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Title: The evolution of the oil industry
Author: Victor Ross
Release date: October 16, 2025 [eBook #77066]
Language: English
Original publication: New York: Doubleday, Page & Company, 1920
Credits: deaurider, Daniel Lowe, and the Online Distributed Proofreading Team at https://www.pgdp.net (This file was produced from images generously made available by The Internet Archive)
*** START OF THE PROJECT GUTENBERG EBOOK THE EVOLUTION OF THE OIL INDUSTRY ***
THE EVOLUTION OF THE OIL INDUSTRY
[Illustration: The first oil well drilled near Titusville, Pa., on
August 27, 1859, by Col. Edwin L. Drake, the pioneer man of the world]
THE EVOLUTION
_of the_
OIL INDUSTRY
BY
VICTOR ROSS
ILLUSTRATED FROM PHOTOGRAPHS
GARDEN CITY NEW YORK
DOUBLEDAY, PAGE & COMPANY
1920
COPYRIGHT, 1920, BY
DOUBLEDAY, PAGE & COMPANY
ALL RIGHTS RESERVED, INCLUDING THAT OF TRANSLATION INTO FOREIGN
LANGUAGES, INCLUDING THE SCANDINAVIAN
PREFACE
BY DR. VAN H. MANNING
_Director of the Division of Technical Research of the American
Petroleum Institute. Formerly Director of the Bureau of Mines of the
Department of the Interior_
A glance at the chapter headings in this little book shows that it
is an endeavour to present in succinct form a survey of a great and
ever-expanding economic revolution--the interpenetration by petroleum
of all industries, whether of the factory or the field, land or sea,
war or peace. This phenomenon has been almost exclusively a development
of the past six decades, and the United States of America have been
the predominant factor in the innumerable changes wrought thereby. The
narrative confines itself rigidly to historic records and material
facts, undeniably romantic in themselves. But as the epic unfolds
itself, it assumes a super-phase, the import of which cannot be
measured by mere figures--a super-phase with invaluable applications to
the problems of humanity in an industrial age.
Petroleum, it becomes clear, was the first natural product to
which the abstract theory of order, as understood by modern social
philosophers, was applied in a large and general sense. It must be
accounted good fortune not only for America but for the world at large,
that this movement, though gradual at the outset, commenced almost
within a decade of the birth of the modern petroleum industry at
Titusville, Pa., in 1859. The outcome has tended to influence economic
thought the world over, especially since war on an unprecedented scale
put all established systems, traditions, and institutions to the acid
test.
Foreign observers and critics, friendly or unfriendly, admit that in
one matter American foresight and enterprise have taught the older
nations valuable lessons--and that is in respect of standardized
production--or to put it in another way, organized industry.
America’s achievements in this domain during the past half century
have represented incalculable and beneficial advancement beyond the
industrial conditions of all past centuries. With this record of
progress, the growth and expansion of the petroleum industry have
been inseparably associated. The famous pioneers in organizing the
production, refining and distribution of petroleum have also been
pioneers in the application of the principle of order to industry;
which, in essence, means the elimination of waste and misdirected
energy from human effort.
Organized industry means something entirely different from a system
aiming at quick and enormous profits. It is based on a definite theory
of scientific effort, whereby all the possibilities of a given resource
are developed to their fullest degree, so that waste ceases, the value
of the worker’s labour is increased with benefits to himself, and
the consumer receives the blessings of nature’s dower at the lowest
reasonable cost. As the ensuing chapters show, the accomplishment of
these objects in the case of petroleum has involved much more than
the application of the physical sciences to manufacturing processes.
It has meant the development of systematized methods in discovery and
location, transportation and distribution, so that from the moment
oil is “struck,” in say a barren patch of prairie, until any one of
the many products of crude petroleum is placed in the hands of the
consumer--here, or in some distant isle of the sea--there shall be no
waste and no injustice, and that all the hands through which it passes
shall reap a just benefit.
The far-sighted Americans of the transition period in this country’s
history, who created the modern petroleum industry, and built up the
machinery for its continuous expansion, began with the definite aim
of involving order from chaos. They were from the outset reformers
of business methods and enemies of waste. The latter had become
colossal during the unsettled years that were marked by the duration
and aftermath of civil war. The work of these business pioneers was
gradual, but it developed an ever-increasing impetus; and as the
years went on the ethical import of their mission became more and
more apparent. It would be wide of the facts to say that the element
of gain played no part in these developments. Little indeed would be
accomplished in the way of progress were the incentive of personal gain
in some form or other removed. On this point the Scottish economist,
Adam Smith, spoke pertinently one hundred and fifty years or more
ago: “By pursuing his own interest a man frequently promotes that of
society more effectually than when he really intends to promote it.”
Nevertheless it is clear that in the case of some of the leaders most
closely identified with the organization of the petroleum industry,
personal motive and energy were supplemented by a sincere desire to
promote the prosperity and welfare of the American people as a whole.
Coming to the larger question of what the principle of order means to
humanity in the abstract, it must be noted that all modern thinkers
whether they be supporters of capitalism--the system on which all
past industrial and national progress has been based--or intellectual
socialists pin their faith to that principle as the sole means whereby
mankind can be raised to a higher level. Moderate socialists are
especially emphatic on this point and it is the key-note of their
writings. They attribute the great mass of poverty and suffering
which still exists in this world to lack of order--to the failure of
mankind, in the individual and in the aggregate, adequately to realize
its importance. The goal which all enlightened men, of whatever school
of thought, desire to see attained, is the abolition of poverty; not
the imaginary poverty of the man who chafes because he cannot have
everything he desires; but the actual, galling poverty that is born of
the worker’s inability to produce sufficient to earn rewards that will
enable him to live according to decent standards. It is to the eternal
credit of the leaders of the petroleum industry in America that they
have set a beacon of order and efficiency which lights the road by
which that great end--the abolition of poverty--may be reached. It is a
principle that runs like a golden thread through the vast and complex
system that has grown up around petroleum.
The ensuing chapters show how much it has meant in prosperity and
progress to the world at large to have a great natural resource like
petroleum developed to the fullest degree of its potentialities, so
that all who come in contact with it participate in some measure in the
benefits. These considerations are obviously of greater importance than
some others which have been impressed on the public mind in exaggerated
terms. The fact that a few men of organizing genius may have reaped
fortunes in consummating the aim of bringing order out of chaos and
turning waste to profit is of slight significance in comparison with
the certainty that millions of people have been benefited by their
operations. It is one of the rooted axioms born of human experience
that genius of whatever order, so long as it assists civilization, is
entitled to exceptional rewards. Particularly is it true of that rare
order of genius which lies back of directing minds. Without their
leadership the efforts of humanity to advance itself would be in vain.
What the extraordinarily efficient organization of the petroleum
industry has meant in wealth to such leaders is in the aggregate but
a drop in the bucket in comparison with the benefits conferred on the
people as a whole--increasing rewards for the producer in every stage
of its development, lowered costs for the consumer, and stimulus to
countless forms of industrial activity.
Thus it can be truthfully maintained that the spirit of coöperation,
honest endeavour and hatred of waste and slovenly methods by which the
present condition of that industry has been achieved offers a valuable
and well recognized message from America to the world at large, and
suggests a solution for many of the ills that beset civilization to-day.
CONTENTS
PAGE
PREFACE v
By Dr. Van H. Manning.
CHAPTER
I. PETROLEUM IN HISTORY AND LEGEND 3
II. WHAT IS PETROLEUM? 11
III. DAWN OF AMERICA’S PETROLEUM INDUSTRY 30
IV. FOUNDER OF THE PETROLEUM INDUSTRY 37
V. PETROLEUM AS A WORLD INDUSTRY 44
VI. LOCATING THE OIL WELL 57
VII. DRILLING THE OIL WELL 65
VIII. COLLECTING AND TRANSPORTING CRUDE: THE PIPE LINE 76
IX. REFINING AND MANUFACTURING PETROLEUM PRODUCTS 89
X. PETROLEUM AND OTHER INDUSTRIES 106
XI. PETROLEUM ON THE SEVEN SEAS 116
XII. PETROLEUM IN THE GREAT WAR 129
XIII. AMERICA’S INVESTMENT IN PETROLEUM 148
XIV. PETROLEUM IN THE FUTURE 160
LIST OF ILLUSTRATIONS
The first oil well, drilled near Titusville, Pa.,
on August 27, 1859, by Col. Edwin L.
Drake _Frontispiece_
FACING PAGE
A temporary oil reservoir in Oklahoma 26
Early activity; the famous Red Hot Oil Field
near Shamburg, Pa. 42
Where Pithole stood 43
The Drader Well in the Moreni Field, Roumania 66
Burkburnett in Northern Texas 67
Big yield well in Mexico flowing into temporary
storage pond 82
Laying a pipe line through a Louisiana forest 83
Lines for loading oil on vessels standing from
one to two miles at sea 98
Battery of crude stills at the Bayway Refinery,
Linden, N. J. 99
“Look boxes” in the “Still House” where the grades of
oil are separated according to gravity 114
A modern tanker carrying 4,000,000 gallons of oil 115
A tanker being loaded with gasoline and oil
at a refinery dock at Port Arthur, Texas 146
Kansas wells flowing oil into a temporary
sump, or earthen reservoir 147
Steam stills at a modern refinery 162
Storage tank at Cushing, Oklahoma, struck by lightning 163
THE EVOLUTION OF THE OIL INDUSTRY
CHAPTER I
PETROLEUM IN HISTORY AND LEGEND
While the petroleum industry is in the fullest sense modern, it has
been known to, and casually utilized by mankind for centuries. It
is named in the earliest annals of the race; and allusions to it
are abundant in the literature of the East, from which much of our
Western literature had its inspiration. It was applied to the service
of religion, and was a subject of superstition in times which are
enshrouded in legend. In the authorized Bible and in the Apocrypha
there are more than two hundred allusions to it. The legend of Noah
speaks of his having used pitch to tighten the seams of his ark, which
certainly indicates a familiarity with the uses of fluid bitumen
available in the East. In Deuteronomy there is mention of “oil out of
the flinty rock;” and Biblical students could cite countless other
instances where the meaning clearly indicates a common use of the
surface deposits of Western Asia.
It is believed to have been a strong factor in trade between Ancient
Judea and Persia, which latter country has again in the twentieth
century become a factor in oil production. It played its part in
the worship not only of the Hebrews but of other Eastern nations,
and to the primitive minds of those peoples assumed miraculous
characteristics. The burning wells of Baku were the objective of
religious pilgrimages among the prehistoric peoples; and despite the
colossal waste of past ages these wells still flow and are a factor
in commerce. The Zoroastrians, or Fire Worshippers, a sect of Persian
origin, which gained many adherents in ancient India also, regarded
these wells as the manifestations of a great imprisoned spirit, who was
supposed to breathe inflammable vapour from his nostrils. Zoroaster
has a temple at Baku, and students of folk-lore hold that these
burning wells helped to confirm the belief in a literal Hell of fire,
common to races of Semitic origin. The Macedonian conqueror of Asia,
Alexander the Great, witnessed the burning lake of Ectabana in his
march to the east, centuries before the Christian era. Marco Polo, the
Italian explorer of the middle ages, among many fables, revealed to
Europe the truth about the oil resources in Baku, and had sufficient
of the instincts of a trader to discern their commercial value.
Well-founded belief in the medicinal properties of petroleum, common to
all countries where it is found, was also prevalent among the ancient
peoples.
The reference to its use in the construction of Noah’s ark shows that
the utility of pitch, as a binding material in building operations, was
recognized. It is clearly this material that is meant by the “slime”
which is stated to have been used as mortar for the erection of the
Tower of Babel; and it is supposed to have played its part in more
definitely authenticated structures like the palaces of Babylon and
Nineveh, and the Temple of King Solomon.
Less familiar are the Greek legends relative to petroleum. Plutarch,
in his life of Alexander the Great, after recording some experiments
of the Macedonian conqueror with petroleum, in the course of which
he nearly burned a favorite slave to death, suggests that it was the
fluid signified in one of the legends of Medea. The story ran that
Medea, wishing to destroy a successful rival in love, the daughter of
King Creon, gave her a wreath and crown anointed with some inflammable
liquid. As her victim approached the altar flame during a religious
festival, the wreath and veil became ignited and the unfortunate
princess was burned to ashes.
The ancient Egyptians undoubtedly used petroleum for embalming and
medicinal purposes, and filled the cavities of dead bodies with
asphaltum, so that nomadic Arabs in later times have been known to use
mummies stolen from Egyptian tombs for fuel. Petroleum in its more
fluid form is also supposed to have been used to preserve the ancient
papyrus against the boring of insects and the rust and rot of time. To
this extent at least historians and archæologists are indebted to this
gift to man.
Rome, in her gradual conquest of the Western world, made all known
oil supplies her own. Consequently allusions which obviously refer to
petroleum are frequent to the Roman historians; and here once more it
was applied to the use of religion.
The early records of Russia, the Scythian nation of ancient history,
are obscure, but it is quite clear that the properties of petroleum
were known to them for ages. When Igor descended on Greece, his
vessels were destroyed by a fire that burned on water; which has led
some modern historians to believe that petroleum entered into the
composition of “Greek Fire,” the secret of which is lost.
The Greeks, indeed, are said to have made ingenious use of petroleum
at all times. Those who have read in Gustav Flaubert’s “Salammbo” the
story of the rising of the mercenary troops of Carthage after the
first Punic war will recall the tactics of one of the Greek captains
who turned back the Carthaginian elephant corps, by sending among them
swine smeared with petroleum and ignited.
In later days the greatest of Russian Emperors, Peter the Great, showed
himself alive to the commercial value of the Baku wells. When in
1723 he obtained from Persia control of the Baku Khanate, he ordered
the seizure of as much white petroleum as possible, and directed
that a refining master be sent there. “This,” remarks a historian of
petroleum, “is the first record of a vacancy for a manager of an oil
refinery.”
As we go farther east history becomes less exact and legend more
quaint. In Burma the story of a sweet-smelling deposit of petroleum is
the subject of a tale more than a thousand years old. It is related
that King Alsungsithu was making progress through his realms with his
seven wives and on his magic raft. At one point the ladies went ashore
and finding sweet-smelling earth, anointed themselves and delayed so
long that they forgot the hour appointed for their return. The angered
king issued the decree “let the queens who love scented earth more
than me, their Lord, be put to death.” The doomed ladies replied “From
too much love of this fragrant earth we must now die. Let it lose its
fragrance and become an overflowing stream of foul-smelling oil, and
let those who collect it pay us honour as their protecting deities.”
They were executed and became Nats or guardian spirits and belief in
them is still preserved among workers in the Burmese oil fields. But
if the legend could be accepted as true the slain women assuredly took
a sad vengeance, for the only offense that can be charged against so
beneficent an agent as crude petroleum is its odour, which assuredly
belies its virtues.
There are the remains of very ancient oil workings in Burma, Japan and
China. Indeed, China, a pioneer in many arts, was undoubtedly one in
oil production. Boring in the modern sense was unknown to most of the
ancient peoples but it was practised in China centuries ago, a fact
which will come under consideration when we take up the mechanical
phases of oil production. They had some deep wells at a time when other
nations were merely utilizing surface accumulations, and eruptions.
A natural substance which has played so considerable a part in the
literature and legend of Europeans and Asiatics did not fail to appear
in the beliefs and practices of the aborigines of this country. From
time unknown the red man has gathered and made medicinal use of the
surface petroleum of the Oil Creek region of Pennsylvania; and its
utility in more than one respect was known to the Indians of California
and Mexico. The Senecas imparted to the French Jesuit missionaries--who
in the seventeenth century, explored not only Eastern Canada but the
Northern States and the Mississippi Valley--the curative virtues of
oil; and two hundred years later it was known to the settlers of
Northern New York State, Pennsylvania and Ohio as “Seneca Oil.” The
early Spanish missionaries to Mexico and California found the natives
selling in their market places petroleum gathered from the surface of
the water along the seashore, chiefly for burning purposes. Father
Acosta, one of the early missionaries to Peru, noted petroleum floating
in the water off Cape Blanco and, as early as 1692, the Spanish
Government granted concessions for the collection of Peruvian oil.
In the years immediately prior to our war of Independence, allusions
to the petroleum resources of what are now the United States became
frequent; and the commercial value of the product was known to General
Washington himself. Washington, who was a great believer in the future
of the country, which was in his day called “the West,” acquired three
large tracts of land on the Ohio River bottoms. One of these was at
Point Pleasant, the birthplace of General Grant; a second at Round
Bottom, later the site of the City of Cincinnati; and a third at the
mouth of the Kanawha River, rich in coal and oil. The father of his
country had a singular prescience with regard to the element which was
to play so great a part in modern American industry; for in his will,
speaking of this third tract, he says: “This tract was taken up by
General Lewis and myself on account of the bituminous spring which it
contains, of so inflammable a nature as to burn freely as spirits and
is nearly as difficult to extinguish.” Certain of its immense future
value, he requested his heirs not to dispose of this particular tract.
CHAPTER II
WHAT IS PETROLEUM?
Petroleum, or to use its comprehensive colloquial synonym, “oil,” has
come to play such a widespread part in every-day life that most people,
the younger generation especially, take its existence for granted
without further enquiry. Few pause to reflect that this basic essential
of modern commerce is a comparatively new agent for the service of
mankind. Its applications are so manifold that it is now recognized as
indispensable; whereas in a period so recent as that of the advent of
Lincoln in American history it was almost negligible as a contributor
to the nation’s wealth and productive power. The development of
petroleum ranks third among the three great discoveries in the realm of
applied science which have revolutionized industry in the past hundred
years--the other elements being electricity and steam. In company
with electricity, it has effected changes in methods of manufacture,
and added to the comforts of civilization in ways that it would take
volumes to relate. It has been a factor in revolutionizing warfare--as
the recent great conflict proved--and it is essential to the arts of
peace.
Like electricity, with which its development as a servant of man has
been coincident, its utility consists in the fact that it is a source
of light, heat and energy. But unlike electricity it is a passive as
well as an active agent. For illustration, the same motor car which
is propelled by one product of crude petroleum is also lubricated and
enabled to travel by means of another product of the same commodity.
Petroleum is the latest of the earth’s riches which man has learned
to adapt to his needs. The use of iron, for instance, goes back to
prehistoric times, and the same is true of nearly all metals, precious
and otherwise, of salt and many other of our mineral products which the
chemistry of creation has provided in the crust of this terrestrial
sphere. But for countless centuries man went his way knowing of the
existence of petroleum, yet utilizing it only in a sporadic and
casual manner, until American ingenuity and adaptability--working in
coöperation with scientists of other lands--made it the marvelous
agent that it is to-day. And all this has happened since the
grandfathers of most of the younger generation of the twentieth century
were born.
The word petroleum comes from two Latin terms signifying “rock” and
“oil”. “Rock-oil,” which was an early name given it on this continent,
is accounted for by the fact that certain shales and coals possess oil
as part of their constituents. It is one of the family of bitumens,
which even in their natural state assume many forms. In its commercial
sense the word “petroleum” is a generic term covering the whole
group of hydro-carbons--the refined or manufactured products as well
as the crude oil. But as yet scientists are divided in opinion as
to its origin and the extent of the world’s supply. All we know is
that it is diffused over almost every section of the earth, and that
new deposits--on the scientific development of which geologists are
constantly at work--are ever being discovered.
One school of scientists holds that it is of inorganic origin, derived
from metallic carbides lying below the porous strata which serve as
Nature’s reservoirs for the crude product that is “mined” by the
modern oil producer. But the more widely accepted view is that crude
petroleum is of organic origin, born of either animal or vegetable
matter embedded in the earth’s surface, which in the process of
decay or transmutation has taken this form. Travellers state that in
the neighbourhood of the Caspian Sea the conversion of such organic
matter into petroleum is visibly in operation to-day. The British
scientist, Sir Boverton Redwood, in explaining the natural process
by which petroleum came into existence, has pointed out that in the
comparatively deep and quiescent water along the margin of the land
in past there would be abundant opportunity for the accumulation of
deposits of the remains of marine animals and plants, as well as of
vegetable matter from the land, borne down to the coast by water
courses. The changes which the world has undergone would result in the
burial of these accumulations under sedimentary strata, during the
process of creating land where once was water.
During geological ages different parts of the earth’s surface have
alternately been raised and submerged. When above sea level they have
been at times subjected to disintegration and removed by such agencies
as water, wind, and glaciers, and when submerged the same localities
have received deposits, as we now see being made under the ocean and
at the mouths of rivers. As all the geological formations which are
stratified have been deposited in their respective localities while
that part of the earth’s surface was under water, and as oil is, almost
without exception, found in these formations, we are able to account
for the fact that petroleum is frequently discovered in localities
which are now at a great distance from the sea. It would also explain
why oil is frequently found in association with salt--a circumstance
which had its accidental bearing on the earlier development of the
petroleum industry in the United States. Many other arguments have been
adduced supporting a belief in the vegetable origin of petroleum that
would be worth discussing at length, were this a scientific treatise.
Much controversy still prevails. The holders of the inorganic theory
who assume that petroleum could be formed by chemical reactions from
minerals are for the most part chemists who base their conclusions
on laboratory experiments; whereas the scientists who hold by the
organic theory are geologists, who base their contentions on actual
investigations of the earth’s crust and the records of its changes as
written in the rocks.
