Oil & Gas
North Slope Legacy
By Julie Stricker

n 1963, several major oil companies braved bone-chilling winds and blizzard conditions to drill exploratory wells on the North Slope, coming up with dry hole after dry hole after dry hole and burning money along the way. By 1967, only ARCO (Atlantic Richfield Company) and Humble Oil & Refining Co. were left. After much debate, crews moved the sole drill rig to Prudhoe Bay.

Petroleum geologist Tom Marshall chose the area as part of Alaska’s 100 million acre land holdings after statehood because it reminded him of Wyoming oil basins. The 1964 selection of that chunk of frozen tundra drew skepticism from many, but Alaska’s North Slope had long been known to have oil seeps and Alaska Natives had burned tarry lumps of sand for generations. Then-President Warren G. Harding set aside an Indiana-sized chunk of land in 1923 as Naval Petroleum Reserve 4, now the National Petroleum Reserve-Alaska.

Drilling was slow and arduous, until one of the workers tested a pressure valve—and the gas erupted from the pipe so strongly that the crew ignited a 50-foot flare. The following March, the companies confirmed the presence of oil, lots of oil. It was a major turning point for Alaska—and Humble Oil, which in 1972 officially adopted the name Exxon, was on the ground floor.

By this time, however, the companies—Standard Oil, Esso, and Humble—that became Exxon had been active in Alaska’s oil and gas industry for more than half a century, operating under a variety of names.

In 1921, Exxon predecessor General Petroleum opened its first field office in Anchorage. At the time, Anchorage was slowly emerging from its roots as a dusty, muddy tent community near the mouth of Ship Creek where the Alaska Railroad was headquartered.

It wasn’t the most appealing community, with many of its early residents leaving to serve in World War I or in search of greener pastures after construction of the railroad was completed. The city was incorporated on November 23, 1920, with a population of about 1,850 residents.

But there were much bigger things on the horizon.

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‘On the Map’
By now, Alaska was on the map for oil and gas potential, with natural seeps reported at Katalla, southeast of present-day Cordova, and the north side of Controller Bay in 1896. Alaska’s first commercial oil production was in Katalla in 1902. Small-scale production continued in the area until 1933, when the local refinery was damaged by fire and the site was abandoned.

In 1925, General Petroleum drilled its first well at Yakataga Beach, located on the north shore of the Gulf of Alaska about midway between present-day Cordova and Icy Bay. The area was promising, US Geological Survey geologists wrote in 1925, but likely only for shallow wells, under 1,200 feet, with small production of just 15 to 25 barrels, with deeper drilling a possibility.

“The cost of test drilling will probably be three times that of similar work in California because of the remoteness of the field, the physical difficulties of getting drilling material on the ground, camp and road construction, and the importing of skilled men,” the geologists’ report says.

It continues, saying the “rapid exhaustion of the world’s store of petroleum and the steadily increasing demand for a diminishing product give an important aspect to these undeveloped oil fields.”

In 1958, an in-house General Petroleum publication quoted one of the members of the Yakataga Beach drilling crew as saying the area was “where wonderful things happen and where men are men and hardships are taken with a smile.”

The harsh conditions endured by the Yakataga Beach expedition led to years of stories.

One of the original expedition members was Jack Samuelson, who recalled just how hard it was to even get to the site.

“Under a chilly moon and a freezing wind, the party left Yakutat headed for Icy Bay, a very appropriate name for the place,” the General Petroleum story goes. “After a night of bad weather and every man willing to contribute his part to the feeding of the fish, morning found us heading into a bay completely covered with icebergs, little ones and others bigger than skyscrapers.

“This was in the first part of May and we were locked out by the ice, with the only hope that a westerly wind and an outgoing tide would scatter the ice so that a few leads could be found where the strong little craft and the scow she was towing would be able to wiggle into Mud Bay to unload the freight and men.”

They finally straggled to shore and landed with tractors and oil field equipment, only to have to send the boat back to Yakutat repeatedly until the hundreds of tons of equipment needed for the next two years to drill an exploratory well were in place.

After all that, the 2,005-foot Sullivan No. 1 well was a dry hole.

Becoming ExxonMobil
In 1926, General Petroleum was purchased by Standard Oil of New York. It was a pattern that persisted over the next several decades as geologists scoured the state, including Cook Inlet, the Alaska Peninsula, Norton Sound, Yukon Flats, Beaufort Sea, and the North Slope, looking for oil after Middle Eastern countries nationalized their oil industries. Drilling on the Alaska Peninsula, the Kenai Peninsula, and the first efforts on the North Slope all came up dry.

In 1955/1956, Humble Oil drilled a 14,375-foot exploration well at Bear Creek on the Alaska Peninsula but did not find commercial quantities of oil. In 1965, Mobil made a significant discovery at Granite Point, an offshore site in Cook Inlet, about 50 miles southwest of Anchorage. By 1968, it had a total of seven producing wells on its offshore platform, with a total production of 24,000 barrels per day.

