ExxonMobil in Alaska: Oil’s great adventure: Voyage of SS Manhattan

In a recent (1970) interview, J. Kenneth Jamieson, board chairman of Jersey Standard, answered some of the questions raised by the voyage of the icebreaking oil tanker SS Manhattan through the Northwest Passage to Alaska. (Jersey Standard started out as Standard Oil of New Jersey after the Rockefeller monopoly was broken up by the U.S. government in 1911. Jersey owned Humble Oil & Refining, eventually totally absorbing its identity and in 1972 changing the company name to Exxon.)

Q: The first crossing of the Northwest Passage by a commercial vessel has attracted worldwide attention. How do you assess its importance?

A: I see it as one more step forward in an adventurous business. In the search for oil and for new technology in exploration, production, transportation, and refining, the oil industry has continually pushed forward the frontiers of knowledge as well as the frontiers of the physical world.

Q: The voyage has been hailed as a success. Does this mean that a fleet of icebreaking tankers will be built?

A: The voyage was a technical success and a great triumph of marine engineering and seamanship. The Manhattan was a research vessel, and evaluation of all the data it brought back is still under way. Whether tankers will be used to move Alaska’s North Slope oil through the Northwest Passage to the East Coast of the United States depends on economics — on the cost per barrel for this form of transportation and related facilities. We are still working out the answer.

Q: What are the alternatives?

A: A 48-inch diameter pipeline is going to be built from the North Slope to the Gulf of Alaska. From there, tankers will carry the crude to West Coast refineries. To expand the market beyond the West Coast, the industry is evaluating alternatives to the Northwest Passage. One is to move the oil by tanker from the Trans Alaska Pipeline’s southern terminal to Puget Sound, Washington, and then across the United States by pipeline. Another is to build a pipeline across Canada to the United States. Other proposals include tanker transportation tied into a Panama pipeline, tanker transportation around Cape Horn to the East Coast, and even submarine tankers.

Q: How can Humble, Jersey Standard, and the other companies that participated in the Manhattan’s voyage justify this $40 million expenditure?

A: It’s about the same as drilling 20 dry holes in a frontier area — you risk money to make money. We needed the data collected on this voyage in order to estimate the cost of tanker transportation from the North Slope. Building pipelines or building tankers and their terminals will represent an investment of billions. And if we find, for example, that tankers can move oil from the North Slope to the East Coast at a lower per barrel cost than a pipeline can do it, that might save the companies involved many millions of dollars a year. Only by keeping transpiration and other costs as low as possible had the oil industry been able to hold down product prices over the years.

Q: What impact will North Slope oil have on world markets for crude?

A: Probably none. We expect to sell North Slope oil in the United States rather than in Europe or Japan, where it could not compete with lower-cost foreign oil. The North Slope discovery may be the biggest in North America, but the Middle East still has 70 percent of Free World reserves as we know them today.

Q: How will North Slope oil affect U.S supply and reserves?

A: The North Slope discovery could possibly equal existing U.S. proved reserves. But even this will not be enough to meet the increasing demand forecast for the 1970s. Continued exploration for oil in the United States is essential for our future security and growing energy needs.

Q: Will North Slope oil affect U.S. product prices?

A: Not in the long term. Expanding markets will absorb all the oil the industry can supply. Humble expects its North Slope crude to be priced competitively in the domestic market. Of course, a drastic lowering of U.S. oil import controls — which I do not expect at this time — could change the price structure and delay the development of North Slope oil. But according to the best present estimates, Humble expects to be moving its North Slope crude to the West Coast by 1973 and east of the Rockies soon thereafter.

Q: What could the opening of the Northwest Passage mean to Canada?

A: If the Northwest Passage becomes a commercial sea route around North America, it could benefit the Canadian north as much as Alaska. It would provide a means of transporting oil which might be discovered in northern Canada and other minerals might be developed.

Q: Are there any broader lessons to be learned from the Manhattan’s voyage?

A: It certainly tells us something about the price of progress. Only a healthy industry operating in a favorable business environment could afford to invest $40 million in this important undertaking. Let’s not forget that this was a privately financed project. Both the U.S. and Canadian governments provided icebreakers and observers, but there were no subsidies asked or granted. Yet the result is likely to promote world commerce and open new regions to development and settlement. The Manhattan carried a fine group of scientists, engineers, sailors, and businessmen who were recruited from private companies and engaged in the same kind of profit-seeking venture that sent 15th century explorers across the world’s oceans in search of new trade routes. I think it was a truly great accomplishment.