The assumption is that the organic matter, after being imprisoned in
the sedimentary rock by the processes indicated, under the influence
of heat and pressure in some cases assumed the form of coal; in other
instances succumbed to decay; while in other cases it formed crude
petroleum and gas. It is assumed that a mere fraction of the organic
matter which was gradually imprisoned in the formation of sedimentary
rock would have been sufficient to create incalculable stores of
oil and gas. The mode of decomposition by which these elements were
generated is one of Nature’s secrets; and the stage in the history of
oil-bearing rock in which the necessary chemical transformation took
place is equally a matter of conjecture. As has been said, the presence
of salt is a prevalent phenomenon in connection with oil deposits the
world over. Not only is a strongly saline water commonly present in
the vicinity of petroliferous rock, but in a number of fields oil is
closely connected with large masses of rock-salt, gypsum and dolomite.
An important fact which makes definite conclusions difficult is that
in its world-wide distribution petroleum is to be found in almost the
whole range of strata which forms the earth’s crust; from the earliest
or Laurentian rocks to the most recent formations of what is known in
geology as the Quarternary period.
It is, however, evident that oil has often moved from the formations in
which it was made to other formations, generally loose or porous, which
have served as natural reservoirs for storing the oil in the earth.
It is probable that in most instances the migration took place by
filtration or flowing through fissures or openings from one formation
to another, while in some cases it is evident that a distillation took
place and the migration probably was made in the form of vapor, which
was ultimately condensed in a cooler formation and there stored.
Generally speaking, however, it reveals itself in commercial
quantities chiefly in the Devonian and carboniferous formations which
are comparatively old; or in the Tertiary rocks, aeons younger in
geological evolution. The geographical distribution is as diverse as
the geological; the deposits in many instances occur along well-defined
lines and in association with mountain ranges, though this condition is
by no means axiomatic. It is assumed that in the elevatory processes
which obviously occurred while the earth’s crust was attaining its
present characteristics, certain folds were formed which arrested and
collected the oil in productive belts.
Early misapprehensions with regard to the origin of petroleum are
indicated by the familiar word “coal-oil,” now used to signify one
of the most popular products of crude petroleum; but originally
derived from the fact that what we now know as kerosene or lamp oil
was produced from the distillation of coal before petroleum became an
important source from which the lamp oil was obtained. Over a century
ago miners in Shropshire, England, observed oil trickling from fissures
in coal veins and assumed that coal was the source of the liquid.
This belief was intensified by the fact that the earliest discoveries
in Pennsylvania, which resulted in the creation of the great modern
petroleum industry of the United States, were in the vicinity of
vast deposits of bituminous coal. Shortly afterward this belief was
disproven by the discovery of valuable oil fields in the western part
of the province of Ontario, Canada, where no coal exists; and other
discoveries on this continent and elsewhere have furnished abundant
proof that oil may exist in large volumes independently of coal.
In considering the two primary theories as to the origin of petroleum,
whether inorganic--that is from chemical action on rocks forming part
of the earth’s crust, or whether organic, from the decay of vegetable
and animal matter--there are many strong arguments for both theories
and it is quite reasonable to believe that both may be correct. There
are localities where petroleum exists in formations showing little
evidence of animal or vegetable remains and little possibility of
having reached these formations by migration. As a rule, the production
in such formations is small, rarely in commercial quantities, and it is
probably derived from inorganic sources. This possibility is further
demonstrated by laboratory experiments.
On the other hand, it is probable that the greatest sources of
petroleum are due to organic origin, more particularly in the
carboniferous or the tertiary formations, where coal, cannel-coal,
lignite, and other similar products are most frequently found.
Hydro-carbons identical with most of the products of the distillation
of petroleum, are so commonly obtained from the distillation of coal,
lignite, and even bituminous shale and peat that in most cases the
organic theory of the source of petroleum appears to be the correct one.
Natural gas usually exists in association with oil deposits and in a
great measure has the same properties, its existence as a gas or a
liquid being dependent on the temperature and pressure under which it
is held. In recent years, before it is sold for consumption as natural
gas, it has become the general practice of oil producers to compress
and chill the gas to obtain a considerable yield of gasoline which
exists in the natural gas as a vapor. Another process for extracting
this gasoline is by absorption, that is, passing the gas under a
comparatively low pressure through a heavy oil, which takes out a part
of the gasoline from the gas. In both processes, but especially in the
high compression system, there is a considerable percentage of very
volatile gasoline obtained, which is highly explosive and difficult to
retain as a liquid. Varying in different localities and under different
conditions, natural gas yields commercially from one-half gallon to
five gallons of gasoline per thousand cubic feet, although extreme
cases show much wider range.
Natural gas, in conjunction with hydraulic pressure, is the cause of
what is known to oil operators as a “gusher” or flowing well. It is the
compression and volatility of the gas imprisoned for ages in the rock
that sends the oil spouting into the air and has been known to create
a flow of 170,000 barrels in a single day. As a general practice, and
probably due to the weight of overlying strata, the pressure of gas
encountered in drilling into oil formations is proportional to the
depth. This pressure is generally known as rock pressure and the flow
of the wells is in part due to it. A principal factor in the production
of oil or gas is the nature of the formations from which the production
is derived--their thickness and porosity.
In some cases, notably in Mexico, the flow seems to be caused by the
action of water. Here the formations are very porous, opposing little
obstacle to the flow of the oil and gas through the formation. The
production from the wells under these conditions is very great and,
unlike most wells, a gradual decline in the yield is unusual, there
being little sign of exhaustion until the moment when the well begins
producing salt water in increasing proportions. After the appearance
of the salt water the production of oil diminishes rapidly and for
practical purposes soon ceases, due to the small production of oil and
the fact that it comes out as an emulsion with the water, which is very
difficult to utilize.
A characteristic of the Mexican wells is that the oil, and finally
the salt water which follows it, are generally produced at a high
temperature--from 115 to 145 degrees. Such gushers originally produced
another fallacious belief that oil exists in subterranean pools or
reservoirs; but investigation has shown that oil has been preserved in
the rocks in a way somewhat similar to that in which water is retained
in a sponge. A typical piece of oil rock examined under the microscope
reveals millions of tiny interstices between different grains of sand.
Porous, oil-bearing sandstone may contain one-tenth or one-eighth
of its bulk in petroleum. The term “oil sands” is common in the oil
industry and refers to the type of coarse grained porous rock which
forms the best reservoir for petroleum; but limestone and some of the
rocks described by geologists as conglomerates sometimes serve the same
purpose. In every instance the oil-bearing stratum has been covered by
a layer of non-porous rock, whose impervious qualities keep the oil and
gas imprisoned until penetrated by the drill. Surface deposits are also
a well-known phenomenon; and were the only type of deposits known to
the world until modern times. About them has grown up much interesting
history and legend which will be dealt with in a subsequent chapter.
The geographical distribution of petroleum is, as has been said,
world-wide, and the oil prospector, followed by the capitalist, who
make these discoveries available to the world, are constantly opening
up new fields. Oil discoveries necessarily mean great commercial
expansion for the localities in which they occur; and no small part
of the enormous wealth of the United States has resulted both from
the abundance of our deposits of crude, and from the manifold uses to
which they have been applied in the improvement and standardization of
manufacture. Though the United States is the greatest oil producing
country in the world, production on modern commercial and scientific
lines first began across the seas, in the little Kingdom of Roumania.
There the industry in a modern sense had its birth in 1857. The United
States entered the field by virtue of the Pennsylvania discoveries
in 1859, and the original industry has attained enormous proportions
through later discoveries in such scattered portions of our country as
California, Oklahoma, Wyoming and Texas. Italy was the third entrant in
the field of organized production in 1860, but her industry has never
assumed large proportions. Other countries became producers in the
following order: Canada, Russia, Galicia (then Austrian, now Polish),
Japan, Germany, India (Burma), Dutch East Indies, Peru and Mexico.
The Mexican industry dates back only to 1907 and that country is now
recognized as one of the world’s greatest fields.
In the United States when we speak of benzine, gasoline and naphtha
we allude to the more volatile distillates of petroleum. Lamp oil,
as it is called in England, and kerosene or coal oil, as it is known
in America, constitutes another product. While petroleum refining is
conducted primarily for the production of motor fuel, illuminating oil,
lubricants, wax, gas oil, and fuel oil, of various grades, there are a
host of specialty products obtained from petroleum which go into use
in almost every phase of human activity. These include pharmaceutical
preparations for internal and external use, in the form of medicinal
oils, ointments, salves, and soaps; cements, including binders for
briquetted fuels, water-proofing and saturating agents; special
solvents, used to some extent in all chemical laboratories; and an
imposing list of rare chemicals, such as higher alcohols of the nature
of fusel-oil, and a large variety of organic sulphur compounds.
The word “naphtha” comes from Russia, where it is applied to all crude
petroleum, and was supposedly derived from the Persian, nafata, to
exude. Early Roman writers like Strabo and Pliny, who were acquainted
with the burning and lighting properties of the surface oil deposits
known to the ancients, spoke of it as bitumen and liquidum candidum.
And other terms in Roman and Greek literature obviously signify the
same substance.
Additional designations are: Ropa, ropianka, (Galician Polish) pacura
(Roumanian), Huile de naphte and pétrole brut (French); erdoel, rohoel,
rohnaphtha (German); yenan (Burmese); sekinoyn (Japanese) shi-yu
(Chinese); chapapote (Mexican).
There are also a large number of names for such petroleum products as
paraffine, or mineral wax, of which the Spanish brea is an example; and
for asphalt, which is really petroleum in a dense form.
Surface indications of petroleum and natural gas are frequent and
diversified. The most common is in the nature of seepages, which are
generally found in what are geologically highly disturbed areas,
underlain with petroleum deposits. These seepages most frequently occur
where the oil-containing formations have been folded and exposed on
the surface, either when the folding took place or subsequently through
the cutting of water courses. From these formations the oil seeps out
and is shown as a coating on the streams or, in case the quantity is
great or the oil very heavy, it is shown as asphalt deposits, of which
there are many in Mexico, and of which the best known are the pitch
lakes in Trinidad and Venezuela.
It is a common occurrence in oil fields, more particularly those in the
younger geological formations, to find mud volcanoes, probably caused
by the escape of gas, bringing with it some water, which reaches the
surface as mud. These mud volcanoes vary from a foot or two to several
hundred feet in height in different localities and frequently cover an
area of several acres.
Another evidence of petroleum is found in Galicia in the form of
ozocerite, which is in many ways similar to paraffin, but has some
distinctive characteristics. This ozocerite is found on the surface
or in mines. It exists in nature frequently in the form of lumps of
several pounds of weight and more commonly impregnating the shale from
which it is removed by boiling and removed as a scum on the boiling
water.
[Illustration: A temporary oil reservoir in Oklahoma. When petroleum is
produced in advance of the erection of tanks it is held by earthen dams]
Petroleum is found in different parts of the world and even in
different formations in the same locality with widely different
properties and composition. In some cases the oil is found almost white
and varies through all the shades of amber and brown to black. It is
found as highly liquid as gasoline and with a viscosity such that it
will hardly run away from the hole--almost as viscous as the asphalt
used for pavements.
It is also interesting to note that the crude oil from different
localities, and even from different formations in the same locality,
not only varies greatly in its own properties, but the manufactured
products derived from different grades have very different properties
as well. From some crude oils special lubricating oils can be made
which cannot be manufactured from other oils. The same is true of
the paraffins derived from different oils, some, for example, being
especially desirable for one purpose while paraffin derived from
another crude is more suitable for another purpose, due to its
different properties and action under treatment. Thus, the refined oils
from different crudes show a great variety, some lamp oils possessing
much greater illuminating power than that derived from other crudes
and this not due to the method of manufacture but to the actual
difference in the properties of the refined oil derived from the
different crudes.
In Roumania and Russia the wells produce enormous quantities of sand
with the oil, particularly when they first start flowing. The Roumanian
wells frequently start flowing sand as fine as flour and more like the
dust of a country road. This sand may hardly smell of oil at first
and at this stage it covers the ground like a volcanic ash, sometimes
breaking in the roofs of neighbouring houses.
In the course of a few days the sand begins to show more oil but piles
up around the mouth of the well, giving it the appearance of a small
volcano. As the quantity of oil increases it reaches a stage where
the oil and sand will flow away from the well together and the oil
is settled out in dams before being pumped to the tanks. Later, the
percentage of sand becomes less until it is almost negligible.
The action of the sharp sand is similar to that of a sand blast,
necessitating much ingenuity in changing the pipes and valves for
handling the well while it is flowing.
The diversity that is characteristic of petroleum in its geological and
geographical distribution, and in its adaptability to the needs of
humanity, is also to be found in the nature of the crude oil deposits.
It differs in colour, density and other qualities in almost every
field. In America, with which this book chiefly deals, three distinct
basic types are recognized; the mixed base (paraffine and asphalt in
combination) found in Ohio, Oklahoma and other States; the paraffine
base, which is characteristic of the paler crudes of Pennsylvania and
West Virginia; and the asphalt base common to the fields of California
and Texas. The special qualities of the crude fix in a large measure,
the character of the products each yields when subjected to refining
and manufacturing processes.
CHAPTER III
DAWN OF AMERICA’S PETROLEUM INDUSTRY
The words of Washington show that long before the actual birth of
the petroleum industry in the United States, discerning minds were
at work on the best means of turning the bituminous or petrolific
deposits of this continent to practical commercial uses. In passing
it may be said of Washington that he was the father of his country
in a wider sense than that of having been the victorious general who
made the Republic possible, and its first executive head. He was its
earliest influential prophet of the power that was to be born of the
unlimited natural resources of what was then the “hinterland” of the
original commonwealth. During the first five decades of the nineteenth
century there were a considerable number of Americans, less eminent
than he--explorers, scientists and business men of imagination who
looked to petroleum as a potential resource of national wealth. And
speculations of this kind were not confined to the United States.
In Great Britain and other countries processes were patented for the
refining of mineral oils. The main purpose in view was the development
of a substitute for sperm oils in anticipation of the decline of the
whaling industry, which had become the main source of illuminants and
lubricants. In America, also, petroleum had its recognized medicinal
uses, the traditions of which had been acquired from the Indians.
Thus, in the thirties, “Seneca Oil” produced at Lake Seneca, New York;
and “American Medicinal Oil,” a Kentucky preparation, were familiar
household remedies, especially as embrocations for burns, sores and
rheumatic affections.
The casual use of petroleum as a basis for proprietary medicines had,
as will be seen, an interesting bearing on the future development of
the industry; but the great factor which led to the production and
utilization of petroleum on a large scale was a natural phenomenon
already alluded to--its alliance with salt or brine deposits. Had not
the growing American population been compelled to secure adequate
quantities of salt by boring and establishing brine wells, it is
possible that the Pennsylvania oil discoveries, with which the
real history of the modern petroleum industry begins, might have
been indefinitely delayed. During the first half of the nineteenth
century five different states had salt industries based on the boring
process--Pennsylvania, Ohio, West Virginia, Kentucky and Tennessee. In
connection with most of these wells petroleum occasionally appeared,
usually to the annoyance and embarrassment of the operators. In the
light of future events it is interesting to note that sometimes the
presence of the dark and evil-smelling liquid led to the abandonment
and condemnation of a salt property. Nevertheless, it was the machinery
devised for the purpose of boring for brine that enabled men like Drake
and other petroleum pioneers to achieve their revolutionary discoveries.
The first American salt well of which there is any official record was
begun in 1806 and completed in January, 1808, on the Great Kanawha
River in what is now West Virginia. Charlestown, Va., was then the
nearest town, and in the vicinity of this brine well the first burning
gas spring had been discovered in 1773. At Tarentum, on the Allegheny
River, Pennsylvania, salt wells were started in 1810 which also yielded
petroleum in considerable quantities, and such pioneers as Col.
Ferris and Samuel M. Kier endeavoured later to turn this by-product
to commercial account. The first flowing oil well was drilled
unintentionally in 1818 at the mouth of Troublesome Creek, on the Big
South Fork of the Cumberland River, twenty-eight miles south-east of
Monticello, Va., by one Martin Beatty, who was seeking brine. “The
Devil’s Tar” as he called it, was allowed to flow into the Cumberland
River and covered its surface for a distance of thirty-five miles.
The oil became ignited and an enormous conflagration ensued, which
destroyed trees along the banks of the river, and also the salt works.
What would to-day be regarded as a piece of stupendous good fortune was
then accounted a disaster; though this particular well later supplied
the chief ingredient for “American Medical Oil” a remunerative compound
bottled at Burkeville, Kentucky.
The most enterprising man in utilizing this unwelcome by-product of
his salt wells was Samuel M. Kier. Originally a chemist and druggist,
he resolved in the later forties to ascertain its uses both as a
medicine and as an illuminant. Experiments at distillation to secure
a burning fluid for lighting purposes were a success, and his product
attained some vogue in rivalry to a kerosene which was being extracted
from oil shales in the province of New Brunswick, Canada. But Mr.
Kier’s chief business was that of the sale of petroleum for medicinal
purposes--a compound he named “Kier’s Rock Oil.” He advertised it by
imitations of an American greenback, which bore a vignette showing the
plant at Tarentum with the derricks used in boring and pumping the
brine wells--for it must be remembered that Kier was primarily a salt
merchant who treated petroleum as a side-issue.
This imitation greenback was destined to influence the course of
history. A prominent New Haven business man of the day was Mr.
George H. Bissell, who had become interested in the possibilities of
petroleum through his acquaintanceship with Prof. Crosby of Dartmouth
College. The latter had received from a physician at Titusville, Pa.,
a historical city in connection with the coming industry, a bottle of
petroleum, sent as a curiosity. Bissell was so interested that he,
in company with friends, purchased for $5,000 a tract of one hundred
acres at Titusville, with an oil spring on it. A company was founded,
known as the Pennsylvania Rock Oil Company, with a nominal capital
of $500,000 and a tentative start made at collecting the surface
oil by digging and trenching. Prof. B. Silliman, of New Haven, made
a favourable report on the fluid as an illuminant but the cost of
production rendered the project commercially impracticable. Mr. Bissell
was, therefore, left with the Titusville property on his hands. The
story runs that one day in the summer of 1857 while in New York he
saw in the window of a Broadway drug store one of Kier’s imitation
greenbacks, showing the picture of the derricks at Tarentum, Pa. The
idea suddenly came to him of developing the Titusville property just as
salt properties were developed by boring and pumping. Though short of
capital, he set about obtaining backing for the attempt, and the final
outcome was that a small syndicate was formed in New Haven, Conn., to
work the Titusville oil lands. This syndicate engaged Edwin Laurencine
Drake, the most historic figure in connection with the beginning of the
American industry, to carry out the work. How he set about his task,
and how he succeeded will be the subject of a subsequent chapter.
It is necessary to point out that unless the foundations had already
been laid for refining and marketing the crude petroleum, Drake’s
discovery would have been almost as valueless as that in 1818, which
resulted in the conflagration on the Cumberland River. Science,
however, had been grappling with the problem of extracting from
the crude a safe burning oil and eliminating the offensive odour.
This latter was a very important consideration, and for years after
petroleum began to assume the proportions of a large industry it
encountered prejudice on this account. By the later ’fifties so much
progress had been made that the possibilities had been created not
merely for a large domestic trade in oil, but also for the development
of an export market. Drake’s discoveries at Titusville in August, 1859,
may, therefore, be said to have come at the psychological moment.
CHAPTER IV
FOUNDER OF THE PETROLEUM INDUSTRY
On October 4, 1901, a magnificent monument was unveiled at Woodlawn
Cemetery, Titusville, Pa., to the memory of Edwin Laurencine Drake at
the expense of the late Henry H. Rogers, of the Standard Oil Company,
himself a pioneer of the Pennsylvania oil fields in the boom days of
the sixties. The inscription on the monument not only describes Drake
as the “Founder of the Petroleum Industry” but gives an explicit review
of what his services meant, not only to the people of the United States
but to mankind at large. It runs as follows:-
Col. E. L. Drake, born at Greenville, N. Y., March 29, 1819; died at
Bethlehem, Pennsylvania, November 8, 1884, Founder of the Petroleum
Industry, The friend of man.
Called by circumstances to the solution of a great mining problem,
he triumphantly vindicated American skill and near this spot laid
the foundation of an industry that has enriched the State, benefited
mankind, stimulated mechanic arts, enlarged the pharmacopoeia,
and has attained world wide proportions. He sought for himself not
wealth nor social distinction. Content to let others follow where he
had led, at the threshold of his fame he retired to end his days in
quieter pursuits.
His highest ambition the successful accomplishment of his task, his
noble victory the conquest of the rock, bequeathing to posterity the
fruits of his labour and his industry. His last days oppressed by
ills--To want, no stranger--He died in obscurity.
This monument is erected by Henry Huttleson Rogers, in grateful
recognition and remembrance.
Drake was in his fortieth year when, through friends in New Haven, he
was appointed director and superintendent of the Titusville properties
of the Pennsylvania Rock Oil Company and the Seneca Oil Company. As
a youth he had led a wandering life and his education was such as he
could pick up at odd moments. He had worked as a commercial traveller
and hotel clerk, and was a railroad conductor at the time he took
service with the Bissell syndicate, which had decided to experiment in
drilling for oil. He himself was so thorough a believer in the project
that he put all his small savings into it. The salary at which he was
engaged was a thousand dollars a year, which signified considerably
more in the later fifties than it does to-day. On reaching Titusville
early in 1859 he soon realized that he was handicapped by lack of
practical knowledge of drilling processes, and therefore sent for one
William Smith, a man of long experience as a driller of brine wells,
who came with his two sons to assist in the work. The method adopted
was that of forcing cast iron pipe through the soil at a spot near the
“old oil spring,”--well known to the farmers of the locality.
