December 1957

If you are inquisitive, sleuthful, determined, sneaky, can keep a secret, have the gift of gab, and coincidentally expensive tastes, what might your career path be in today’s E&P organization? That’s right…a landman. Things were not always quite so lucrative for their predecessor…the lease broker. Witness the following testimonial from a South Texas lease broker circa 1957. “Starting out with $1,000, which I saved from my former work during the First World War, I built it up after 38 years to about $1,000. A farm bought primarily for the mineral gamble and a few mineral or royalty interests that pay anywhere from 1 cent to as much as $20 per month, cost me $1,000 total. So there you have my balance sheet after 38 years as a lease broker. Maybe some day I will get my money back.”

East Texas crude oil - $3.25/bbl; U.S. active rig count – 2,526

December 1982

Costs mount for Apache and partner El Paso Exploration from a high-flowing deep gas blowout in the Texas Panhandle. Uncontrolled gas flow from the Key #1 continues at about 25 MMCFD, while relief well directional control problems delay kill operations. More than $41 million has been spent on this well thus far. Chomping at the bit to participate, oil industry executives report that they expect the Chinese to take a slow, meticulous approach to exploration by foreign companies. The Chinese bureaucracy is reportedly unparalleled in the developing world. Exploration/development continues by Shell and Atlantic Richfield in Washington State and Oregon. Exxon reports plans to spud a 25,000 ft well in Los Angeles County early in 1983.

U.S. active rig count – 2,655

December 1996

Venezuela is reportedly studying a proposal to renew an old triangular agreement with Russia and Cuba by which state-owned PDVSA would ship 20,000 b/d of heavy crude to Cuba, while Russia would supply an equal volume of crude to some of PDVSA’s customers in western Europe. The Venezuelan energy ministry estimates that the arrangement would save Venezuela about $2/bbl on freight costs. Enron and Shell jointly acquire a 50% stake in the pipeline assets of Bolivia’s state-owned YPFB. The U.N. Compensation Commission approves a $610 million damage award to Kuwait Oil Co. to be applied to the cost of putting out oil well fires set by fleeing Iraqi soldiers during the Persian Gulf war. Brazil and Russia jump on the bandwagon with Total and Elf to try and strike a deal with Baghdad to buy Iraqi oil, subject to U.N. approval. If approved, the range of all such deals would include oil for: medicine, wheat, sugar, and cigars (for you know who).

Light sweet crude oil - $25.15/bbl; Natural gas - $3.48/MMBTU; U.S. active rig count – 856

The Rest of the Yarn

This month we conclude a series of articles describing the indispensability of petroleum in successfully waging World War II.

In 1924, President Coolidge wrote, with great prescience, that “the supremacy of nations may be determined by the possession of available petroleum and its products.”

World War II, viewed by many as the greatest conflict ever fought, dramatically emphasized the indispensability of oil to any strategy for victory. U.S. output of gasoline for military use in the later stages of World War II was about 18 times greater than in World War I, and that of aviation gasoline about 80 times as great. Approximately half the tonnage of supplies shipped overseas consisted of petroleum products.

Oil – the attempt to conquer its sources or to manufacture it, the attempt to deny it to an enemy – all were major factors in determining the strategy of World War II. In fact, the war started and ended in major efforts to keep oil, the blood of war, flowing through the veins of the war machines.

Future wars may be fought with nuclear missiles, insidious chemicals, high powered lasers, or something out of a James Bond novel, but as far as World War II was concerned, the allies rode to victory on a wave of oil.

History Quiz

Three metals which are key elements in refinery catalysts were all discovered in Sweden in the mid to late eighteenth century. What were those three metals?

If you would like to participate in this month’s quiz, e-mail your answer to contest@spe.org by noon, December 15. The winner, who will be chosen randomly from all correct answers, will receive a $50 gift certificate to a nice restaurant.

Answer to November’s Quiz

The Goose Creek field in Harris County, which opened up major oil production in our own backyard, and the Salt Creek field in the Powder River basin, the first significant oil field in Wyoming, were both discovered in 1908.

Answer to October’s Quiz

In the late 1950’s the C.U.S.S. Group operator consortium was formed to, among other things, cooperate in the development of some novel offshore drilling techniques. The four operators that made up the C.U.S.S. Group were: Continental, Union of California, Shell and Superior.

Congratulations to October’s winner – Bill Huskey with William L. Huskey & Associates