Q&A with Steve Marshall: President BP Exploration (Alaska) Inc.

• Author: Mehta, Neil
• Position: Interview

Oil and gas powerhouse BP is Alaska's largest investor. In 2003, the company set aside $700 million for its Alaska business. It intends to invest billions more over the next several years. But despite those numbers, many Alaskans still find themselves asking, is BP going to stay in the state in the long run?

Alaskans' concerns about the company's commitment have been fueled by BP's recent decision to forego exploration for new oil in frontier areas to instead focus on finding ways to commercialize known oil and gas resources in and around existing fields.

So is BP here to stay? The answer, insists Steve Marshall, president of BP Exploration (Alaska) Inc., is an "enthusiastic and an unequivocal, yes."

Marshall recently took time out of his schedule to speak with Alaska Business Monthly about the direction of the company's Alaska operations.

ABM: BP Alaska has made clear that its intention is to develop existing oil fields in the North Slope as opposed to pursuing new exploration. What led the company to this decision?

Marshall: We looked at the numbers. BP has approximately 5 billion barrels of oil and gas equivalent in Alaska that has already been discovered and not been produced. That is the largest accumulation of discovered oil and gas anywhere in BP's portfolio. So we have a huge legacy of previous exploration success that has yet to be developed.

Secondly, it is a matter of channeling our capital investment to the areas where we believe we will get the best returns. In order to do that, we have to look at our track record. BP has a fantastic record in developing existing fields and discovering ways to extend the life of existing fields through technology enhancements or new drilling techniques.

Unfortunately, we haven't had the same level of success with exploration. Over the 10-year period that we aggressively pursued exploration, we only commercialized 160 million barrels. During that same time, we discovered more than 900 million barrels through extensions in existing fields.

We realized we couldn't afford to spend so much money on exploration and not get results. So, we decided to divert that capital into the development of existing resources and extending the life of existing fields.

ABM: What does BP need to do to continue to be successful in developing oil from existing fields?

Marshall: Several things. We need to be efficient with our costs, focus on technology and drilling techniques and invest in transportation.

First, is the issue of being cost efficient. It is no secret that in our industry capital flows to those places with the best returns. While Alaska is blessed with terrific resources, it is also quite remote. To get oil from the North Slope to Valdez to the West Coast refineries is...