Operations were started in February and after many tedious delays rock
was struck at a depth of thirty-six feet. If they were to go farther
steam power was necessary, and by August 1st, this had been secured.
In the meantime the drilling operations had been the joke of the
countryside, but Drake literally could not afford to fail. With steam
power it was found possible to drill through the rock at the rate of
about three feet a day until toward the end of the month oil was struck
at a depth of sixty-nine and a half feet. No record was kept of the
exact date, though the New York Tribune a few weeks later fixed it at
August 23rd. The well was not a free flowing one, but yielded to the
pumping process.
The discovery, momentous as it was, did not create much excitement
except in the immediate locality. John Brown’s raid, at Harper’s Ferry,
and the possibility of the Civil War, which was to ensue within less
than two years, were the chief topics in the public mind of America.
Shortly after the discovery a fire wiped out the existing plant but
kindly neighbours, now satisfied that the experiment was no failure,
assisted Drake, and when the well was again set in working order its
flow was more promising than ever. In the view of experts, Drake’s
achievement as a pioneer may be regarded as limited to one great feat,
the drilling with steam power of the first cased oil well. He ceased
to be an active factor in the development of the newborn industry
with the drilling of this first well. Following his inspiration,
others organized it and in the course of a few years a great army of
industrial workers, merchants, financiers and distributors of all
classes became associated with petroleum and placed it in a foremost
position among the world’s industries. Drake himself finally left
the oil regions in 1863 with about $15,000 savings, which he soon
lost in other forms of speculation. In the stupendous events of the
national conflict he was almost forgotten. In 1869, ten years after
his discovery, the older oil men who had known him learned that
he was sick and penniless, with a wife and family at the point of
starvation. They raised among themselves a purse of $5,000 and later
the State Legislature was prevailed upon to grant him an annual pension
of $1,500, which maintained him in comparative comfort at his home in
Bethlehem, Pennsylvania, until his death in 1884.
The scale on which petroleum production increased during the period
immediately following Drake’s discovery is indicated by the fact that
though the total American production in 1859 was 2000 barrels, in 1869
it had risen to 4,215,000 barrels. It must be remembered that those
who started the oil industry in the United States were in almost every
instance poor men who attained wealth with its development. As the
news of the new industry and its possibilities spread, more and more
wells were sunk along Oil Creek and the Allegheny River; farm lands
containing oil prospects began to command enormous sums, methods of
extracting the crude petroleum from the depths of the earth improved
and gradually American inventive genius began to be applied to the
industry with enormously fruitful results. The Civil War undoubtedly
interrupted development at the outset, and the new oil fields gave
many a brave soldier to the Northern cause.
The really sensational developments in connection with the oil fields
began as the Civil War was drawing to a close. Then they commenced to
assume the romantic and fevered aspect of California in the days of
the early gold rush a decade or more previous. Unfortunately, the oil
fields possessed no Bret Harte, as did California, to write the epic
of good-fortune and ill-fortune. The story of the City of Pithole, not
far from Titusville, is, however, as romantic as anything in the annals
of gold discovery. It sprang to full life in 1865, a mushroom city
with all the vices and excitements of frontier life. Fabulous tales
have been told of its population, which probably never exceeded 20,000
but 20,000 men and women all excited by the fever of speculation and
money-getting gave life in Pithole a gusto not equalled at that time on
any other part of the continent. Gamblers and adventurers flocked there
in company with many legitimate oil men. In the speculation that ensued
fortunes were made and lost daily. Then, after a year or two, the wells
which had shown such riches began to decline and Pithole was quickly
deserted. A few years later a visitor found only two inhabited
houses in a city that had for a time been the home of thousands of
restless mortals. Later still some of the abandoned wells were made
productive by new processes, but the glory of the mushroom city had
vanished forever. In other parts of this continent there have been oil
crazes, but nothing approaching the story of Pithole. And it is famous
for another reason; it was the scene of the establishment of one of the
earliest pipe-lines, a system which has been an invaluable auxiliary to
the growth of the American industry.
[Illustration: Early activity; the famous Red Hot Oil Field near
Shamburg, Pa., in 1870]
[Illustration: Where Pithole stood--the main street of a Pennsylvania
oil town, which had a population of 20,000 in 1870, as it looks to-day]
The success of the early oil men of the United States not only in
grappling with the problem of crude production, but with those of
conservation, transportation, refining and the development of new uses
for the various elements of the treated crude, set an example to all
the world.
From 1870 onward, though Pennsylvania continued to lead, American
methods were copied in many other countries. The foundations of
the trade which have made petroleum the most international of all
commercial undertakings were at that time laid; and this brings us to a
survey of the industry as a world interest.
CHAPTER V
PETROLEUM AS A WORLD INDUSTRY
The standardization of the petroleum industry which began in America
during the later sixties naturally excited emulation. Just previous
to the Pennsylvania discoveries of 1859 something like a systematic
industry had been established in connection with the Roumanian
deposits, sixty years later destined to be a military objective of
vital importance in the World War. But the actual sinking of oil
wells by the boring process was a later development in Europe. As was
natural, the first foreign country to profit by Drake’s example was
our neighbour Canada, which has long been an oil producing country,
and to a still greater extent, thanks to friendly American initiative,
an oil-refining country. Before speaking of the extent of the American
branch of the industry in the twentieth century it is worth while
briefly to scan the oil fields of other lands.
The most important are those of Russia, particularly the deposits
of Baku, which, as has been related, figured in ancient history and
legend. The unsettled condition of Russia renders an exact statement
of the condition of its oil industry impossible at the present
time, but prior to the war the Russian oil-fields had an output of
approximately 72,000,000 barrels annually, or 15 per cent. of the then
world’s production. During the past fifty years the Russian fields have
produced at least 1,650,000,000 barrels; but, though this aggregate
seems large it represents less than half of the petroleum production of
the United States during the same period. It is believed, however, that
Russia possesses great wealth in undeveloped oil fields, particularly
in the south-western Caucasus. As yet the main part of the production
of this vast country has come from an area of about 4,000 acres in
the Baku region, near the Caspian Sea. Prior to 1870 Russia’s output
of petroleum came from surface pits, dug by hand, rarely more than 50
feet deep. Boring by steam power after the American method was first
systematically introduced by Robert Nobel, the famous scientist and
expert in explosives, who went to Baku in 1873. Even in 1893 the number
of bored wells in Russia was less than 500, but at the last census in
1911 wells of this type had increased to over 3,000. The Nobel brothers
also assisted Russian oil production by introducing improved methods of
transporting the crude oil, based on American experience, as well as
improving refining processes through their own ingenuity. Many other
companies operating in Russia prior to the Bolshevist régime have
showed some disposition to follow their example, but the progressive
spirit that has actuated the oil pioneers of North America has been
lacking. One great obstacle to development which existed long before
the Russian revolution of 1917 was the intractable character of the
Russian workmen, encouraged, it must be admitted, by the reactionary
spirit of the Russian capitalist. In contests between capital and
labour much loss was sustained through incendiarism, and there are
recorded instances where in a single night dozens of productive
oil-wells, which had taken years to “bring in,” owing to the special
geological difficulties of the Russian fields, were destroyed. Such
catastrophes of course represent economic loss to the whole people;
and Americans have good reason to congratulate themselves that in the
oil fields of the United States labour conditions have been such that
conflicts have been almost unknown.
Roumania, geographically adjacent to Russia, was prior to its
participation in the great war, producing about 11,000,000 barrels,
or approximately 1,600,000 tons, of crude petroleum annually. The
beginnings of her industry, already alluded to, were based on hand dug
wells, three feet square and walled with horizontal oak planks, into
which workmen would descend and bring up the oil in wooden buckets or
bags of leather. Here, too, the oil area is comparatively small, and it
was not until twenty years ago that mechanical equipment designed on
the American model was introduced by foreign capitalists. Men trained
in the oil-fields of this continent found employment there, although,
when at the end of 1916 the exigencies of war compelled the Allies
to adopt the policy of destroying the Roumanian wells, in order that
the Central Empires should not obtain much needed supplies of oil, it
was by English instructions and officers that the melancholy task was
accomplished. Roumania has a great petroleum storage port at Constanza,
fed by a trunk pipe-line of American model connecting it with the
oil-fields.
Galicia or Austrian Poland, as it was once called, lies in the same
geographical zone as Roumania, and possesses an oil area 200 miles
in length and varying from 40 to 60 miles in width, although 90%
of its production comes from the Boryslaw field. This field, which
was the chief source of supply for the Central Empires during the
war, necessarily suffered much in the conflict but ten years ago was
producing about 1,900,000 tons of crude annually. It is now on the way
to restoration. The development of the Galician industry on a large
scale was directly due to the introduction of modern drilling methods
in 1882. The petroleum wealth of that country lies very deep and wells
of a depth of 4,000 feet are common.
Though the chief customer of the Galician fields for a considerable
period, Germany also made efforts at developing a petroleum industry
of her own, but, as in the case of Italy, her oil-fields, though not
entirely negligible, do not bulk large in the statistics.
It is clear that Europe not only owes much to American ideas for her
native developments but is also dependent on other continents and to
sea-borne cargoes of oil for supplies adequate to her needs. This is
particularly true of Great Britain and France, whose statesmen have
emphatically expressed their gratitude for the indispensable aid in the
prosecution of the war provided by the leaders of the American oil
industry, who organized a steady supply on an enormous scale.
The early efforts of British scientists to develop home supplies of
oil from shales and other forms of oil bearing rock were productive
of benefits through improved methods of refining, rather than by the
development of a really important home industry. Thus the United States
and all oil-producing countries owe a debt of gratitude to Dr. James
Young of Renfrewshire, Scotland, whose improvements in the processes
of manufacturing paraffine from shale oil, during the early part of
the nineteenth century, were of infinite value in developing the uses
of petroleum after its presence in large quantities was proven by the
pioneers of Pennsylvania. Great Britain, realizing her own need, also
helped the world’s oil industry when she built the first oil-tank
steamers on the River Tyne.
Though Great Britain, with the exception of a small well recently
drilled, has no deposits of crude so far as known, she is at the
present time experimenting with processes to distil petroleum from oil
shales, coal, cannel coals, ironstones, lignite and peat; but more
important still, she is encouraging the oil industry in various parts
of her great Empire. Under the British flag, either as autonomous
parts of that Empire or as countries which she holds a mandate to
govern, are the important oil-fields in Burma, Persia, Egypt, Trinidad
and Assam.
The Burma fields have of late years been developed in accordance with
modern practice, and the producing area, long a subject of quaint
legend, much extended, so that according to recent estimates the annual
crude production from this source is upwards of one million tons. The
Persian oil fields will be a factor to be reckoned with in future, and
an oil port fed by a pipe line on the American model already exists
at Abadan on the Persian Gulf. Egypt has also a future as a petroleum
producing country, for within the past ten years not only “gushers”
but wells which give evidence of steady flowing qualities have been
discovered, and plans for development are already well advanced.
Crossing to this hemisphere the name of the British colony Trinidad at
once suggests itself. Its famous lake of pitch has long been a source
of supply for that dense form of petroleum which is known as asphalt;
while other deposits of crude yield surprising percentages of more
volatile products like motor spirit.
And while on the subject of petroleum under the British flag, reference
may be made to Canada, although the industry there is very closely
allied with that of the United States. In Eastern Canada, oil has
long been produced in limited quantities, but within recent years
the prospects of great new oil areas in the foothills of the Rocky
mountains and extending almost as far north as the Arctic circle have
led to glowing hopes that may or may not be realized.
A more distant foreign field, which is gaining importance in the eyes
of the world, is that of the Dutch Indies in the Far East. There has
been considerable oil production in Borneo, Java, and Sumatra, in
the development of which the services of American experts have been
enlisted and indeed it may be said that the petroleum industry has
done a great deal to make world-citizens or cosmopolites of many good
Americans.
Japan’s connection with oil is ancient and it has its own industry
at Echigo; but like China, which also worked deposits of oil in
prehistoric days, it is a large importer of American petroleum
products, especially illuminating oils. The American travelling in
remote parts of Asia is often reminded of home on seeing the tin
containers that have crossed the Pacific from this country.
Returning to this continent we find that the Mexican oil fields have
come into prominence more rapidly than those in any other land, for
there the industry has existed only since 1907. The Mexican pools now
rank after the United States as the second largest producing area
in the world. Most of the latter-day sensations in the matter of
petroleum have been provided by Mexico, where both American and British
capitalists have acquired large interests. In 1908 the “Dos Bocas”
gusher in Northern Vera Cruz was drilled. At a depth of 1,800 feet gas
was encountered which blew out the drilling apparatus and presently,
through a fissure which developed under the boiler room of the drilling
plant, an eight-inch column of oil was spouting hundreds of feet into
the air. Becoming ignited it burned for fifty-eight days, producing a
column of flame a thousand feet in height and fifty feet in diameter.
The well then began to produce hot salt water and is still producing
probably a million barrels of salt water per day. In 1910 another great
gusher, the “Potrero del Llano” was struck but fire was fortunately
averted, and the daily flow was estimated at 125,000 barrels.
Production on so magnificent a scale has never been known in any other
part of the world. Before this well went to salt water, in 1919, it had
produced more than 100,000,000 barrels of oil.
Another Latin American republic which has developed a very important
oil industry in recent years is Peru, and it is supposed that other
parts of South America will yield their riches in the future.
Despite the petroleum wealth of other lands, however, the United States
far outdistances them, not only in the output of crude petroleum but
in the manifold products extracted from it. The magnitude of the
American industry may be gleaned from the fact that in the past year
(1919) United States wells produced about 377,000,000 barrels, or over
65 per cent. of the world’s supply. The lead of Pennsylvania as the
chief oil-producing state and the pivotal point of the world’s supply
continued for many years, but has long since been superseded. For a
number of years this state provided 98 per cent. of the oil production
of this country. In 1891 the total production of Pennsylvania oil was
35,839,777 barrels, and in 1897 35,165,990 barrels, so that the maximum
was reached in 1891. The greatest daily average production was during
the month of November, 1891, when it reached 135,676 barrels. This
pioneer territory suffered a gradual decline, and at the present time
it is estimated that Pennsylvania produces about five per cent. of
the American supply. Nevertheless, the output is considerably greater
than in the boom days of the sixties when the phrase “Struck Ile”
became an accepted synonym for the sudden acquirement of riches. As
the importance of the industry grew, oil prospectors busied themselves
in every part of the republic in probing for this source of wealth,
and are still indefatigable after sixty years. What is known as the
Mid-Continent fields, which includes such States as Kansas, Oklahoma
and Wyoming, have developed enormous potentialities, while on the
other side of the Rockies and the Sierras the California fields some
years ago became one of the great sources of the world’s supply. The
California development is an example of the rapidity with which an oil
field can become productive on an enormous scale under modern methods.
The records of achievement there show that it is possible, with the
modern system of rotary drilling, to get down nearly 4,000 feet below
the surface within the period of a month, depending on the nature of
the formations, and the experience in that state demonstrated a finer
quality of crude at such depths than could be produced from deposits
nearer to the surface. California too furnishes at certain points an
illustration of the mechanical ingenuity of the modern oil worker;
for there are to be seen oil wells sunk in the sea at a considerable
distance from the shore, the encroachment of sea-water being overcome
by carrying the casing above high-water mark.
Until a comparatively recent period the California fields held the
record for production, but in 1918 the young State of Oklahoma forged
to the front, with a production of more than 100,000,000 barrels in
one year, and a large undeveloped territory which there is every
reason to believe will prove rich in petroleum. Tulsa is the centre
of the Oklahoma industry and is an example of a town which has grown
suddenly from a small agricultural settlement to a thriving centre of
metropolitan aspect as a result of the oil industry.
There are those who believe that Texas will very shortly attain
eminence equal to that of both California and Oklahoma as a petroleum
region. The gulf fields came into prominence about the dawn of the
present century, and have perhaps witnessed more booms than other
sections of this continent. Speculative eras in new fields which
have been brought in by “wildcat” drilling, which term should not
be confused with wildcat mining speculation, are however regarded
by sane and conservative oil men as harmful rather than helpful to
the petroleum industry. They invariably produce false inflation and
subsequent depression; and involve in reproach one of the greatest
economic blessings bestowed upon humanity.
Thus far we have surveyed petroleum in its many general aspects and
the remainder of this treatise will be devoted to a description of its
production, subsequent treatment and manifold application to the needs
of present day commerce and civilization.
CHAPTER VI
LOCATING THE OIL WELL
When Edwin Laurencine Drake went to Titusville, in 1859 the first
question he asked of the natives was the location of “the oil spring”
known to the Indians and the farmers who succeeded them. The modern oil
seeker no longer concerns himself with surface indications.
In truth there is little or nothing in the contour of the latter-day
oil-fields to suggest oil to the eyes of the uninitiated. But
geologists first located probable oil bearing formations and have made
calculations of the formations two or three thousand feet below and
the drilling sites are located in accordance with them. Roughly, the
theory upon which such operations are based is that the sub-surface
rocks undulate, and that the presence of oil is most assured at the
highest points of the undulations. By measuring dips at given points
they calculate the distance in a certain direction to what they deem
the most favourable site and surveyors proceed to fix and designate
it. In cases, not infrequent when the lease which conveys the right of
drilling is limited in area, it is the business of the surveyor to see
that the site chosen is well within the boundaries of the plot acquired
for drilling purposes.
On the subject of present-day methods of location a recent contributor
to “The Lamp,” an American oil journal, provides much interesting data.
Oil geology, he points out, is not an exact science but it enables one
to focus exact information upon the creation of a theory regarding the
probable structure of an untested area. In Oklahoma, for instance,
geological investigations made within the past five years resulted in
the discovery of many of the new pools. All drilling is in some sense
speculative, or to use the oil man’s phrase, a “wild cat,” at the
outset; but in Oklahoma it was found that the proportion of dry holes
on territory recommended by the geologists was less than one-third
of the failures that resulted before that science was invoked. The
speculative nature of the oil business in its initial stages is
indicated by the fact that less than one per cent. of the area of the
oil region of Pennsylvania is producing territory, although it has
probably been more thoroughly drilled than any field in the world. The
limited extent of even the permanently productive fields is one of the
phenomena of petroleum. More than one-half of the production of the
State of Wyoming is found within an area of not more than six square
miles. The famous Tepetate-Casiano pool of Mexico, which produced more
than seventy-five million barrels of oil from 1910 to 1918, is about
one-half mile wide and three miles long. When we compare the acreage of
oil areas with that of the continent, the analogy of the needle in the
haystack at once suggests itself.
The geologist draws the certain deduction that oil migrates through
some porous formation from its original source and concentrates itself
in detached “pools” of comparatively small dimensions. It is the oil
pioneer’s business to find these pools. Again, there may be several
successive deposits of what are known as “oil sands,” separated from
each other by hundreds of feet of barren formation. The depth of a
well in itself means nothing. The operator must know in what strata he
expects to find the oil. If these beds prove dry, then he abandons the
test, regardless of whether the drilling has reached 1,000 or 4,000
feet.
Past experience has taught the geologist that oil-bearing formations
manifest themselves by certain surface indications, such as gas
springs, and surface seepages of oil or asphalt. In an untested field
the expert studies the character of the successive formations along
such outcroppings. In any mountainous region earthcrust upheavals
during past ages have exposed a series of formations, similar to those
which lie deep below the surface of the plains. Thus it is possible to
predict with a fair degree of accuracy just what the formations will
be for a considerable depth from geological indications. Geologists
have also learned to recognize certain types of structures favourable
to the accumulation of oil pools, known as anticlines, synclines, salt
domes, monoclines and so forth. Thus it is sometimes possible to make
in advance of drilling a surprisingly accurate forecast of what these
operations will reveal.
Because for the most part oil fields exist in rather sparsely populated
districts, remote from centres of commercial and industrial activity,
the general reader has probably very little knowledge of the unceasing
efforts that are being made in many parts of this country to maintain
the supply of crude oil at an adequate level through new discoveries.
The spirit of enterprise and initiative is even more alive to-day
than it was in the time of Drake and the pioneers who followed him
in the Pennsylvania field. The hopeful speculative spirit is as ever
necessary; the capital fulfils an ever-growing function in this source
of prosperity and employment for the community at large.
In the oil industry any well drilled outside the narrow limits of a
producing “pool” is regarded as a “wild cat” test. The element of
a gamble is inevitably present, but has been materially reduced by
science. An old established company in an important field is constantly
adding to its land holdings in advance of the trend of development, and
out of the profits from its developed productions sets aside a certain
amount to expend for speculative ventures, to protect its investment
in pipe lines, refineries, etc. The company also continues to drill in
the vicinity of a producing pool until it is entirely surrounded by dry
holes, and its limits demonstrated. Consequently, in an established oil
field development work and prospecting are one and the same thing.
The matter of opening up new fields in regions where there have been
no previous wells to serve as a guide presents a very different phase
of speculative enterprise. The pioneer producer must make a very
substantial financial investment for roads and equipment. He must
have the courage and grit to continue his efforts, even though he at
the outset obtains negative and unsatisfactory results; sometimes
for a period of years. Nor do his troubles end when he has made an
important discovery, for then land hitherto almost valueless becomes
much sought after by competitors, and legal complications involving
titles and taxes are not slow to develop. If he has been fortunate
enough to open up a real oil-field his exploration work must be of
sufficiently broad scope to determine the location of the principal
belt of favourable territory, the approximate depth and character of
the oil bearing formations, and the possibilities of permanence in the
wells themselves. The quality of the crude petroleum “mined” may be
less important than the quantity.
