The setting was pure Piura desert: dry, hot, windswept, adjoined by the refinery's stacks and the oil fields that stretched inland. The International Petroleum Company designed Punta Arenas as a self-contained colony where a resident American family would find all the comforts of home. Houses ran on 110-volt power, the same as the American grid. Gas arrived continuously. Two pools served an exclusive residents' club. The company manager occupied a private residence, and another house was reserved for official guests with a view over the Pacific beach. An elementary school and middle school initially followed the American school curriculum. There were no sidewalks, but a 25-kilometer-per-hour speed limit kept the traffic gentle. The blocks were organized alphabetically, each block holding ten houses, with letters added as the community grew. When the regular alphabet ran out, they added letter combinations like CH and the letter Z. Single workers lived in designated bachelor blocks with shared bathrooms.

The Talara refinery was the provocation that launched a revolution. On October 3, 1968, General Juan Velasco Alvarado seized power in Peru, and one of his first acts was to nationalize the International Petroleum Company. The refinery and all its associated assets, including the houses of Punta Arenas, became property of the newly created Petroperu. The symbolism was as important as the economics. For decades, Peruvian nationalists had viewed IPC as an emblem of foreign exploitation, and Velasco's seizure was meant to demonstrate that the country's resources belonged to its people. Some changes in Punta Arenas were gradual. The electrical system slowly converted from 110 to 220 volts. The school started following the Peruvian curriculum and offering secondary education. But the Americans who had made up the community began to leave. Through the 1970s, retirements thinned their numbers. By the 1980s, virtually none remained.

Peruvian workers who took over the supervisor positions moved into the houses, but the community never lost its sense of separateness from the city of Talara beyond the gates. During Alan Garcia's first presidency in the 1980s, Peru entered an economic crisis that widened every inequality. When the 1983 El Nino floods devastated the coastal desert, Talara residents struggled to find food at inflated prices. Meanwhile, Petroperu chartered aircraft to deliver fresh meat, poultry, and other supplies to its supervisors in Punta Arenas. The contrast was impossible to miss. The benefits that came with the job, free housing and transportation, free education, free water, electricity, and gas, were attractive enough to justify relocating to an isolated corner of the country. They were also a source of deep resentment among neighbors who had none of these things, and whose memories of 1983 lasted long after the floods receded.

Punta Arenas did not end in a single event. It faded through the 1990s as the Talara refinery faced declining production and falling oil prices. By 1999, many houses had been rented to outside companies as Petroperu tried to squeeze revenue from assets it could no longer fully use. Privatization plans came and went without resolution. Empty houses were offered to private buyers, with limited success. Many were demolished. Today only the houses closest to the old club and the school remain, the rest replaced by open ground and the memory of a grid that once organized an entire community. Peruvian psychoanalyst Jorge Bruce wrote a book of short stories in 1981 called Arena de Punta Arenas, set during the IPC years, preserving something of what it was like to live in a neighborhood where the blocks were lettered and the holidays changed according to whose holidays counted that year.