Wildcatting in Alaska

Along a bleak stretch of the southeastern shore of Alaska, the country is blanketed by parts of three glaciers. Heavy snows fall in winter; during the summer torrential rams pour down. In that spot last week, Phillips Petroleum Co. chose to go wildcatting for oil, the first major effort of a private company. Phillips' handsome chance-taking Chairman Kenneth Stanley ("Boots") Adams, 53, thinks it is a sporting proposition largely because signs of oil have been found there by seepages and in icebergs from the area. Under Adams Phillips has built a reputation in tne oil business as an aggressive firm willing to pioneer, not only in oil exploration but in natural gas and petrochemicals.

In awarding Phillips the first Alaskan oil development contract, the Government set stiff terms. Phillips will have to spend at least $1,200,000 on exploration before June 30, 1956, and another 40-c- an acre on the million-acre tract every year thereafter. It must also sink two wells by 1956, start another two by the middle of 1958, and drill a well a year in each of the two adjoining districts* (Katalla-Yakataga) from 1959 to 1963, making a total of twelve wells in ten years. Phillips will lose the rights to land it does not develop under the terms of the contract.

Phillips will not be alone in its oil hunt; it will team up with Oklahoma City's Kerr-McGee Oil Industries, headed by Oklahoma's Senator Robert S. Kerr. The two firms have gone 50-50 on exploring for oil from Montana to Louisiana for the past 15 years, started working together shortly before Adams became Phillips' president. The son of a railroad man Adams left the University of Kansas in 1920, just short of graduation, to join Phillips as a warehouse clerk. By 1932 he was assistant to President Frank Phillips. At 35, Adams was named treasurer, and in 1938 he became president. He moved up to board chairman 13 years later. In the Alaskan venture, Phillips, as usual will put up the money, Kermac crews will do the geological exploring and drilling.

Of all Alaska's rich mineral wealth oil has been the hardest to come by. Since the '20s, several companies have drilled its public lands, but all gave up. The only oil that has been found is on the U.S. Navy's 37,000-sq. mi. reserve at Point Barrow. It has cost the U.S. $50 million in eight years of development.

* Because of the greater risk, Phillips will have to pay the Government only 25-c- an acre (v. the standard 50-c--an-acre rental fee for Government lands in the U.S.) plus a 5% royalty on any oil it produces in the first ten years. After that the royalty goes up to 12 1/2%, the standard royalty on domestic oil, but the U.S. can take payment in cash or kind (i.e., oil).

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