THE OIL SPRINGS.

Poverty Bay Herald, Volume XVI, Issue 5568, 13 September 1889, Page 2

THE OIL SPRINGS.

DR. STOKER'S REPORT. The following is the rojurt of Dr. Storm-, furnished to the directors of the South Pacific Petroleum Company some time ago, but which has been withheld from publication up to the present : — Dear Sirs,— ln accordance with your instructions I now beg to h;md you ;v detailed report of my examination of your properties nt Gisbnrne, New Zealand, and also of the condition of affairs as I found them whilst there. For the more thorough understanding of the natural petroleum industry in New Zealand a short history of the chief events concerning your Company will enable you to have a clearer insight into the whole question. It is beyond any shadow of doubt that natural exudations of petroleum oil occur on the East Coast of New Zealand. Full reference is made to these in the report "On the Oisborno Oil Springs " by Mr H. A. Gordon, and issued by the New Zealand Government iv 1888. On the map accompanying that report he marks what he considers to be the "oil belt " of country. I need not, therefore, further detail the evidence of the existence of oil naturally ; beyond the points indicated by him, there are, I understand, still others where natural exudations of oil occur. An examination of the whole district to confirm this would be a matter occupying considerable time. On the Pakake-a-Whirikoka block leased by the South Pacific Petroleum Company are various and natural exudations to which I refer later on. More or less attention has been drawn to these natural oil springs and at various times companies have been formed to develop ;url work them. Hitherto from various causes no practical result has come from these operations. The South Pacific Petroleum Company is the one which 'has made the fullest progress, but even it will call for special comment in its past operations. The land upon which it has been working' was originally leased by the Poverty Bay Petroleum Company from the Maoris. This Poverty Bay Petroleum Co. started with a nominal capital of L 50,000. After expending LSOOO, and having put down two bores only without any practical result, it went into liquidation and the liquidator sold the rights of the Maori lease and the complete boring plant, derrick, houses, pumping plant, except boiler and engine, for the sum of Ll5O to Messrs William Clarke and William Fleming. The lease was for 21 years, from 1873. The sale was made to Messrs Clarke and Fleming in 1880, and immediately thereafter the South Pacific Petroleum Co. was formed, 15,000 paid up shares, I understand, being given for the lease and plant. Mr William Clarke went over to Poverty Bay as a Managing Director and started operations. Boring was begun on the ground, using 5g inch pipe. The first bore was got down only about 70 or 80 feet, a Mr Kendall superintendingthe work. The pipe used was so light that the bore stuck at the distance above named, oil and gas being both found in the bore, oil coming in at the rate of about 5 gals, every 24 hours. A second bore was then started 8 or 9 foot away from the previous one, , using again the light pipe which had been proved unsuitable. This bore also stuck, and for the same reason that lost the first bore. Mr Kendall was still Manager. The boreholes were drilled only the exact size of the pipe used and no margin of space, taking into account the character of the strata through which they were working, was made, to admit of a freer sinking of the pipe used. After this second bore stuck, Mr Kendall, although sent for by his Directors did not go to them as asked, but squaring up the local debts of the Co., he sent off his books and papers to the <3ompnny's ; office, and then sailed direct from New Zealand to San Francisco.

After Kendall's departure a Mr Berry was appointed local Manager in Gisborne, ■i Mr Wright from Melbourne being made boring manager on the property, Mr Berry keeping accounts, attending to expenditure, providing all supplies &c, and liis action in that direction is matter of very free comment in Gisborne as to the manner and extent of his expenditure. Mr Wiight, from what I could learn, was a good practical man. but was greatly retarded in his operations by a lack of necessary supplies to carry on the work.

