Prudhoe Bay, inlet of the Beaufort Sea and Arctic Ocean, N Alaska, in the Alaska North Slope region, east of the Colville River delta. In 1968 one of the largest oil reserves in North America was discovered in Prudhoe Bay. The ensuing trans-Alaskan oil pipeline built there connects Prudhoe Bay to Valdez, Alaska. Despite the harsh climate, drilling activity and the oil industry have led to increasing development and settlement of the Prudhoe Bay area.