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diff --git a/77066-0.txt b/77066-0.txt new file mode 100644 index 0000000..9bf7a89 --- /dev/null +++ b/77066-0.txt @@ -0,0 +1,3802 @@ + +*** START OF THE PROJECT GUTENBERG EBOOK 77066 *** + + + + + + 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. + + + +*** END OF THE PROJECT GUTENBERG EBOOK 77066 *** |