BP in Alaska: Alaska’s 1969 windfall

Prudhoe Bay discovery attracts bidders from around world to lease sale auction

Frank Baker

For Petroleum News

The size of the Prudhoe Bay field attracted worldwide attention, and this translated into an enormous level of interest. By the time the sale rolled around on Sept. 1, 1969, the Anchorage airport was home to at least a dozen corporate aircraft and the city’s hotels were bustling. Companies went to extraordinary lengths to maintain secrecy. All of the major U.S. companies were, if not participating, at least represented along with many independents.

Charles Towill, one of BP’s first public affairs representatives in the U.S., recalls employing a resourceful communications method to relay sale information to BP management.

“At the time of the September 1969 Prudhoe Bay lease sale, Anchorage was a community of 125,000, almost half of the state’s total population,” says Towill. “There was no satellite link, so TV programs, including news, were sent up in cassette form from Seattle — making everything a day late. I was running public relations for BP in New York at the time, but was paying my first visit to Alaska when the lease sale occurred.

“Because of communications difficulties, BP’s office in New York had no means of following the lease sale bidding, which was only broadcast on local (Anchorage) TV. To overcome this, I set up an open telephone link from Anchorage to New York from a room in a local hotel, and relayed the bids I was seeing on TV. This worked well and New York immediately passed the bidding results to BP corporate headquarters in London.”

The lease sale — by auction — was carried out in public with the companies’ sealed bids opened before an audience of oilmen, bankers and journalists. The state received the largest windfall in its history to that point — some $900 million for the oil and gas rights on the blocks it offered. There hadn’t been a bonanza like this in Alaska since the gold rush at the turn of the century.

BP had been joined by a new partner, Gulf Oil. While Gulf provided most of the cash for their bids, BP contributed its knowledge of the North Slope.

This new partnership acquired six blocks at a cost of $97.7 million covering a promising area in the Colville River delta, some 20 miles to the west of Prudhoe Bay, in the general area of the Prudhoe Bay field. However, BP and Gulf’s bids were topped by other groups, including Phillips-Mobil-Socal, and Amerada Getty.

While BP heritage company ARCO reaped the glory of discovering Prudhoe Bay, BP belatedly claimed a bigger prize — in that roughly 60 percent of the oil bonanza was under leases it acquired in earlier sales. The lion’s share of the natural gas, or what is called the gas cap, however, was within the ARCO and Humble (later to become ExxonMobil) lease area.

The debate continues today over whether it was BP’s technical prowess in seismic survey interpretation or serendipity that led to its success in acquiring Prudhoe’s prime oil tracts.