USA > California > History of California, Volume V > Part 22
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HISTORY OF CALIFORNIA
of the state and companies organized to work them. In 1865 there were sixty-five companies in existence with a nominal capital of $45,000,000. Shares sold for as high as $1,000 and $1,500 was paid for a single share. Glowing prospectuses described in detail the enormous profits that were sure to come. One com- pany narrated that the seepage of oil on its property was so voluminous that cattle were engulfed and drowned in its flow. They probably had reference to the prehistoric animals that were mired in the asphaltum beds of La Brea.
Frenzied finance methods were not unknown then. One company was exploited as follows: 10,000 acres were bought for $22,000 greenbacks, equal to $10,000 gold. One-half was sold to eastern speculators for $50,000. This half was sold for $450,000 and then went into the assets of the California Petroleum Company as $1,000,000 which advertised to have twenty natural oil wells of the largest size. Another company advertised that spring No. I contained 144,500,000 gallons of oil actually in sight. Ten of these wells would yield in twelve months $5,460,000. A man digging in a swamp dug up some mud that smelled of petroleum. A company was immediately capitalized for $600,000. Oil properties were exploited in every county from Humboldt to San Diego, but there was no apparent success.
The cause of the failure is easily seen in the light of subsequent developments. In the first place most of the companies were not bona fide. They existed on paper only and were formed for stock selling purposes alone. In the second place, the prospecting was not
347
THE PETROLEUM INDUSTRY
thorough, the wells were not deep enough, and very little oil was obtained. Third, the oil obtained was very different in quality from the eastern oil and yielded practically no good illuminating products, which at that time was the only valuable constituent of the petroleum. Fourth, many scientific men of the day, notably Clarence King and J. D. Whitney pronounced the oil of no value whatever, which was true as far as their knowledge went at the time. In the fifth place, the supply was so small and uncertain, that no demand could be created. All these influences combined, gave a setback to the industry, until in 1887 according to W. L. Watts, there were only four companies in operation. All the projects were not fakes; some companies worked with a serious purpose but the development was on a small scale, as was the case in the east during this period. As a matter of fact, little oil was obtained. The methods of drilling were crude and deep wells were unknown. The only known use for petroleum was for the production of illuminating oil. The petroleum from the northern part of the state was more like eastern oils, containing no asphaltum and yielding a large percentage of kero- sene. This stimulated prospecting in the north, and a paper by Professor Silliman, the noted scientist, published at this time, giving the analysis of a sample of crude oil from Humboldt county and maintaining that California oil was suitable for all refining purposes, encouraged the prospectors. But apparently little petroleum was obtained.
In 1865 six twenty-gallon casks of crude oil, were shipped from Mattole creek, Humboldt county. A
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HISTORY OF CALIFORNIA
well five hundred feet deep at Moody Creek, in Santa Clara county, yielded one barrel a day. Forty cases were shipped from the south. Other small yields were obtained but little was done with the product. This indicates the condition of the industry at this time.
In 1866 operations on a somewhat larger scale were conducted, mostly in the south. A still of 300 barrels capacity was constructed in Kern county. Wood, which was hauled thirty miles, was used as fuel. Some 4,000 gallons of refined oil was manufactured but the freight to San Francisco, amounting to $75 to $90 per ton, destroyed any possible profit. Some few other serious attempts to distill the oil met with like disastrous results.
Such was the condition of the petroleum industry in California in 1865-1866. About the only tangible re- sults were the specimens of crude petroleum exhibited in the Paris Exposition, of 1867.
The second period in the development of the Califor- nia oil industry was from about 1868 to 1892. During this period prospecting was continued in the various territories, small refineries were erected and attempts to create a profitable industry were made by various individuals. At first little progress was made. The oil business had a bad name. Many men had lost their entire investments. Imaginative promoters and fake companies had failed to justify their promises. Clarence King, of the United States geological survey, and J. D. Whitney, the state geologist, had pronounced against the quality of the oil and gave little hope of ever finding any large reservoirs. Oil investors became discouraged and in 1884 there were only four companies in existence that were actually producing oil.