Though it is obvious that the obstacles that confront the pioneer
operator are not insurmountable, the conditions described show why
the history of oil discovery is bestrewn with failures. This has been
particularly true of the Latin American fields of Venezuela, Colombia,
Argentina and Costa Rica, and of many Asiatic attempts. Even in the
great gusher field of Mexico the first tests were drilled in 1869, yet
it was not until 1902 that any important production indicative of the
great future of that region resulted. More than 50 wells drilled in a
space of 33 years were failures.
It is, therefore, apparent that detailed, scientific information
on which to proceed is almost as important in the initial steps as
strong financial backing, and efficient organization. The methods
used in the early days of the Appalachian fields of Pennsylvania
depended absolutely on “fool’s luck” and steadfast optimism. As this
field extended down into West Virginia and Kentucky, and over into
Ohio, the ever-increasing number of failures caused the operators to
cast about for some sort of a working formula in choosing locations.
From the crude efforts of these early investigators the fundamentals
of modern oil-geology were developed. The old-fashioned operators’
creed contained this axiom: “If you wild-cat enough in an oil field,
you will make money in the long run.” But this no longer is a safe
working motto. The steadily increased cost of drilling has made it of
paramount importance to make careful selection beforehand. The modern
oil operator realizes that Mother Earth provides many clues and hints
which he cannot afford to disregard. The oil geologist interprets the
surface indications and such other information relating to a given area
as is available; and is ever on guard against the over-optimism of the
promoter.
CHAPTER VII
DRILLING THE OIL WELL
Methods of well drilling differ in various regions in accordance with
the special problems to be encountered and perhaps no other industry
furnishes more examples of mechanical ingenuity in the solution of
physical difficulties. Drake went about the business of drilling
the first well by using the traditional methods of boring for salt.
Improvement was inevitable, however, and the Canadian wells of Western
Ontario, which came into existence almost contemporaneously with those
of Pennsylvania, were fruitful of inventions which have influenced
drilling practices in many parts of the world. If we go back to the
origins of oil and salt drilling mechanisms we find ourselves in China
centuries before the Christian era. The Chinese used an auger attached
to a pole that was held in a vertical position from a cross pole
supported on a post. The end of the cross pole was fastened to a lever
while a driller guided the cable to which an auger or boring tool was
attached. Several coolies jumped from a platform on to the reverse side
of the board, so that the tool would be jerked up and would plunge
down and thus deepen the hole with each stroke. The deeper the hole
became, the more coolies required for the task of “kicking down.”
Jumpers were not a part of the staff of an oil-drilling organization
in America in the early days but foot power was sometimes employed for
the same purpose of driving the drilling tools into the ground. To-day
labour-saving machinery plays as great a part in well drilling as in
other branches of industry.
Let us suppose then that an oil company, or an individual with the
requisite capital at his back, has advanced through the preliminaries
which must precede drilling operations; the geologists have made a
favourable declaration as to the prospective site; the leases and
royalties have been arranged and the title is secure. When it is
decided to start drilling, roads are built, water lines laid, and the
lumber, casing machinery and other equipment are hauled to the location
(often under very primitive and difficult conditions). The apparatus
most commonly installed under these circumstances is the Pennsylvania
cable system, which consists of a standard derrick or rig, built
of wood or steel, about eighty feet in height, having a twenty-foot
base and a four-foot top. The strength of the derrick is conditioned
entirely by the size and depth of the well the operator wishes to
drill, for nowadays nothing is left to chance. The size of the hole
necessary in starting a well depends upon the physical formation. If
it is soft, it is necessary to start with a hole of large diameter, to
overcome the disabilities produced by caving. It sometimes happens that
soft formations cave so much that it is necessary to insert several
columns of casing before the required depth is reached. A hole with a
large diameter is also used in deep drilling.
[Illustration: The Drader Well in the Moreni field, Roumania. This well
was producing 20,000 barrels daily when it caught fire]
[Illustration: Burkburnett in northern Texas, showing development since
August, 1918]
The drilling equipment is called by the oil workers a “string of
tools.” It consists of a rope socket, a stem or sinker about thirty
feet long and five inches or more in diameter, depending on the size
of the hole to be drilled, with a bit at the bottom. Attached to a
string of tools is a set of what are known as “jars,” which take their
name from their function of enabling the driller to jar the sinker
loose. Manila or wire cable is wound upon a large reel known as the
“bull wheel” which is placed in the base of the derrick and a section
of this cable passes over a crown pulley at the top of the derrick
and is fastened to the rope socket and “string of tools.” The drilling
movement is created by a power-driven walking beam which is a heavy
timber working on an axis. This walking beam rocks up and down, with
a stroke of three or four feet; thus the tools are raised and dropped
at regular intervals, their great weight giving them a stroke equal
in force to a steam hammer. The power used is ordinarily steam and
the cable is connected with the walking beam by a temper screw, which
enables the driller to lower the tools and handle them with ease and
accuracy.
Another method of growing importance is the rotary system, perfected
within the present century in the Gulf Coast field of Texas and
Louisiana and which in many sections is coming into common use. Its
special advantage is speed in soft or caving formations. It consists
of a perforated fish-tail bit screwed to a string of drill pipe, which
projects up through the derrick platform and is rotated at the rate
of about two hundred revolutions per minute by a turn-table. The top
or “grip” joint of the pipe is usually made square, or hexagonal,
to supply a good bearing surface for the turn-table. The tools are
suspended by means of a swivel at the top of the grip joint. This
swivel also has a hose connection through which thin mud is pumped down
to the bottom of the hole. The circulation of this mud carries out the
cuttings made by the fish-tail bit, and also serves to plaster up the
side of the hole and thus prevent caving. The column of mud in the
hole exerts a hydrostatic pressure which absolutely prevents quicksand
from running in and causing the hole to collapse. A rotary appliance
has been known to drill two hundred feet or more in twelve hours, but
usually so high a rate of speed is impossible, since the pipe stem has
to be pulled out at frequent intervals and the bit replaced. The fact
that the delicate fish-tail bit grows smaller with wear creates this
necessity.
Another periodical process that must be carried on in the intervals of
drilling is that of lining the hole with casing, in order that water
and caving strata may be cased off before the oil sands are reached.
After a well is operating, the lower part of the casing may rust
through, causing leakage. To meet this difficulty an inner casing is
put in place with a casing shoe, on the outside of which is lead or
other soft material which expands under pressure from above to make a
snug fit. Not infrequently, it is necessary to decrease the size of
the hole with packers in this way four or five times, though it is kept
as large as is practicable all the way down.
When oil is struck it is sometimes suddenly driven to the surface by
imprisoned gas, and another gusher, a comparatively common phenomenon
in Mexico, is recorded. But if this condition does not arise,
tubing and pump are inserted and the oil is drawn to the surface.
Not infrequently, however, the oil sands at the outset do not yield
an adequate flow and in a great number of cases what is known as
“shooting” with nitro-glycerine, an interesting and once dangerous
process, is resorted to. In the early days before oil production had
been reduced to scientific formulas the obtaining of crude was often
attended with serious hazards to life. Ignorance of the properties of
petroleum also created imaginary dangers for the pioneers. In 1860
the people of Western Pennsylvania were thrown into a panic by the
proposal of a stranger, claiming to be a European scientist, to shoot
a white-hot bolt into the bowels of the earth through an iron pipe
driven to a great depth for the purpose. By the ignition of inflammable
gases thought to exist in the great cavities beneath the earth’s crust
the promoter expected to produce a sufficient explosion to lay bare
the subterranean reservoirs of oil. The Pennsylvania populace, instead
of viewing this proposal with the apathy usually accorded to the
first essays of inventive minds, possessed sufficient imagination to
picture the possible results, and were so convinced that the alleged
scientist minimized the possibilities of his project that they selected
a small but determined committee to lynch him. Because he threatened to
undermine not merely the foundations of society but the ground on which
society subsisted, he was taken into custody by the authorities and
solemnly warned to desist.
Less than a year afterward nitro-glycerine was being exploded in large
quantities down deep in the earth to shatter the oil-bearing rock and
make wells flow, without noticeable public or physical disturbance.
Any one who has watched farmers blow up tree stumps with dynamite may
imagine what effect eighty quarts of nitro-glycerine would produce
at the bottom of a deep eight-inch well. The “oil-shooters” are
necessarily men of steady nerve and extreme caution. A shot will vary
from ten quarts to as much as three hundred quarts, as the well to be
treated may seem to require. For this purpose the nitro-glycerine is
contained in tin tubes or shells five feet long and two inches or more
in diameter, pointed at the lower end and having bail handles at the
top. From five to fifteen shells, as the case may be, are lowered into
the hole with extreme delicacy, and then the “go-devil”--a five-pound
pointed shell--is released point downward. Nowadays, it is customary
to use a nitro-glycerine squib wound with a long fuse more often
than a “go-devil,” since the lowering of the cans of explosives may
loosen earth which forms a cushion above the shells. An example of the
presence of mind of a well shooter was provided a few years ago. Just
after the first shell had been lowered, the rope suddenly slackened.
This could only mean that the well had unexpectedly begun to flow and
that in the space of a few seconds the shell containing six quarts of
deadly explosive would be hurled from the well mouth. There was no time
to run and the only thing that could be done this “well shooter” did.
Bracing himself directly over the well he grasped the shell as it came
to the surface, and although the impetus with which it had ascended
threw him across the derrick and dislocated his shoulder, he held it
free from contact and saved the lives of the entire crew.
Under the careful arrangements now made, a well is controlled with no
more loss of oil than the driller thinks necessary to flush out the
dirt and debris caused by the explosion.
The early or flush production of a well is usually of considerably
greater volume than its normal or settled flow after it has been in
operation for a few weeks. This decline in production is often as much
as 50% in the first 30 days. Where wells do not flow naturally, various
devices can be used to stimulate the output. Gas pressure has much to
do with the problem. As a general rule the well of low gas pressure
must be pumped from the beginning. The “gusher” which is the result
of high gas pressure usually recedes rapidly in the matter of flow
and becomes what is known as a “pumper,” the name given to wells when
pumping is resorted to.
The minimum of flow at which a well ceases to be profitable varies
according to location, and is fixed by many conditions of which
transportation and quality are the most important. Thus, in Mexico,
a well yielding only fifty or one hundred barrels per day is usually
abandoned as uncommercial, whereas in Pennsylvania and West Virginia,
where the facilities for handling are better, there are thousands of
old “pumpers” in operation producing a superior grade of oil, many of
which supply only one-fourth of a barrel per day.
The production of the first well drilled on a new location fixes the
policy to be pursued with regard to the rest of the acreage under
lease. After it has been tested and proven to be satisfactory the
remainder of the property is drilled as quickly as possible. If the
field is shallow and the wells are all “pumpers,” a central power
station operated by gas or gasoline is sometimes installed which
may provide the energy for pumping as many as a dozen wells. The
shackle-rods spread out over the field like a spider’s web, and the
rhythmical “chug-chug” is music to the ears of the oil man and also to
the farmer who has leased the oil rights to him--for the song of the
pumping plant symbolizes fat royalties.
It will be clear to the reader that even in the initial process the
production of crude petroleum under modern standardized processes
which eliminate, so far as possible, waste of labour or of product,
involves a considerable capital expenditure. The cost of a well in a
new district, where the depth is likely to be in the neighbourhood
of three thousand feet, may amount to considerably more than $50,000
and a year may pass in the process of drilling. In the case of deep
wells a permanent derrick is built, but in earlier days, for shallower
holes a portable drilling machine was used, and with good fortune oil
was often reached within a short time and the cost kept well within
a margin of $5,000. It will be remembered that in the original Drake
well at Titusville, oil was struck at sixty-nine and a half feet and
that it took seven months to drill the well; a concrete illustration
of the improvement in methods which has transpired in sixty years. But
the days of cheap drilling have passed into the limbo of half-forgotten
things and there is practically no oil production at the present time
which does not represent a very considerable initial outlay.
CHAPTER VIII
COLLECTING AND TRANSPORTING CRUDE: THE PIPE LINE
When a new lease or area proves itself to be commercially productive,
marketing the product becomes the next consideration. In the earliest
stages of recovery and storage of petroleum there were great losses
through lack of facilities, but modern mechanical science has largely
eliminated the appalling waste of early days.
The crude is pumped into small flow tanks, and from there run either to
a pipe line station or to a “tank farm.” The problem of saving the flow
of gushing wells at one time presented serious difficulties; and one
of the most valuable of the early inventions was the clay underground
tank. The petroleum is directed into a sump-hole lined (wherever
possible) with clay, which, because of its close texture, makes an
absolutely leakage proof reservoir. From the sump-hole it is pumped
to the tanks, but this is usually but a temporary shift. When the
gushing process ceases, pumps are installed and direct pipe connection
with the storage tanks is established. The modern pump which lifts
the oil from the oil-bearing strata to the surface is a very powerful
mechanism. One of these will handle a column of oil as high as four
thousand feet, and deliver it into pipes. As has been mentioned in
alluding to the California seacoast fields, the intervening ocean
itself constitutes no obstacle to operations. Not infrequently the
walking beam, used in the drilling, is brought into commission for
pumping purposes. It is rather a cumbersome system but has this
advantage, that it enables the operator to begin production immediately
and realize cash for his output.
In what is known as the field tank, situated adjacent to the derricks
and pumps, the oil operator deposits his daily production, which is
later pumped to the “tank farm” for shipment. The capacity of a tank
is known to a gallon. So many inches or feet of petroleum in a tank
represent so many barrels. The gauger drops a steel tape into the oil
until it touches bottom, and the location of the oil showing on this
steel is the measure of the contents. Then the valves are opened and
a portion of the contents flows away to the pump station or “tank
farm.” A second measurement is taken, and the difference between the
first and second measurement reveals the quantity of oil drawn off. The
gauger then issues to the producer a credit certificate or “run ticket”
representing the quantity of the crude received at that particular time.
There are other complications, however, before the oil reaches the
market. If the wells are gaseous in any considerable degree, the oil
must pass through a gas separator before it enters the tanks. The
gauger must measure and draw off any water present, which, owing to the
proverbial incompatability of oil and water, is not difficult, and in
calculating the amount of the credit slip he sees to it that no water
is inadvertently paid for.
Gas itself is not infrequently an important by-product of an oil lease.
Almost invariably gas is associated with oil, although oil is not
always found where gas is available. From many wells immense quantities
of gas escape while drilling is in progress, and may occasionally
wreck the machinery. Drillers have become expert in handling these
difficulties and in casing off the gas and corking it up for future
use. In many of the oil districts of the South and Middle West, natural
gas from the producing areas has become the fuel of countless people
who will never return to the use of coal, so long as this cheap and
cleanly source of heat and light is available. Some wells yield as much
as 25,000,000 feet of gas per day.
With gas and water eliminated, the crude oil is pumped from the “field
tank” to the “tank farm,” a collection of great containers built near
the oil fields to take care of the output of wells which produce oil
faster than the pipe lines carry it to the refineries. These containers
are built of sheet steel and have a standard capacity of about 55,000
barrels in most cases, although some are constructed to contain 80,000
barrels. They are riveted and must be absolutely proof against leakage.
Incidentally, it may be mentioned that one of the difficulties which
human ingenuity cannot combat is the tendency of lightning to become
attracted by these steel constructions on the open prairies. Great
havoc and waste sometimes result. Another convulsion of nature also
dreaded by the oil man of the Middle West is the cyclone, which at
times is especially disastrous to derricks and pumping plants.
There is but one more stage through which the crude petroleum passes on
its way to the refinery, but this stage is so important and has been
such a vital factor in the organization of the American oil industry,
as well as in those of other countries which have emulated the system,
that it demands extended reference. It is the pipe-line system which
has done more to make the products of petroleum available to all at
reasonable prices than any other innovation in connection with the
industry. It is in reality like the waterworks system which reaches
under the streets of modern towns and cities, but extending beneath the
surface of millions of square miles of territory.
When, as a result of the Pennsylvania discoveries, petroleum became a
commercial commodity, and opened up sources of untold wealth to the
people of this continent, little thought was at first given to the
transportation problem. The earlier wells on Oil Creek were situated
so close to the navigable water that barrels of oil could without
difficulty be loaded upon barges or smaller craft and floated down the
river. In periods of drought when the water was too low to float such
craft, oil boats would be assembled on a mill pond near the wells and
the water dammed back while the loading was in progress. Then the gates
would be opened, and the fleet, carried on the flood and guided by
pilots, would be rushed down Oil Creek to the Allegheny River.
As production increased, and new districts without convenient water
transportation were successfully drilled, it was necessary to devise
new methods. The production of some wells, inaccessible by water,
became a drug on the market and in 1862 crude oil prices at such wells
fell as low as 10 cents a barrel. To meet the difficulty, a system
of teaming was adopted and great caravans of the oil wagons became a
familiar sight in inland oil regions. Such a caravan in the days before
the pipe-lines would sometimes consist of no less than 6,000 wagons
drawn by two horses each, and carrying from five to seven barrels of
oil. Travellers of the early sixties encountering this spectacle were
amazed at the endless stream of vehicles. Work was thus provided for
a large number of men, who, with a team, could earn from $10 to $25
per day conveying petroleum from the wells to the nearest point of
shipment. Roads were in many cases so bad that they tore down fences
and made new thoroughfares to suit their convenience and they were a
lawless set, as later events proved.
The inspiration of constructing a pipe-line which would obviate
teaming, and by which oil could be made to flow direct to the shipping
point or the refinery, is credited to a Jerseyman named Hutchings, who
laid a short pipe line from some wells in which he was interested.
The first test of conveying crude oil in pipes was through a two-inch
iron pipe in process of being laid February 19, 1863 from the Tarr
Farm to the Humboldt Refinery at Plumer, Pa., about six miles
northeast of Oil City, Pa. The distance was two and a half miles.
The teamsters, forseeing that their earnings would be diminished and
perhaps disappear, if the system were generally adopted, destroyed the
line and warned other producers against similar attempts. Hutchings
was obstinate and built a second line. Again the teamsters completely
destroyed his work. Undaunted, he tried again, with no better luck,
and in the end died a broken and penniless man. But his idea did not
die with him. In 1865 one Henry Harley commenced to lay a pipe line
to the terminus of the Oil Creek railroad but the teamsters not only
cut his pipes but burned his collection tanks. The State authorities,
however, gave him armed protection and his line was completed. It was
of two-inch diameter, with a rated daily capacity of 800 barrels.
[Illustration: A big yield well in Mexico flowing into a temporary
storage pond]
[Illustration: Laying a pipe line through a Louisiana forest]
J. D. Henry, one of the most eminent historians of petroleum, asserts
that the first commercially successful pipe line was constructed
in the summer of 1865 by Samuel Van Syckel of Titusville, from the
mushroom city of Pithole, Pa., to the nearest railway station, Miller
Farm, a distance of four miles. Van Syckel had the backing of New York
capital, and the basis of his success, after similar projects had been
abandoned as visionary, was due to better mechanical arrangements. Van
Syckel’s line does not appear to have suffered from the lawlessness
of teamsters. On the completion of Harley’s second line in the same
neighbourhood, both proved so commercially successful that capitalists
bought and amalgamated the two. Teamsters continued to give trouble and
effect damage but protective measures were successful in securing the
performance of the enterprise.
From that time onward the mileage of pipe-lines has steadily
multiplied, and by means of them the crude petroleum collected at a
“tank farm” on the prairies is conveyed to refineries many hundreds of
miles away. The first pipe-line of considerable length was laid in
1880 from Butler County, Penn. to Cleveland, Ohio, a distance of over
100 miles. Almost immediately after trunk lines from Bradford, Pa. to
the Atlantic seaboard were commenced. By 1893 there were 3,000 miles of
pipe lines in the Eastern states with storage facilities for 35,000,000
barrels of oil.
British and French historians of petroleum, viewing the development
of the industry from the standpoint of impartial observers, regard
the year 1883 as an epochal one in its history, because it marked the
initiation of a comprehensive policy with regard to pipe-lines, under
the inspiration of John D. Rockefeller. Mr. Rockefeller, originally a
produce merchant, became interested in the oil business as early as
1862 by the purchase of an interest in a small refinery at Cleveland,
and by 1865, had become so convinced of the possibilities of the
petroleum industry that he devoted himself exclusively to the refining
and shipping business. In 1870 this business became incorporated as the
Standard Oil Company.
Of the events of 1883 Alfred Lidgett, a noted British oil expert and
editor of the _Petroleum Times_ (London, England), says in his book
“Petroleum,” published in 1919: “Then a few master minds came to the
front, and loyally supported by John D. Rockefeller, they undertook
the herculean task of practically girdling the United States with a
system of oil pipe-lines that has no parallel anywhere. They eliminated
the jaded horses, oil boats, wooden tankage and slow freights,
tedious methods, and questionable practice of handling petroleum, and
substituted therefor the steam pump, the iron conduit, the steel tank
storage, and systematic and business-like methods which soon commanded
the confidence and respect of all oil-producers. They extended
their pipe-lines to almost every producing well and established a
transportation system which serves the industry to-day as no other
on earth is served. The advantages of the modern pipe-line to the
oil-producer are obvious.”
The pipe-line connection to the producer’s well and tanks ensures
prompt clearance of the crude and a steady cash market for his output,
under the system defined in the last chapter. The elimination of waste
and the reduction of cost in connection with transportation, of course,
resulted in great material benefits to the consumer of petroleum
products. It is indeed quite clear that without this Napoleonic
organization of the pipe-line service the boon of petroleum could not
have been adequately utilized by humanity at large.
