Oilfield hands continue to reflect on the industry’s worst blowout in history near High Island, where for a time all wells tied to the platform went wild as a result of the explosion damaging all of the closely spaced wellheads. $ Venezuelan oil attaché Eduardo Acosta tells an SEG convention that his country is striving to meet its obligations to establish greater reserves for the defense of the western hemisphere. (And Oh by the way, Venezuelan oil is really domestic oil and should be given preferential treatment in any U.S. oil import control program.) $ Speaking of countries that are looking after the U.S.’ best interests, Libya is reportedly close to delineating its first oilfield, thanks to the efforts of a U.S.-based operator consortium. $ The Engineers Joint Council reports that all 1958 engineering graduates had jobs or job offers within one month of graduating.
East Texas crude oil - $3.25/bbl; U.S. active rig count – 1,972
ARCO President William Kieschnick reports that the hydrocarbon base for ARCO for the rest of the century will be Alaska. (No big surprise here.) $ With the world water depth record for a fixed platform set at 1,025 ft, McDermott Engineering initiates an industry initiative to assess the feasibility of constructing a fixed platform in 1,600 ft of water. (Surely not!) $ Statoil and Total begin work on a project designed to develop the technology for long distance transportation of oil and gas through the same pipeline. (New buzz word – polyphasic technology.) $ Reports out of London indicate that crude oil futures trading on London’s International Petroleum Exchange are due to start later this year, with North Sea Brent being used as the marker for the futures contract.
U.S. active rig count – 2,338
Shell, Amoco and Exxon begin production from their GOM Ram-Powell TLP in 3,214 ft of water, a new world record for a production platform. $ The U’wa Indians in Colombia threaten to commit mass suicide if Oxy and Shell proceed with exploration plans on their rain forest land. $ Meanwhile, three thousand Shell refining and marketing staff in Europe face the ax in the next 2-3 years under a drastic shake-up intended to cut costs and make operations more “customer-focused.” (Certainly doesn’t sound very “employee-focused.”) $ Union Pacific Resources ups the ante to $84/share in its bid to take over Pennzoil. $ A quick response, automatic shutdown, and calm seas help minimize damage from a subsea pipeline rupture in the Santa Barbara Channel near a national marine sanctuary.
Light sweet crude oil - $22.06/bbl; Natural gas - $2.96/MMBTU; U.S. active rig count – 974
The Rest of the Yarn
Continuing with last month’s look at Winston Churchill’s impact on the global petroleum industry, this month we examine some important petroleum supply relationships fostered by Churchill.
The likely choices for supplying the British Admiralty’s oil requirements were the Royal Dutch Shell Group and the smaller Anglo-Persian Oil Co., but the latter was in a weak financial position. To avoid being acquired by Shell, Anglo-Persian Oil Co. offered the Admiralty a deal: a 20-year fuel contract. It warned that if the company were to be absorbed by Shell, Shell would be in a position to demand monopoly prices from the Royal Navy.
In 1914, an agreement was signed with Anglo-Persian by which the British government would invest 2.2 million pounds Sterling and would acquire 51% of the company. Despite this agreement, Anglo-Persian did not remain the sole supplier to the Admiralty. Churchill also negotiated a fuel contract between Shell and the Royal Navy. As a result of these deals, the British government was assured a large supply of oil.
By the summer of 1914, the British Navy was fully committed to oil, and the government had assumed the role of Anglo-Persian’s majority stockholder. For the first time, oil had become an instrument of national policy and a strategic commodity. It has remained so ever since.
The Oribi field was the source of the first offshore crude oil production for what African country?
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
The oil industry titan and philanthropist whose son wrote shortly before his father’s 94th birthday:”…In all these years of effort and striving, your own life and example have been to me the most powerful and stimulating influence. What you have done for humanity and business on a vast scale has impressed me profoundly. To have been a silent partner with you in carrying out these great constructive purposes and benefactions has been the supreme delight of my life.”…was John D. Rockefeller.
Answer to May’s Quiz
The Canadians claim that the true father of the oil industry, circa 1858 (one year prior to Colonel Drake), was James Miller Williams whose strike was at Oil Springs, Ontario.
Congratulations to May’s winner – Betty Robbins with Texas A&M Petroleum Engineering Department