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THE PETROLEUM INDUSTRY
This period was one of readjustment. The fact that oil was present in many parts of the state was estab- lished. It was shown that certain districts in the south were promising. The problems of refining, due to the difference in composition between eastern and Califor- nia oil, were gradually solved. Methods of making gasolines, kerosenes, and lubricants were worked out. Uses for asphaltum, an important constituent of the southern petroleum, and which did not exist in eastern oil, were developed and methods for its manufacture were devised. In general there was a slow development. Most of the smaller companies perished in the process, for as a rule, the industry was not profitable. Some of the larger modern companies had their inception during this period. The Pacific Coast Oil Company, afterward bought by the Standard Oil Company, was organized in 1879, with C. N. Felton as president and G. S. Schofield (the present president of the company) as auditor. In 1882 they had two refineries, one at Alameda Point, costing $160,000, and one at Newhall costing $25,000. Their principal sources of supply were Pico cañon and Moody Gulch in Santa Clara county, and their entire production was about six hundred barrels per day.
They supplied about one-third of the local demand for refined products and had a small export trade to British Columbia, Mexico, and the Pacific islands.
In 1884, Mr. Lyman Stewart, a member of an eastern oil firm, invested $13,000 in oil properties, mainly in Los Angeles county. This was the beginning of the present Union Oil Company, a company that at present is capitalized for $75,000,000.
350
HISTORY OF CALIFORNIA
Such was the condition of the oil industry in California up to the early nineties; a slow development mainly through the efforts of a few large companies (large for that period), and a knowledge that oil was present in many parts of the state.
In 1892 a well was sunk in Los Angeles to a depth of three hundred and sixty-five feet. It yielded oil. Instantly there was excitement. A recrudescence of the speculative fever of the sixties ensued. Within three years over three hundred wells were bored in the vicinity, of which about one hundred were fairly pro- ductive, yielding a gross total of six hundred barrels per day. In 1897, the total production from this Los Angeles field amounted to 1,400,000 barrels and in 1902 over fourteen hundred wells had been bored and had yielded about 9,000,000 barrels. The rapid increase in production was welcome. Crude petroleum was beginning to be used as a fuel. The increased supply stimulated its use and the demand soon overtook the supply. It was a profitable product. Its gaining importance reawakened the interest in prospecting. In 1899, J. F. Elwood, having noticed oil in some seep- age water near Bakersfield, dug an ordinary well with a pick and shovel to a depth of seventy feet and then with an auger penetrated the oil sand. This discovery, re- ceived locally with indifference, attracted the attention of outsiders, and California witnessed the most striking oil boom in its history. Bakersfield, at that time an unimportant small town, grew up over night. The surrounding land, desert and forbidding, was eagerly bought and sold by speculators. As is so often the case, most of the old inhabitants refused to believe in the
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THE PETROLEUM INDUSTRY
value of the strike and as a result the profits were reaped by outsiders. The profits were immense. Land that was practically valueless, that could not be disposed of for $1.25 per acre, was sold for $1,000 to $5,000 per acre and instances of $10,000 were known. Of course, many of the claims were worthless. It took time to develop them. Transportation was difficult, supplies were for a time unobtainable, but at the end of three years, in 1902, the limits of the field were fairly well determined and it was known to be one of the great oil districts of the world. At that time there were eleven hundred productive wells yielding from a few barrels to six hundred barrels a day, the average being 50-60 barrel wells.
This huge production, amounting to over 4,000,000 barrels per year, lowered the price of oil, which had been selling for $1.00 to $1.50 per barrel, to twenty to twenty-five cents, and even at this price could not be sold. This condition was only temporary. Oil had been used for fuel but until the discovery of the Los Angeles field there was not enough of it to supply any great demand. The Los Angeles production, later supplemented by the Kern river field, began to solve the fuel question. Coal was not plentiful in California, and what there was, was of an inferior quality. Practi- cally all was imported and sold at prices varying from $8.00 to $12.00 per ton. Owing to the fact that the calorific value of petroleum was higher than even the best coal, it made an economical fuel. About three and a half barrels of oil were equivalent to a ton of coal. There were many other advantages of oil as a fuel. The ease of transportation, the compactness of storage,
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HISTORY OF CALIFORNIA
the simplicity of firing, doing away with stoking and removal of ashes, and the absence of smoke, all com- bined to make petroleum an ideal fuel, and add to that its cheapness-it is little wonder that coal burning is now about a thing of the past.
