November 1956

The mysterious Russian turbodrill is unveiled in the In secret tests conducted at Dresser, the turbine-powered drilling system was reported to have made hole at a rate of 500 ft per hour. A symposium in explores the commercial applications of atomic radiation in refineries and petroleum product processing. (Wo now!) British and French forces enter Egypt to begin unblocking the Suez Canal, a ploy by to gain a stranglehold on oil traffic through the canal. Because of the Suez crisis, WW II ships are brought out of mothballs to transport crude-oil from the Gulf Coast to other U.S. ports and to European allies.

East Texas crude oil - $2.90/bbl

November 1981

What operators made the $200 Million-in-Earnings-for-the-Third-  Quarter-1981 Club? The group includes some names that are slowly fading from memory, including Standard Oil of , Gulf, and Getty. Mobil’s proposed takeover of creates a serious stir in Congress. The House introduces a bill that would place a moratorium on takeovers of middle-sized oil companies by international oil companies. The rig count sets another record with 4,437 active rigs during the month.

active rig count – 4,437

November 1996

The Russian government embarrasses Gazprom by freezing some of its accounts for nonpayment of about $2.8 billion in back taxes. Texaco unveils a restructuring plan designed to stimulate growth, rather than simply cut costs. (Meanwhile, lurking in the bushes.) Beleaguered Energy Secretary Hazel O’Leary submits her resignation. Front runner appears to be Representative Bill Richardson of New Mexico. Brazil appears close to privatization of its petroleum sector.

    Light sweet crude oil - $23.88/bbl
Natural gas - $2.74/MMBTU
active rig count - 849

The Rest of the Yarn

For the next few months, this column will take a look back at the early history of oil trading in this country…How and where did it get its start?  Who were the players? How was it regulated?

 

Nowadays crude oil is bought and sold at both posted prices and contract prices. It is hard for today’s oil operator to fathom how oil was marketed in the industry’s infancy.

 

In the years immediately following the Civil War, when the oil business was getting established around , “oil brokers” visited the individual wells on horseback and made whatever bargains they could with individual producers. In the process, they obtained “certificates,” each good for 1,000 bbl of oil, and these certificates were peddled to refiners or other traders at whatever prices they could get – usually much higher than what they had paid the producers.

 

The first oil exchange was probably a railroad coach on the line that was built from in 1866. A special car was fitted up for the oil brokers, and the train took 3 hours to make the 17-mile trip each day because it stopped at every lease along the way so the brokers could dicker with producers. Then they would trade the certificates with each other on the way back to

 

Along about 1870 a “curbstone exchange” grew up in . Brokers literally had their offices in their hats, and when they met on the corner they would buy and sell oil certificates. In 1874 an oil exchange was formally organized, and it established strict rules and hours for trading. Reflecting the size and profitableness of the business, the exchange built an elaborate three-story building in downtown Oil City, containing not only a trading pit surrounded by a big gallery, but offices, committee rooms, reading rooms, telegraph lines, and other conveniences for its 400 members.

 

For the next 20 years or so the Exchange dominated the crude-oil market of the world. Next month more on the influence of the Exchange on oil trading.

 

Readers are encouraged to submit brief, ostensibly true stories about notable personalities from our industry’s storied past. Submissions should be e-mailed to contest@houston.spe.org.


History Quiz

Here is one for the cultured amongst us. The grand opera Aida was written by the Italian Verdi to celebrate something that proved to be of great significance to the oil industry. What was that celebratory something?

 

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

 

Answer to October’s Quiz

Phillips Petroleum was the first operator to drill deeper than 25,000 ft on a well in in 1958.

 

Answer to September’s Quiz

Starting with the postulates…(1) Knowledge is Power and (2) Time is Money, Dilbert’s “Salary Theorem” is proven as follows:

          Since Power=Work/Time; Knowledge=Power, and Time=Money

          Then Knowledge=Work/Money.

          Solving for Money, you get Money=Work/Knowledge.

Thus, as Knowledge approaches zero, Money approaches infinity.       
Conclusion: The less you know, the more you make. Thus,      engineers and scientists can never earn as much as business executives and sales people.

 

Congratulations to September’s winner – Jerry Sears with Bank of