The company noted that the first shipment of crude oil from its Alaska holdings arrived in Los Angeles on August 8, 1967, and oil was soon regularly transported from the Drift River Terminal to Mobil’s Los Angeles refinery.

In 1958, General Petroleum held leases on 50,000 acres on the Kenai Peninsula and another 50,000 near the mouth of the Kuskokwim River.

Then came the strike at Prudhoe Bay, which changed the fortunes of then-Humble Oil—and much, much more.

The 1989 oil spill from the Exxon Valdez tanker in Prince William Sound marked a low point, spilling more than 250,000 barrels of crude oil. Nearly 11,000 people participated in the cleanup effort and Exxon spent more than $4.3 billion, including compensatory payments, cleanup costs, settlements, and fines. In the aftermath, the company overhauled its operational systems to prevent future incidents.

In 1999, after merger with Mobil Oil, what is now ExxonMobil has become one of the top three producers of oil in Alaska and holds huge gas reserves on the North Slope. It is a multinational oil and gas corporation, headquartered in Irving, Texas, and the largest direct descendant of John D. Rockefeller’s Standard Oil, according to the company.

With an estimated 60 percent of Alaska’s oil and gas resources at Prudhoe Bay, and many new discoveries in recent years, ExxonMobil continues to invest in drilling wells and looking for new ways to enhance the recovery of oil and gas, extend the life of the fields, and increase production. According to US Bureau of Ocean Energy Management estimates from 2016, there are 50 billion technically recoverable oil-equivalent barrels yet to be discovered in Alaska.

Seventy percent of its workers and contractors live in Alaska.

“These resources, including 25 trillion cubic feet of known natural gas resources at Prudhoe Bay, Point Thomson, and other fields, could help meet Alaska’s in-state energy needs and could bring commercial volumes to the broader marketplace for generations to come,” according to ExxonMobil.

Recent Efforts
Today, ExxonMobil is the largest working interest owner at Prudhoe Bay, which is operated by Hilcorp Alaska. Since production began, Prudhoe Bay has produced more than 12 billion barrels of oil.

ExxonMobil also is a co-venturer in the Endicott oil field, about eight miles east of Prudhoe Bay in the Beaufort Sea, also operated by Hilcorp. Endicott was discovered in 1978 and is located 2.5 miles offshore; it includes two manmade islands for drilling and production.

The first, the Endicott Main Production Island, began operating in 1987 as the first offshore Beaufort Sea production system. It is linked to the mainland by an above-ground pipeline that connects to the Trans Alaska Pipeline.

The company also has a stake in the Kuparuk Unit, operated by ConocoPhillips. Discovered in 1969 west of the Prudhoe Bay unit, the Kuparuk River Unit is the second-largest oil field in North America, according to ExxonMobil. It began producing in 1981 and includes more than 800 wells, three processing centers, 600 miles of surface pipeline, forty-one drill sites, and other operations facilities.

ExxonMobil is also a co-venturer in the Trans Alaska Pipeline System (TAPS), which spans more than 800 miles from the North Slope oil fields to tidewater at Valdez. TAPS includes the 360-mile haul road, eight pump stations, a pressure-relief station, and the Valdez oil terminal.

The pipeline cost more than $9 billion to build in the ‘70s and remains an engineering marvel. More than 17 billion barrels of oil have moved through it since startup on June 20, 1977.

One major focus today is ExxonMobil’s Point Thomson operation, midway between Prudhoe Bay and the village of Kaktovik on the edge of the Beaufort Sea. ExxonMobil estimates the Point Thomson reservoir holds an estimated 8 trillion cubic feet of natural gas and 200 million barrels of natural gas condensate—about a quarter of known gas resources on the North Slope.

The field was discovered in 1977, but with no dedicated gas pipeline and the nearest infrastructure miles away, development was slow. In 2006, then-Governor Frank Murkowski sued ExxonMobil over the delays and a protracted legal battle ended with a settlement in 2012. Four years and $4 billion later, Point Thomson went into production. It can produce up to 10,000 barrels per day of natural gas condensate—a high-quality hydrocarbon similar to kerosene or diesel—which is transported by a 22-mile pipeline to TAPS.

The company has been working with the closest Alaska Native village to Point Thomson, Kaktovik, and the North Slope Borough since 2008 on topics such as site design, location, and operations. ExxonMobil also helped Kaktovik establish the Kaktovik Community Foundation. Its initial donation was used in part to develop a community ice cellar. The company has also taken steps to minimize its development’s impacts on polar bears, which are common along the Beaufort Coast.

According to ExxonMobil, “With our Alaskan partners, the ongoing work and investments in Point Thomson are also laying the foundation for future gas development. Alaska has the opportunity to become a global natural gas leader. We are excited to be contributing to the next chapter in Alaska’s energy legacy.”