In conveying oil through the pipe lines both gravity and pumping are
used. The pumping station at the “tank farm” forces the crude into
pipes through which it commences its long journey to the refinery. This
pumping equipment is in itself a wonderful mechanism and drives the oil
over heights where gravity cannot assist. The pipe at the field lines
where the journey starts varies in diameter from 2 to 8 inches and the
joints are screw threaded. The main trunk lines are from 6 to 12 inches
in diameter and pumping stations to continue the driving process are
located at necessary intervals along the route. In some fields the oil
is heavier than in others and then the stations have to be located
nearer to each other, while in the case of certain very heavy crudes,
heat is applied to promote the flow before it enters the pipe-line.
By this system the amount of oil that flows under the soil of the
United States to distant points exceeds half a million barrels daily.
Concealed and unobtrusive, these lines do their work so well that
millions of people whom they serve are unaware of their existence.
Everyone knows of the freight train that links up the small town
factory with the central distributing point, and of the grain car which
carries the farmer’s wheat to the seaboard; but little attention is
paid to this great but inconspicuous transportation adjunct of American
industry, the petroleum pipe-line.
As the system has grown, handling in tank cars of anything but refined
product has become more and more nearly obsolete, for economic reasons.
Once installed, the pipe-line system is cheap and easily maintained.
It would, indeed, be quite impossible to conduct the American oil
industry of to-day by the use of railroads, even though they were
greatly multiplied. The crude oil which flows daily, east of the Rocky
Mountains, through pipe-lines would fill over 2,500 tank cars. Since,
on the average, a barrel of crude travels 1,000 miles before it reaches
its destination, it would require approximately 75,000 tank cars to
do the daily work of transportation effected by the pipe-lines, not
to mention approximately 900 engines which it is estimated would be
required to move them. Leaving out all the possibilities of congestion
in stormy weather, it will be seen that such a task is one that
railroads could not hope to carry out. In its present dimensions
the oil industry, therefore, owes as much to the pipe-line as to the
actual existence of oil deposits themselves. The work they perform
is infinitely more even and uninterrupted than that of any system of
railroad or water transportation. The pipe-lines run to full capacity,
winter and summer, day and night, the year round, making possible the
existence of great central refining plants where the crude can be
treated in bulk at the lowest possible cost, and where distribution can
be effected at the lightest impost on the ultimate consumer.
CHAPTER IX
REFINING AND MANUFACTURING PETROLEUM PRODUCTS
As has already been intimated, the Pennsylvania oil discoveries of
fifty years ago would have been relatively valueless if methods of
refining had not advanced sufficiently to develop the marketable
possibilities. If the reader has followed this narrative he will not
have failed to note that it was the optimism of experimental chemists,
who discerned in petroleum the possibilities of an illuminant which
would take the place of whale oil and other fats, which first suggested
to pioneer investors like Bissell the idea of developing America’s
oil fields by the boring system. Certain crude traditional methods
of refining petroleum had prevailed for centuries in the East, but
they had not produced an illuminant that would be acceptable to our
civilization.
The advancement of science, which gradually enabled the early American
refiners to produce a comparatively odourless, safe, and free-burning
oil from the crude, gave the necessary stimulus to the new industry.
The American refining system has since become one of the greatest
examples of standardized industry, fascinating in its minutiae,
and amazing in the efficiency and economy of its organization. The
pipe-line system has promoted the establishment of great central
refineries whither the crude travels distances of anywhere from five
hundred to fifteen hundred miles, and which, by treating it in vast
quantities, are enabled to provide the world with the products of
petroleum at the lowest possible cost.
It is the purpose of the refining process to produce from the crude
petroleum marketable products and this involves two stages. First:
The separation of the crude petroleum into its constituent parts,
corresponding in general to gasoline, kerosene, lubricating oil, etc.,
and, subsequently, the purification of each of these roughly separated
products to bring them into marketable condition.
The process might be best understood by likening the crude petroleum
to gravel scooped from out of the hillside. Such gravel would consist
of a mixture of sand, fine gravel, coarse gravel, rocks and boulders.
In this condition it would be unmarketable, except perhaps to fill up
marshy land. By analogy the crude petroleum consists of a mixture of
many different compounds and the mixture itself is unmarketable and of
no value except as a fuel, at once troublesome and dangerous.
To prepare the freshly mined or “crude” gravel for the market it would
be sifted through a series of screens which would separate it into its
component sizes. As a result of the sifting operation there would be
produced builders’ sand suitable for use in mortar, fine and coarse
gravel desirable for concrete, rough rock for road foundations, and
boulders for masonry structures.
The crude petroleum oil is a liquid and cannot be sifted on screens as
is the crude gravel, but nature has given it properties in consequence
of which it may be separated into its constituents almost as easily
as is the gravel. These properties are the different boiling points
of the several constituents. Thus, when water or any other single
liquid is heated it continues to increase in temperature until boiling
begins, after which its temperature remains the same, no matter how
rapidly the heat is applied, until all of the liquid has been boiled
away. When petroleum is heated, however, it begins to boil at a very
low temperature, a temperature hardly hot enough to injure the skin,
in some cases. It is not the whole of the petroleum which is boiling,
however, but only the very lightest part of it, that is, the gasoline
or naphtha. If the temperature were to be held constant for a short
length of time all of the gasoline would have been boiled off, and
although the liquid would be just as hot as it was before, the boiling
would cease entirely. If the heating is now continued, however, and the
temperature of the oil raised to some higher figure, it again begins
to boil and now it is the kerosene constituent of the crude petroleum
which is being converted into vapour and driven out of the liquid.
After a time all of this kerosene will be gone, and as before, the
liquid, although still at the same temperature at which it has just
previously been actively boiling, remains quiescent. In this fashion
the various constituents of the crude petroleum may be separated from
one another by a “sifting” operation somewhat similar to that used to
separate sand from gravel and gravel from rock, except that instead
of employing screens to effect the separation there is employed an
apparatus in which the heat of the oil can be gradually increased
and the products, which are successively driven off in this fashion,
separated from one another.
The apparatus commonly employed for this purpose is called a “still”
and consists merely of a steel receptacle, usually in the form of a
horizontal cylinder, much like a simple steam boiler. These stills
have been developed to large capacity, some of them holding upwards
of 50,000 wine gallons of oil at one time. The still is mounted over
a furnace which is usually heated by coal just as an ordinary steam
boiler. In this still the temperature of the crude petroleum is
gradually raised and with each elevation in temperature a different
product is boiled or driven off the mass of liquid until finally
nothing remains in the still except a small quantity of black residue
which is known as petroleum coke.
It remains, therefore, to cool and condense these vapours. This is
accomplished by an apparatus called a “condenser” which is connected to
each still. An elementary condenser consists merely of a coil of pipe
submerged in a tank of cold water. The vapour leaving the still passes
through the submerged coils in which the vapour by cooling is caused
to return to a liquid condition. Into one end of the condenser coil,
therefore, the vapour from the still enters and from the other end
there flows the condensed liquid.
The first and most important step in the process of refining all crude
petroleum is conducted in the fashion above described. A refinery
of large size will have perhaps 100 of those crude stills which are
generally arranged in groups or batteries, each battery containing
a dozen or more stills. From each still the condenser pipes are led
to a “receiving house” which is located in some central position. In
this manner it becomes possible for a single responsible supervisor
to observe and control the operation of a large number of stills.
The supervisor is called the “stillsman” and upon him rests the
responsibility for directing the initial process of separation or
sifting by which the crude petroleum received at the refinery is
roughly separated into different “fractions” or parts, each of which by
further refining becomes a marketable petroleum product. As generally
conducted, this first distillation process separates the crude
petroleum oil into four major fractions.
The fraction which has the lowest boiling point and is therefore the
first to be driven off from the crude petroleum in the still as the
latter is heated, is the naphtha or gasoline fraction. When all the
naphtha or gasoline from any particular still has been driven off,
the stillsman, stationed in the receiving house and able to observe
constantly the character of the condensed liquid, which is delivered
by the pipe from the condenser coil to the house, will change the
connections in the receiving house so that the next “distillate” to be
received will flow to a separate tank. This second distillate which
comes into the receiving house and is thus diverted to a separate tank
will be the illuminating oil distillate or, in refinery parlance, the
“refined oil distillate.” It is interesting to note that “refined oil”
to a petroleum refiner still means kerosene illuminating oil, since
in the original petroleum industry this illuminating product was the
only fraction of the crude oil which was highly purified or refined.
The entire remainder of the crude petroleum, including gasoline and
the lubricating oils and other products heavier than kerosene, were
either discarded wholly or else sold for whatever they would bring in
an unrefined or very poorly refined condition.
The next product which is driven off from the crude oil after all of
the kerosene has been removed is a somewhat heavy and discoloured, but
free flowing oil, known as “gas oil.” Gas oil is seldom sold at retail
and the general public has very little knowledge of it. Its main use
is for the manufacture of city gas, auxiliary to coal, the products of
which form the base of city gas.
The next product after the gas oil and the last important product of
crude petroleum is the lubricating oil distillate, which is known as
“paraffine distillate” for the reason that it contains the paraffine
wax.
With the exception of the gas oil, which by reason of the uses to which
it is put does not usually require any further treatment, the products
thus roughly separated from the crude petroleum each need not only
further separation, but actual chemical purification to prepare them
for the market.
Considering these products in the order in which they are derived
from the crude petroleum, the gasoline or naphtha fraction is often
subjected to a second distillation by which it is further “sifted” into
light, intermediate and heavy naphthas. It is customary to conduct this
second distillation process by steam heat instead of by fire, since
the gasoline or naphtha fraction boils at such a low temperature that
it is unnecessary to resort to a furnace and furthermore, the quality
of the product is thought to be better if the second distillation is
conducted with steam. Following this second distillation the naphtha
or gasoline is subjected to chemical purification which involves
treatment with sulphuric acid, with sodium hydrate, sodium plumate
and filtration through Fuller’s Earth--a species of clay which has
been found to have not only a mechanical but probably also a chemical
purifying and decolourizing action. There is a considerable variation
in the purification or refining method employed by the different
refiners, but the foregoing treatments are the principal ones now in
vogue. The marketable products produced from the crude gasoline or
naphtha distillate by this re-distillation and purification process
are principally as stated--light naphthas, intermediate naphthas and
heavy naphthas. The light naphthas range from petroleum ether, an
exceedingly sweet-smelling and volatile liquid to aviation gasoline,
especially suitable for use in aeroplane motors under extreme
conditions of temperature and power development. The intermediate
naphtha is the ordinary gasoline of commerce, principally used as fuel
for automobile engines. The heavy naphtha is that often sold under the
name of benzine, cleaners’ naphtha, solvent naphtha or varnish makers’
and painters’ naphtha. As these names indicate, the heavy naphtha
is principally used in the manufacture of paints and varnishes, for
dry-cleaning and as a solvent in the chemical industries.
The second fraction of the crude petroleum, the kerosene, illuminating
oil, or “refined oil,” is likewise ordinarily subjected to a second
distilling operation, the main purpose of which is to separate it from
any traces of gasoline which would tend to make it highly explosive
and dangerous when used in lamps. This re-distillation is followed by
a chemical purification, producing the kerosene of commerce, which is
not only so safe that it may be heated to a temperature well above
100° F. without danger of giving off any explosive vapour, but is also
water-white in colour, crystal clear, and of such purity that it may be
burned in a lamp in a closed room without producing offensive odours or
smoke.
The third major fraction of the crude petroleum is the gas oil which
has previously been referred to. In general this product may be
marketed without further treatment.
[Illustration: Lines for loading oil on vessels anchored from one to
two miles off shore. This is a regular practice in Mexico where a deep
harbour is not available]
[Illustration: Battery of crude stills at the Bayway Refinery, Linden,
N. J.]
The next and last major fraction is perhaps the most interesting of
all. It is from this fraction that the host of lubricating products
are obtained and also the paraffine wax which has almost entirely
superseded animal and vegetable waxes, not only for candles, but for
laundry use, for producing water-proof paper, for sealing preserve jars
and for a multitude of minor uses. The first step in the treatment of
this “paraffine distillate” or lubricating oil distillate fraction of
the crude petroleum is to separate from it the paraffine wax which
it carries in solution. This is accomplished by chilling the oil to
a very low temperature through the use of refrigerating apparatus.
When the oil is thus chilled the dissolved wax therein crystalizes so
that the mixture resembles nothing more than slush or mush ice. Having
caused the dissolved paraffine to freeze and come out in the form of
slush in this fashion, it remains to separate it from the oil. This is
accomplished by filtering the mush, still held at its low temperature,
through canvas cloths. The oily part of the mush passes freely through
the cloth while the solidified particles of wax remain on the face
of the fabric. The first two products separated by the chilling
and filtering processes are therefore a wax-free oil and an impure
paraffine wax.
The impure paraffine wax is known as “slack wax” and is melted and
poured in a liquid condition into shallow pans, where upon cooling, it
solidifies. The pans are then slowly and cautiously heated, and as the
temperature of the wax rises, the small quantity of oil which it still
carries sweats out of the wax, just as though the wax were actually
perspiring.
As a result of this sweating operation there is produced “crude scale
wax,” the ordinary wax of commerce. It is yellow to ivory in colour,
contains only a small proportion of oil and is almost odourless and
tasteless. The crude scale wax is very commonly further refined by the
general methods used throughout the oil industry, i.e. by treatment
with acid and alkali, and by filtration, to produce refined paraffine
wax of pure white colour, free from oil, and without odour or taste. It
is this refined grade of wax which is commonly met with in the retail
market.
Returning to the wax-free oil which passes through the canvas filters,
leaving behind the impure wax, we find that this is the product from
which lubricating oils are obtained. It is an oil of dark brown or
amber colour, considerably heavier than kerosene and has a very greasy
feeling which is indicative of its value for lubricating purposes.
Elaborate methods have been devised for accurately determining and
gauging this greasiness or viscosity, which is the property of the
oil upon which its lubricating value is most dependent. In general,
this oil is in part re-distilled, that is, it is charged into a still
and subjected to a temperature which is sufficient to drive off, in
the form of vapour, some portion, though not all of the oil under
treatment. This process, accurately described as “reducing” the
oil, serves to concentrate in the residue remaining in the still,
the heavier or more greasy or viscous constituents, the grade or
viscosity of the lubricating oil depending on the extent to which this
reduction is carried. As in the case of the other petroleum products,
it is customary to carry out a chemical purification process and to
filter the oil subsequent to the re-distillation. As a result of such
further chemical purification and filtration, the colour of the oil
is improved, any suspended solids or dirt which it may contain are
removed, and any chemical constituents which it may contain and which
may be detrimental to its use, are destroyed.
The refining process above described is that which is most largely
employed in this country, being a typical process for obtaining
gasoline, kerosene, gas oil, lubricating oils and paraffine wax from
the grade of crude petroleum produced from the central and central
western states of the United States. The process is considerably
varied, however, in dealing with crude petroleum of different
characteristics. For example--there is produced in Mexico and imported
into this country for refining in the plants located on the Atlantic
Coast a very large amount of petroleum oil which is little more than
thin asphalt. Oil of this character is not generally used for the
production of lubricating oils or wax, but is instead merely refined
for the production of gasoline, kerosene, and fuel oil, or for gasoline
and fuel oil only. It will be understood that the term “fuel oil”
merely indicates any heavy petroleum oil free from dirt and water, and
fluid enough to be readily pumped through a pipe, and containing no
constituents which would make it apt to give explosive mixtures with
air. Fuel oil of this description is largely replacing coal as a fuel
for steamships.
The State of California produces a considerable quantity of this
“asphalt base” crude petroleum, which, like the crude petroleum from
Mexico, is subjected to refining processes very much simpler and
yielding mainly gasoline, kerosene and fuel oil. It is usually also
from crude petroleum of this character that the artificial asphalts
which supplement the supply of natural asphalt for paving material
are produced. These artificial asphalts in general represent the
heavier constituents of crude petroleums, such as those of Mexico
and California. The term artificial asphalt is perhaps a misnomer,
for, although the properties of the asphalt are somewhat modified
by the refining operation, the asphalt exists as such in the crude
petroleum oil and the main purpose of the refining operation is merely
to separate it from the fluid constituents of the oil in which it is
dissolved.
There is also a large amount of oil produced in the United States,
mainly in Pennsylvania, which is of a character especially suited to
the production of high grade lubricants by a simple refining method.
With oil of this character the lubricating constituents do not require
distillation to separate them from impurities. The crude petroleum
may be directly reduced by distillation, taking off the three major
fractions, that is, gasoline, kerosene and gas oil, and leaving behind
in the still a very good grade of lubricating oil which, however,
contains paraffine wax. To separate this wax from the lubricating oil,
in which it is dissolved, an ingenious process called cold settling
is resorted to. According to this process, the mixture of lubricating
oil and wax is diluted with gasoline, enough gasoline being employed
to make a very thin liquid, and the mixture is then chilled to a low
temperature. From the chilled mixture the paraffine separates out in
the form of a thick grease which settles to the bottom of the chilling
tank. This grease is subsequently refined to produce the various grades
of petroleum jelly. The lubricating oil diluted with naphtha and
separated from the paraffine or grease as described is subjected to
re-distillation for the separation of the naphtha and forms a base for
the production of a wide variety of high grade lubricants.
Returning to the analogy by which we compared crude petroleum oil to
crude gravel mined from the hillsides, it will be noted as in the
case of the gravel, the various crude petroleums differ in character
considerably, according to their origin, and that the refining process
must be modified to suit the character of the oil.
The analogy may be pursued one step further to explain one of the most
interesting developments of the modern petroleum industry, i. e., the
manufacture of gasoline not naturally contained in crude petroleum.
This process of _manufacturing gasoline_ is called “cracking.”
Let us assume that we desire to obtain from crude gravel, mined from
the ground, a maximum amount of fine gravel. We would first use all of
the fine gravel which was naturally contained in the crude gravel and
then we might pass the remainder of the gravel, which is too large for
our use, through crushing rollers which would crush or crack it, thus
producing an additional quantity of fine gravel. An analogous process
has now been successfully developed for the treatment of petroleum
oils. According to this process, a heavier constituent of the crude
petroleum oil, for example, kerosene or gas oil, may be subjected to
distillation at high temperatures, and under high pressure in special
stills designed for this process, thus securing increased quantities
of gasoline. In this operation a certain proportion of the heavier oil
treated is caused to break down into gasoline. The U. S. Bureau of
Mines estimates that in 1919 some 15% of the country’s total gasoline
production was obtained by this process.
CHAPTER X
PETROLEUM AND OTHER INDUSTRIES
Petroleum products not only enter as an essential into great
industries; but their manufacture and distribution have given birth
to many allied industries directly connected with the oil business.
The plant of a modern refinery, for instance, by no means begins and
ends with equipment for the distillation and treatment of oil. We have
seen that the petroleum industry has given birth to an underground
transportation system entirely unique, which accomplishes something
impossible to railroads, under any conceivable organization. The
architectural breadth and completeness of detail which characterize the
petroleum industry as now organized, also extend to many mechanical
trades. The modern refinery is a self-contained institution. It goes
outside its own organization for little. Besides its still hands and
other types of oil workers it has its corps of carpenters, pattern
makers, machinists, acetylene welders, boilermakers, sheet iron
workers, riveters, blacksmiths and the like. A modern refinery of the
large type is a complex industrial unit, astonishing in its diversity
of duties and pursuits. Among them this army of workers construct
almost everything that is necessary to carry out the work of storage
and distribution. Steel, delivered from the rolling mills in immense
plates, emerges in the form of tank wagons, stills, condensers, tanks
and all the varied equipment of the refining industry. Highly technical
and intricate mechanical operations are carried out in connection
with the manufacture of these accessories. The lay visitor to such an
institution will find himself amazed by the sight of roller shears that
cut out half an inch of iron neatly and easily. Punching a four inch
washer out of solid half-inch steel is a relatively light operation
with the power available. By means of the multiple punch a row of
holes is cut in a sheet of steel within fewer seconds than it would
have taken the village blacksmith of the olden time hours to execute.
The hydraulic press pats the steel plates into the required shape with
a stroke of several tons. Cutting steel with an acetylene flame is a
familiar sight, and the man who operates this torch could cut a hole in
the side of a battleship in short order. Electric cranes toss beams
weighing twenty tons or more about as though they were jack-straws. By
such processes a tank capable of holding 55,000 barrels of oil comes
into being with astonishing expedition. The production of the barrels,
boxes and innumerable subsidiary requirements of a great manufacturing
industry are all a part of the plant’s activities. Refineries also
provide a considerable portion of their own fuel. The gas produced in
the refining process is collected to run gas engines which provide
power for various mechanical operations.
Although the refinery is self contained, the various branches of oil
production, transportation and treatment have been a stimulus to
many industries. Invention has been applied to the construction of
improved oil drilling and pumping machinery; the pump lines themselves
are prefaced by mechanical production of the requisite piping. Of
the petroleum industry was born the tank steamer and the tank car.
Though the crude reaches the refinery largely by means of its own
transportation system, its various transformations leave by other
routes. Most of the gasoline and other products that are consumed on
this continent find their way from the refinery to the distributing
stations in tank cars, which have become an institution on American
railways. Solid trains of them leave the great refineries every day;
without them it would be impossible to deliver the various petroleum
products, indispensable to industry, to consumers so expeditiously as
now.
