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ANWR opening is no guarantee of an oil bonanza

  • Author: Steve Haycox
    | Opinion
  • Updated: December 28, 2017
  • Published December 28, 2017

Passage of the 2017 Tax Cuts and Jobs Act has buoyed spirits in many Alaskans. Sen. Lisa Murkowski wrote in these pages a week ago that congressional opening of the 1002 area, the coastal plain of the Arctic National Wildlife Refuge, to exploratory oil drilling brings to Alaska renewed hope for new jobs, larger paychecks, stronger economic growth and enduring prosperity. That's an expansive list of benefits the senator anticipates will flow from tapping into any finds of commercially profitable oil deposits in the refuge's coastal plain.

Among others, Tim Bradner, also in these pages, has cautioned that if there is a find, it will take years before Alaska can see any payoff. He put his warning in a context of contingency, that is, if there is a find of any commercial viability. Given the history of oil exploration in Alaska, he was quite right to do so.  Consider:

The sun sets behind an oil drilling rig in Prudhoe Bay, Alaska on March 17, 2011. REUTERS/Lucas Jackson/File Photo

Alaska was a major national investment item right after the Klondike gold rush. The accompanying population swell suggested the country was opening up, and both oil geologists and financial counselors sought to direct venture capital to projects there. The first area to attract attention was the Iniskin Peninsula, an area on the west side of Cook Inlet north of McNeil River, across from Homer. Two companies drilled there in 1898 and 1899, to no avail, one group losing a schooner just trying to get up the coast from Seattle. One of the companies, Alaska Petroleum Co., drilled in three subsequent years, never striking good oil. All the wells had shows of oil, but one drew mostly salt water, another collapsed on itself, the other produced a few hundred barrels before going dry.

Another area that attracted attention was Puale Bay, also on west Cook Inlet, south of McNeil River. Cap Lathrop invested in that venture. Drilling between 1902 and 1904 proved unrewarding.

Geologists' interest in an area that has good rock formations seems never to die, and perhaps with good reason. Oil exploration is as expensive and risky as any serious mining activity. The chances of hitting a paying deposit are slim, even with today's advanced technology; in earlier days it was nearly a matter of dumb luck. Drilling a hole next to a deposit costs just as much as drilling a hole into the deposit, and if the drill misses, or if the deposit is only gas, or water, or oil that's too viscous, it's a lost investment. But there's always the chance that the next well will hit the bonanza.

New attempts were made in at Puale Bay between 1923 and 1926, this time with money from a number of Hollywood movie stars, but again the drillers had no good result. New teams made another attempt between 1938 and 1940, but again with no good result. There would be more work there in the 1950s and 1960s, but a half century of trying yielded nothing substantive.

Better known by some Alaskans is the endeavor at Katalla, south of the mouth of the Copper River on the Gulf of Alaska. The first wells drilled there showed considerable promise and attracted the richest investors of the day, the Guggenheim mining syndicate and J.P. Morgan. By 1907, a town established there to house workers and supplies had a population of about 5,000. But in that year violent storms in the Gulf destroyed a substantial breakwater built to protect the town and a long pier built to service the syndicate-owned Copper River and Northwestern Railway. For six weeks weather frustrated all attempt to get provisions to the town. Katalla never recovered; the wells produced only enough oil to supply the town of Cordova with lubricants, into the early 1930s. Then the coup de gras came on Christmas Day 1933 when fire consumed the processing plant of the last company to work the site.

More Alaskans are familiar with the most expensive dry hole ever drilled, named Mukluk, in the Beaufort Sea just off Alaska's North Slope, in 1983. Twelve companies invested almost $2 billion in that failed venture. And Shell has apparently poured $4 billion into its recent unsuccessful exploration in the Chukchi Sea.

Hope springs eternal, but whether it will be realized in the Arctic refuge is a long shot.

Steve Haycox is professor emeritus of history at the University of Alaska Anchorage.

The views expressed here are the writer's and are not necessarily endorsed by the Anchorage Daily News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary@adn.com. Send submissions shorter than 200 words to letters@adn.com or click here to submit via any web browser.

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