He sunk a bore, the third, near to the previous two abortive ones, to a depth of about 370 feet, and then he left, assigning as reason his being unable to get what was needful for the proper carrying out of the work. When Mr Wright left, Mr Bony, the Gisborne Manager, was in money difficulties. AMr P. Bourke was appointed in his place as local agent, and a Mr Frank Weaver was appointed boring manager, the Company bringing him over specially from America, some six years ago. He put clown three bores for the Company, all of them adjacent to the ones I have before named. These bores were put down within two years of his arrival, two derricks being built which are now destroyed. His first bore was put down 165 feet, 8 inch pipe being used, and then a wait of some four months was made for a boiler and engine, which were then found necessary. When these came, the boro and the pipes in it had got so bent from the slipping action of the strata that a fresh bore had to be started. His .second bore — the fifth since tho Company's start —was then begun, and he s;ot down with it to a distance of about 224 feet, when it stuck also, the reason given being that "slipping clay" had caught the pipes and prevented further sinking. Mr F. Weaver mentioned that his work was always kept back for lack of supplies. Then finally he put down his third bore — the sixtli attempted since the Company started — building the derrick for it about a quarter of a mile from the other two. This bore was sunk to a depth of some 3<>7 feet, 8 inch pipe being used as far down as possible, and thereafter (5 inch pipe put in. This 6 inch pipe also slipped oil 1 the plumb ; no farther work could be done on it, and as a consequence the bore was lost. This occurred in June, 1884. At that time Mr Washington I. Weaver, another American oil driller, began to work for the Company on salary. He had been originally brought out from the U.S.A. by the Southern Cross Petroleum Company to bore for them on their property situated near the East Cape (see map). They, from lack of capital or other cause, suspended opei'ations, and the South Pacific Petroleum Company arranged with Mr Wash. I. Weaver to superintend their woj'k. He went to the scene of the boring operations just mentioned, and after examining what had been done, stopped all work on the locality where all the previous work was done, and after some negotiations with the South Pacific Petroleum Company, took a contract Avith them to sink a boro in a fresh locality and upon specific terms, Mr Frank Weaver being retained on salary until Mr Wash. Weaver fixed his boring contract.

It is proper here to state that up to this point all work done was on that portion of the Pakake-a-Whirikoka Block, where natural exudations of both oil and gas were observable (see map accompanying this).

Mr Wash. I. Weaver's agreement with the South Pacific Petroleum Company was dated 10th July, 1884, and agreed that for. LSOO he would remove the machinery from its old site and place it on the ground where he proposed boring He would would build two dwellings for laborers, and also the derrick, at his own expense; put inachineiy in order, and find all labor for carrying out contract — lumber, Arc, being .supplied by the Company.

He also agreed to drill a well on a site

indioated by Dr Hector, New Zealand Government Geologist (this site is about two miles from the scene of the previous work (see map), on the following terms : — Ist 300 feet £2 3 0 per foot •2nd 300 feet 2 l."> 0 „ 3rd 20!) feet 310 0 „ 4th 200 feet 410 0 „ Making 1000 feet iv all ; Weaver to have right to use all tools, machinery, and property of the Company, but to keep all in order, tear and wear excepted ; the Company also to supply all necessary pipes for the bore. He began by removing machinery, derrick, and building house, «&c, completing this part of his work early in December, 1884. Drilling was started on 11th December, 1884. By July, 1884, the well was down 800 feet, and the company was due Mr Weaver L 2,700, but had only paid him Ll,ooo, leaving a balance of unpaid of L 1,060., 060. Weaver stopped further work until he got paid. On 24th July he I got Ltsoo to account and then went to work again, the Board of the Company promising to pay him 10 per cent interest on his unpaid balance. By January 1886 he had finally completed his contract for boring lOOOfeet, and his account shewed L 1730 plus interest as still being due to him. When the 1000 fe-jt was bored the Company wired Mr Weaver to bore 200 feet f urther at L 5 per foot. He started work and at 1107 feet the show of gas and oil was so good that he wired the Chairman, Mr Fleming, to come over and see it. When Mr Weaver got down to 1200 feet, the Board wired him to proceed with another 100 feet. He then found a pipe had got split, and some time was taken up in lifting pipes and repairing the damage. "When he got all the 0-inch pipe down he had to wait 4 months for 4Hnch pipes. After getting them he at once put in nearly 1200 feet. The "shoe"' used in working the bore then " got jammed and it took over 3 months getting it out : thus 7 month sj, time was consumed. Work at drilling was again resumed, and on 11th December 1887, 1321 feet were finished, the oil and gas spurted, the gas took tire and the derrick was burnt down, the rope was also burnt and the tools weighing about 2000 lbs dropped down to the bottom of the bore.

