors, the key role is continuing to do exactly what they’ve been doing in Alaska for the past 30 years: investing billions of dollars in developing and maintaining facilities and other infrastructure to commercialize the vast oil and gas resources in the huge fields like Prudhoe Bay on the North Slope and the McArthur River field in Cook Inlet.
New set of investment opportunities emerging For many years, basic economics severely restricted the roster in Alaska’s oil and gas industry. The sheer magnitude of the capital requirements to develop large fields in remote areas meant major oil and gas companies were the only ones that could afford to invest here.
But as Alaska’s huge oil and gas fields have matured, a new set of investment opportunities is emerging in the smaller, more marginal fields that remain.
And with it, a new set of investors who not only are smaller and nimbler, but also highly aggressive and entrepreneurial. Enter the independent producers.
Just as billions of barrels of reserves in the large fields would go untapped if it weren’t for the huge ongoing infusions of capital that only the multinationals can provide, so, too, would millions of barrels of resources in these smaller fields if not for the risk-taking and investments of the independents.
Those barrels translate into jobs for Alaskan workers. Business opportunities for Alaskan companies. Long-term revenues for state government and local communities. A longer and healthier life for North Slope and transportation infrastructure like the trans-Alaska pipeline. A broader-based and more diverse oil and gas industry.
So there are plenty of benefits to go around … for Alaskans and for the industry.
What will it take? What will it take for the contributions of independents to grow? Access to acreage. A fair and reasonable regulatory environment and permitting process. A stable state fiscal climate. Competitive costs.
Sound familiar?
That’s because they’re the same things the majors need in order to continue to invest in the huge fields providing critical infrastructure for smaller developments. And it’s why we’re working hard to drive down costs without compromising safety or the environment.
The majors are doing our part to make opportunities available to independents through partnerships. By sharing geologic data. Providing access to undeveloped lease acreage. Streamlining operations to reduce costs and make the North Slope globally competitive for new investments.
State headed in right direction Thanks to the efforts of the state legislature and the Murkowski administration, the state is heading in the right direction, too.
Recent legislation streamlining key regulatory processes — oil spill contingency plans, the Alaska Coastal Zone Management Program and air permitting — and establishing an exploration incentive credit will make Alaska a more attractive place to invest for independents and majors alike as they evaluate their global investment options.
Significant challenges remain, both to implement these bills and to ensure a sound state fiscal environment. Alaska remains one of the most expensive oil and gas provinces in the world, and we must be relentless in our collective efforts to take costs out of the system.
Everyone has a role to play in transforming billions of barrels of potential into production — majors and independents, politicians and regulators, state and federal governments, contractors and vendors, Native corporations and many others.
Working together, we can be a powerful combination that will ensure Alaska’s place among the world’s great oil and gas provinces for decades to come.
Editor’s note: Steve Marshall is the current president of the Alaska Oil & Gas Association. He is also president of BP Exploration (Alaska) Inc. and based in Anchorage.
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