Petroleum’s faculty, as a standardized industry, of attracting to
itself subsidiary trades is, however, but a negligible consideration
in comparison with its relation to industry and commerce in the larger
sense of these terms. The noted English publicist, Sydney Brooks, has
drawn a pen picture of the marvellous interpenetration of the world’s
industrial fabric which has taken place within the past fifty years.
“To-day” says Brooks, “petroleum enters into our daily life under
the guise of at least 250 different and marketable commodities. It
lights our lamps and stoves; it cleans our clothes; it prepares our
varnishes; it acts as a substitute for turpentine in the printing,
dyeing and painting industries; it invades our tables in the form of
artificial butter, confectionery and a number of other edibles; it
supplies us with our wax, our candles, our chewing gum, and a vast
array of ointments, salves and drugs; it furnishes the dressing table
with perfumes and the smoking room with matches; it imparts the final
lustre to our collars and shirts; and the textile trades use enormous
quantities of it for finishing soft goods; it medicates our bodies and
gives to preserved fruits their peculiarly toothsome appearance; it
blends with animal and vegetable oils in a range of combinations almost
infinite; its residue can be burned as coke, or used in the manufacture
of electric arc-lights, or employed in road making as a rival to
asphalt; it lubricates our machinery and drives our motor cars, our
ships, our aeroplanes, our locomotives, our ploughs and tractors. By
means of it every form of transportation on land, in the air, on the
seas and below the sea, has been immeasurably extended and in many
instances revolutionized. There must be at least a hundred trades that
now use oil for heat and power purposes where ten or fifteen years ago
they used nothing but coal. The demands for it are indeed illimitable.”
Mr. Brooks is speaking exclusively of the part that petroleum plays
in the industrial and social life of Great Britain. In the United
States its applications are wider still. Were it necessary, it would be
possible to dilate on the relation of petroleum to agriculture in this
country, where the farmer who operates a large acreage in the middle
west or in Texas and California, by means of tractors finds petroleum
an indispensable ally. In this sense petroleum has helped enormously to
increase the food supplies of the world and the national wealth of the
United States.
One of the greatest, if not the greatest of modern industries on this
continent--the manufacture of motor cars--would to all intents and
purposes be non-existent were it not for one offspring of petroleum
(once regarded as almost the least valuable product of the refinery)
gasoline. Invention has reacted radically on the oil industry, from
decade to decade, and especially on its refining phase. Until the
advent of what is known as the “internal combustion” engine, for
instance, the demand for gasoline was so limited that when produced,
as was inevitable in the distillation of many types of crude, it
represented but a fraction of its present value. To-day this engine,
which lives and functions by gasoline, has created an ever-increasing
demand for that fluid which taxes the energy of all refineries to meet.
The internal combustion engine with the assistance of petroleum has
indeed exercised such a powerful influence in changing the face of
civilization as to demand fuller reference. It not only made the
automobile practicable, but the aeroplane, the dirigible air-ship, the
submarine and a host of other craft possible. When, during the autumn
of 1919, the entire railroad system of Great Britain was paralyzed by
a general strike, and the people of its great and overcrowded cities
were face to face with starvation, it was admittedly the internal
combustion engine, operated by gasoline (commonly known overseas as
motor spirit or petrol)--that saved the situation. To understand its
appellation the reader should note the fact that the older forms of
engines were operated by steam generated in boilers, heated by external
combustion--a process familiar to everyone. The internal combustion
engine, on the contrary, runs by fuel (usually gasoline) which is
introduced directly into the contrivance itself. There it is vaporized
and mixed with air so as to become an explosive substance with great
powers of propulsion. It is not difficult to grasp the immense saving
of weight and space which is involved by the elimination of the boiler
from the mechanism of an engine. During the war especially, the minds
of all mechanical experts were applied to improvements that would
result in an engine being made lighter and lighter with each new model,
while at the same time meeting enormous power demands. Without such
space-saving contrivances the flying machine would never have reached
its modern development, and the motor car would not have come into
general use. The revolution effected by automatic traction alone,
with the co-operation of petroleum, would have seemed incredible a
generation ago. The pioneer users of motor cars bought their gasoline
at drug stores. To-day the “gas” stations in every country village and
in connection with every large garage and auto-livery give testimony
to the part a single product of petroleum plays in the social and
commercial life of the American people. The automobile industry, which
could hardly have been born without petroleum as an auxiliary, now
represents an enormous investment in this and other countries giving
employment to innumerable workmen of all classes.
Oil as a source of power is to all intents and purposes an outgrowth
of the twentieth century. Its function as a source of light and heat
is historical. Lighting by means of oil lamps has in itself undergone
great improvements since the early days and the use of oil as a fuel in
a manner distinct from its application to automobiles, aeroplanes and
other inventions operated by gasoline engines, is steadily increasing.
It is taking its place as a substitute for coal, not only in the
United States but to a marked extent in other countries. For some of
them it may be said to have proved a solution for railroad problems
that were at one time almost insuperable. Russia, for instance, for
the last thirty years, and up to the time when internal conditions
disrupted her industrial organization, utilized her own petroleum
for fuel. The railroads of Mexico, Argentina, Brazil and other Latin
American countries as well as in Roumania are now served by oil burning
locomotives where a decade or so ago coal or wood was employed. In
this country the Southern Pacific Railroad and other well known
transportation corporations have demonstrated that the locomotive run
by liquid fuel is an economic success; in 1919 the amount of fuel oil
used for this purpose in the United States was approximately 50,000,000
barrels. Railroad experts have discovered that the steaming capacity of
a locomotive running on fuel oil is so materially increased that it is
possible to haul with it a greater tonnage at a much increased speed
than would be possible with a coal fired engine.
[Illustration: “Look boxes” in the “Still House,” where the grades of
oil are separated according to gravity, the process being known as the
separation of “cuts”]
[Illustration: A modern tanker carrying 4,000,000 gallons of oil]
Oil as a domestic fuel is gradually making its way because of the
advantages it gives in the matter of cleanliness. Even the
time-honoured oil stove has been subjected to such improvements as to
be a vastly more acceptable inmate of the home than it was in days
gone by. The use of petroleum as a fuel for stationary engines in
manufacturing plants has also kept pace with its employment in other
directions and here again its superior heating power, the elimination
of dust and the saving of labour involved are economic factors of first
importance.
The invention of new devices for the utilization of oil have
necessarily proven a stimulus to manufacture. Indeed, it would be
impossible to trace the myriad paths by which petroleum enters into the
public and domestic economy of the civilized world. So far we have left
untouched one of its most pregnant applications; its relation to sea
power and to maritime commerce, which is so wide and important as to
justify a separate chapter.
CHAPTER XI
PETROLEUM ON THE SEVEN SEAS
The intimate connection between petroleum and maritime commerce became
assured from the day it was recognized that the United States had
resources destined to make her the chief reservoir of the world’s
supply. An interesting discourse could be written on the manner in
which the people of many nations have for centuries depended on ships
and seamen for light. The function of the old whaling ships in the
world’s economy is now performed by the modern oil-tankers--although
carrying the means of light to other lands is but a minor part of
the service of these latter day vessels. The relation of petroleum
to the sea may be approached from several angles. The necessity of
conveying vast quantities of oil across the oceans of the world has,
for instance, produced a form of maritime architecture almost as unique
in its kind as is the pipe-line in land transportation. Then again, oil
has within recent years tended to revolutionize the fuelling of both
the merchant marine and the war fleets of this and other countries.
Petroleum’s relation to naval activity in time of war is so important
that it will be dealt with in a separate chapter. As a stimulus
to international relations it has played a stupendous part in the
evolution of the United States from a great but isolated nation into a
world power.
One of the most important factors in the early development of the
petroleum industry in America was the realization that there existed an
almost limitless market overseas awaiting this new product. American
petroleum met an ever-growing need. Owing to the decline in the annual
catch of whales the world was being searched for substitutes for whale
oil and in the matter of lubricants for machinery there was something
like famine. Within two or three years after the sinking of Drake’s
well, Europe was eagerly seeking to purchase not only the crude but the
refined products, and the demand has grown apace ever since, despite
the development of oil fields in other parts of the world. In the
annals of the oil industry the name of Dr. A. F. Crawford, who in 1861
was U. S. Consul at Antwerp, holds an honourable place. In that year he
arranged that a shipment of forty barrels of refined oil should be sent
to the industrial country of Belgium and thus export to the continent
of Europe was begun. Great Britain, which had been trying to develop
Scottish shale oil production, was also quick to avail herself of the
American discoveries. From the outset the problem of how to carry
large quantities of petroleum products without waste, danger or injury
to other cargoes, occupied the minds of shipping men. The earlier
shipments were in the nature of samples despatched in ordinary cargo
vessels, usually from the port of Philadelphia.
In November of 1861 Messrs. Peter Wright and Sons, a well known
shipping firm of that city, chartered a small sailing vessel, the
_Elizabeth Watts_, to carry oil exclusively and to deliver her cargo
in London. So great was the apprehension among sailors of the dangers
of sailing on an oil-ship that to get a crew the old-fashioned plan
of kidnapping seamen under the influence of drink was resorted to;
and the crew reached London without other disaster than the injury to
their sensibilities involved. The success of this voyage prompted other
shipowners to embark in the business, so that by 1864 shipments of oil
from various Atlantic ports had grown to a very respectable total.
Casks or barrels were used for transport, entailing a very great
waste of oil, time and labour. The casks themselves called for a large
initial outlay and leakages were a source of loss, damage and possible
danger. In 1863 the thought of carrying oil in bulk in vessels,
specially designed for that purpose, appears to have occurred almost
simultaneously to importers in different parts of England. Henry Duncan
of Bromley, Kent, is generally admitted to have been the father of the
idea. He chartered a schooner at Chicago, fitted her to carry oil in
bulk and in her hold and loaded her at Sarnia, Canada, then as now, an
oil shipping point of inland America. The experiment was ill-fated, for
the schooner was lost in the Gulf of St. Lawrence before entering on
the high seas. But the scheme of carrying oil in the holds of wooden
ships in bulk was later successfully adopted by other shipowners and
continued in practice until 1878.
The genesis of the modern tanker dates from the launching of the
_Atlantic_ at St. Peter’s on the Tyne, Yorkshire, in August 1863. In
the record of this launching it was set forth that the vessel was
specifically designed to carry petroleum in bulk “without the aid of
casks” but there is no evidence that she was ever put into commission.
The real beginning seems to have been made with the Belgian ship,
the _Charles_, which is believed to have been the first ocean going
ship to be fitted with iron tanks for the transport of petroleum and
to be equipped with pumps for unloading the cargo. She was a sailing
vessel and her capacity has been estimated as high as 7000 barrels in
bulk. Between 1869 and 1872 she plied between New York and European
ports. By 1878 the business of carrying oil in iron ships specially
built for that purpose, or in converted vessels like the _Charles_ had
become definitely established and barrel-carrying ships had practically
disappeared from American harbours. At first oil was carried only on
sailing vessels, owing to the supposed danger of fire; but gradually
adjustments were made which rendered it feasible to propel oil ships by
steam.
The growth of the petroleum industry in the ’eighties made it clear
that the converted oil ship was uneconomical and somewhat dangerous.
Leakages in such vessels produced gases that sometimes caused
explosions; and one curious fact was demonstrated, namely, that there
was greater menace in an empty oil ship than in a full one, for the
reason that the exposed surface from which explosive gases might
emanate was infinitely greater. When an oil ship of scientific model
was filled to capacity the only danger points were the hatches through
which it had been filled; whereas when empty, especially if there had
been carelessness in unloading, the explosive area and the possible
formation of gas-producing deposits was greatly increased. With the
converted ships the chances of leakage were necessarily many, owing
to numerous and inaccessible waste spaces outside the tanks. This
led shippers to insist on improved tankers built in such a way that
absolute control could be exercised over every drop of oil on board the
vessel, and over every emanation of gas given off by that oil. Much
ingenuity was displayed by ship-builders in meeting this requirement
and the modern tanker has the two great merits of being absolutely free
from the risks of waste and danger.
For a good many years past the construction of oil tankers has been
one of the important branches of industry in the leading shipbuilding
countries; and they carry not only the predominating American product,
but that of all the scattered oil fields of the world. They bring
crude to our seaboard refineries, but they carry little crude away;
their business is that of conveying the finished oils to other lands.
The shipment of the crude product of American wells overseas has long
since ceased as a result of the stupendous development of our refining
industry, but Mexico has lately come into prominence as an exporter of
crude. In comparison with the earlier oil ships the modern tanker shows
the same ratio of growth which characterizes all phases of petroleum
development. The place of the tiny craft of the ’sixties and ’seventies
has been taken to-day by the tanker which runs to dimensions of more
than 500 feet in length and correspondingly wide beam. Whereas the
little Belgian ship, the _Charles_, fifty years ago carried a maximum
of 295,000 gallons, one of the larger types of modern oil tankers will
carry more than 4,500,000 gallons.
The greater petroleum organizations do not depend on private shipping
firms to carry their products, but build their own vessels. The
great American tankers of to-day are equipped with ample deck space
so that the officers and sailors have more freedom of movement
than do many city-dwellers in their own home. The impulse that the
petroleum industry has given to the American merchant marine as a
whole is developing a seafaring spirit among American youths that was
non-existent a generation ago. Many of the American tankers are among
the largest that fly the Stars and Stripes. Such giant vessels coming
up the fairway of a foreign port constitute a graphic advertisement
for the United States, and serve as the symbol of an industrial
nation standing at the head of the world’s commerce. It is fitting
that the American flag should have been carried to every port of the
seven seas in connection with petroleum, the American product which
has revolutionized the world’s industry. These great vessels carry
the source of light, heat and industrial energy to peoples of every
language and every colour. Great progress has been made in economizing
time and labour in connection with cargoes. Where but a few years ago
it required days to load or unload a ten-thousand ton ship, the task is
now performed in a few hours. The oil is handled by the use of powerful
pumps or by gravity, when possible. Owing to the speed with which oil
cargoes are handled no other ships on the ocean do so much sailing, or
spend so little time in port as the oil tanker.
So far in this chapter we have dealt solely with the development of the
sea-transportation of oil itself; but even larger vistas are opened
when we come to its growing relation to all forms of maritime commerce
and naval activity. This arises from the rapidly increasing use of oil
as a marine fuel. In that respect it holds very high potentialities for
America’s seaborne trade. The oil tankers we have been describing are
oil burning, and the same system is being applied to many other types
of vessels which constitute the arteries of the world’s trade. Until
quite recently the supremacy of Great Britain in maritime commerce
was in a considerable measure due to her plentiful supplies of bunker
coal obtainable at low cost in ports like Swansea, Wales. But the
definite advantages of oil as a fuel for the navigation of steamships
are changing the whole maritime equilibrium. As an English writer has
said, the position that oil has captured for itself in this respect has
been fairly won on its merits. Oil fuel has one and a half times the
heating power of steam coal, so that weight for weight carried, the
radius of action is extended fifty per cent. A vessel equipped with a
modern internal combustion engine consuming fuel oil may make a voyage
of fifty-seven days without replenishment, whereas the same vessel
operated by the old type of coal-fuelled steam engine would be obliged
to re-fill its bunkers at the end of fifteen days. In 1912 an Oil
Congress was held in London, England, when statistics were presented
containing a comparison between coal and fuel oil on the great Cunard
Liner the _Mauretania_. It was shown that for the round trip from
Liverpool to New York and back there would be a saving of at least 5000
tons of fuel and that the force of stokers required could be reduced
from 300 to 30 men working under much less difficult conditions. The
resultant increase in available space for cargo and passengers is of
enormous importance to ship-owners. The relative values of oil and coal
for marine use are not limited to the superiority of oil engines over
the old-fashioned steam engines. The caloric or steam-raising power
of oil is so much greater than that of coal as to produce a fifty per
cent. superiority. Another factor is that of cleanliness. Coal is not
merely bulky and prolific of many inconveniences in the confined space
of a ship, but it is unquestionably dirty, as every harbour bears ample
testimony. Oil is clean, smokeless and leaves no ashes and clinkers.
It can be pumped on board from a tender while both ships are making
considerable speed. The late war furnished innumerable demonstrations
of the superiority of oil as a source of motive power at sea, which
will be presently dealt with; as an aid to peaceful commerce its
influence during the next few years is certain to be revolutionary and
incalculable in its benefits.
The future of the oil-burning ship depends directly upon the supply of
fuel, a question that at the moment is giving both the oil men and the
steamship operators a good deal of concern. In recent months, owing
principally to the changes effected by the intrusion of salt water in
the Mexican fields, it has been a difficult matter for vessels not
protected by contracts to obtain fuel oil. The advantages of this
method of raising steam are so considerable that it will prove a great
economic loss if, through failing supplies, it becomes necessary for
oil-burning ships to revert to coal.
It would be a mistake to think that other great commercial powers
are not alive to the possibilities of oil on the seven seas, but
Americans may take pride in the fact that their own business men are
playing a foremost part in the sea-chapters of the wonderful epic
of the petroleum industry. Through their foresight and enterprise
the oil bunkering station is being established at home and abroad to
perform the same function that coaling stations have performed for the
world’s maritime commerce in the past. Although displacement of coal
by oil in any wide measure is perhaps the most recent development in
the story of petroleum; and the construction of oil-burning in place
of coal-burning ships is the latest phase of maritime architecture,
American oil producers have already anticipated the change in events
by establishing oil-bunkering stations in various parts of the world.
Here again American enterprise has shown itself alive to the needs of
international trade by providing supply depots at ports where American
oil-bunkering ships are likely to call. It is highly important that
vessels under the Stars and Stripes should not be wholly dependent upon
foreign agencies for filling their tanks. The United States Shipping
Board has shown much interest in the development of an organized
plan whereby bunkering facilities shall exist to render American
ships independent of the vexatious restrictions sometimes imposed by
governments in other parts of the world.
A glance at the list of such stations as it stood at the end of the
year 1919 shows how much petroleum has done to extend the influence
of the United States of America on the sea. Exclusive of the domestic
establishments on the Atlantic seaboard and in the Gulf of Mexico,
bunkering stations have been established by American initiative at all
the chief ports of Canada, whether on the Atlantic or on the Pacific
Coast, the Great Lakes, or the Gulf of St. Lawrence, in South America,
at Rio de Janeiro, Brazil; Montevideo, Uruguay; Campana and Buenos
Aires, Argentina; at Valparaiso and five other ports on the long coast
line of Chile; and at three ports in Peru. Bunkering facilities have
also been established at both approaches to the Panama Canal and at
many points in the West Indies, including Bermuda. There are nine such
stations in Great Britain; three in Norway; two in Sweden and three in
Denmark, covering effectively the North Sea and the Baltic. Those on
the Mediterranean include five in Italy; one in Tunis (Bizerta) and one
in Egypt (Port Said).
These stations are designed to promote those peaceful and happy
relations which should follow on the development of international
trade, and to assure facilities for America’s expanding seaborne
commerce.
CHAPTER XII
PETROLEUM IN THE GREAT WAR
No survey of the place that petroleum holds in the social and
industrial organization of the world would be complete without some
reference of the role it played in the late war. It was inevitable
that in a crisis where all the scientific, mechanical and organizing
genius of the leading nations was concentrated on instrumentalities
to strengthen themselves and weaken or destroy the foe, a product of
so many applications should prove a tremendous factor. It would be
indeed possible to write a lengthy volume on the influence of petroleum
on history, based on actual deductions drawn from the incidents of
that greatest of conflicts. It was an indispensable factor in the new
methods of warfare that were developed; it influenced the military
and diplomatic strategy of all belligerents; it was a stupendous
contributor to the victory of the Allied and Associated powers. Earl
Curzon of Kedleston, a member of the British War Cabinet, stated
the fact tersely when he said, shortly after the signing of the
armistice--“The Allies floated to victory on a sea of oil.”
This was intended as a direct commentary on the assistance rendered by
the United States to that cause and was a just acknowledgment of one
phase of this country’s contribution.
In the preceding chapter the growing maritime importance of petroleum
has been shown, and it was therefore inevitable that in a conflict in
which sea power was so decisive an influence that it should have been
closely related to naval effort. Even if the uses of petroleum had
been confined to one instrument of warfare merely--the submarine--it
would have influenced the course of history and the fate of nations.
Without petroleum the submarine as an effective agent in war could not
have come into existence, and the whole story of the conflict from
the winter of 1915 onward would have been different. Again, without
petroleum no air-craft could have left terra firma, and military
tactics based on the powers of observation provided by these “eyes of
the army” would not have come into existence. It must also be admitted
that the toll of destruction both on land and sea would not have been
so great. It would not have been possible for any country to embark on
a diabolical policy of destroying unarmed ships and unfortified cities,
and wreaking vengeance on helpless non-combatants. But these crimes
cannot be charged against petroleum itself, but rather against the
ingenuity of men bent on destruction.
These were but two instances of the part petroleum played in the war.
It is no exaggeration to say that there was no phase of belligerent
activity in which it was not an active agent. From the very outset of
hostilities in August, 1914, discerning men in Allied countries foresaw
that victory must rest with the side which commanded the greater
reserves of petroleum. Thus from the beginning America, as the chief
source of the world’s supply, was recognized as a factor of inestimable
importance in the ultimate decision. Germany was as fully alive to
this circumstance as her enemies. The high commands of the warring
nations, from the very outset, took into consideration the desirability
of securing possession of the oil fields in other lands. It was one of
the aims of the British navy in driving German ships from the seas to
prevent oil reaching the Central Empires from the Western Hemisphere.