The Company was advised of this misfortune, and by wire Mr Weaver got instructions to contract for the building of a new derrick. He arranged for that work and then proceeded to Sydney. The Board intending at this point to refloat the Company on a larger basis, instructed Mr W. Weaver to suspend further work, leave men in charge of the existing l'ig at the oil bore and contract to erect another new derrick and the necessary houses at the spot near the Homestead on the Pakake-a-Whirikoka block which was selected as the basis for another new bore. [See map for this locality.]

After fixing up these affairs Mr W. Weaver went for a visit to America, the position then being that the Board were negotiating for the refloating of the Company. At this point [Dec'B7 or Jan'Bß] it first apparently began to be noticed that the lease under which the Company was working was 21 years from 1873, thus leaving only G years to run, a period too short to be marketable. Prolonged negotiations then took place, and it was not until Nov., 1888, that the new lease was signed. This lease is for 21 years from Dec. 'Bß. Mr W. Weaver in the interim had returned from the U.S.A. and was instructed not to resume work until the new lease was signed. Immediately thereafter Mr Weaver began to lift the tools in the bore. He found them jammed, there being some obstruction in the pipes. A report from Mr Weaver has been sent by him to the Secretary of the Company detailing all lie has had to do in fishing up the tools, so that I need not recapitulate what he states therein. Tlin niifnnmn nf )i i« _u.uarlr. i* fclmfc by llbll January this year the tools had been raised about 450 ft and during my visit they were raised nearly 100 ft further, when the gudgeons of the " bull reel," owing to the strain on them, broke, and work had to bo suspended until the damage was repaired. This was the position of affairs when I left Giaborne.

Such in brief is the past history of the South Pacific Petroleum Company ; and the sum of the results from its opei'ations consist of :- —

Ist. Seven bores have been sunk, of which the results from six are absolutely nil. The whole money expended thereon and during that period may safely be written off as having only been expended in gaming questionable experience, the most noticeable thing during that portion of the Company's history being an almost total lack of intelligent supervision or direction of the working operations.

2nd. One bore sank to a depth of 1321 feet, in which the tools for drilling are at present Hxed. Until these tool are brought to the surface it cannot be said that even this bore will be available or what may result from it. As to its cost I can form no actual estimate, beyond stating the contract price for drilling, ttc. , to its present depth has been L 5200 or thereby, plus the cost of pipes furnished by the Company, and of the cost of which sundry complaints were made to me in Gisborne, and to which I consider it my duty to refer. There are also sundry other outlays, stores, supplies, repairs, «fee., to be added, of which I could get no actual note. 3rd. Sundry arrears of wages and pay due to the workers of the Company ; amongst others, Mr Frank Weaver spoke to me of claims he had against the Company for salary. 4th. Mr Washington Weaver also expects compensation for the time he has been working since he found the tools fast, his contract having been previously completed. I now shall proceed specifically to report upon the properties owned by your Company. They consist of leasehold areas, viz. Ist. 6103 acres 3 roods 20 perches or thereby,known asthePakake-a-Whirik oko block. 2nd. 5 acre block known as the Waitangi block, lease dates for 21 years from Ist December, 1888. The general conditions detailed in the lease in your possession are fair, the only point left unfixed being that no provision for the use of firewood is made. On the Waitangi block, 5 acres, there is only permission given to put down one bore. This block is the one on which the bore is now being worked. It almost adjoins the Pakake-a-Whirikokablock,and when the bore was started was supposed to be included in it. A subsequent suavey of the Pakake-a-Whirikoka ground proving it to be outside, a separate lease had to be got, hence this Waitangi 5 acre block. It, however, is not yet surveyed. A small section of ground to the west of this Waitangi block and nearer the Pakake-a-Wliiri-koka block could I think with advantage be leased by the Company. The accompanying sketch plans shows the leases held, their distances from Gisborne, the various leases taken up for oil boring by others in the district, and also the approximate position of a pipe line to Gisborne should such be required. Pakake-a-Whirokoka block: This ground is 31 miles distant from Gisborne, and at the junction of the Waipaoa and Waingaromia rivers, which form boundaries of part of the property. The ground is about 230 feet above the sea level. I have been over the whole of the lease, and consider that of the total area some 900 acres are specially suited, owing to their position, for boring upon. The six bores put down on this block are all within a radius of about threequarters of a mile, and are at an elevation of some 1300 feet above sea level. It is on this elevation that the natural exudations of petroleum oil occur. A ridge of sandstone outcrops near these springs. In my opinion this is the upcast which by

