A mountaineer riding on a mule wanders onto a well site in northern Kentucky and inquires as to what the rig crew is doing. He is told that they are fishing for a drill bit. He asks how deep the hole is and is told that it is as deep as a tree, hoping to dispatch the nosey fellow. He leaves and returns in an hour dragging the lost drill bit behind his mule. He warns the astonished rig crew to be careful where they drill those holes, as this drill bit of theirs almost hit his still when they penetrated his moonshine cave. With the advent of tubeless tires, futurists warn that the American way of life may undergo drastic changes. Without “inner tubes,”… How will children learn how to swim? What will poor folks use for life preservers? What will the handyman use for emergency patches, springs, and hinges? Social ecologists express fears that the slingshot may become extinct. A new well in North Dakota is recorded with the well name Stanolind 1 New Year Many Ribs. State officials speculate that since the well is on an Indian reservation, the well may have been named after the landowner or a member of his family that was born during a New Year’s Day barbecue. What operator offers the highest individual bid in this year’s late OCS lease sale? Humble? Gulf? Kerr-McGee? Phillips? Would you believe…Forest Oil of San Antonio?
East Texas crude oil - $2.90 per bbl; U.S. rig count – 2,364
The chairman of the beleaguered National Iranian Oil Co. goes on strike to protest the continual interference by the nation’s religious leaders. The ayatollahs are reportedly preparing to install their own NIOC chairman in their continuing effort to purge the country of former monarchist sympathizers. The Soviet Union reaches an all-time high crude output of 11.8 million bbl/day. The DOE takes over the job long-held by the API of collecting and reporting data on U.S. crude reserves. Shades of the old Chinese adage about who should be watching the hens…the farmer (Uncle Sam) or the rooster (industry folk): “When it come to eggs, farmer take and rooster make.” (The adage is more compelling if you can visualize Mr. Miyagi reciting it.) The U.S. active rig count approaches a 22-year high and the active seismic crew count a 20-year high.
U.S. rig count – 2,364
Low U.S. natural gas prices lead to more shut-ins. Operators reporting substantial shut-ins include Cabot, Devon, Enron (probably won’t affect their reported production volumes), Seagull, Anadarko, Mitchell, Coastal, CNG, Vastar and Noble. Saddam Hussein is at it again. This time he is rattling his saber about possibly attacking Kuwaiti oilfields. Some believe that increasing unrest in his country is leading him to remind the people that he is still in charge. Industry experts report that any new electric generating capacity built in the foreseeable future would be gas fired. At a gas-fired power generation cost of $400-500 per kw-hr, the $800 per kw-hr for coal and nuclear generation are no contest. Viet Nam reports plans to seek bids for offshore acreage near the history-rich city of Bach Ho, Viet Nam’s only current source of commercial oil production. The city was re-named after archaeologists uncovered millennia-old bronze digging implements in archaeological sites just outside the city. BP finishes installing the jacket and deck on their Pompano platform, the second tallest fixed platform in the Gulf of Mexico. Only Shell’s Bullwinkle structure is taller.
West Texas Intermediate - $17.40 per bbl; Natural Gas - $1.64 per MMBTU; U.S. rig count – 828
Brazil is now expected to become one of the sizzling hot spots for exploration in the coming decade. Underscoring that prediction—and bringing an end to the upstream monopoly of state oil company Petrobras—is the official award of 12 offshore blocks to multinational firms. The European Commission approves the industry’s two largest planned mergers—Exxon-Mobil and BP Amoco-ARCO—on the condition that certain divestitures are made. With industry consolidations continuing and the U.S. rig count dropping to a 47-year low this past summer, fifteen firms now own 54% of all U.S.-based rigs. A military coup occurs in Pakistan, but it is not expected to affect foreign oil and gas company operations in the country. Saudi reserves of 261 billion bbl could jump to 400 billion bbl with enhanced recovery, and negotiations with potential foreign investors are slated for year end.
West Texas Intermediate - $22.38 per bbl; Natural Gas - $2.91 per MMBTU; U.S. rig count - 721
The Rest of the Yarn
He came to Houston in 1917, studied law, and became a county judge. He founded the First City National Bank, later to be run by his son. The rise of the bank was closely linked to that of his law firm. He and his law firm had the foresight to concentrate on the most promising industries—oil and gas, and insurance. He was an indomitable personality, whether as a senior law partner or as a member of the powerful, unofficial 8-F Crowd, cronies including Herman and George Brown, Gus Wortham, and others, who met regularly in a suite in the Lamar Hotel and exerted great influence in city and state politics. (More on the 8-F Crowd in a future Then & Now.) Winning was his objective in business, politics, and play. At the racetrack with Herman Brown or Gus Wortham, he might bet a hundred dollars on a favorite, but he would also bet minimum money on each horse in the race, so that he could always hold up a winner’s stub. He was one of the first “movers and shakers” in Houston to tightly interconnect banking and legal institutions. One reason for the success of the big law firms in Houston ever since has been their intimate connection with the prominent banks of Houston. The banks became a huge source of business for these law firms, and it continues today. During his stewardship, all lawyers in his firm wore hats and worked on Saturdays. He lived to the ripe old age of ninety-three. (More on his law firm and its most famous alum in future Then & Now’s.) Consider this an introduction into the life of Judge James Elkins, county judge and founding father of the Vinson, Elkins law firm. And now you know…The Rest of the Yarn.
Readers are encouraged to submit brief, ostensibly true stories about notable personalities from our industry’s storied past. Submissions should be e-mailed to email@example.com.
When, where, and why did man first begin drilling and casing vertical holes in the earth’s crust?
If you would like to participate in this month’s quiz, e-mail your answer to firstname.lastname@example.org by noon, October 15. The winner, who will be chosen randomly from all correct answers, will receive a $50 gift certificate to a nice restaurant.
Answer to September’s Quiz
In the early days of the petroleum industry, the 40-gallon barrel used by many industries was increased to 42 gallons to compensate the buyer for evaporation during transport. Due to fraud and misrepresentation, the only barrels guaranteed to be 42 gallons were the blue barrels manufactured for and used by Standard Oil. Thus the standard measure for oil became the blue 42-gallon barrel or “bbl.”
Answer to May’s Quiz
The oil industry stole the concept of fractionation from the wine industry, which learned that it could increase the octane number of wine by fractionating or distilling it down to cognac or sherry.
Congratulations to May’s winner (not many correct answers this month)—Mark Glaser with Weatherford.