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40 Years at Prudhoe Bay: Richfield, others go elephant hunting Geologists pore over few North Slope outcroppings; California company’s team gets excited about oily sands in two locations Rose Ragsdale For Petroleum News
In the early 1960s, Richfield Oil Co., with other companies that were operators, participated in the discovery of oil and gas fields across Cook Inlet, racking up success after success with such finds as Middle Ground Shoal, Granite Point, McArthur River and North and South Cook Inlet.
Richfield’s emphasis was on large promising structures beneath the Upper Cook Inlet, but the events taking place in the far north on some 88,000 square miles of nearly treeless tundra would have greater significance and far-reaching consequences for both Richfield and Alaska.
In the summers of 1963 and 1964, at least six oil industry helicopter-supported field parties were fanned out across the central and eastern North Slope and into ANWR. The abandoned Navy camp and airstrip at Umiat, located on the Colville River in NPR-4, served as a base of operations; at the time, this was the only improved airstrip on the North Slope other than the airstrips at Barrow and Kaktovik, which were too remote from the outcrop belt to be of use to industry geologists. Umiat was a beehive of activity. Wien Airlines had a station agent and several bush pilots based there, as well as three-day-a-week scheduled flights from Fairbanks on its route to Barrow. Aviation fuel was available for purchase, and a catering company had opened a kitchen for meals.
Most of the companies started off in mid-June working out of Umiat; the helicopter of choice was the Bell 47G2, a small machine with a piston engine mounted behind a fish bowl-shaped bubble for a cockpit, and an open tail boom. The main rotor blade was wood, with a stainless steel leading edge and a steel spar down the center of the blade. The G2 held the pilot and two passengers, an extra 10 to 20 gallons of fuel in cans and a small amount of field gear on the side racks. The ship could cruise at about 60 mph and without the extra fuel, had a range of about 2 1/2 hours of flying time. The limited fuel range meant that most field parties soon ran out of work that could be done within the fuel range from Umiat, thus after a week or so, most of the field parties then moved to widely dispersed tent camps located on river bars or lakes.
Richfield Oil’s 1963 field operation was similar to that of many of the companies, with the exception that in addition to the helicopter, Richfield had chartered a single engine Cessna 180 to work with the field party for the summer. Early in the season the Cessna was equipped with wheel-skis so that it could operate on the frozen lakes as well as on the gravel strip at Umiat. In mid-June 1963, Richfield moved its camp to Peters Lake in ANWR; the 180 ferried camp equipment, a large amount of aviation gas, and passengers to the campsite on the lake shore. After camp was established, the plane was used to ferry fuel caches to other lakes, and fly back and forth to Umiat to mail in reports, ship rock samples, and pick up food shipments that came in on Wien Airlines. After the lake ice melted in early July, the plane was switched to floats and the pilot continued his routine, flying between the tent camp at Peters Lake, a subsequent camp at Cache One Lake near the Echooka River, and a small lake at Umiat.
Most of the tent camps consisted of a large wall tent as a cook tent, an office tent, and several sleeping tents. Most field parties consisted of four to six geologists, and the most important people in the camps were the pilots, helicopter mechanic, and of course the cook. A good cook was the key to a happy camp. Besides the pilot, the mechanic was the key to a safe operation — he spent most evenings working on the ship, inspecting, tuning, repairing, and balancing the rotor blades, which soaked up water during every rainstorm. Field operations consisted of flying the geologists, two at a time, out to creek or river bluffs or mountain top outcrops to walk traverses, describe the rocks, and map the geology on aerial photographs or topographic maps. At the end of a traverse or the end of the day, the helicopter pilot would return to ferry the crew to a different location or back to camp.
Though it was a big country and most of the field parties were camped in separate locations and operating independently, it was not uncommon for two or three helicopters and field crews to end up on the same outcrops at the same time — all trying to be secretive and proprietary about what they were seeing and interpreting. Evenings in camp were spent compiling data and updating the mapping. And so it went for the summer — most of the field parties had 2 1/2- to 3-month field seasons without break until the end of August, when they migrated back into Umiat.
Field party report makes impact In 1963, Richfield sent geologists Garnett Pessel and Gil Mull, two youngsters with several years of experience, to the North Slope to build on the data acquired by field parties in 1959 and 1960 and U.S. Geological Survey reports from the 1940s and 1950s.
Late in the season after two months of exploring, Pessel wrote a letter to Ben Ryan, conveying their conclusions and describing an outcrop he had seen on the banks of the Sagavanirktok River.
At a banquet held by Gene Rutledge in 1988, in honor of the men featured in his book, “Prudhoe Bay Discovery,” Charlie Selman, Richfield’s division geophysicist, recalled events leading to the decision to continue exploring the North Slope.
“It was Cretaceous sand that just crumbled in your hand,” Selman said. “He (Pessel) got all excited and wrote, ‘If we can’t find an oil field in something like this, I give up.’”
