BP looking to cut deals on exploration acreage, Marshall tells Anchorage chamber

Kristen Nelson, PNA editor-in-chief

BP Exploration (Alaska) Inc. doesn’t plan to do frontier exploration in Alaska, the company’s president, Steve Marshall, told the Anchorage Chamber of Commerce Sept. 9.

But, he said: “Discontinuing our frontier exploration program on the North Slope does not mean we’re giving up building a strong and sustainable future in Alaska. It does mean we’re going to build a future on our successes, not our weaknesses and failures.”

And what about the exploration acreage the company holds?

BP does not plan to sit on its acreage and block others from exploring.

“On the contrary,” Marshall said, “we’re engaged in discussions with other companies that are interested in exploring it.” (See Slugger story on page 9.)

Marshall said BP is “working with a number of companies, including some of the independent companies, to make sure that commercial arrangements can be secured to make sure that acreage is available to any company that wishes to explore in Alaska.”

BP will also do anything it can in terms of providing access to data, he said.

“You know, I think just having two or three or four voices in Alaska isn’t as good as having 10 voices arguing in Juneau for different interests,” so BP is “doing everything we can to make sure we’re not the barrier.”

BP’s focus on its existing fields does not mean the company is in harvest mode in Alaska, Marshall said, but the company has shifted its investment to “in-fill drilling and mature field development” with about half of the company’s 2002 development spend associated with drilling. (See page 3 news brief.)

BP has a resource of some 7 billion barrels of oil equivalent on the North Slope, Marshall said, with about a third of that, more than 2 billion barrels, proven reserves. Just producing those barrels, he said, “requires significant ongoing investment together with operational and cost-management excellence.”

Marshall said it is “against all predictions” that “we have stabilized production and now look to sustain oil and gas production well into the 21st century.”

But sustaining production, he said, means that “we cannot afford to chase new barrels regardless of cost. And we will only choose projects that will continue to improve our financial performance.”

Marshall cited numbers he has used before: over the past 10 years BP has explored for and developed just 160 million barrels — and that has been around existing fields.

By contrast, the company has added 900 million barrels to reserves in existing fields.

“That’s where we’re successful,” he said, “and that’s where we’re going to focus our effort and spend.”

ANWR not in BP’s 7 billion barrels

While BP is still exploring in and around existing fields, “we’re not counting on any new provinces opening up… If and when ANWR opens, as with any emerging province, we’ll evaluate it,” he said.

Asked if it would be possible to solve the state’s fiscal gap by boosting oil production by 5 percent a year, Marshall said that just keeping existing production flat is the equivalent of adding a new Northstar and a new Alpine field come online every year — some 150,000-200,000 barrels every day, every year — “and the investment to go with that is enormous.”

“It’s a huge challenge to boost production,” he said.

“In the short term, I think boosting production absent some big new developments could be tough.” But, he concluded, “I think it’s not inconceivable.”