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40 Year at Prudhoe Bay: BP’s trail to Prudhoe Bay
Petroleum News
While its drilling program in the foothills was under way, BP and Sinclair carried on surveying to the north along the coastal plain of the North Slope. These were all seismic surveys, for there were no rocks or outcrops available for geological examination.
The U.S. Navy had established that oil-bearing sands existed at Point Barrow, but the question was, did they continue all along the coast?
In 1963 a brilliant young geologist, Jim Spence, came out to BP’s Los Angeles office as chief geologist for the Alaska operation. Using seismic results from surveys in the winter of 1963-64, Spence and the exploration team were able to define for the first time two arches on the coast, an enormous buried dome near the Colville River Delta and a smaller faulted structure at Prudhoe Bay, further to the east. It was felt that Prudhoe was more likely to contain oil than Colville because of a tilt and then a reverse tilt, which had led to the oil migrating eastwards.
But both were good prospects and in September 1964, BP approached the Alaska government, requesting that all the state selected lands covering Colville and Prudhoe be put up for competitive bidding. In December 1964, the state decided to place half of the requested leases on the auction block and chose Colville instead of Prudhoe Bay for the honor.
In July 1965, while BP was making plans to bring a Canadian rig across from Umiat to drill at Colville, the state put up the first acreage at Prudhoe Bay for leasing. By this time, the American companies, especially Richfield Oil Co., Humble Oil Co., Atlantic Refining Co. and Pan American, had begun to take notice of BP and Sinclair’s efforts on the North Slope. They had all carried out geophysical surveys of their own in the area.
Sinclair bows out Just before the Prudhoe lease sale, Sinclair decided to withdraw from the project. The company had never favored the North Slope program, but had been persuaded by BP’s better-than-average record of oil discovery.
Without Sinclair’s support and despite a very limited budget, BP forged ahead on its own, bidding against the far greater resources of the American competitors. Deciding there was a chance the oil-bearing sands were thin on top and thicker on the flanks of the Prudhoe structure, the British company spread its bids to include those leases which seemed to be around the outer edge, acquiring 32 blocks for $1.44 million, or an average of $16 an acre.
Richfield and Humble pursued the 40 square miles on the crest, some of which they acquired for $93 dollars an acre, outbidding BP’s $47 per acre, Mobil and Phillip’s $12 per acre and a $6 per acre bid from Atlantic Refining.
In 1966, BP got another disappointment when it drilled another well on the crest of the Colville structure and found only small quantities of oil.
With dollars running short, BP sought and found another partner in Union Oil Co. and began drilling a second well, Kookpuk No. 1, on farmed-out acreage in the central part of the Colville.
Atlantic Refining, meanwhile, merged with Richfield Oil and regained a dominant position on the North Slope. The newly formed company, still in partnership with Humble, decided to go ahead with a previously planned wildcat well between the Tooklik and Sagavanirktok rivers. Drilling began in March 1966.
In January 1967, the State of Alaska held another competitive lease sale with 38,000 acres of Prudhoe Bay tracts offered, compared with 403,000 acres in the 1965 lease sale.
This time, both Sinclair and Union Oil declined an invitation from BP to join in the bidding, and the company once again waded into the fray alone and with only a $250,000 budget. By carefully spreading its bids and going for acreage where others were unlikely to offer competing bids, BP was able to pick up six more blocks for $44,000 each, or an average of $17 an acre.
BP finally gives up Shortly after the lease sale, ARCO’s Susie well came up dry, and a few weeks later, the second Colville well, being drilled by Union Oil, also proved to be a failure. At that point, even BP’s determination wavered. Over five years, the company had drilled or invested in eight wells drilled on the North Slope and spent $30 million with nothing to show for its efforts.
The British company decided to cut its losses and leave the Slope. It stacked the drilling rig at Pingo Beach in preparation for shipment elsewhere, closed its offices in Anchorage and Los Angeles, disbanded the staff and stored the scientific records it had accumulated.
A few months later in March 1968, ARCO announced its discovery at Prudhoe Bay. By June, the company had confirmed its find seven miles to the southwest with the Sag River State No. 1 well, using the Canadian rig that BP had relinquished and stacked at Pingo Beach.
Rejecting offers by ARCO to take over all the Prudhoe acreage, BP decided to return to the Slope to carry out its own drilling operations. It meant a frantic rush to find a rig and assemble all the necessary equipment. With no roads to and on the North Slope, there were only three possible routes – to fly everything in from Fairbanks, which was prohibitively expensive; or to ship by barge along the Mackenzie River from Canada or by way of the Aleutians and the Bering Straits. In either of the two sea routes there were only six weeks of summer when the pack ice in the Artic Ocean melted enough to allow the barges to reach the North Slope.
It was too late in the year to use the Mackenzie River route, which BP had pioneered. No one had ever tried such a large commercial shipment through the Bering Straits, but the company believed it was the only possible way.
With only days notice, BP acquired a rig that had been drilling in Tyonek and had it barged, along with 4,500 tons of related equipment, through the Beaufort Sea to Foggy Island, a few miles east of Prudhoe Bay in mid-August, just before encroaching ice made the Beaufort Sea impassable.
BP confirms Prudhoe Bay When winter freeze-up came in November, BP unloaded the barges and hauled the rig and other equipment to a site on the banks of the Putuligayuk River five miles from the coast and three miles south of ARCO’s Prudhoe Bay State No. 1 discovery well.
BP geologist Geoff Larmanie told Crude Dreams author Jack Roderick 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.
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.
The announcement proved to be extremely significant. BP had acquired enough leases in preceding years to lay claim to about 60 percent of the entire Prudhoe Bay oil field.
After further drilling and analysis, BP announced six months later that an independent review of eight of its Prudhoe Bay wells indicated that nearly 5 billion barrels of recoverable oil lay under its leases, valued at $15 billion (in 1969 dollars), excluding the cost of its production.
The entire Prudhoe Bay field was estimated to contain 9.6 billion barrels of recoverable oil and 26 trillion cubic feet of natural gas, making it a super-giant field of Middle East proportions.
With improved technology and additional investments, Prudhoe Bay’s recoverable oil reserve figure has climbed steadily over the past three decades and has been revised upward to exceed 13 billion barrels.
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