Mr Joe Marushack is President, Asia Pacific and Middle East, of ConocoPhillips. He has been in Singapore since 2012 to run ConocoPhillips' Asia Pacific and Middle East operations, and was previously President of ConocoPhillips Canada Limited, a post he took up in May 2010. Mr. Marushack started with one of Conoco's predecessor companies in 1982 and in 2000, he was named vice-president of gas development in Alaska. In early 2007 Mr. Marushack moved to Australia to lead Conoco's operations there. He holds a Bachelor of Science in Civil Engineering from University of Wyoming and Masters in Business Administration from University of Utah.

1. You are based in Asia at a time when unconventional gas is seen as a game-changer and demand for the fuel continues to rise on the back of economic growth in the region. What role will unconventional gas will play in Asia and on global markets?

Mr Joe Marushack: Asia has significant unconventional potential but commercial production is still far from proven. I believe shale success in Asia is a real possibility but probably will not happen as quickly or to the same degree as in the U.S. The U.S. had many enabling conditions for the shale revolution, such as:

• Private mineral rights
• Substantial pipeline infrastructure with open access to it
• Large land-based rig fleet
• Service industry
• Skilled workforce
• Established regulatory framework
• Free market prices
• Water availability for hydraulic fracturing
  
  

All countries in Asia will lack some of these benefits, which will impact the timing and could also impact the cost of shale development. Successful countries will be those with the right geology and also the right fiscal terms appropriate to the cost and risk of shale gas developments.

ConocoPhillips is committed to exploring China's shale potential and we recently announced two Joint Study Agreements in the Sichuan Basin. These JSAs provide ConocoPhillips with access to high-quality shale plays through cooperation with Sinopec and PetroChina.

2. With Asian countries looking to diversify their sources of fuel from fossil fuels to renewables, what do you think Asia's future oil and gas landscape will look like? How do you see the fuel mix in Asia evolving by 2035?

Mr Joe Marushack: The International Energy Agency (IEA) projects that world energy demand is expected to grow by 35 percent by 2035. This includes oil, natural gas, coal, nuclear, hydro and renewables. China and the rest of Asia are likely to capture over two-thirds of that energy demand growth.

Today, oil and gas represents over half of the energy mix globally. While the use of renewable sources is projected to grow, the IEA projects that oil and gas will still meet over half of world energy demand in 2035. Significant investment in oil and gas supply is needed to satisfy this demand growth. The IEA projects that $19 trillion will need to be invested by 2035 to develop sufficient oil and gas supplies.

At ConocoPhillips, our mission is to power civilization. Energy plays a foundational role in enabling global economic development and human progress. Many sources will be needed to meet global energy demand, and this fact underscores the importance of a balanced energy policy approach.

ConocoPhillips' approach to sustainable development stems from our fundamental intent to prosper as a business and to meet the energy needs of present and future generations. In doing so, we also will create value and improve living standards for our stakeholders.

3. Much has been heard about the development of North American shale gas assets, but less has been heard about the development of oil sands, in countries such as Canada where you were based. What are the prospects and challenges for oil sands projects and is this something Asia would benefit from?

Mr Joe Marushack: There are fundamental changes happening in North America, not just in shale gas. We’ve seen an industry transformation in three areas:

• First, our new ability to economically produce oil and natural gas from shale rock.
• Second, our success at operating in water over a mile deep in the Gulf of Mexico. The Gulf is now the world's premier destination for deepwater developments.
• And third, rising production from the Canadian oil sands – one of the largest hydrocarbon deposits in the world. And doing so in an environmentally responsible way.
  
  

I think Canadian oil sands are one of the main reasons why North America has moved from long-perceived resource scarcity, to abundance. The shale revolution has created a surplus of light oil in the U.S. but many of the U.S. refineries were configured years ago to run on heavy oil from Venezuela and Mexico. Production in those countries is falling and the U.S. needs a replacement. The Canadian oil sands hold similar-quality heavy oil to that of Venezuela and Mexico. So it poses a real long-term supply option to meet North American energy demand.

