40 Years at Prudhoe Bay: Alaskans remember Prudhoe Bay — Roger Herrera

Nancy Pounds

Most Alaskans don’t remember what Alaska’s economy looked like before the discovery and development of Prudhoe Bay. Only 14 percent of about 670,000 Alaskans today lived in the state in 1968, the year of the Prudhoe Bay discovery, according to Scott Goldsmith, economics professor at the University of Alaska Anchorage’s Institute of Social and Economic Research. So nearly nine out of every 10 residents today know little about Alaska prior to major development on the North Slope, he said. Goldsmith compared 1968 and 2008 in a recent report called, “How North Slope oil has transformed Alaska’s economy.” A few longtime Alaskans, participants and decision-makers during Alaska’s major economic changes, recently recalled events of the era.

In the late 1960s, a British Petroleum geologist Roger Herrera walked the North Slope foothills and interpreted seismic data. He had joined the international oil producer in 1960.

Herrera saw firsthand the changes for BP and Alaska, resulting from oil development on the North Slope.

The Prudhoe Bay find was important on many levels, he said.

BP’s early North Slope research focused on the Colville River area, west of Prudhoe Bay. Geologists gathered data from that area, finding dry holes, even at their best looking above-ground site, Herrera said. It was a big disappointment.

“That’s the reason they didn’t drill (Prudhoe Bay) first even though they were the biggest land owner. They were licking their wounds,” he said.

Also, corporate officials were unwilling to spend more money and take high risks in Alaska.

In 1968, geologists at Atlantic Richfield uncovered promising geological data in the Prudhoe Bay area, and Arco officials proposed a deal for BP’s Prudhoe Bay land, he said. BP then swiftly pursued its own successful Prudhoe Bay research.

The next step to reap the benefit of Prudhoe Bay was construction of the trans-Alaska oil pipeline. “We now had $50 billion in hardware to build,” Herrera said.

“Everyone says the pipeline was the biggest construction project at the time,” said Herrera, a retired BP executive who now does consulting work. “But obviously the development of infrastructure at Prudhoe Bay was equally significant. They went hand in hand.”

Development on the North Slope proved to be unique, unlike BP’s work in the Middle East, he said. The company had to confront permafrost, eighth-month-long winters and moving huge quantities of oil, he said. “It was a brand new clean slate,” which caused much nail-biting by BP employees, Herrera said.

“It turned out to be much more expensive” than originally anticipated, he said.

Land-ownership issues caused delays from 1969 to 1975 and escalated costs, he said.

“BP was radically affected. The cost of it was going to be gigantic,” Herrera said.

BP had signed an alliance with Sohio, requiring Sohio to fund Prudhoe Bay development and earn a progressive interest in Prudhoe Bay ownership, he said. The cost of the project almost bankrupted Sohio.

“BP escaped that because of the side deal with Sohio,” he said.

The Prudhoe Bay find added significantly to BP’s world oil reserves. “Prudhoe reserves filled that void in world oil reserves. It was a lifesaver for them.”