A Century Of Oil ANNIVERSARY OF DRAKE’S DISCOVERY

Press, Volume XCVIII, Issue 28984, 27 August 1959, Page 12

A Century Of Oil ANNIVERSARY OF DRAKE’S DISCOVERY

[Specially written ter "The Press" by

R. H. LAUNDERI

Today is the most important centenary of the century. When Colonel Edward L. Drake struck oil at Titusville, Pennsylvania, on August 27. 1859, he set moving the industry that characterises our time. Although Drake’s was the first commercially-drilled oil well, mineral oil had been known and used for centuries before. The Bible abounds in references to oil; indeed, archaeologists have uncovered receptacles coated with bitumen that were made in preBiblical times. The Incas in Peru, the Aztecs In Mexico, the Indians of America, all used bitumen and asphalt, and Marco Polo records that travellers cam? from distant parts to a “fountain of oil” at Baku to get oil to use In lamps. The Romans and Persians used mineral oil in many ways; the Crusaders put it to military use when they used naphtha flamethrowers in the storming of Constantinople. Oil seepages, and in some cases pits that enlarged seepage areas, were the sources of pre-Drake oil. The men who financed Drake’s well were attracted by the possibility of a substitute for whale oil for lamps. Whales were distant and costly to catch —and were getting scarce. When refined, skimmings of oil from a spring near Titusville produced an illuminating oil as good as whale oil. The experiment inspired Drake’s backers to hope that by drilling a well they might find at hand oil in quantities that could be marketed profitably. Financial and mechanical difficulties hampered the work; but after a year, on August 27, 1859. the well reached 69j feet, and oil oozed in. It was found possible to pump 35 barrels a day at first, later 20, from the well. As each barrel sold for 45 dollars, Drake’s well soon became a lucrative investment. It started an oil rush on the banks of the Pennsylvania creek, that was to be known henceforward as Oil cre** u The search spread. In the next year. Kentucky, Ohio, and Tennessee joined the ranks of oilproducing States. Before the new century, the vigour of the search for oil was apparent not only in the United States, but in many other parts of the world. Science Aids the Search

At first, explorers were attracted to oil sites by the ancient seepages or by guesses or deductions: but in a few years the aid of geologists was sought and acknowledged. Geologists determined that rocks of certain geological ages were more likely to be oil-bearing than rocks of other ages; they showed that oil was to be found in porous sandstones and limestones, the oil filling the minute interstices between the constituent grains of rock; the geologists discovered that particular foldings in the earth's surface were more favourable to oil accumulation than others.

The science of judging the possibilities of finding oil hidden thousands of feet below the earth’s surface received new tools during the 1920’s and 1930’s when it was shown that magnetometers and seismographs could be used to trace the shapes of underground layers. Today, oil exploration is an operation backed by the best resources of several branches of science that money can buy. Yet the search for oil is still a most hazardous business. Even with the fruits of 100 years' experience behind the effort, only one exploratory well in nine in the United States finds oil in commercial quantities. Markets for mineral oil began to develop when it found that it had other uses besides replacing whale oil for lamps and lard for the axles of carts and coaches. During this early—kerosene—age. the fractions of gasoline in a crude oil had to be distilled off first to ensure that the kerosene was reasonably safe for use in oil lamps. In fact, the early refiners were embarrassed by “wastes” that are today the most valuable products of refining. With the invention of the motor-car, the emphasis in refining turned to gasoline, and to making better and better gasoline as improvements in the design and construction of internal combustion engines focused attention on the quality of the fueL Dramatic impetus was given to the growth of the oil industry by the creation of demand for the heavy tractions of crude oils as fuel for ships, locomotives. and stationary boilers.

