Alaska’s past, in perspective: Big oil discoveries on the North Slope almost never happened

Big oil discoveries on the North Slope in the 1960s almost never happened. Alaskans were sharply divided on whether the state should use up its land-selection entitlements under the Alaska Statehood Act on what many thought was useless tundra at Prudhoe Bay.

Many opposed it, including Gov. Bill Egan, and surprisingly, the oil and gas industry.

Luckily for Alaska, the idea had its champions, including Tom Marshall, a geologist who was helping the state make its land selections, and then-natural resource Commissioner Phil Holdsworth.

Egan was influenced, however, by Alaskans who felt the young state’s land selection entitlement should be used to choose from federal lands further south with mineral, forest or agricultural potential.

Alaskans were familiar with those in the early 1960s.

Holdsworth had a mining background but he understood the benefits oil and gas could bring.

Egan reluctantly agreed to make state land selections on the Slope but then a new problem arose – where to make the selections.

The petroleum industry pushed the state to choose lands on the southern North Slope near where the U.S. Navy’s early exploration had found oil.

“This was a logical and safe way to explore. Oil and gas companies like to explore near where oil was previously discovered,” Marshall said in an interview.

But the Navy’s discoveries were very small and not big enough to support a pipeline. Giant discoveries were needed.

As a geologist, Marshall liked what he saw along the Arctic coast, where there were thick sedimentary rocks. Marshall thought that the rocks near Prudhoe Bay would be deep enough for oil to form.

This was just Marshall’s hunch, however, because there were no oil seeps or indication that the rocks actually held oil.

Other geologists were skeptical. In fact, federal geologists had dismissed the Prudhoe area for inclusion in the Naval Petroleum Reserve No. 4 (now National Petroleum Reserve-Alaska) and other scientists rejected the area for inclusion in the Arctic National Wildlife Range, which would eventually become a congressionally-created wildlife refuge.

When the federal government included Prudhoe in its offer of federal lands for a lease sale in 1958 there was no industry interest in the area.

Reluctantly, Bell and Holdsworth rejected Marshall’s recommendation. There was, however, an unexpected development.

As historian Jack Roderick writes in his book Crude Dreams, a problem arose in the determination of a land boundary along the Arctic coast. The federal government didn’t have money to do surveys of the coastal boundary and recommended the state select adjacent onshore acreage because it would simplify the problem.

Since Alaska already owned the offshore, to the three-mile territorial limit, and if the state also owned the onshore acreage a boundary survey wouldn’t be needed.

This gave Marshall and Holdsworth a new argument, and in 1964 they were able to convince Egan to select a 1.59-million-acre strip of coastal land that included Prudhoe Bay, according to Roderick’s Crude Dreams.

Industry, meanwhile, was becoming more interested in the coastal area. BP and Sinclair Oil, working as partners, and Atlantic Richfield and Humble Oil (now Exxon) in their own partnership, had drilled a series of costly dry holes in the southern Slope.

Intrigued by Marshall’s geologic work, the companies looked north.

The state wasted no time putting its newly-selected coastal lands up for lease. The first state North Slope lease sale was held in 1964 and included lands west of Prudhoe. After dry holes were drilled in that area the companies were ready to give up.

The state decided to try one more time, with a lease sale in 1965 on lands around Prudhoe. BP bid and acquired leases along with ARCO and Humble, as 50-50 partners.

ARCO and Humble had just finished another expensive dry hole to the south.

Since the rig ARCO and Humble used had to be hauled to the coast for transport off the slope and since the new Prudhoe leases were along the route, the two companies had permission for one more well, at Prudhoe Bay.

What happened then is history. The largest oil field in North America was discovered, and, and Alaska would never again be the same.