There was a setback in 1889, when an explosion on the Southern Pacific steamer Julia, in Carquinez straits caused the railroad company to go back to coal in its ferry boats for a number of years. With the present method of topping to remove the volatile constituents, oil can be made as safe as coal, and the result has been that at present oil is in universal use for steam making purposes and its consumption for this purpose is increasing daily.
This third epoch in the history of the petroleum industry brought in a new factor; viz: transportation. During the first and second periods the production of oil was so small that while transportation was incredibly high, in most cases the question was not of much im- portance. During the third period, beginning in 1892 with the discovery of oil in Los Angeles, the increased quantity was consumed locally and by the railroads, but the relatively enormous yield of the Kern county fields created a new condition. This immense quantity of oil could not be consumed locally. It had to be trans- ported to new markets. This condition was promptly met. The railroads built hundreds of tank cars. The Standard Oil Company constructed a pipe line from Bakersfield to Point Richmond with numerous laterals. Other trunk lines were laid. The Associated Oil Com- pany has pipes terminating at Martinez and Port Costa. The Producer's Transportation Company, an offshoot
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THE PETROLEUM INDUSTRY
of the Union Oil Company, has laid a line from the San Joaquin valley fields to Port Hartford. Thus out- lets to tide water are amply provided for. Each of these companies owns fleets of vessels to carry the oil from these terminals to distant markets, which now comprise the whole Pacific coast of North and South America, China, Japan, India, and Australia, and will, before long, Europe. A pipe line across the Isthmus of Panama was built seven years ago, but its value, except for local use, will be diminished when the canal is opened.
The problems connected with pipe transportation of oil offer peculiar difficulties. California petroleum differs from eastern oil in containing asphaltum. Any considerable quantity of this asphaltum renders the oil so viscous that it is very difficult to pump. Various methods have been devised to overcome this difficulty. The usual method is to heat it; it is much more fluid when hot. Another method is to add water. The use of a spirally rifled pipe to increase this lubricating action of water, is a California invention.
Transportation has kept up well with production and the thousands of miles of pipe lines serve to move the oil promptly to its destination.
Pipe line transportation existed on a small scale very early in the history of oil production, but usually more for local use. The first, that might be called a trunk line, carried the oil from the Ventura fields to Ventura on the Pacific ocean, from whence it was transported in two tank steamers of 7,500 barrels each. But the large scale development did not begin until much later.
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HISTORY OF CALIFORNIA
The speculative spirit excited by the Kern river discovery induced prospecting in other parts of the San Joaquin valley. Indications of oil were known to exist in various parts of Kern and Fresno counties from the early days and various attempts to exploit them had been made. But owing to lack of capital and to primitive methods of boring, little progress had been made. In later years improved processes for drilling were invented and wells thousands of feet in depth could easily be bored. The rich deposits at Bakersfield showed the possibility of enormous rewards to the prospector who could find another such field. Many of these wildcatting attempts met with failure, but some were successful. One of the districts that showed the presence of petroleum in large quan- tities was Coalinga, west of Fresno. Here the first gushers were struck. This territory has shown itself to be a great producer. In 1897, Fresno county produced 70,000 barrels; in 1901, 547,000; in 1911, 17,830,433 barrels.
Another district that was shown about this time to be promising was Sunset and McKittrick, in Kern County, west of Bakersfield. The fact that petroleum existed on the west side of the San Joaquin valley, at McKittrick on the south, and at Coalinga in the north, led the thinking oil men to believe that it also lay in between. Prospecting showed this to be so. Within recent years the territory in the neighborhood of Taft, Maricopa, Midway, Buena Vista and Lost Hills, has produced some of the greatest wells in the world. Even the famous Blue Goose well of the Home Oil Company, in the Coalinga fields, with its initial
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THE PETROLEUM INDUSTRY
output of 15,000 barrels per day, and the Silver Tip well in the same district that produced 45,000 barrels in seventy-two hours, were surpassed.
