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.