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PETROLEUM DIRECTORY: Finding Kuparuk was a big surprise Geologist: Sinclair’s ploy to boost stock price ends with discovery of North America’s fourth-largest oil field Rose Ragsdale For Petroleum Directory
The discovery of Kuparuk River, North America’s fourth largest oil field, was a good example of exploration serendipity.
The driving force behind Sinclair Oil Corp.’s 2.5-billion-barrel find in 1969 actually originated thousands of miles away in the boardroom of a competitor, according to Christopher J. Lewis, area geologist for Alaska at the time
Sinclair, which had partnered with BP in the 1964 state Colville lease sale, was smarting from one disappointing exploration effort after another on the North Slope. This bad news had culminated with Colville No. 1, the first attempt to find commercial quantities of oil on the North Slope, turning out to be a dry hole.
Gulf & Western made a hostile bid for Sinclair, who by that time had closed its Anchorage office. But the New York-based independent wanted nothing to do with Gulf & Western, recalled Lewis.
He told the story of Kuparuk’s discovery in a presentation titled, “Three Big North Slope Surprises,” at the Pacific Section meeting of the American Association of Petroleum Geologists in Anchorage May 9.
Lewis, 74, described the process of finding the Kuparuk River field as one big surprise.
Angered by Sinclair’s rejection of the buyout offer, Gulf & Western Chairman Charlie Bludhorn is rumored to have said to Sinclair’s chairman, “I’m going to get your company, Mr. Thomas, and when I do, the first thing I’m going to do is fire you and your bunch of lackeys.”
The geologist said Sinclair Oil then sought to counter the overt threat from Gulf & Western by drilling another well on the Colville leases near the recent Prudhoe Bay discovery, which had excited the oil industry and its investors.
“The thinking was that if we would spud a well; our stock would go up; and Gulf & Western wouldn’t get us,” he recalled.
Arduous Arctic conditions Lewis said he was summoned to the offices of exploration subsidiary Sinclair Oil & Gas in Denver on a Friday evening just before Thanksgiving 1968 by Regional Vice President Glen Simpson.
“I want you to go out there and stake a well location straight away,” Simpson told Lewis.
The next day, Lewis climbed aboard a plane to Fairbanks where he just happened to stumble upon the party chief of a Union Oil seismic crew working in the Colville area.
“I was able to use their camp and helicopter,” he said.
The weather was very cold with temperatures dipping 40 degrees below zero Fahrenheit. That first day Lewis said visibility was limited due to the frosting up of the helicopter bubble and as he and his surveyor were in the back seat they could not help the pilot to find the location. The next day he borrowed a tracked vehicle from the seismic crew and with one of their surveyors, set off across the tundra.
“We only had a few hours of daylight,” recalled Lewis. “With two surveyors aboard, suddenly I realized that we were going 180 degrees in the wrong direction. I saw the lights of Bud Helmerick’s place to the northwest of our location. We needed to go southeast. We finally got to the site just before dark.” (One of Helmericks’ sons, Mark Helmericks, runs Colville Inc. today.)
A likely well site The geologist said he had spotted two odd-shaped lakes from air photographs and picked a location in between them because he thought it would be easy to find.
They marked the spot with a flag and returned on the third day to finish plotting the well site.
Months later when drilling began in early 1969 Sinclair assigned Lewis to sit on the well.
“We were drilling at 6,000 feet without any hope of getting anything because we were downdip from the Colville High, and that was a dry hole,” Lewis remembered. “I was having my dinner when the crew said we had had a break.”
In drilling parlance, “a break” meant the rate of penetration had increased because the drill bit encountered porous layers of rock.
“When I looked at the cuttings, I realized that we had an excellent oil sand,” Lewis said. “I wanted a core to obtain a solid rock sample of the sand but the rig site did not have the connections to core in a 12 1/4-inch hole.”
Wireless communication was usually so poor that Lewis realized he would have to travel to Fairbanks to confer by phone with his superiors in Colorado about the next step and then travel back to the slope, using up over a day of precious drilling time in the process. Instead, he decided to ask the drilling crew to test the well.
Surprise, surprise “Our surprise was complete when the test produced oil. We recovered oil at a rate of about 1,000 barrels per day in that well,” he said.
Sinclair named the well Ugnu No. 1 because the Ugnuravik River ran through the area. “It was really a small stream. Ugnuravik was too long, so we just called it ‘Ugnu,’ ” he said.
In short order, the well spewed barrels and barrels of crude into a pit on the tundra. “We could have bulldozed it over, but thought the easiest thing was to burn it,” he said. “Thereupon we applied a lighted torch to the black gassy pool.”
Leaping tongues of flames soon warmed the icy tundra.
But an Atlantic Richfield Co. rig working only 14 miles farther east never saw the fire. The entire ploy, meanwhile, paid off handsomely for Sinclair. The company’s stock price rose, and ARCO soon offered to buy the company in a friendly takeover.
At the time of the takeover, Lewis said Alaska was no longer a top priority at Sinclair. Company officials saw themselves as major players in the Rockies where Sinclair had made a number of significant discoveries.
Ironically, one of the first things ARCO did when it took over Sinclair was sell many of the company’s assets in the Rockies.
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