Later, when the blockade of Germany was definitely established and
pressure was brought to bear against countries suspected of enabling
Germany to obtain various classes of supplies by indirect purchase,
petroleum products were regarded as the most important items in the
extended list of contraband of war.
On land, oil constantly influenced the thoughts of generals. The great
and lengthy Russian offensive against Lemberg in Galicia aimed at
cutting off Germany and Austria from recourse to the oil fields of
that region. The long drawn out diplomatic embroglio with regard to
Roumania all centred around the oil fields of that country. Germany
was determined that Roumania should be forced into the war, either as
an ally or an enemy; for in either case it would give her a pretext to
seize the oil fields. In the end a British military mission destroyed
the wells to prevent their utilization by the German invaders. In the
operations of Turkey against Russia the oil wells of Baku were the
objective. The early British operations in Mesopotamia were chiefly
intended as a precautionary measure for the protection of oil fields
of which the Persian Gulf is the outlet. Citations such as these from
the history of the war on all fronts could be multiplied to show how
closely the petroleum question was interlocked with belligerent action.
It is admitted by candid historians that at the outset of the war
the British Government did not appear sufficiently to appreciate the
grave importance of petroleum products in the prosecution of war.
The conflict had not been in progress for more than a few months,
however, when the disruption of the European fields and the obstacles
to obtaining regular supplies from the far East caused grave alarm both
in London and Paris. It was then that the friendship of the American
people for the Allied cause made itself felt in practical form. Had
American oil interests then proved hostile or indifferent; had the
Government of this country yielded to Germanic pressure and placed
an embargo on oil shipments, the cause of the Allies would have been
doomed. In 1917 it was admitted in the British House of Commons that
adequate supplies of petroleum products were quite as essential as men
and munitions. This was almost an understatement, because without the
aid of petroleum the necessary maximum of effort in other respects
would have been impossible.
Apart from naval and aerial needs, a reminiscent picture of the
Western Front during the three or four years of trench warfare reveals
the predominant importance of petroleum. It proved a decisive factor as
early as the Battle of the Marne. It will be recalled that one of the
greatest factors in Marshal Joffre’s victory was the feat of General
Gallieni in transporting a fresh army from the Paris area to the front
by commandeering nearly every motor car and taxicab in Paris. Thus,
petrol transport hastily improvised saved Paris and turned the scale
of the 1914 campaign against the Germans. It will be recalled that the
conflict then settled down to a prolonged era of trench warfare. The
Allies commenced the construction of strategic railways to support
the armies of the line, but between the railheads and the actual
battlefront in the long stretch from the North Sea to the borders of
Switzerland, transport was almost wholly dependent on motor spirit
or gasoline. Innumerable heavy motor lorries carried food, guns and
ammunition to the fighting forces. But the function of petroleum
products on land did not end in its association with commissariat and
supply. It was an aggressive instrument. The greatest new factor in
land fighting that the war developed was the “tank”--a land battle
cruiser, first introduced by the British at the Battle of the Somme
in July, 1916, and afterwards adopted by all armies. This great
instrument of war was wholly dependent on petroleum products for its
power of movement. Without the internal combustion engine operated by
gasoline it would have been an immobile toy. Again, when liquid fire
came into use petroleum was the basis; and in another great destructive
agent--the explosive, known as T. N. T.--toluol, which is found in some
of the heavier grades of petroleum, was a basic constituent.
Though petroleum in the hands of inventors became an agent of terrible
destruction, it had its beneficent uses in battle as well as in periods
of tranquility. Armies organized on so vast a scale could not have been
fed without it. When the battle raged the Red Cross vehicles which
performed the work of transporting the wounded to the dressing stations
and field hospitals were propelled by gasoline. And when darkness had
fallen on the fray the oil lamp and the paraffine candle were lighted
to cheer the tired soldiers. An English writer who visited the front in
1917 wrote of the all-pervading uses of petroleum: “It was to be found
wherever there was a vestige of life in those zones of battle; the
soldiers in their, at times, lonely dug-outs, used oil for cooking as
well as light, and all traffic was guided from disaster along the roads
by the use of oil, which also offered the only source of artificial
light in the Red Cross vehicles. What an immense organization it was
which depended for its ceaseless activities upon the products of
petroleum.”
The British established a petroleum depot at Calais of an immensity
previously unprecedented, where all products required for the
organization of transport were stored; and it must be noted that
lubricants of all kinds were as essential as gasoline itself, to keep
moving the wheels of the innumerable motors that were employed by the
various arms of the service.
If petroleum was the life blood of activity in the battle areas, it was
not less so of the munition factories where the means of offense were
fabricated. Had a real petroleum famine arisen during the days when
factories in Britain and France were straining every effort to keep
their armies supplied with the means of combat it would have been an
incalculable catastrophe. Though the Allies, once they really awakened
to the dangers of the situation, had pursued the policy of piling up
reserves of petroleum products there were times when the failure of a
single tanker to arrive on schedule time from this side of the Atlantic
caused grave apprehension; and when in April, 1917, the United States
entered the war, reserve supplies had fallen dangerously low.
If only because it placed the entire oil resources of America at
the disposal of the Allies, the entry of the United States into the
conflict proved the salvation of their cause; and the story of what
the oil interests of this country did to strengthen the hands of the
fighting men is one of the brightest chapters in the history of the
war. After the armistice, Marshal Foch summarized that achievement in
these words: “No military operation of the Allies on sea, on land,
under sea or in the air was ever interrupted by the lack of petroleum
supplies.”
Unquestionably one of the motives which actuated Germany when, in
February 1917, she decreed unrestricted submarine warfare and ordered
the Stars and Stripes off the seas, was the hope of cutting off the
petroleum supplies of her foes. Even before President Wilson declared
war, several American tankers had been sunk by German U-boats. The
German Government fully understood that a cessation of oil shipments
from American ports would mean an almost immediate paralysis of
belligerent effectiveness in her foes and the “German Peace,” for which
they had long been manoeuvring, would have been accomplished. When
activity was keenest on the Western front eighty per cent. of the oil
and oil fuel used by the Allies came from the United States. After the
war was over it was revealed that forty-eight per cent. of the fighting
force of the British navy was dependent on oil for fuel and any delay
in the supply would have brought the Allies down with a crash.
It is now admitted that in the Spring of 1917 the Allies were closer to
disaster than was known to any, save a few men at the head of affairs.
It was a turning point in the world’s history. Next to man-power and
munitions the resources needed above all others were petroleum and its
products. The French coal fields had been lost. There was a labour
shortage in Great Britain; Russian, Roumanian and Galician sources of
supply were now definitely in the hands of the enemy. The Mediterranean
Sea, through which the Far Eastern supplies must come, was a hot-bed of
submarines; and indeed losses of oil steamers in all dangerous waters
were so great as to show that they had been named as special targets
by the German high command.
An exchange of confidence between the Allies and the United States
naturally followed the decision of this country to defend the freedom
of the seas. Immediately after President Wilson’s declaration of war,
urgent despatches from Great Britain warned our government that reserve
supplies of petroleum in Europe were so low that unless immediate
assistance were rendered, a partial demobilization of the British fleet
must ensue. “We must have oil” said Marshal Foch, whose prescience had
not yet been rewarded by elevation to the Supreme Command, “or we shall
lose the war.” Italy was in no better position, fuel oil, aviation
naphtha, gasoline and lubricants had been so seriously depleted.
When the secret of the situation was confidentially communicated to the
leaders of the American oil industry, there was an instant response.
The National Petroleum War Service Committee was formed, with Mr. A. C.
Bedford, Chairman of the Board of the Standard Oil Company, (N. J.) as
its presiding officer. The organization embraced all the oil companies
of the United States. Those who had been life-long keen business rivals
joined hands to keep the great war machine in Europe in action.
Profits became a minor consideration. Agreements to stabilize prices
and curb speculation were formulated and observed. Production on a
scale previously unprecedented in this land of enormous oil production
was organized. Soon it was recognized that the work of the National
Petroleum War Service Committee, though unostentatiously performed,
was the most efficient and the most fruitful in results for the cause
of democracy of any industrial institution in the war. It achieved the
remarkable feat of meeting every war demand for petroleum products of
all kinds, of conveying these products across the Atlantic, despite
the submarine scourge. When the war came to an end there were larger
stocks on hand in Great Britain and European countries for the use of
the armies and navies of America and her allies than at any previous
time in history. These results were achieved by the voluntary efforts
of thousands of men serving in every phase of the oil industry, crude
production, refining and transportation. After the armistice the
Government of France, in recognition of what had been accomplished,
conferred on Mr. Bedford the Cross of the Legion of Honour.
Co-ordination having been arranged, the problems to be dealt with came
under two heads, (1) Increased production; (2) Sea-transport. The first
constitutes a record of highly organized endeavour never surpassed in
the history of industry; the second one of actual heroism.
Plans for increased production were well under way by the summer
of 1917 and it must be remembered that the entrance of the United
States into the war and our resolve to create an immense and fully
equipped army greatly increased domestic necessities in addition to
the obligation to keep our allies in Europe supplied. The thoughts of
all were fixed on the great blows which were to end the war in 1918.
When the winter of 1917–8 arrived it seemed as though the elements were
fighting on the side of the Hohenzollerns. The extraordinary severity
of that winter, complicated by a coal shortage, all but paralyzed
railroad traffic. Thus, deliveries of the finished products necessary
to war industry and belligerent activity were embarrassed in a degree
that caused the greatest anxiety to the National Petroleum Committee.
Yet somehow or other it performed its task and the refineries trebled
their pre-war output, expanding their capacities like an accordion.
In addition to the vast quantities consumed at home, shipments abroad
arose to stupendous figures. In the year 1918, 2,628,961 tons of
fuel oil alone were shipped from the Eastern seaboard for the use of
allied navies; and in the same year more than one million tons of high
distillates and other petroleum products also crossed the Atlantic,
entailing more than 500 tank steamer loadings.
This was accomplished in the face of a shipping shortage that appalled
those in the secret of its extent and in the face of the submarine
activity virulently directed against oil cargoes. It was in this matter
that the sailors of the American merchant marine showed a heroism
not excelled by soldiers in the field or the seamen of any nation.
The great value to civilization of the fleet of tank steamers built
up by American oil exporters was also demonstrated. When President
Wilson declared war one great company had already lost three big
vessels through submarine attack, and during the war these losses
were augmented by seven more, representing a loss of more than 75,000
deadweight tons and a toll of many lives. To meet its losses this
particular company undertook to build a new ship for each sunk, and
so efficiently was this policy carried out that its fleet, which had
totalled 445,975 tons at the commencement of unrestricted submarine
warfare in February, 1917, had grown to 492,080 tons under the American
flag when the armistice was signed in November, 1918. Nor was the
problem of shipping limited to that of carrying petroleum across the
Atlantic. Much was required for coastwise trade in North and South
America.
The resourcefulness of the oil men of America was not confined to
mastering the seemingly insuperable problems of increased production
and transport. A minor contribution to the efficient prosecution of the
war was the construction of a pipe line across Scotland to supply the
British and American navies in the North Sea and avoid sending tank
steamers through the dangerous sea routes leading to the naval bases on
that body of water. This work was carried out by Mr. Forrest M. Towl,
President of the Southern and other pipe line companies, and was in
full operation shortly before the armistice was signed. In this work
both the American navy and the British Admiralty coöperated.
Even apart from its wonderful assistance to belligerent action on
land, it is clear that petroleum played a vital part in winning the
war at sea. The following succinct statement of what it accomplished
was given by a well-known oil man conversant with all phases of the
subject, shortly after the armistice.
“Oil and internal combustion engine made possible the submarine,
enabling Germany to stave off defeat as long as she did, but oil burned
under boilers gave us the increased efficiency of the destroyer, which
conquered the submarine. It was the ability of the Allies to obtain a
constant, ample supply of oil and the superiority of oil over coal as
fuel for naval operations that finally turned the tide of battle and
proved a decisive factor in the war.
“The destroyers that broke down the morale of Germany’s undersea crews
were oil burners of such remarkable flexibility and speed as to bring
about a sharp change in naval practice. It took some time to bring the
number of destroyers up to the work laid out for them by Germany’s
early advantage, but the fate of the undersea boat was sealed with
the arrival of the first oil-fired destroyer in the waters where the
submarine preyed. The original fleet of war vessels which the United
States despatched to convey merchant vessels and hunt U-boats were all
16,250 horse power, which at top speed could show 32 to 35 knots an
hour. Later on we had destroyers developing 27,000 horse power but the
small boats had already proved the case for oil fuel in war.
“One of the reasons for the success of the destroyer in keeping the
lanes of travel reasonably free from the undersea menace was the
ability of the oil-fired warships to take on fuel in the open sea.
The American flotilla had a tank supply vessel stationed at longitude
36 degrees West, from which oil was taken on by the destroyers at
the rate of 40,000 gallons an hour, without interruption even in the
roughest weather. Indeed, there were times when bunkering was done with
both vessels travelling at six knots an hour. Similarly oil gave the
larger warships increased speed and independence in the matter of fuel
stations.
“The British battle cruisers with which Admiral Sturdee destroyed the
German fleet at the Falkland Islands were oil burners. To-day, modern
war vessels are using liquid fuel almost exclusively, the United States
having definitely abandoned coal-fired boilers in its construction
plans some time ago.”
In addition to other advantages it carried, the use of oil fuel in the
War was of great practical value, for the following principal reasons:
A lesser tonnage of oil replaced the amount of coal required for the
same steaming radius, or an equal tonnage of oil gave the men-of-war a
greatly increased steaming radius.
Boilers fired by oil have a much greater steaming capacity than with
coal, so that the actual speed of a ship converted to use oil fuel is
materially increased without any change in boilers or engines.
In war operations the oil burners can lay down a heavy smoke screen at
will by turning more oil into the burners than can be consumed with
the air supply admitted. This results in a heavy bank of smoke which
destroyers throw out to hide the larger ships from the enemy, or which
merchant ships produce to conceal their whereabouts from submarines.
Petroleum thus proved an indispensable factor in saving the world from
autocratic domination, just as during the previous half century it had
become an incalculable influence in the arts of civilization, and had
effected a beneficent revolution not only in the industrial but the
social life of countless communities. By American methods of business
organization it has been made to yield its highest potentialities
for the good of humanity, both in peace and war. If this little
book brings to any reader a fuller knowledge of the romance and
all-penetrating importance of this great birth-right of the American
people it will have served its purpose.
[Illustration: A tanker being loaded with gasoline and oil at a
refinery dock at Port Arthur, Texas, one of the large Gulf oil ports]
[Illustration: Kansas wells flowing oil into a temporary sump, or
earthen reservoir]
CHAPTER XIII
AMERICA’S INVESTMENT IN PETROLEUM
A perusal of the foregoing chapters should correct any vague impression
in the mind of the reader that the oil business is a lucky adventurer’s
game like placer-mining, where a man may find a pocket of nuggets, wash
them in his pan, and thus become possessed of sudden wealth. This used
to be the popular impression in the days when the phrase “Struck Ile”
was synonymous with a sudden stroke of luck. Undoubtedly the man who
chances to own lands on which oil in paying quantities is discovered is
blessed with good fortune, especially under modern conditions whereby
fair and generous treatment is assured to him. But he contributes
nothing to the expensive processes by which the precious liquid is
extracted from mother earth, and risks no capital in the experiment.
Perhaps more prevalent and fraught with infinitely greater
possibilities in loss and disappointment is the delusion that oil is
a speculator’s game; that the very words “oil” or “petroleum” in a
promoter’s advertisement are a guarantee of large dividends and soaring
values. This delusion has no doubt been nourished by the fact that
some large private fortunes in the United States have been accumulated
almost entirely in the oil business. Countless people of a speculative
tendency have loosely associated oil with great riches, and cherished
the theory that whoever became associated with the production or
refining of petroleum was necessarily, as if by magic, assured of large
and easily acquired profits. The oil fortunes loom large in the public
mind because they have been concentrated in comparatively few hands;
and the fact is overlooked that these fortunes have been based not
merely on the raw product, but on progressive methods of distribution
and the elimination of waste. It is obvious that when the vast scope of
the industry is considered and the fortunes arising from it are set off
against the volume of sales, the financial returns are not spectacular.
For every man who has made a fortune in oil, there are dozens who have
earned but a bare subsistence from it, and others who have failed even
in that, for they have sacrificed all in efforts to locate new wells.
In previous chapters the arduous and costly labours which precede the
process of distribution that begins with the conveyance of oil into
the pipe-lines have been described. It should be borne in mind that
more often than not these labours are unproductive. Oil does not bubble
forth from springs; it conceals itself in the bowels of the earth and
it is rarely that it even betrays its presence unmistakably by surface
indications. When the subsequent outlay in handling the product of
even a gusher is considered, the vast capital outlay involved can be
visualized. The investment required by initial measures for locating
and producing crude petroleum is so great that competent authorities
can name more than one locality in which the money put into leases,
construction, drilling and plant exceeds the gross value of the oil
that has been obtained or can ever be forthcoming from these fields.
Many millions of dollars during recent months have been poured into
oil company flotations that in all likelihood will never yield any
return whatever. Even well-organized companies, directed by men of
experience, seldom prove bonanzas in a day when leases command very
high prices; the exception arising where the company happens to be the
first comer in the field that later develops important production.
The oil business partakes of the nature of most other industries; it
yields profits when fortunately located and economically operated. But
there is no certainty that even the company which possesses leases in
established fields will prove profitable. Under the circumstances it is
ridiculous to assume that mushroom promotions, by men with no actual
experience in the oil business, and whose talents lie rather in the
direction of writing advertisements, can yield profits to those foolish
enough to invest in them.
The experience of one of the large producing companies, operating in
the best fields of this country, financed exclusively by oil men and
directed by some of the ablest men in the business, may be cited as an
instance of the uncertainty of profits. This company produced about
five million barrels of crude oil in 1919 and sold at the relatively
high prices then being obtained. Nevertheless, the company’s profit
and loss statement for the year showed a net loss of approximately
$1,000,000. This does not mean, of course, that this company is a
liability to its owners. It may have expended in work that could not
properly be capitalized, large sums of money that will eventually
be repaid out of production. It is easily conceivable that without
any material increase in its investment its yield of oil might be so
augmented by 1921 as to make its business show a very handsome profit.
What this case does prove is that something more than good leases,
experienced men and ample capital is needed to insure large returns
from money put into oil promotions.
People who clamour against the prices exacted by producers of crude
oil overlook the fact that wells have an unfailing habit of playing
out. This means that a producing company must never cease drilling and
exploring. To do so would mean an early decline in its production and
eventual failure even of its best wells. The monetary return from a big
producer must not only offset the cost of that well but repay the owner
the cost of drilling a large number of dry holes, abandoned after large
expenditures.
Production in the United States is only kept up by the work of the
“wild-catter” in locating new pools and by more intensive drilling of
the old fields. Both involve heavy costs. There were drilled in this
country last year no fewer than twenty-nine thousand new wells, but the
net increase in production over 1918 was but twenty-two million barrels
of crude. The declining yield of wells necessitates amortization to
cover the cost of new wells to take their place.
Figures purporting to show the aggregate by which the investors of the
United States have enabled this country to become the dominant factor
in world production must be considered in light of the fact that such
totals are in a large measure merely estimates. It is not possible to
obtain detailed statistics covering the cost of drilling that has gone
for naught; but an approximately accurate estimate can be reached by
striking an average based on the experience of leading companies.
It is fair to estimate production at $1,000 per barrel of daily yield,
multiplied by the current price for that grade of crude. On this basis
Oklahoma leads all other fields with production valued at $958,517,000.
The fields in north and central Texas are worth on this basis
$617,690,000 while California is third with a total of $456,443,000.
On the basis of the country’s production in February, 1920, California
produced almost exactly the amount of crude derived from Oklahoma,
274,966 barrels per day, in the one case, as against 273,862 in the
other, but the posted price of Oklahoma crude was $3.50 per barrel as
compared with $1.66 for the lower grade California product. The daily
average production in February, taking the country as a whole, was
1,130,759 barrels, and the value of that oil at the current price was
$3,541,511. This would give an approximate valuation of the country’s
production, on the basis assumed, of $3,541,511,000.
Discovery of a new pool means a race to lay pipe-lines in the field
to relieve the temporary storage tanks which are generally of limited
capacity. Oftentimes, a considerable investment made in anticipation of
large production is rendered almost valueless by the early exhaustion
of new wells or by their failure to maintain anything like their flush
production. These lines in the different fields are known as gathering
pipe-lines. They are connected with main trunk pipe-lines running
to the various refining centres. According to the Bureau of Mines,
there are at this time approximately thirty-two thousand miles of
trunk pipe-lines and eleven thousand five hundred miles of gathering
lines. At the present day replacement cost, this mileage is worth,
respectively, $360,000,000 and $40,000,000, a total of $400,000,000.
The money actually invested for the existing pipe-lines is probably
considerably less than this sum by reason of the fact that a great deal
of mileage was built prior to the present era of high costs, but it
is a safe assumption that the pipe line system represents an actual
investment of not less than $300,000,000.
The United States is over-equipped with refineries, measured by
their ability to obtain the necessary crude oil to operate them to
capacity, but it is not over-supplied from the standpoint of the
potential demand for refined products. On the first of January,
1920 there were three hundred and seventy-three refineries, with a
daily capacity of 1,530,565 barrels. Since that date there have been
completed ninety-nine more refineries, adding 263,500 barrels to the
daily capacity. Even before the completion of these new refineries,
it was estimated in the report made by the United States Geological
Survey that the country had a surplus refining capacity of 177,000
barrels per day over the production and importation of crude oil. Since
that time the surplus capacity has been increased to about 500,000
barrels daily. Averaging the cost of the complete refineries with
those of the much less costly skimming plants, the refineries of the
United States represent a total investment of about $1,795,000,000.
