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Providing coverage of Alaska and northern Canada's oil and gas industry
January 2019

Vol. 24, No 1 Week of January 06, 2019

BP confirms discovery

While ARCO reaps the glory of discovering Prudhoe Bay, BP claims a bigger prize with 60 percent of the oil under its leases

Kay Cashman

Petroleum News

After British Petroleum, or BP, turned down an offer from ARCO in 1968 to purchase all its Prudhoe Bay area leases, the company quickly decided to resume drilling.

With 48 hours’ notice, a barge and drilling rig with 4,500 tons ancillary equipment was headed from the southern part of the state to the Bering Sea and onto Prudhoe Bay before encroaching ice made the Beaufort Sea impassable.

The BP airlift comprised five chartered C-130s, each costing about $250,000 a month, plus three Super Constellation aircraft.

John Matyr, then general manager and vice president of BP Alaska and veteran of Kuwait, New Guinea, Trinidad and Libya oil fields, described the difficulty of these early logistics efforts: “I can recall those great Hercules thundering through the winter night and the great flurries of snow whirling up along the lights burning at the side of the ice runway. It was the most difficult operation I’ve ever been associated with.”

In a 1970 interview with BP’s corporate magazine BP Shield, truck driver Burn Roper vividly described the weather conditions as ground-based crews scrambled to deliver BP’s critically needed drilling equipment overland.

“We needed almost as much fuel to keep warm as to run the rigs,” noted Roper. “The temperatures were something fierce, running down to minus 65 degrees Fahrenheit. At this temperature steel was as brittle as candy; human flesh froze in 30 seconds. Engines had to be kept running round the clock - from fall to spring they never stopped.”

Roper drove a 20-ton transport truck in a convoy that in 1968 made the 11-day, 600-mile trip up the winter ice road from Fairbanks over the Brooks Range to the North Slope.

“We had a tractor with us to pull us over the ice ledges we met along the way,” Roper said. “These ice steps were more than 2 feet high. We had radios in our cabs, and though we were alone, we could talk to each other and to the convoy leader.”

Using a rig that had been barged from Kenai in late summer, drilling began Nov. 20, 1968, on BP’s Put River No. 1, on the banks of the Putuligayuk River, 3 miles from the Arctic coast and 3 miles south of ARCO’s initial discovery well.

In an interview with Jack Roderick in the book “Crude Dreams,” released in 1997, BP geologist Geoff Larmanie noted that Put River No. 1 was designed to be located outside the edge of the gas and in the oil leg of the Prudhoe Bay structure.

“BP wanted to determine the thickness of the Prudhoe column at Put River and to then use this information to re-evaluate its seismic data,” Larmanie said.

“As drilling continued throughout the winter, communications security was a problem. People at the well had to communicate with company officials, but without others listening in.

“Everyone was sharing these terrible radio frequencies. We had a very good radio man in London who knew the international system … frequencies, the VHF and rural problems, but we didn’t have FCC authority to use the frequencies. So, as we were getting closer to the target at Put River No. 1, we were sending information out in sealed bags - airlifted, hand carried stuff.”

Larmanie noted that on one occasion messages were exchanged by two Welsh-speaking geologists, one on the rig and the other at Anchorage. “Welshmen Harvey Jones and Ron Walters conducted a conversation in their native language, transferring all the Put River information from the rig to Anchorage,” he said.

Finally, on March 13, 1969, BP made brief announcements in London and New York: “Oil had been discovered in porous sandstone below 8,000 feet,” with an oil column thickness greater than that at Prudhoe Bay. It was a major extension of the Prudhoe Bay discovery, like the Sag River State No. 1 well.

Just prior to making a major announcement about the results of all its Prudhoe confirmation drilling, British Petroleum, or BP, bid on more North Slope acreage in the Sept. 10, 1969, state lease sale.

The size of the Prudhoe Bay field attracted worldwide attention, and this translated to an enormous level of interest. By the time the sale rolled around, 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.

The lease sale - by auction - was carried out in public with the companies’ sealed bids opened before an audience of oilmen, bankers and journalists.

Charles Towill, one of BP’s first public affairs representatives in the United States, 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,” said 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,” Towill said.

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, many of BP and Gulf’s bids were topped by other groups, including Phillips-Mobil-Socal and Amerada Getty.

While ARCO reaped the glory of discovering Prudhoe Bay, BP belatedly claimed a bigger prize - roughly 60 percent of the oil bonanza was under leases it had acquired. The lion’s share of the natural gas, or what is called the gas cap and much less valuable, was within the ARCO and Humble Oil 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.

On Sept. 28, BP finally made a detailed announcement about the results of all its confirmation drilling.

At that time, the total field was estimated to contain about 9.6 billion barrels of recoverable oil and 26 trillion cubic feet of natural gas - a super-giant oil field of Middle East proportions.

With improved technology and additional investments, today Prudhoe Bay’s recoverable oil reserve figure has been revised to about 13 billion barrels.






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