The most famous of these gushers, that are now so common that they excite but little more than passing comment, was the Lakeview, in the Maricopa district. This well had been sunk to a depth of about 2,300 feet without any success. A discouraged board of directors had directed the superintendent to discontinue drilling. In spite of these orders he continued for a few days, when suddenly without warning, in the morning of March 15, 1910, a bailer, weighing half a ton, was shot up out of the well and was embedded in the top of the derrick. With a roar that could be heard a mile, oil, rocks, sand, bones and teeth of prehistoric animals, and gas were thrown out under terrific pressure. The column rose 300 feet in the air. No provision had been made for collecting the oil and it ran down gullies like a water flood. Various attempts were made to control the gusher but they were futile. The flowing oil was collected in a sump and from there pumped to Port Hartford on the coast and then stored in concrete tanks. One of these tanks collapsed and nearly 500,000 barrels of oil were irretrievably lost.
This well flowed almost continually for two years at a rate of about 42,000 barrels a day, although at times its output was at the rate of 60,000 to 70,000 per day. Towards the end of its life the flow was but a few hundred barrels a day, but the total yield was immense, amounting to nine or ten million barrels and netting the owners (the Union Oil Company being
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HISTORY OF CALIFORNIA
the majority stock holder), about $300,000. It ceased producing in March, 1912. Attempts since then have been made to revive it but without success.
Many other gushers have been bought in California with an initial flow of from 3,000 barrels to as much as 4,000 barrels daily, but none of them have had the long life and the continuous large flow of the Lakeview.
The period from 1900 to the present has been one of ever increasing production. The contrast between the condition of the industry in the early days and now is best shown by the following table:
PRODUCTION OF PETROLEUM IN CALIFORNIA FROM BULLETIN 64, MINING BUREAU
Year
Bbls.
Year
Bbls.
Prior to 1876
175,000
1894
783,078
1876
12,000
1895
1,245,339
1877
13,000
1896
1,257,780
1878
15,227
1897
1,911,569
1879
19,858
1898
2,249,088
1880
40,552
1899
2,677,875
1881
99,562
1900
4,329,950
1882
128,638
1901
7,710,315
1883
142,857
1902
14,356,910
1884
262,000
1903
24,340,839
1885
325,000
1904
29,736,003
1886
377,145
1905
34,275,70I
1887
678,572
1906
32,624,000
1888
990,333
1907
40,211,17I
1889
303,220
1908
48,306,910
1890
307,360
1909
58,191,723
1891
323,600
1910
77,697,568
1892
385,049
19II
84,648,157
1893
470,179
1912
90,074,439
The present year will probably witness a production of about 100,000,000 barrels.
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THE PETROLEUM INDUSTRY
The transportation and disposal of this huge quantity of oil is in itself a large problem. We have already spoken of the pipe line systems that are being increased every year. The larger companies maintain fleets of vessels for coast wise and foreign distribution, the Standard Oil Company having 28 tankers; the Union Oil Company, 18; the Associated Oil Company, 10. Many other vessels are engaged in this trade and it is constantly increasing.
In addition to ships and pipe lines, petroleum is transported in tank cars. Several thousands of these cars are now in use.
Connected with transportation, is the question of storage. The stocks of oil at the beginning and the end of the transportation lines must be cared for. The tanks are of steel or concrete. The usual capacity of the steel tank is 33,000 barrels, although some are larger. Ordinarily larger amounts are stored in con- crete reservoirs. Some of these contain 500,000 barrels, or even 1,000,000 barrels. The petroleum is frequently stored in sumps, or earthen reservoirs, but this method is not economical. The amount of oil thus accumulated is naturally variable but at the present time it is in the neighborhood of 100,000,000 barrels.
Another phase of the petroleum industry is the refining. Oil is a mixture of substances of different boiling points. When crude oil is distilled, the more volatile gasolines come off first, then the kerosenes, then the light and heavy lubricants and a residuum of asphaltum is left. All of these products are of value and are being made in larger and larger amounts. Some of the refineries are of great capacity; the
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HISTORY OF CALIFORNIA
Standard Oil Company treating about 15,000,000 barrels per year and the Union Oil Company about 8,000,000 barrels.
