As of year-end 1958, the oil outlook for Alaska is “still very long-range.” However, with three active wells (all with fishing problems), several rigs in transit from the West Coast, and at least 35 active geological/geophysical crews, there is room for optimism, especially at Kenai, the Cook inlet, and the Bethel and Copper River basins. $ Pemex announces plans as a national policy to emphasize natural gas as the fuel in Mexican industrial development. (Better get started on the infrastructure!) $ Atlantic Refining announces the development of a technique for detecting hydrocarbon seeps in submerged areas using an infrared analyzer unit which checks for methane in the water. $ Engineering careers appear to be losing their appeal to youth. Overall college enrollment in 1958 was up 4.1% over 1957, and all disciplines experienced increases except for engineering which experienced a 7.6% decrease in enrollment. (Don’t know what they’re missing.)
East Texas crude oil - $3.25/bbl; U.S. active rig count – 2,321
How about this for a creative takeover defense? Superior Oil, which was being actively courted by Mesa Petroleum, announces what could become a “sacrificial dividend” designed to ward off unwanted suitors. The dividend amounted to a certain number of shares of preferred stock that could be redeemed for cash if an outsider acquired 35% or more of Superior’s voting stock. The redemption price would be the highest price paid by the acquiring firm during the preceding 12 months. In the process, an acquiring firm could find itself in control of a company drowning in obligations to its own preferred stockholders. $ Two more independents report plans to increase capital spending next year…Superior Oil and Enserch. (How many of you formerly worked in what used to be called the Enserch Building on Richmond or have been out on a well location off of “Old Superior Road” in Montgomery County?) $ The insurance companies are at it again, as American Exploration Co. closes a limited partnership with five insurance companies to acquire producing properties in the Gulf Coast crescent area. (See…It’s not just the dentists.)
U.S. active rig count – 2,678
Mergers and layoffs continue to make headlines. While Parker Drilling and Superior Energy Services work on revising the stock exchange rate for their merger, Chevron and Texaco independently report that they are carefully reviewing merger and acquisition opportunities. Meanwhile, Texaco announces the elimination of 2,000 jobs, and Union Pacific Resources reports that it will reduce its Fort Worth headquarters staff by 14%. Australia’s Woodside Petroleum takes a more novel approach by trimming $400 million in spending in the next two years while retaining all 1,700 employees. $ BP breaks the existing GOM production record, as one of its Troika Project completions comes in at 47,000 BOEPD, breaking the existing record held by another Troika well. $ The oil price crash has led to the shelving of a proposed $1.8 billion heavy crude joint venture involving Venezuela’s Pdvsa and Coastal Corp. Meanwhile, Enron signs a joint venture accord with South Korea’s SK Corp. to distribute gas in the country. (Beware of wolves in sheep’s clothing!)
Light sweet crude oil - $11.19/bbl; Natural gas - $1.95/MMBTU; U.S. active rig count – 669
The Rest of the Yarn
Continuing with last month’s look at Hugo Chavez’s impact on the global petroleum industry, this month we examine his rise and fall in popularity.
Two explanations have been offered for Chavez’s undeniable early popular appeal. Venezuela’s combination of extensive oil resources and widespread poverty, a combination often found in petroleum-rich countries, offered an opening for a “people’s avenger.” Also, if there is one thing that Chavez has continued to successfully communicate, it is that he cares about people. His social-welfare missions have been extremely popular.
After decades, even centuries, of running the country like their own personal hacienda, the elites’ grip on the corruption-riddled and exploitative system was finally undone by this popular figure who represented the first dark-skinned member of the impoverished majority to seize power in Venezuela. That same impoverished majority viewed Chavez as a hero.
While gleefully playing the buffoon, he has managed to dismantle and refashion most of Venezuela’s political institutions. He has taken control of its crucial industries (oil, most importantly) and rewritten its Constitution twice. He has used headline-grabbing rhetoric, aggressive diplomacy and petrodollars to become one of the most famous political figures in the world. Having abolished term limits, he can stay in power as long as necessary to build his “21st century socialism” in Venezuela.
Despite these oft-admired qualities, Chavez has failed to sell his savior-of-the-people image to all within and without Venezuela. His political base was taken aback as he began to rule by decree and dismantle checks on executive power. Described as a “womanizer” by his critics and as a “hyena” and a “negative force in the region” by U.S. officials, Chavez has nevertheless managed to legitimate himself as a proud Latin American nationalist bravely standing up to United States imperialism. The political opposition tried to overthrow him in a 2002 coup and ended up discrediting itself as an enemy of democracy.
Next month, Chavez’s confrontations with the U.S.
I coined the word “kerosene,” patented a process for making it from coal, wrote a technical handbook on how to distill the “lamp-oil” from pitch, tar, and soft coal, and was well on my way to raking in a fortune when some fool named Drake drilled an oil well. Who am I?
If you would like to participate in this month’s quiz, e-mail your answer to email@example.com by noon December 15. The winner, who will be chosen randomly from all correct answers, will receive a $50 gift card to a nice restaurant.
Answer to November’s Quiz
First discovered in outer space, I fast became essential in building vehicles to traverse outer space. I am somewhat of a nuisance to the oil industry, while much sought after for use in industry, medicine, the military, and research. And in the mid-twentieth century, the Bureau of Mines was investing more than $12 million to produce me. I am helium.
Answer to October’s Quiz
The Oribi field was the source of the first offshore crude oil production for the Republic of South Africa.
Congratulations to October’s winner – Bo Holland with Scientific Drilling