Selman added to Pessel’s letter, recommending that Richfield send a seismic crew up north. Ryan attached a cover letter simply stating that he concurred with Pessel and Selman’s recommendation and sent it to Harry Jamison, Richfield’s Alaska district manager in Los Angeles.
“As luck would have it,” said Selman, “a drilling operation had been canceled somewhere else, so ... Jamison got the funds to put a seismic crew on the North Slope.”
Great deal for Humble Despite Richfield’s growing enthusiasm for North Slope exploration, limited budgets probably would have quashed the company’s oil hunting efforts in the Arctic were it not for a strategic partnership it entered with Humble Refining Co. ( predecessor to ExxonMobil) in preparation to bid on leases in the State of Alaska’s first lease sale for North Slope acreage in December 1964. It was the first of many joint agreements between the two companies in the 1960s that led to an enduring and lucrative partnership on the North Slope.
“That partnership has to have been one of the all-time great deals for Humble (now ExxonMobil),” Mull said. “It bought into half of everything Richfield had done to that point (which included the preceding years of surface field mapping, two seasons of seismic data (winters of ’63-’64 and ’64-’65), and a lot of federal leases Richfield had previously acquired) — all for $1.5 million in cash and an obligation to pay for another $3 million worth of seismic data. So for $4.5 million, Humble got onto the North Slope after most of the other major oil companies already had surface mapping and seismic data and had already gotten a land position up there.”
In the 1964 sale three other companies, Sinclair Oil & Gas Corp. — a predecessor of ARCO, its partner, British Petroleum, and Atlantic Refining Co., another ARCO predecessor, acquired leases that were to become part of the Kuparuk River field.
Most of the 600,000 acres that the State of Alaska offered for bid in the Colville area, west of Prudhoe Bay, were purchased by Sinclair and BP. The bids averaged $32 per acre.
The next lease sale, for Prudhoe Bay, was held just over six months later in July 1965. Richfield and Humble were determined to outbid BP for this acreage, wrote author Jack Roderick in Crude Dreams. Five people selected the tracts: Harry Jamison, Armand Spielman, Ben Ryan, George Shepphird and Charlie Selman, according to Roderick.
“Actual bids were worked up by the Los Angeles land group under Frank McPhillips.”
“We decided we had to bid at least three times what BP bid in 1964 to get the tracts,” Selman told Roderick.
It was a momentous decision that would lead the company to riches.
At $94 per acre, Richfield outbid BP, Atlantic Refining, Chevron, Shell, Mobil and Phillips for the crestal tracts — those parcels located on the crest of the Prudhoe Bay structure.
“We bid higher on the crest and then lower on the flanks,” according to Richfield geologist Harry Jamison. “That’s exactly why we got the crest — the gas cap — and a portion of the oil. BP got the oil rim.”
BP did end up with more than half the oil in the Prudhoe Bay field “by spreading its bids across the entire structure,” said Roderick, who, at the time, was an individual investor in Alaska oil and gas leases.
Ironically, Humble wanted to put another $1 million into the sale, but Richfield demurred. If Humble had prevailed, the partnership might have won the leases on the Prudhoe structure’s flank, too, which likely would have landed them ownership of virtually all of the Prudhoe Bay oil field, Mull told Petroleum News.
A third lease sale in 1967 covered offshore leases in Prudhoe Bay that were not included in the first sale of leases in the Prudhoe Bay area.
Richfield and Atlantic Refining join forces Atlantic Refining also picked up 28 tracts in the July 1965 lease sale. Later that year, Atlantic purchased Richfield and the two companies merged in 1966 to become Atlantic Richfield Co., or ARCO. The two men who led the merger talks were Atlantic Chairman Robert O. Anderson and Richfield Chairman Charles S. Jones.
The two companies needed each other, according to Roderick’s description in Crude Dreams. Richfield, he said, had come under scrutiny from the U.S. Justice Department because the company was partly owned by Sinclair and Cities Service Oil, and Atlantic hadn’t been able to drill any wells on the North Slope.
Mull said the Justice Department was looking at Richfield for possible antitrust violations. “In fact, all three companies competed vigorously in many places,” he said.
Richfield’s merger with Atlantic made sense because Richfield “was somewhat cash poor,” which is one of the reasons that Humble was able to buy in to Richfield’s interests on the North Slope, Mull maintained. The merger of Richfield and Atlantic, Roderick said, “catapulted the new organization into seventh in size of all oil companies in the United States.”
Frustration and hope Richfield’s Jamison was appointed as ARCO’s first Alaska district manager after Anderson directed senior ARCO executive Mo Benson to put the smartest geologist he could find in charge of the Alaska exploration program.
The last half of the 1960s was both a frustrating and trying time for oil companies exploring northern Alaska.
For example, ARCO and Humble spent more than $4.5 million (in 1968 dollars) on the Susie No. 1 well, just north of the Brooks Range foothills before finally abandoning the well on Jan. 9, 1967.
Still, from that great loss came one of the biggest triumphs in business history: The discovery of oil at Prudhoe Bay.
Former Richfield geologist Gil Mull contributed to this report.
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