I expect that we will see more light oil from North America be exported to Asia. The U.S. refining and processing sectors were designed to run heavy crudes and the increasing light crude supply will strain refining capabilities and exceed U.S. demand. The obvious solution is to export light oil to Asia and while importing heavy oil from the Canadian oil sands.

But this raises the issue of infrastructure. Canada needs more capacity to move bitumen from Alberta to world markets.  While the fate of the Keystone XL pipeline remains uncertain, bitumen is moving by rail – not necessarily the most efficient alternative.  In addition to Keystone XL, which would move the oil sands south to U.S. Gulf Coast refineries, pipelines are proposed to move oil sands crude to the East and West Coasts for export.  Increasing supplies of oil sands will provide another supply option for Asian refiners. 

ConocoPhillips holds approximately 1.5 million acres of land in the Athabasca Region of northeastern Alberta. This represents approximately 16 billion net barrels of resources, making ConocoPhillips the holder of one of the largest land and resource positions in the region.

ConocoPhillips’ bitumen resources in Canada are produced via steam assisted gravity drainage or SAGD technology. SAGD involves injection of steam into the reservoir, effectively liquefying the heavy bitumen, which then is recovered and pumped to the surface for further processing.  One of the objections to oil sands is carbon dioxide emissions during production. But new technology is continually reducing those emissions per unit and more innovations are under development.

4. ConocoPhillips' presence in the Asia-Pacific is marked by its assets and production-sharing contracts in China, Malaysia and Indonesia. How does ConocoPhillips ensure value-add private-public partnerships with its host governments?

Mr Joe Marushack: I’m a firm believer in strategic relationships and collaborating with host governments and National Oil Companies on mutually beneficial solutions to common concerns. As you mentioned, ConocoPhillips’ presence in the Asia-Pacific region is full of examples of win-win relationships with local stakeholders.

The U.S. unconventional revolution has also transformed some of the new joint ventures we see between national and international oil companies.

• Traditionally, partnerships with its host governments were designed to address resource-access issues and, from the standpoint of the host government and NOCs, they benefitted from international companies bringing state-of-the-art technology, proven management expertise, experience in many geologic and operational settings, and access to markets and capital.
• Now, a new model has emerged for joint ventures between national and international oil companies. IOCs still want access to conventional resources held by the NOCs. But recently, the NOCs have become active in seeking participation in unconventional opportunities and gain expertise similar to that of the IOCs.

5. Throughout your career with ConocoPhillips, you have worked in markets with a significant environmental lobby such as in the state of Alaska and Australia. What initiatives does ConocoPhillips have in place to balance its business imperatives with its commitment to protect the environment?

Mr Joe Marushack: In ConocoPhillips we emphasize safety and environmental stewardship in all that we do.  Leadership in these areas is the most important part of my job.  We recognize the importance of these issues and the company takes these issues seriously.  We are actively engaged to understand different perspectives and consider feedback as we develop our plans and make decisions.

ConocoPhillips is committed to protecting the environment that we share. We follow high environmental standards in order to ensure that our actions today will not only provide the energy needed to drive economic growth and social well-being, but also secure a stable and healthy environment and economy for tomorrow.? ? ConocoPhillips’ approach to environmental and social issues integrates principles, commitments, positions, action plans, performance indicators, engagement, results and reporting

Through delivering on our commitments to environmental, social and economic performance, we will be the best company to have as a supplier, investment, employer, partner and neighbor.

• Corporate strategies and action plans have been developed for key issues and are updated periodically.
• The objective of our strategies is to prepare the company to succeed in a world challenged by complex environmental, social and economic issues and increasing stakeholder expectations.
• We have climate change, water, and biodiversity corporate Action Plans developed which create focus on key aspects of addressing the issue, clearly assign accountability, and drive goal setting and engagement.
• Our business units, including in Asia Pacific, have Action Plans that define goals, targets, objectives and/or key actions in more detail, and are focused on the needs and priorities of the business and assets in that region.