By Naomi Klouda and Adrian Lysenko
Editor’s note: As energy issues continue to plague the country, the future development of Cook Inlet’s resources remain in question. Coal at Chuitna, gold at Pebble Mine, numerous offshore gas reserves and the reduction of oil flow from the 12 platforms currently churning in the Inlet point to the need for both economically sound and environmentally responsible development.
This is the second in a five-part series, where the Homer Tribune is looking at how Cook Inlet has transformed from a humble, twisting waterway to one of the most resource-rich areas in the nation.
Long before discoverers and explorers arrived, Alaska’s Native people knew all about oil. It seeped from gooey ponds and oozed from rocky outcrops. Oral history records that sometimes the people burned it in their stone lamps or used it to coat skin boats. But for the most part, they ignored it.
The first oil claims in Alaska were filed in the 1890s, on the Iniskin Peninsula north of Mount Augustine. A settlement that grew there, on the west shore of Cook Inlet, no longer exists, only equipment and other remnants remain sunk halfway into the soil.
In 1898, the first Alaska wells were drilled there. They struck small amounts of oil, but not enough to support production. Then, prior to Alaska Statehood in 1959, large amounts of oil were discovered in Swanson River on the Kenai Peninsula. One reservoir has already produced 230.6 million barrels of oil and 279 billion cubic feet of gas, said Kevin Banks, director of the Alaska Division of Oil and Gas.
“It’s one of the few places in the Inlet where oil and gas are produced together,” Banks explained. “The field produced oil until the mid ‘90s, at which point the production went into ‘blow down.’ That means rather than re-inject gas to produce oil, it is used only for gas.”
The early discovery of the large oil field near the Swanson generated a fair amount of interest from several oil investors, including Marathon, Unocal, Mobil, Chevron and Texaco.
On July 15, 1957, Richfield Oil Co. was the first to drill, striking oil on their very first well at a depth of 11,000 feet. Pulling in 200-500 barrels a day, it was marked as the first major commercial discovery in Alaska.
Because of Richfield’s success, other companies began drilling in the area.
In 1960, a joint venture between Richfield Oil Corporation and Standard Oil resulted in the building of the first commercial pipeline in Alaska from Swanson River to Nikiski Beach. Tesoro later built a refinery at Nikiski in 1969, which began producing diesel, gasoline and jet fuel. A Chevron refinery also was built around the same time, then was dismantled in 1995. According to the division’s annual report, today’s reserves are estimated at 1.7 million barrels of oil and 7.1 billion cubic feet of gas.
Where there’s oil, there’s work
America’s appetite for oil to fuel vehicles, aircraft and other machinery grew from the turn of the century on, with finds in Oklahoma, Texas and California. These, as well as other states, supplied all the oil the country needed until the late 1950s. By then, some of these oil fields were in decline and American companies were beginning to look at importing foreign oil.
Then came Alaska’s announcement of a big oil discovery. It was welcome news at a time when the territory was about to become a state.
When Alaska’s oil field at Swanson was announced, experienced workers signed on and transferred to the Kenai Peninsula. Most workers doubted they would be in Alaska long. Oil field work was generally transient work. Few could have predicted that the Swanson Oil Fields could produce crude from their startup in 1960, to well into 1990s. Some, who arrived to work on the fields as young men, are still around to tell about it.
“I was young and thought, ‘What the heck? I’ll go for it,’” Kenneth Slater recalled in an earlier interview. “We gave it a year (in 1959), and that year is still going.”
Everything was done by hand in those days, Slater said. With no pipeline in the field, each day, one or two tanker trucks would haul the oil to Seward to be shipped to the Lower 48.
The oil discovery at Swanson River played a pivotal role in building the communities surrounding it. Kenai, closest to the development, was home to 500 people in 1957. Many of those were homesteaders spread far apart. Now the population stands at more than 7,000, with nearby Soldotna coming in at more than 4,000.
Housing was built near the Swanson River Oil Field for workers, but electricity only reached the highway at the end of the road. Slater told how everyone would bring freezers down to the end of the road to plug them in.
In 1961, Slater was one of the eight or nine workers hired by Chevron. He eventually became foreman.
Once the discovery of North Slope oil proved promising in the 1960s, many workers left Swanson for higher pay in Prudhoe Bay. Slater remained at Swanson until his retirement in 1986.
According to Greg Merle, Chevron’s current Swanson River production foreman, technology has transformed it all.
“If we wanted to monitor temperatures on compressors, we had to walk over,” Merle explained. “Now, everything is done by computer.” Merle was under Slater’s tutelage when he first started at Swanson.
Swanson’s total lease area was 71,000 acres. Given what has been learned since those early days – from environmental hazards to new drilling techniques – an oil-drilling prospect today would take up much less space than earlier vast fields.