This total includes real estate and much equipment not ordinarily
associated in the public’s mind with the business of refining. There
is, for instance, at several of the larger refineries valuable wharf
and railroad terminal property, extensive manufacturing plants for the
production of tin containers, factories for the manufacturing of steel
and wooden barrels, foundries, machine shops, pattern shops, etc.
As a reserve between the current daily production and the refineries’
consumption there is always above ground a stock of crude petroleum
awaiting its turn to pass through the pipe lines, this stock varying
greatly according to the demands of the refineries and the rate of
production in the fields. In April, 1920, the crude stocks on hand
totalled 124,873,000 barrels, which was worth at the prices quoted in
the different fields at that time, $393,724,580. In addition, there
were large quantities of refined stocks in the course of treatment at
the plants. The gasoline alone reported on hand March 31st was valued
at more than $125,000,000, while the kerosene on hand as of the same
date was worth approximately $35,000,000. Lubricating oils, fuel and
gas oil, wax, coke, asphalt, crude oil awaiting distillation and
miscellaneous products on hand brought the total value of the refinery
stocks up to $370,000,000.
There is, of course, a very large investment in the fleets required
both for bringing crude oil to the refineries in this country and for
carrying finished products to the markets of the world. On January 1,
1920, there were six hundred and seventy-eight tankers engaged either
in the oil business or as supply ships for the navies of the world,
and of these, three hundred and ninety-four, with a deadweight tonnage
of approximately 1,500,000, were under the American flag. This fleet
represents an investment of $250,000,000.
The minor phases of oil marketing are represented by the multitude
of stations, warehouses, bulk barges, tugs, motor trucks and tank
wagons, tank cars, private railroad sidings, storage tanks, etc. in
all parts of the United States. It is customary to allow an investment
of $4.00 per barrel for the real estate and equipment needed to do
a retail marketing business, and $1.00 per barrel for the tanks and
docks required in the fuel oil department. On this basis the domestic
marketing equipment for the country represents a total investment of
approximately $660,000,000.
No attempt has been made here to bring in the investment by American
oil companies in other lands. The principal item under this head is,
of course, the huge sums that have been expended in drilling and the
acquisition of producing properties, leases for development and for
surveys, etc., in Canada, Mexico, South America, Roumania, and other
countries. The value of the tankers used for foreign service has been
estimated but no allowance is included for stations and other equipment
to handle petroleum products abroad.
We have here an aggregate investment in the production, transportation,
refining, and distribution of petroleum and its products of
$7,310,000,000. With this equipment, the United States last year
produced 377,000,000 barrels of crude oil from within its borders and
imported 55,000,000 barrels more, chiefly from Mexico. We exported
366,000,000 gallons of gasoline, 965,000,000 gallons of kerosene,
1,175,000,000 gallons of gas and fuel oil and 276,000,000 gallons of
lubricating oil. Against that may be set our domestic consumption,
showing that while we produced in this country more than two-thirds
of all of the world’s petroleum, we consume in almost the same ratio.
There was marketed in the United States last year 3,426,000,000
gallons of gasoline, 1,397,000,000 gallons of kerosene, 6,290,000,000
gallons of gas and fuel oil, and 568,000,000 gallons of lubricating oil.
These figures show not only the immensity of the oil industry but also
make clear the vast extent and variety of the auxiliary investment it
calls for. Clearly it is no speculator’s game, but one in which the
most expert knowledge and economic discretion are entailed if it is to
yield profits at all.
CHAPTER XIV
PETROLEUM IN THE FUTURE
In these chapters an effort has been made to place before the reader
the story of the development of petroleum from a negligible and
unappreciated product to its present basic and essential position
in the world’s industrial and economic structure. Having attempted
to portray the part it plays in the arts of war and peace, and its
intimate relation to civilization as now organized, it is fitting that
something should be said as to the future of petroleum.
To those who have read the preceding chapters--particularly those
relating to shipping and all other classes of transportation--it
will be clear that this constitutes an international as well as a
national problem. The course of events in connection with the world
industry may even be said to have a paradoxical aspect. American
petroleum became an international institution when, shortly after the
Pennsylvania discoveries, the eagerness of other nations to secure it
was evinced. The increase of production was so rapid that for years
the supply far exceeded the domestic demand, and made the creation of
foreign markets necessary to the American oil interests. These foreign
markets have contributed materially to American national wealth and
are now an important factor in the country’s favourable trade balance;
exports of petroleum products from the United States for the year 1919
representing a value of $343,776,385, and ranking fourth in order of
importance of the country’s exports.
Our oil companies have been international traders for several decades,
but their operations have been entirely based on private initiative
and have rarely benefitted by official coöperation. The phenomenal
growth of inventions and manufactures pivoting on the products of
petroleum, which has transpired during the twentieth century, has,
however, entirely reversed the situation that existed in the year 1900.
Though the United States provides almost seventy per cent. of the
world’s production from wells on her own soil, she is to-day actually
an importer of crude oil to meet the needs of the domestic market,
combined with those of the foreign market for the manufactured products
of petroleum, which yield vast revenues to American wage-earners
engaged in their creation.
To the American people, who use six times as much petroleum per capita
as the citizens of any other country, and who own ninety per cent. of
the motor vehicles in operation in the world to-day, the question of
future supplies is vital. In the face of an ever-increasing demand
for petroleum and its products--through the many channels that have
been described in this book--the ratio of production to consumption
has become so altered that it is apparent that the United States must
in a steadily expanding degree look to other lands for its future
requirements. Statisticians and scientists differ as to how long the
stores of petroleum still lying untapped in our own soil may last,
but are agreed that at the present rate of consumption the American
fields will have been practically exhausted before the dawn of another
century and that adequate foreign reserves to supplement them must be
made available by American enterprise. Petroleum is therefore a problem
about which the man on the street and not merely the oil merchant must
perforce think internationally. The people of other countries are
to-day wide awake to the necessity of securing petroleum reserves
for themselves in regions of potential oil-bearing character; and in
some instances they have shown themselves very active.
[Illustration: Steam stills at a modern refinery]
[Illustration: Storage tank at Cushing, Oklahoma, struck by
lightning--not an infrequent occurrence. 55,000 barrels of crude oil
being consumed]
In an exceedingly able paper presented by Mr. David White, Chief of the
United States Geological Survey, to the Society of Automotive Engineers
in February, 1919, that authority drew attention to “the widening
angle between the flattening curve of production and the rising curve
of consumption,” and announced that after a most exhaustive survey of
American oil potentialities, in which many experts coöperated, the
conclusions had been reached that the available oil in the ground
at the end of 1918 approximated 6,740,000,000 barrels. The total
production of crude from the United States wells from 1858 to the end
of 1918 was approximately 4,598,000,000 barrels, more than two-thirds
as much as the total remaining in the ground according to the estimates
of the Mineral Resources Division of the Geological Survey. To
understand fully the significance of these figures it must be realized
that the rate of production has enormously increased during the past
decade. Mr. White’s figures placed the oil produced from United States
wells in 1918 at 345,500,000 barrels. Production, if continued on like
scale annually, would exhaust the estimated supply in America in less
than twenty years. Moreover, despite its vast extent, the curve of
actual production in that year fell so far short of the requirements of
domestic consumption that the amount of oil in storage was reduced to
the extent of 27,000,000 barrels, and it was necessary to supplement
the home supply with a net importation of 31,000,000 barrels, chiefly
from Mexico. The year 1918 was a war year but in 1919, despite peace,
production in the United States rose to 377,000,000 barrels. Thus
an ever-increasing demand--especially for gasoline--is producing a
pressure on crude supplies greater than in war time.
It does not follow that all the estimated available crude reserves in
American territory can be reached in even the near future. American
oil wells will undoubtedly be producing at least seventy-five years
hence, for the very good reason that all the hidden pools cannot be
discovered forthwith or immediately made productive, even when located.
But the condition the American nation must face in connection with its
own wells is the probability of a gradual decline after the peak of
production has been reached, an event that may transpire this year or
next, or may be delayed for a decade.
Mr. White’s paper, which had the effect of enlightening many as to the
changing phases of the oil industry, also emphasized the possibilities
of the development of shale oil, a potential resource which might
prove a suitable substitute. But since this product is still in the
experimental stage, and since it has never been claimed for it that
it could develop the manifold richness and varied utility of crude
petroleum, it is not necessary to discuss its possibilities in a book
devoted to the latter product. Whatever the future of shale oil, it
cannot alter the plain circumstance that if it is to be maintained at
its present level for any extended period, the American oil industry
must look for reserves abroad.
A glance at the world’s production for the year 1917 proves that the
United States has more at stake in this matter than all the other
nations combined. The production was distributed as follows:
United States 66.2 per cent.
Russia 13.6 ” ”
Mexico 10.9 ” ”
Dutch East Indies 2.6 ” ”
Other countries 6.7 ” ”
Since then the proportion has been altered, Russia dropping to third
place and Mexico rising to second, the relation of the United States to
total production remaining probably unchanged.
The predominating importance of the petroleum industry to the American
people was indicated in a speech delivered by Sir Auckland Geddes,
British Ambassador to the United States, at New York in May of the
present year (1920) when he said that this country controlled 82 per
cent of the present visible world supply.
This estimate of course embraces not only domestic fields but foreign
fields developed by American private enterprise. It demonstrated
completely the claim of the United States to leadership in dealing with
so vital an international question as the world’s petroleum supply--not
only as the chief consumers but to all intents and purposes, the
founders of the industry.
As has been set forth elsewhere in this book, the importance of
petroleum to countries of maritime aspirations, either naval or
commercial, is inestimable, and it is on that phase of the question
that the minds of British statesmen have, within the past five years,
become concentrated. So far as Great Britain is concerned, this is
a new development, born of the great war. Sir John Cowans, G. C. B.,
Quartermaster General of the British Army throughout the decisive
period of the conflict, has said “Great Britain was, when the war broke
out, between twenty and thirty years behind the American and Dutch
nations in its knowledge of oil.” He and other eminent Englishmen have
emphasized the difficulty of making up that leeway, one obstacle being
that at least eight or ten years was required for the education of
an oil expert. In seeking a trained personnel to handle the problem,
Great Britain, like most other countries, must for the time being at
any rate look to the United States. But though the awakening of the
British to the importance of petroleum was belated, it is real. Not
only their Admiralty, but their Army authorities are insisting on the
importance of adequate reserves. Controlling as they do the destinies
of a vast maritime Empire, the growing dominance of oil-burning
ships, and the necessity of providing for their fuelling, has become
an ever-present thought in the minds of British public men at a
time when the American Government, relying perhaps on a factitious
belief in the inexhaustibility of our native oil resources, remained
indifferent. There is no reason to doubt that the aim of Great Britain
is her own national and Imperial security, rather than aggression.
The British Ambassador, in the address referred to, gave the most
absolute assurance on that point, but the fact is patent that, through
governmental coöperation, British oil men have secured distinctive
advantages in foreign fields, advantages which, with similar
coöperation, might have been available to American oil interests--whose
leaders may be accepted as equal to foreign business men in foresight,
courage and enterprise.
The relation of the foreign petroleum situation to the re-born American
ambition to possess a merchant marine that shall carry American wares
in American ships must be clear to every reader. Just as Great Britain
owes her far-famed sea power to her policy of maintaining coaling
stations at the best available locations on the seven seas, she now
aims to preserve that prestige by oil bunkering stations advantageously
placed. The situation might conceivably arise whereby (despite our vast
home production), the American merchant marine when at sea would find
itself dependent on the bunkering stations of foreign powers. No one
will question the right of Great Britain to protect and maintain her
trade routes by reserves of the new maritime fuel, and her Government
deserves praise rather than censure for backing British enterprise in
measures directed to that end. The point to be borne in mind is that
American oil men, the real creators of the industry, have accomplished
what they have in the foreign field virtually _without_ governmental
support or co-operation. It is hardly overstating the facts to add
that they have been harassed and interfered with in their efforts to
maintain the future security of their industry and of their nation
in this matter of petroleum reserves. Thus, there has lately arisen
a demand for constructive legislation which will permit governmental
coöperation and diplomatic action that will place American oil
interests on something like an equal footing with those of Britain
and other countries in securing a necessary augmentation of the home
supply. Disinterested public men who have made a study of the problem
are of the opinion that in the national interest, and entirely without
reference to the advantages that might or might not accrue to this or
that individual, American petroleum companies should be encouraged by
all the power and influence their Government can exert to acquire
foreign sources of supply wherever available.
A glimpse at the facts with regard to the oil bunkering situation shows
how closely petroleum and national aspiration are allied. The estimated
requirements for the U. S. Navy for the fiscal year of 1919–20 were
about six million barrels. In the undesired event of war this estimate
would be vastly increased. With regard to the American merchant marine,
it is worth noting that about one half of the vessels constructed in
1919, representing approximately three million deadweight tons, were of
oil-burning design. On the Pacific Ocean, where satisfactory grades of
steam coal are not so generally available as on the Atlantic, oil has
come into general use as fuel. American companies furnish most of the
fuel oil which is supplied at ports outside the United States and the
United Kingdom, the total number of such foreign bunker installations,
owned by American companies, being 88 in a total of 114. But the
possession of such foreign facilities for American shipping will prove
of little value unless Americans have sufficient oil, from either
home or foreign fields, to furnish adequate supplies at competitive
prices. With an increasing shortage of oil for domestic consumption,
bunker fuel oil supplies can only be maintained through the control of
production in advantageously located foreign fields.
Among the rivals to American enterprise which have arisen, the most
important is the Royal Dutch Shell combination, which, though of
Holland registration, has been a partner with the British Government in
petroleum enterprises, and is to-day the leading factor in the Far East
and in Australia in this vital matter of bunker supply. It is acquiring
potential petroleum fields in Mexico, South America and the United
States itself. The British Ambassador’s statements tend to allay fears
that there is any deliberate attempt to discriminate against the United
States in any part of the world; yet it is a fact that this country
is likely to be seriously handicapped in its efforts to obtain its
share of the world’s carrying trade if its ships abroad are eventually
compelled to rely on foreign companies for fuel.
In order that the reader may clearly visualize the situation with
regard to the prospects of augmenting home supplies, it is necessary to
speak once more of certain foreign fields mentioned in the geographical
survey that constituted an earlier chapter. The nearest field and the
one to which Americans must naturally look, because for an indefinite
period it will continue to produce oil far in excess of the needs of
its own people, is Mexico. Unbacked by governmental coöperation in
any form, American private enterprise has done much in an endeavour
to develop permanent supplies in that country, and has paid its way
generously. Fortunately, the internecine warfare which has paralyzed
the maintenance of law and order in many parts of that country has
been less serious in the oil regions than in some other provinces, but
precious lives have been lost, and considerable property destroyed
without redress. Still more serious is the fact that in the face of
the activities of foreign powers anxious to secure American holdings
of great potential value the American Government has been inert in a
field where, for geographical reasons alone, it has a claim to first
consideration. The patriotism of an American citizen, Mr. E. L. Doheny,
controlling owner of the Mexican Petroleum Company, has been more
potent than that of the public authorities in safeguarding the future
of our interests in that country. Mr. Doheny received a handsome offer
from the Royal Dutch Shell Company for his interests; but he refused
it on the ground that for the future welfare of the United States, his
properties should remain under an American control. Undeniably the lot
of the American capitalist in the Mexican oil fields has been rendered
so difficult that any man might be tempted to sell to the first bidder.
While a recent Mexican administration proposed to “nationalize”
petroleum there have been many attacks in other forms upon the rights
of American oil companies, but so far these companies have escaped
absolute confiscation of their properties. Here is obviously a field
in which American interests must have the same sort of diplomatic
assistance which Great Britain extends to its nationals if the future
is to be secure.
The next closest field to which Americans must naturally look is the
Caribbean Region--the Central American and West Indian Republics,
Colombia and Venezuela. Their importance lies almost wholly in their
future possibilities, but they undoubtedly have oil potentialities of
considerable value. Therefore, the control of concessions is of very
grave importance in view of the need for acquiring extra territorial
oil reserves. Fortunately, Americans are here first in the field,
though enterprise has not gone very far beyond the securing of
concessions. Such privileges obtained in Colombia, Panama, Nicaragua,
Honduras, and Costa Rica are held by various American syndicates. A
Venezuelan concession originally American-owned is at this writing in
British hands, and British capital is also interested in Honduras oil
development. It is obvious that the sympathetic coöperation of the
authorities at Washington, is necessary in the Caribbean area if the
United States is to render secure an ascendancy there.
In South America the rivals of the United States interests are also
active but have not outstripped them, and with a progressive policy on
the part of their government Americans may hopefully look for reserve
supplies from that vast continent, though their development, owing to
the mechanical and speculative conditions of modern oil production,
cannot be rapid. Argentina, which already has two producing fields,
operates them as state enterprises and has as yet granted no foreign
concessions. Peru is already a large producer of crude petroleum and
has opened her gates to American oil interests, but here, as elsewhere,
the need of diplomatic backing is present. Generally speaking,
though the real potentialities of South America are unknown, it is a
territory in which the United States, if it is to safeguard its future
interests, cannot afford to remain indifferent.
The world-wide British Empire includes many countries containing oil
potentialities, though the total production is inconsiderable in
comparison with that of a single American state like California or
Texas. According to the statistics put forth by Sir Auckland Geddes,
production under the British flag in 1919 represented but five per
cent. of the world’s petroleum output. But there is no certainty as to
what the future may bring forth and the general policy in all parts
of the Empire seems to be to keep oil development in the hands of
British nationals and to restrict operations by foreign capital. In
the important oil territory at Burma these restrictions are absolute;
though in self-governing Dominions, like Canada, they do not obtain.
In all Crown colonies the British Government retains the right of
pre-emption at need. Quite as severe are the laws covering oil deposits
or potential oil deposits in French colonial possessions. The Dutch
East Indies, a comparatively promising field, are closed to all but
subjects of Holland, or to companies which have a majority of Dutch
subjects on their directorate; under the latter provision British
capital dominates the oil production of Borneo.
Outside the Western hemisphere the only fields where the United
States may look for reserves, (which, as has been explained, are of
especial importance in connection with bunkering stations,) lie in
what are respectively known as the Near East and the Far East. China
has undoubtedly oil potentialities, though data on the subject is
vague, and it is presumed that the Chinese government, which holds a
monopoly of them, will one day admit foreigners into partnership in the
working of them under some sort of special contract. Japan already has
a somewhat similar arrangement. In demonstrated possibilities the Near
East is of much more promise. The importance of the Roumanian field has
been spoken of elsewhere and prior to the war American interests were
established there. Later in its reconstruction policies Roumania is
contemplating changes in its petroleum program not formulated at this
writing. It is reported that French and British interests, supported
by their respective governments, are making every effort to secure
important holdings in the Galician oil fields, formerly situated in
Austria, but now coming within the boundaries of the new Republic
of Poland. The future administration of the Russian fields is still
problematical. At the moment they are occupied by the Bolsheviki. The
Persian field, by an arrangement dating back to 1901, is operated by
British interests. The potential fields of Mesopotamia and Palestine
are under control of Britain by mandate of the League of Nations; but
that country expressly disclaims any special authority to exclude
other nations from participation in petroleum development in these
territories. It must be plain to the most inexperienced reader that
in the case of Asiatic and East-European fields, however, American
oil interests are powerless to achieve influence and obtain due
recognition without the diplomatic assistance and coöperation of their
home government. It is necessary, if they are to secure equal rights
under international law that will serve not merely as a check upon any
possible unfair discrimination, but enable them to secure workable
international arrangements. These should redound to the interest of
all countries for the United States is the motherland of the science
of oil production. The prestige of this country is such that in many
cases a mere diplomatic protest would be sufficient to rectify many
disabilities under which the American oil company seeking foreign
reserves at present labours, without creating serious disputes or
international entanglements. In the words of Thomas A. O’Donnell,
President of the American Petroleum Institute, with which most of the
leading petroleum producing and manufacturing companies of the country
are associated:
The American oil industry asks only the support of the nation in
giving it an equal status, putting it upon an equal footing with
the nationals of other countries in the development of the world’s
petroleum resources--and it asks this in the interest of the nation.
With the Government at their back to secure for them fair play,
American oil interests could face the future with confidence, if not
with certainty; lacking such coöperation, the future is fraught with
hazard to an industry that stands as a monument to American organizing
genius.
THE END
THE COUNTRY LIFE PRESS, GARDEN CITY, NEW YORK
Transcriber’s Note
Some inconsistencies in spelling, hyphenation, and punctuation have
been retained.
This file uses _underscores_ to indicate italic text. Small capitals
changed to all capitals.
p. xv: changed “Rumania” to “Roumania” (Moreni Field, Roumania)
p. 50: changed “Egpyt” to “Egypt” (Egypt has also a future)
p. 69: changed “fish-tale” to “fish-tail” (the delicate fish-tail bit)
p. 74: changed “rythmical” to “rhythmical” (the rhythmical “chug-chug”)
p. 83: changed “Samual” to “Samuel” (Samuel Van Syckel of Titusville)
On pp. 35, 37, and 57 appears “Edwin Laurencine Drake.” Modern sources
differ in spelling (Laurentine). This name was left as originally
printed.
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