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Out of Phase in the Great North

By Frank Geisel

In an era of big growth (commonly observed as massive corporate exploitation of natural resources without much thought about the intended or unintended consequences), decisions and gambles were made based on the available data and the risk tolerance of high-rollers in the oil and gas industry. Today, we have "big data" and quantitative analysts, yet the decision-making process seems only marginally different.

In the case of Alaskan oil exploration, the data didn’t lie; instead, it was more complex and interconnected than anyone ever cared to admit, and somehow the massive gambling expenditures to find and produce turned out to be strangely out of phase with actual finds, actual production, and world events.

In the ‘86 or ‘87 timeframe, after Mukluk, a giant offshore exploration that became one of the most expensive “dry holes” in the history of Arctic oil and gas exploration, after it became clear that the biggest offshore oil strike since Prudhoe itself wasn’t likely to materialize, most of the major oil companies could simply pack up their explorations, cancel their bids, and walk away from offshore Alaska, leaving everyone else who actually lived and worked there to just … deal with it. 

While it lasted, in an almost mythical way, the early 1980s’ Alaskan oil rush offers some insights and some lessons for thinking about Alaskan resource exploitation. Because maybe there really isn’t a pot of unlimited gold north of the Arctic Circle, no free lunch forever.

These observations of Arctic adventures circa 1980-86 might shine some light on the current heat and smoke of Alaskan “development,” which also seems strangely out-of-phase. Consider the noise about a deep-water port in Nome, or a new Coast Guard icebreaker—good ideas, but needed now and not 10 years (or more) from now.  

But then … in 1980, when our big icebreakers were young and strong, then, well, we simply did what we wanted and flexed a lot of muscle, and that seemed to suit the Alaskan psyche just fine.

Alaska's Oil Rush

In 1979, the U.S. Maritime Administration kicked off a six-year program entitled "Assessing the Feasibility of Year-Round Commercial Transportation in Ice-Covered Waters."

I was fortunate enough to participate in 12 expeditions to offshore Alaska in support of the program. But the official title belied the more down-to-earth efforts, which I characterized like this (in 1982):

"Let's get a bunch of oil companies to throw a bunch of money together, and get the Coast Guard to loan us one of their big icebreakers. With lots of electronics to measure how the boat goes in the ice, lots of tools for measuring the ice conditions, we can figure out how big a tanker it will take to go to Prudhoe Bay in the dead of winter and get our oil out."

In the early 1980s, there was no end to rising oil prices, so there wasn't any end to the money for research projects. Predictions of the price per barrel were clean, climbing lines, all the way past the year 2000! Things were booming and why shouldn't the trend continue? Industry and business had a free hand, so if we wanted to tell foreign oil cartels to piss off, conservation (of anything) was nonexistent, and the price of the product kept climbing, why not spend a hell of a lot of money on new oil ventures? And Alaska was it, baby. Alaska was everybody's plaything, the new frontier, the new world, the untapped resource, the bottomless pit. If you thought the oil discovery at Prudhoe Bay was something, wait until you saw what came next.

Streams of geologists’ reports fueled the fire. The entire continental shelf offshore was carved up into tracts and blocks and whole little empires. Rumor and innuendo ruled—who bought what, who had a hot geology report just in from somewhere, when the next lease sale was, how we could drill longer and pump faster and drag gargantuan vessels through the ice and load them up. Everybody had an opinion, and nobody was wrong. Some wanted to push pipelines out to wells drilled through ice islands, some wanted to use boats, some wanted the natural gas from Canada, and Liquefied Natural Gas tankers would just smash their way over the top of the world. Arctic divisions sprung up in various companies, and for those programs already humming, no project was too big or too outlandish. After all, this was Alaska, ruled by this mantra: “You make big money, you spend big money.”

It was a real Live Show, the last spurt of Manifest Destiny, the Old West, and the Roaring Twenties rolled into one. Alaska was one of the last places where life was brawny and life was big. Life there smelled like money. You could go there and do big things—hell, huge things—and Alaska was so big that they didn't seem so huge or out of place.

When a major oil strike was confirmed at Prudhoe Bay on the northern coast of Alaska in 1969, Alaskans could not have imagined how their lives were about to change. At that time it was decided that the way to get the oil from way up there was to build a pipeline. The very idea of fleets of ocean-going, icebreaking tankers simply wasn't even given much of a sniff, and perhaps rightfully so. Americans didn't know squat about icebreakers; we left that to the hated Russians or the Finns and the rest of that frozen rabble. But we did know engineering, and we would get the biggest, the brightest, the best, and the most, heave them at this little problem, and by God we would wrestle it to the ground. Remember, this was the year of the moon landing. We could do anything, and nothing, certainly not Alaska, was too big, too cold, too rough...or too expensive. After all, there was a bottomless pit, and if gold put a glint in people’s eyes, you can imagine what the thought of all that oil did.

The draw was almost irresistible, almost too good to be true. There was so much money to be made, there were so many people aching to get after it, and in they came. Boom towns! Big engineering! This project needed everybody—welders, pipefitters, carpenters, drivers, pilots, nurses, you name it. They could come for the pipeline and make some serious money. It was rude, rough, and dangerous work, but what a payoff! Besides, when you worked in Alaska, you could walk with a swagger, you could kick ass and take names, you could do as you damned well pleased. From the bottom to the top, a lot of people were doing better than alright and nobody wanted to screw it up. It was a bona fide boom, which just added to the Wild West syndrome.

The whole scene had a wild and hairy edge to it, perfectly fit for Alaska. It was a huge engineering job being completed under what could politely be called adverse conditions. If some of the newcomers stayed, so much the better. The ones who could stand the coarse Alaskan filter of weather, climate, expenses, and living conditions were welcome, simply because they could take it without crying for help. No handouts here, remember. The rest would make a decent, perhaps excellent living, and get out, and some wouldn't make such a good living, gambling or drinking up most of their good wages, and they'd be gone soon. Fine. The Alaskan natural wildness had a way of dealing with weakness.

The boom came, and with it wealth and faster living, which most of Alaska had managed without for so long. After a while, things settled into a more reasonable routine. Except, of course, for the Alaska Natives, who had their whole lives thrown into an uproar from which they would be a long time returning to “normal.”

The second part of this article will discuss the big icebreakers themselves, the missions, the operations, and how the anticipation of major offshore oil exploration and production drove decision-making. The perceived need for year-round marine transportation systems even included a controversial Northwest Passage by Polar Sea in 1985.  Following the oil exploration downturn, however, support for high Arctic marine support simply faded away. Check back in next Wednesday for part two.

*****

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Frank Geisel is a principal consulting engineer with more than 30 years experience in science and industry. He received his B.S. in Ocean Engineering from MIT in 1980, and immediately engaged in six years of instrumentation, data-acquisition, and field-team leadership for 12 major offshore exploration programs in the Arctic and Antarctic.  

[Photo courtesy of Frank Geisel]

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