State braces for a Klondike-style rush for crude
Alaska is on the brink of the biggest oil rush since the founding of Prudhoe Bay more than a decade ago.Skip to next paragraph
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But McKinley-high drilling costs and continued worries about the state's pristine land make its chances of being a major energy source in the next century far from certain.
Nevertheless, as dwindling energy supplies send oil companies into more-remote corners of the globe, Alaska seems set to be one of the ''hotter'' prospects for the 1980s.
''Alaska will be the No. 1 area of exploration for the next several years,'' says Tom Wilkinson, executive vice-president of ARCO Alaska Inc., who, from his office, has a panoramic view of the Chugach Mountains. ''One out of 2 barrels of oil yet to be discovered in the United States has to come from Alaska.''
What makes it so attractive to many gimlet-eyed oilmen is how untapped the expansive state is. Despite enticing geologic clues, fewer wells have been sunk in the area than within the city limits of Los Angeles.
Better drilling technology, relatively high oil prices, and the passage of the Alaska lands bill, which removed some of the uncertainty surrounding ground rules for exploration, have buoyed oilmen's hopes in recent years. But more heartening to the industry is the federal government's proposed five-year lease sale program, and, to a lesser extent, 16 auctions the state plans to hold over the same period.
''There are so few untouched sedimentary basins in the world that you have to salivate when you have four or five big ones on your back doorstep,'' says Roger C. Herrera, exploration manager at Sohio Alaska Petroleum Company.
The accelerated federal program, as planned by Interior Secretary James G. Watt, calls for 16 lease sales off Alaska's coast, including prized acreages in the Bering and Beaufort Seas. Bidding is expected to be particularly hot later this year for tracts in the National Petroleum Reserve, an area west of Prudhoe Bay that could contain more than 2 billion barrels of recoverable oil.
Alaska today accounts for about one-fifth of total US oil output. The bulk of that, 1.5 million barrels a day, comes from the North Slope's Prudhoe Bay field, North America's biggest discovery. By the mid-1980s the state's output will jump another 250,000 barrels a day with the flow from the Kuparuk field, where production began in December.
Alaska may contain as much as 40 to 50 percent of the country's undiscovered oil and gas reserves. By one optimistic estimate, the amount of recoverable crude in the area could top 24.1 billion barrels. With so much energy believed to be in Alaska's basement, oil companies are preparing to go rummaging around.
Last year the state issued a record 188 drilling permits and more are likely to be given out in 1982. ''This past year we have seen more exploratory drilling than at any time in the last 10 to 15 years,'' says John Katz, state commissioner of natural resources.
The slump in world oil prices is causing some companies to trim operations, but few expect any wholesale cutback in activity unless prices bottom out for a prolonged period. ARCO plans to spend $1 billion searching for new pools of crude over the next five years. Randall Meyer, president of Exxon Company, USA, recently told an Anchorage business group that as much as $300 billion could be invested in oil and gas development and other energy-related activities in Alaska over the next half century.
Still, at $20 million to $30 million each, it can cost as much as 50 times more to sink a well in the Arctic than it does in Texas. And with some of the forthcoming lease sales pushing drill rigs farther out to sea, the price tags will go higher.
Moreover, the industrial world's need for more energy bumps into one other basic concern still much alive here: the desire to protect Alaska's wilderness and wildlife. The state's bearded, growth-control governor, Jay S. Hammond, opposes drilling in several of the federal offshore areas to be auctioned off. He is concerned about the impact on fisheries and questions whether industry has adequate technology to handle oil spills in some hard-pack ice areas.
In March, Secretary Watt agreed to drop one sale in the Salmon-rich Bristol Bay, off Alaska's soutwestern flank. But Mr. Hammond, a one-time trapper, is concerned about five other proposed lease sales, including ones in Bristol Bay, Norton Sound, and the Chukchi and Beaufort Seas.
Worries also abound among many native Alaskans (Indians, Aleuts, and Eskimos) who, in their subsistence way of life, are almost entirely dependent in certain areas on fish and the bowhead whale. Drilling is now confined to five months of the year in parts of the Beaufort Sea, where the whale herds make a migratory swing close to shore. That federal ruling is now under review.
''The oil companies are leasing everywhere,'' protests John Adams, director of the Northern Alaska Environmental Center. Clement Joseph Jr., a Yupik Eskimo from western Alaska, adds: ''When they come around and start drilling, it is going to hurt our subsistence way of life.''