Petrochemical Industry Today’s far more discriminating and far more selective market finds the oil refiner meeting every need—and. indeed, finds him seeking to fill more efficiently and more cheaply needs hitherto satisfied by other industrialists. The barrel of oil which 60 years ago was primarily a source of kerosene and not much more, is now not only a great energy producer (oil and natural gas together now provide more than half the world’s energy) but has become a raw material for the industrial chemist. The technique of combining petroleum's preciselyformed hydrocarbons, and the reactions of these hydrocarbons to various processes, are the basis of the petrochemical industry which has had a spectacular development since its rudimentary stages in the late 1940’5. Today in the United States, petrochemicals account for a quarter of the volume abd more than half the dollar value of all chemicals produced. Typical products are found in fibres, plastics, paints, and cosmetics.

Drake’s well at Titusville has produced hundreds of thousands of offspring. From all the wells that have been drilled since Drake’s day, the cumulative production is estimated to be about 14,000 million tons. A hole has been sunk over four miles into the earth in search of 0i1—22 570 feet to be exact. Except for a brief period at the turn of the century, the United States has been the bigeest oil-producinc country and until the Second World War it was the largest exporter, a role it has relinquished to Venezuela. The Middle East is now replacing the United States and the Caribbean as the area of greatest significance. Not only has the Middle ' East passed the Caribbean in production: its reserves overshadow [all others. Of the world’s known 1 oil-bearing structures, those of the Middle East hold 62 per cent of the supply. Reliable information about the oil-producing areas of Russia is far from comprehensive though estimates have put production at 70 million tons in recent years, compared with 330 million in the United States. 138 million m Venezuela, and 70 million' in Kuwait.

As It has grown, the oil industry has produced an accumulation of capitalism’s biggest companies and corporations. In the United States, the structure of the industry has been rather different from elsewhere because oil rights there belong to the owner of the surface land; elsewhere oil rights are generally vested in the government. which is able to grant leases over large areas. In its beginnings, the industry in the United States was disorganised and violently speculative. An organiser—the man who bears the greatest name in a century of oil—appeared in the 1860’s. Rockefeller and Standard Oil Tn 1870, John D. Rockefeller and his associates formed the Standard Oil Comfiany, and by 1878 had secured control of 90 per cent, of the refineries in the country. Rockefeller next concentrated upon marketing and storage facilities. Not till 1886 did he

It was only seven years after Colonel Drake drilled his well at Titusville that New Zealand pioneers began their search for oil.

The Provincial Treasurer of Taranaki, in his financial statement of February 13.1966, referred to “the sanguine hopes entertained of the discovery of the natural reservoir of petroleum that oozes out at the Sugar Loaves.”

A pit was dug to a depth of 60 feet; then, digging being no longer possible, a derrick was erected and drilling commenced at the end of 1866. Nailed on the derrick waz a signboard bearing this legend: “TO OIL OR LONDON.”

enter the production side of the business, and then only on a limited scale. John D. Rockefeller was cbntent that a multitude of independent producers, some quite small, should feed and nourish his oil empire. In 1911, the United States Supreme Court dissolved the Standard Oil Company, and some 33 subsidiaries thereupon became separate and independent entities. One. the Standard Oil Company (New Jersey)—by any method of measurement the world’s largest oil company—accounts for about 14 per cent of the petroleum business of the free world. Other former members of the old Standard Oil trust are leaders in both the domestic industry in the United States and in international operations. Five large American companies headed by Standard of New Jersey, the Royal Dutch-Shell group, and the British Petroleum Company (in which the British Government has a majority share interest) are the controlling factors in the international oil business, and what immediately strikes every observer of international oil is the interlocking and overlapping of the interests of the major oil companies. The bewildered student may be forgiven for wondering where one company ends and another begins, and, indeed, for questioning whether the major groups work in co-operation or competition. However, those who fear the power of gargantuan monopoly may be reassured by signs of lively competition in one place between companies which are placid, harmonious partners in another. To the outsider unversed in the interplay of markets, supply. and politics, it can be as perplexing to consider the relationship between Colonel Drake’s major successors as it is to ponder why a kennel of hounds are content to share their food for 20 days but to fight viciously over similar food on the twenty-first

A picture of Drake’s well appears on Page 8.