tilting the strata has permitted the escape to the surface of the oil now seen there. These springs or holes are filled with water, oil floating upon the water, and inflammable gas bubbling up freely. I saw 11 of these deposits, and collected for special examination a sample of the crude oil.

The entire district consists of a calcareous mirl, with beds of shale and indurated clay underneath. The general stratification is in my opinion favorable to the retention of oil and gas underneath, the whole question to be determined being to get a knowledge of the extent and locality of these deposits.

The lower lying grounds of the Pakake-n-Whirikoka lease near the Waipaoa Valley are what I think most worthy of being wrought. Aqueous action has cut through to such a depth in forming these Hats that if oil is to be got at all in quantity, it certainly will be more quickly reached from these flats than by boring on hill tops 1000 feet higher.

Besides the six abandoned bores upon this block and already referred to by me, the only other work done lias been to erect a derrick, workmen's dwellings, smithy, engine and boiler house, near the homestead, being about 600 yards distant from it at a level of 240 feet above the sea. These were erected during Mr W. Weaver's visit t6 America, aud have not yet been used, boring not having been started. The engine and boiler now in use at the Waitangi block were taken down to this new derrick I understand, and then removed back again. This must have been a considerable expense and I cannot see the object of it. The total value of houses and derrick, &c. , I would estfmate at about L4OO. As regards the derrick itself I would recommend its being overhauled and the timbers bolted together before starting any boring. Whilst it is not the spot to start boring which I would have selected as the first one on the flats of the Waipaoa Valley yet it is in what may be considered favorable ground. The Waitangi 5 acre block is distant some 4 miles up the Waingaromia River from the new derrick at the homestead above mentioned. The bore is about 230 feet above the sea level and as already stated is in the locality indicated by Dr Hector, New Zealand State Geobgist, as being a likely one to yield oil. The buildings on it are similar to those on the homestead on the Pakake-a-Whirikoko Block. The engine, boiler, and winding gear are generally in a poor condition, and are much patched. How long they have been in use I could not say. Certainly they are not in a state to admit of effective work being got from them, and much time in the past must have been sacrificed in making repairs. As fas as I could learn no one from the Company was responsible for looking after the Company's plant. It was left entirely to the contractor, not that I say anything against him in this respect, not knowing in what condition he got tho plant, but certainly in my opinion the Company should have exercised some supervision over its own property. There is a semi-portable engine and feoiler lying near the working plant. It was used at the previous bores, and is now practically useless. Under cover there are also 2 500 gal. wooden tanks, these were imported from U.S.A., and were supposed to be 500 bbl. tanks for storing oil — for such a purpose they are of no use. The bore has been drilled to a depth of 1321 feet a section of the strata gone through is printed and illustrated in Mr Gordon's report — I do not therefore require to repeat these particulars. The tubing in the well consists of to 105 feet 8 inch tubing ; 1104 feet 10 inches (i inch tubing ; 1311 feet 10 inches 4 inch tubing. I could get no sample of oil from the bore owing to the tools not being out of the tubes yet.but Igot from Mr W. Weaver a sample of what came from the well, and Mr J. H. Stubbs, of Gisborne, also gave me a sample of oil taken by him from the bore before the fire took place. These I have under examination. On making enquiry regarding the fire which burnt down the derrick when the oil was struck, I saw Mr Ewan, manager of the station in which the bore was situated. He was passing some time after the fire had broken out and stayed two hours, during that time the tire burnt strongly giving off that characteristic smoke the same as is always seen when oil springs are set on fire. The lire was got out before lie loft, wet sacks being used and plenty of water being at hand. He, however, did not see any oil flowing. T. McCoom, one of the sinkers at the bore, states that after the fire was put out and whilst the bore was covered up, the wet sacks kept pulsing up and down as if moved by outbursts of either gas or oil. After the tools get raised there will be till some work to undertake in clearing he bore of sludge and mud, and posHibly a few feet further of boring to be done before any adequate idea of the oil supply from this bore can be formed. Until this is done it is premature to attempt to form any estimate of what the probable yield of oil will bo.