There are numerous smaller refineries in various parts of the state but they are not increasing in number. The crude petroleum frequently contains a percentage of volatile constituents that give off vapor at ordinary temperatures. Such oils are dangerous to store in quantities and the laws of certain communities require that their volatile constituents be removed before use. This has given use to the process of topping and large works have been constructed for this purpose. These volatile bodies more than pay for the cost of topping, as they are redistilled into gasoline and kerosene.
An increasing amount of oil is being used for road making; either the crude oil or topped oil is employed for the purpose. The railroads use a large amount for dust-laying purposes. Comparatively small amounts of the crude oils are used for other purposes, such as sprays and crude lubricants.
Practically all the gas in California is being made from crude oil. There were many problems to be overcome but the processes are now a success. Natural gas from the southern oil fields has been used locally for a long time, but recently the gas has been carried into Los Angeles.
The natural gas contains considerable quantities of gasoline vapor. Much of this is now saved by various compressing and cooling processes, adding considerably to the gasoline production.
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THE PETROLEUM INDUSTRY
The refineries have given rise to other industries. In addition to the large equipment of boilers, engines, pumps, piping, storage tanks etc., can factories, cooperages and printing establishments are necessary for packages for retail distribution. Large amounts of chemicals, such as sulphuric acid, caustic soda, Fuller's earth, and many others, are used in the refining. Of these sulphuric acid is the most important; about one hundred tons a day are used, mostly for the purification of the kerosene.
Petroleum technology is no exception to the general rule, that the development of any industry gives rise to allied industries.
There are few other uses for petroleum and its products beyond what have been enumerated. But this is only a beginning. Crude oil is a mixture of many chemical bodies; some simple and some complex. The future will show a development of petroleum technology that will be of the greatest importance. Coal tar made enormous wealth for England, although latterly Germany has outstepped her. Petroleum will play a similar part in California.
Dyes, drugs and other organic products will come from the retorts of the chemist. The value of the oil will be enhanced a hundredfold. It will be too costly to use as fuel. Another source of wealth will be added to this already rich state.
The Indian and the Spaniard did not see the gold in the mountains. The pioneer did not appreciate the agricultural possibilities. The citizen of today
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HISTORY OF CALIFORNIA
does not imagine the potential wealth contained in our mineral resources. In less than a hundred years California will have passed through the three great stages of natural growth; the pastoral, the mining, and the agricultural. Now it is on the eve of the tech- nical and manufacturing era, and in this development, petroleum will play no mean part.
Emana Caveira
CONSERVATION IN CALIFORNIA
GENERAL CONSIDERATIONS
U PON the proper use of natural resources depends the progress and prosperity of the pubilc.
The natural resources of California were, from the beginning, thrown open to private exploitation without effective restrictions concerning waste or destruction, and without requiring any direct remu- neration to the public, the former owner of them, for the great value of the properties given away. The very natural result is that the personal interests of private owners have been the only touchstone as to whether the natural resources of California, as they have been relinquished by the public, should be wasted and destroyed, or economically used at such times and in such quantities and under such conditions as the public's necessities require.
If, for instance, the private owner of a California forest, given away by the public, determines that it is to his interest to destroy that forest, he is permitted to destroy it, although irreparable damage may result to the public because of that destruction, and although its destruction is not necessary in order to provide the public with forest products. Or, if the private owner determines that it is to his benefit to preserve his forest intact, the public permits him to preserve it, even if such preservation does cause the more certain and quicker destruction of other forests, or does cause such a starving of the market for forest products as to raise the value of the preserved and other forests and to put a constantly increasing price, which the public must
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HISTORY OF CALIFORNIA
pay, upon forest products, and causes an economic loss to the public because of the deterioration and decay of ripe trees, which ought to be used.
Most natural resources are destroyed when they are used. Natural gas, coal, oil, and practically all the metal and mineral resources are of this kind. They occur in inexhaustible quantities; and upon their con- stant use, in sufficient quantities and at reasonable prices, the public comfort and prosperity very largely depend. The public has given away such natural resources, and permits the private owners to waste, destroy, monopolize, and hold them out of use without regard to the necessities, distresses, or financial troubles of their former owners, the people.
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