“Now, companies are taking advantage of directional drilling,” Merle said. “If we had that technology earlier on, we would have left a completely different footprint.”
Another aspect of early oil work was the severe hazard to humans. These came not only from frequent explosions, but also just from day-to-day work and exposure.
Because of poor records, little is known about the first two decades of oil drilling on the refuge. The state’s Department of Environmental Conservation wasn’t formed until July 1971. The Environmental Protection Agency wasn’t created until President Richard Nixon’s time in 1972-73, said DEC’s Steve Russell, environmental program specialist.
The U.S. Fish and Wildlife Service documented 13 major events from 1961 until 2002 at the Swanson River Oil Field. In 1961, a flow-line break sprayed crude 2,000 feet into the air. The extent of the spill wasn’t discovered until the spring thaw. Environmental laws were not in force at that point.
Another break in 1969 involved a pipeline that sprayed crude into the Swanson River. Xylene and other volatile organic compounds were discovered in soil and groundwater, in concentrations 10 times EPA health standards. A flow line leak in 1991 spilled 5,630 gallons of crude, while 2,000 gallons spilled in 1994. The largest reported spill was in January 1999, when Unocal spilled some 228,000 gallons of crude oil in the refuge.
U.S. Fish and Wildlife Service Contaminants Specialists found a high number of deformed frogs in the Kenai Wildlife Refuge in the summer of 2000. The frogs’ deformities reportedly included missing hind legs and feet, as well as clubfeet and missing eyes. Toxic chemicals are suspected as the cause, but Refuge Operations Specialist Clare Caldes said she cannot confirm that the deformities are caused by oil-related chemicals.
“It’s hard to draw any conclusions,” Caldes said. “It’s a combination of things not only occurring near the oil fields.”
Swanson River drains into Cook Inlet and according to figures kept on spill frequency and volume by the DEC, Cook Inlet is second only to the North Slope in the number of spills. The yearly average amount of spills is 30,000 gallons each year over the past 10 years. In 2008, less than 10,000 gallons were spilled.
In 1960, Ed Onstott moved to the Kenai Peninsula from Yakima, Wash. His step-son, Kenai Peninsula Borough Mayor David Carey, was 8 years old and in the third grade at the time. Carey, his mother and two sisters had followed in 1961.
“This was a pretty desolate place,” Carey said. “There was one wooden boardwalk at the woman’s dress shop in Kenai, and that was the closest thing to a sidewalk.”
Carey said when the family went to Anchorage, they liked the Sears Mall stop light.
“‘Ah, back to civilization,’ we thought,” he said.
The family first lived in a trailer house, as the flood of oil field workers found a shortage of housing.
“It was a good piece of housing compared to what many could find,” Carey explained. “Later that first year, we lived in half of a log home. We were just so pleased we actually lived in a house. Trailers were very cold.”
According to Carey, the only television station was provided by the military, which had a base at Fort Wildwood. Programs started at 3 p.m., and generally went off air at 9 p.m. On Friday nights, they held a midnight theater.
“People were working to survive, and they depended on each other,” Carey said. “There were bars and churches – and people were very much a part of both. There were no libraries, so these were really the only places you could gather.”
Ed, Carey’s stepdad, had come north for an oil field development called Haliburton. The company still maintains a presence on the Peninsula, and more recently, has been at the controversial center of oil contracting work in the Middle East.
In 1963, Ed switched to BJ Field Services, where his job was to put cement casings in for pipelines. Carey said the infrastructure for putting in platforms and drilling demanded a huge amount of concrete to keep pipe in place.
“You have to stabilize it, so you pour a huge amount of concrete down so the casing doesn’t cave in to pressure,” Carey explained. “In 1980, when Ed died, it was of two types of stomach cancer. They were likely caused by the calcium chloride in the cement powder.”
Some 29 years after Ed’s death, the oil industry is a lot different now.At the time, oil field workers were called “roughnecks” and considered pretty tough, Carey remembered.
“They worked without safety equipment, and had no spotters,” he said. There also were few laws protecting them, or holding companies accountable for harmed workers.
Cement came in 100-pound bags – like flour.
“As you poured it in, the flour went everywhere,” Carey explained. “It went in your nose, your mouth. You never wore a mask.”
Oil field workers also weren’t paid well initially, Carey said. The high pay of North Slope workers only came with unions, later on. In fact, the family didn’t own land until much later.
“They were considered oil field trash,” he said. “These were the non-college-educated people who did the huge amount of hard labor that made the industry able to function.”
This winter, Marathon Oil Co. is planning two new exploration wells approximately six miles east of the Swanson River oil field.
This time, they are searching for natural gas.
Nordaq Energy, a small independent company, also plans a well in the same area. It is on private land within the refuge.
Chevron is assessing a third potential gas prospect in Birch Hill north of Swanson River.
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