Innovation, diversification keep oilfield contractors alive.

• Author: Ess, Charlie
• Position: North Slope

The North Slope oil boom is long gone and long-term contract work borne of the big production years is winding down. Now that North Slope oil companies and their support industries must figure out how to turn profits in a future of declining throughput, only the most innovative contractors remain standing. Some have even seen exponential growth.

In the beginning, nobody could have predicted what pumping crude oil from the North Slope would spell in terms of wealth. The U.S. Navy unsuccessfully drilled exploratory wells during World War 11. But it wasn't until 1968 when Atlantic Richfield Company and Exxon discovered oil at Prudhoe Bay that the oil boom got rolling. Subsequent discoveries lead to more than 1,200 oil wells, an 800-mile pipeline and the tanker terminal in Valdez. In terms of tanker traffic, 15,000 tankers have tied up at Valdez, filled their holds with North Slope Crude, and sailed to West Coast refineries. In the peak year of 1988 when production hit 738 million barrels, the pipeline's throughput hit more than 2 million barrels a day. That year's production brought between 75 and 88 tanker landings per month.

Alaska residents have long cherished the royalties from the sales. Since becoming a state in 1959, the state has pocketed nearly $40 billion in oil and gas revenues, most of which has come from the North Slope. In 1976, the Legislature started the Alaska Permanent Dividend Fund program which invested the revenues, and in 1980 proposed that a percentage should be paid to Alaskans based on their residency. The idea ran into legal snags with the U.S. Supreme Court, which ruled the dividend plan unconstitutional because it discriminated against the state's newcomers. However, the system passed muster with the courts two years later after the Legislature relaxed the residency requirement.

This was only a part of the wealth. Activity on the North Slope contributed to the prolific growth of jobbers and suppliers too numerous to keep tabs on. In the 20 years since the valves were opened and the first of some 12 billion barrels of North Slope crude traveled down the trans-Alaska pipeline, Alyeska Pipeline Service Co. has written more than 8,000 contracts. These included services ranging from air charters to temporary housing units at pump stations.

But much of the work took place in the heyday when the companies and contractors could enjoy immense profits. Oil prices held strong until 1986, plummeted for a few years, then...