The only other Comnany working in the district is the Minerva Petroleum Company. They have started boring on a 200 acre lease on the main Waipaoa Valley, have expended nearly LSOOO in all, and have drilled in two bores 1800 feet, their plant they reckon as being worth L2OOO. I visited their works, the bore at which they are now working is down 915 feet, having been sunk at the rate of 75 feet per week. Gas has been struck by them, and they are hopeful of soon striking the oil. The position I have marked upon the map. It will be noticed that the cost of their boring, including tubing, is about 33s 4d per foot, whilst the price by your contract, exclusive of piping or other extras, is as near as can be L 4 per foot. The Minerva cost it what I consider to be about the rate for such drilling as you require.

The whole question of your administration, is one, in my opinion, which requires careful looking into. For the time your Company has been in existence much greater progress should have been made, and ere this a definite knowledge of your oil resources been at your command. As far as I have been able to see or learn, whilst on your property, things have been pretty much left to themselves.and no recognised head, with definite responsibilities, has been appointed to supervise operations or to attend to various matters which in your interest should have been long ere this seen after. For instance, there arc, in the event of further oil being got, the following things necessary ere the oil could be utilized or placed upon the market. Ist. Tank accommodation at the oil bore. 2nd. A pipe line to transport the crude oil to (Jisborne. 3rd. Tank accommodation and refinery at Gisborne. Nothing practical has been done towards these. As regards the Ist., tank accommodation, I have made enquiries and find that suitable tanks, 20,000 gals each, and covered in will be built at the well for about L 260 each, whilst at Gisborne they would be erected cheaper. If oil were spurting now it would simply go to waste. 2nd, pipe line. — I have gone over the ground, and in the accompanying map I have detailed approximately the route which a pipe line would take from the well to Gisborne. There is enough natural fall in my opinion to permit of the oil flowing by gravitation from the wells to Gisborne. The total length of pipe would be about 33 miles. The diameter of pipe I would recommend would be 6 inches. In any case I would recommend the present surveying of the route, and application being made" to Parliament for the necessary authority to lay a pipe line. As matters at present stand neither of these things Iwvu been attended to.

3rd, refinery at Gisborne. — Nothing has been done towards this. My examination of tho district led me to .select n locality convenient to the new breakwater at Gisborne, and on the ground owned by Captain Tucker, of (iisborne. I. saw him, and he said he would lease seven acres of ground to the Company on the position selected^by me on the following terms :— For Ist 2 years Is o annually* For next ." years ... ... 100 „ For next ."> yours ... ... 150 „ For next 3 years 200 „ For nex 1 5 years ... ... 2.10 „ For next 4 years ... ... 300 „ 24 years in all. * Wi'.h power of surrender. Or he would sell tho land outright, but in that case he would require a larger price than the above rent represents. Character of the oil. — My examination of the samples I refer to in a separate communication. And now as regards the future operations of your Company. The sum total of your operations, extending over several years, has only been to add (me other proof to the natural ones already existing, that oil is to be had ; in what quantity you cannot, however, yet say, and it is premature, with the evidence I had before me, to venture on any estimate. I am, however, clearly of opinion, from my examination of the district, that you would be warranted in continuing your operations, but only upon a carefully and properly organized basis. To continue in the past irresponsible fashion would be to court disaster and further waste of time and money. The value of a payable flow of oil is too patent to require >\ny comment, seeing you have such important markets at hand to supply. There is also in tho very immediate future a large outlet for crude oil at hand in supplying steamships with the oil for fuel instead of coal. This should be a further factor with you in determining your final course of action. One or two bores successfully completed should give you proof of the commercial value of what you have. To-day you are without that knowledge. Johx Storisk. Chemical Laboratory, Sydney, February 2, 188 ft.