With its known Alaska oil and natural gas reserves approaching 7 billion boe — its largest single source in its global portfolio, BP plc will be a major player on the North Slope for at least 40 years and most likely, longer, the company’s Alaska chief affirmed this week.

Steve Marshall, president of BP Exploration (Alaska Inc.) told the Anchorage Chamber of Commerce on Monday that as long as the company “can make North Slope projects globally competitive for investments,” the London-based oil giant has no plans to pack up and leave. “At current rates, our proven reserves alone on the North Slope represent 20 years of production at today’s rates, 20 more years of production virtually in the bank…and we can extend it way beyond that with the unproven reserves we already know we have.”

What has worried Alaskans is the same worry rippling through the energy industry — job guarantees. BP closed its Alaskan frontier exploration office last year and transferred executives to Houston. Earlier this year, BP also laid off 120 of its 600 Anchorage-based employees, as well as 75 of the 100 contract workers. However, Marshall explained that while “some of the changes have been painful, many have been misunderstood.” BP started streamlining operations to ensure its future viability in the state, he said.

The North Slope is a maturing region for crude oil, but BP remains positive about its opportunities in Alaska and has no intention of either selling off its assets or of harvesting the remaining reserves before it abandons the state. However, Marshall said BP cannot afford to “chase new barrels regardless of cost,” and instead will “only choose projects that will continue to improve our financial performance.” In an evaluation of its frontier exploration activities, BP made the decision to close the office.

“Others have succeeded at frontier exploration on the North Slope,” said Marshall. “We have not.”

In the short term, BP doesn’t plan to look for new reserves, and won’t put a stake into new regions, such as the federal National Petroleum Reserve – Alaska, located on the western North Slope. Other majors, such as Arco Alaska Inc. and Phillips Alaska Inc., have made new discoveries there. BP also won’t pin any future hopes to explore the controversial Arctic National Wildlife Refuge (ANWR). Instead, BP plans to use its existing fields and concentrate on enhancing recovery there.

“If and when ANWR opens, as with any other emerging province, we’ll evaluate it, look at the commercial terms, consider all of the business, technical, economic, social and environmental challenges a decision to enter ANWR would face, and make a determination as to whether it would be prudent to invest,” said Marshall.

With a 10-year track record of finding and developing 160 MMboe in the North Slope and another estimated 900 MMboe in reserves at existing fields, “That’s where we’ve been successful, and that’s where we’re going to focus our efforts,” Marshall said of the company’s reserves. BP’s estimates don’t assume future oil and gas finds, either, he added. “We’re not banking on any future exploration success.”

Earlier this month in a 6-K filing with the Securities and Exchange Commission, BP reported that third quarter oil and natural gas production would be about 5%, which is lower than it previously forecast. BP said the drop is the result of problems in certain international operations, the shut-in oil wells on the North Slope, and what it said were “natural gas export constraints” in North America (see Daily GPI, Sept. 4).

In Alaska specifically, BP said its third quarter results would be affected by a shutdown of its Interconnector pipeline, which it said interrupted gas exports to the Lower 48 and curtailed production. Also, a casing failure on the North Slope caused a precautionary shutdown for a couple of weeks. And, BP said its reduced North American gas output resulted from “throughput constraints in third-party pipelines and processing plants.”

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