The Atlantic Richfield Co. announced today that oil has begun to flow from a new Alaskan North Slope field that the company expects to become the second-most productive in U.S. history.
The Kuparuk field, located 40 miles west of Prudhoe Bay, began production Dec. 13, Arco President William F. Kieschnick said today at a Los Angeles press conference.
Officials at Arco, the 7th-largest oil company, predict that the field will produce 80,000 barrels per day in 1982 and 250,000 barrels per day by 1986; it is currently yielding 50,000 barrels a day. Prudhoe Bay, the largest oil field in North America, produces 1.5 million barrels of oil a day, approximately one-sixth of the total U.S. production.
With this new field, Arco will be able to "maintain our domestic oil production levels over much of this decade, a situation we believe is unique in the domestic petroleum industry," Kieschnick said. Kuparuk will make Atlantic Richfield "virtually self-sufficient in providing for the crude oil needs of our refining and marketing operations," he added.
Kuparuk, 260 miles above the Arctic circle, will be "the second-most prolific oil field in the history of our country," ultimately producing a total of 750 million barrels of oil, Kieschnick said. Arco and other companies have invested about $500 million to tap the field and expect to spend a total of $8 billion.
Kieschnick said that when Kuparuk was discovered a little over a decade ago, it was "a geological success and an economic failure," because of the extremely severe weather conditions. Company officials said in a prepared statement that the rise of crude oil prices in the late 1970s prompted them to decide in favor of limited production at Kuparuk. "With the exemption of new Arctic production from the windfall-profits tax, the decision was made to expand field development," it said.
The Los Angeles meeting was linked by telephone to press conferences in Dallas and Anchorage, and company officials in all three cities echoed Kieschnick's statement: "This is a good-news day."
Kuparuk's production is expected to reduce the amount of oil that must be imported by the United States, and thus reduce the flow of American dollars out of the country.
Arco Alaska, Inc., a division of the Atlantic Richfield Co., operates the field. Originally, the company planned to operate on about 20 square miles with 100 percent Arco-owned leases. Those plans have been expanded to include other companies in the ownership of the field, which is now planned to cover about 200 square miles. Under a preliminary agreement, Arco Alaska will receive 80 percent of the field's first three years of production, with that percentage dropping to between 57 and 59 percent of the total net production over the life of the field.
Exact percentages of ownership in the field have yet to be decided, but Atlantic Richfield said today that two other major owners will be British Petroleum and Sohio Alaska Petroleum Co.
Kuparuk was first discovered in 1969 in a joint venture by Sinclair Oil Corporation, which later merged with Atlantic Richfield, and British Petroleum. Companies that will hold minor percentages of the field include Union Oil Co., Exxon USA, Chevron USA, Mobil Oil Corporation and Phillips Petroleum Co.