Alaska oil riches flow to Britain...

Press, 1 June 1977, Page 17

Alaska oil riches flow to Britain...

William Darch, British president of the mammoth Alyeska Pipeline Company, is on top of the world these days. As commander of an army of 23,000 workers, he is bringing the most audacious engineering project in history to a successful conclusion.

"We’re ready to go on June 20, a month sooner than expected.” he told me at the group’s conference centre — also known as their “war room.” "After all the trials and setbacks, we’re breaking through for the touchdown.” Darch once played scrum-half for Wales.

A stocky, genial figure, highly visible in boardroom black amid the checked shirts and windbreakers of boom-town Anchorage, Bill Darch runs — drives might be a better word — a consortium of eight oil companies which have built a 798-mile conduit to carry Alaska’s black gold from the Arctic to the markets

of the lower 48 states and also, perhaps; Japan. If the pipeline’s cost — nearly $8.5 billion —

seems monstrous, one must remember the size of the pay-off. There is an estimated $l2O billion worth of oil, waiting to be divided up. And a rather incredible aspect of the adventure, which began a decade ago, is that the British Exchequer is likely to emerge as the biggest winner of the lot. I learned this as I made my way from Anchorage — a southern Alaskan city replete with statues of, and hotels and inlets named after Captain Cook, who claimed the area for King George 111 in 1778 — to the bleak fastness of the North Slope, 250 miles above the Arctic Circle. Here the oil begins its 30day journey to the ice-free port of Valdez, in the south.

Landing at Dead Horse, an airstrip near the frozen rim of Prudhoe Bay, we pulled on boots and

parkas before going over to a “winterised” jeep. Then we drove across a lunar landscape dotted with camps and rigs to the British Petroleum Control Centre. In deference to United States feelings, nobody here makes much of BP’s

By

CHARLES FOLEY,

, “Observer,” London

dominant role in what is still called “the allAmerican pipeline.” That is one reason why the bonanza is little known in Britain, absorbed as Britons are in the North Sea prospects. Even in the United States, few appreciate the extent to which BP — the world’s fifth largest company and Britain’s leading industrial concern — has taken in America’s recordbreaking oil field. BP, with a junior partner, 5.0.H.1.0., (Standard Oil of Ohio) has 54 per cent. Next comes Atlantic Richfield with 21 per cent, and

Exxon with 20 per cent. The rest is split among eight firms. For many years to come, Britain will earn a major slice of dollar revenue from the North Slope’s ten billion barrel reserves. There is, of course, a snag. To ease the budget-

ary strain, Prime Minister James Callaghan is pledged to sell 17 per cent of the state’s 68 per cent holding in BP, Britain's hottest stock. The sacrifice has already caused L e f t-wing mutterings. More trouble lies ahead. Tony Benn, Britain’s Energy Minister, complained that it was “like hocking the family plate,” only to be told by a BP chief that it was the Government, not the company, which has to be bailed out.

BP openly welcomes the forced sale. Even though

no-one has interfered with their operations since Winston Churchill, as First Sea Lord, created the Anglo-Persian Company (later to become BP) to secure the navy’s oil needs in the First World War, they want the shares more widely dispersed to

head off any future nationalisation. So senior directors, I am told, will go off in the next few weeks on shareselling missions, mainly in America, armed with jumbo income forecasts. Forty per cent of the company’s assets will soon be located in the United States, and it pays to emphasise the midAtlantic look. On the North Slope, talk is rather on how BP, with its nose for new oil, began buying up leases as early as 1959 in an area where Eskimos spoke of

“lakes that burned.” They sat tight until A.R.C.O. (Atlantic Richfield Company) announced a strike in 1968, then rushed in men and rigs. “That’s how we hit the big one,” says Charlie Wark, BP’s field co-ordinator. Wark, aged 47, is

number one man on the western side of the North Slope — the other half is being run by A.R.C.O. for a group of United States companies. He works a 12-hour day with his team, seven days a week, then joins his family in Anchorage for a break. How is life up here? “It’s like hanging. You get used to it,” And the pay is right. A dishwasher pulls in $775 a week, cook $lOOO. Some outside workers — they deserve it — can bank $40,000 a year — or blow it on vacations. BP’s strike was followed

r by a remarkable deal with a junior United States firm, Standard Oil of t Ohio, which was thirsty i for crude oil. Having more i than it could handle, and > seeking a bridgehead into 1 the United States market, BP swapped its North s Slope crude for a 25 per _ cent 5.0.H.1.0. shareholding. This, by agreement, is to rise to 54 per cent by the end of the year when ” the daily output reaches ! 600,000 barrels. So i 5.0.H.1.0. owns the oil, > but BP will own r 5.0.H.1.0., and four s barrels out of every five i produced on their side of ; the North Slope. ’ The partners also 1 agreed that 5.0.H.1.0. > should pay for plant and pipeline costs. These have 1 doubled and redoubled in a decade during which graft, theft, political foes, ’ and a powerful ecology ' lobby had to be overcome. The struggle has left _ 5.0.H.1.0. laden with longterm debt, while BP, i which bought the early

leases for a song, is home and dry.

“5.0.H.1.0.? That’s something painted on the back of my hard hat,” said a Texan worker. The green BP shield was on the front. But no-one is complaining. The oil 5.0.H.1.0. nets could make this modest outfit one of the three biggest petroleum producers in the United States. Without pause, on both sides of the North Slope, the search for more goes on. When I drove up an ice road across the frozen bay towards some offshore islands which sported drilling rigs, I was warned: “Those Wells are tight” In other words, the work going on is secret. And, in September, President Carter is due to decide on the route for a multi-million dollar gas pipeline to release the immense Alaskan reserves — at least a tenth of the United States total — needed in “the lower 48.” — O.F.N.S. Copyright.