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PREFACE v

CHAPTER

POLITICAL AND COMMERCIAL GEOLOGY

AND THE

WORLD'S MINERAL RESOURCES

PETROLEUM

BY JOHN D. NORTHROP

In this article, prepared in June, 1918, by Mr. Northrop, have been incorporated certain notes and additions; as, for example, information furnished by E. Russell Lloyd, of the United States Geological Survey; A. G. White and W. E. Perdue, of the Bureau of Mines, and others.

INTRODUCTION

BY J. E. SPURR

Coal and iron are the backbone of industrial civilization, and should be considered first in any attempt to analyze the ownership and control, as between nations, of the world's mineral resources. Kin to coal in growing importance, however, is the lighter, fluid and volatile mineral substance, petroleum, whose significance is vast and as yet not wholly defined. More easily transportable than coal, and yielding refined products whose explosive action in internal-combustion engines furnishes greater power in proportion to weight than was once deemed possible, petroleum and its products, apart from their immense direct economic importance, may, in the automobile, the submarine, and the air plane, and through numerous other applications, control strategically, from a nationalistic standpoint, the more inert foundations of civilization. Moreover, the use of crude petroleum as fuel, especially for ships, is of the most vital importance in these days of greater competitive plans for expanding world-wide commerce, and establishing the strength and ready efficiency of navies. Great maritime nations must have, for their oil-burning ships, oil-bunkering stations under their own control in all parts of the world where they wish their commerce to dominate, and their navies to protect their interests efficiently.

Mr. Northrop's paper follows:

USES OF PETROLEUM

In its crude or semi-refined state, petroleum is extensively utilized as fuel under locomotive and marine boilers and to a small extent in internal-combustion engines of the Diesel type. Certain grades of petroleum are utilized in the crude state as lubricants.

The principal use of petroleum is for the manufacture of refined products, of which the number and uses are legion. The lightest gravity, etherial products are employed as anaesthetics in surgery. The gasolines are the universal fuels of internal-combustion engines, and the naphthas are widely used as solvents and for blending with raw casinghead gasoline in the manufacture of commercial gasoline. The kerosene group includes a variety of products utilized primarily as illuminants, but in annually increasing quantities as fuel in farm tractors. The lubricating oils and the greases derived from petroleum are indispensable to the operation of all types of machinery. The waxes derived from petroleum of paraffin base are utilized in many forms as preservatives and as sources of illumination, and in the last three years have become indispensable constituents of surgical dressings in the treatment of burns. Petroleum coke, because of its purity, is in demand for use in certain metallurgical processes and for the manufacture of battery carbons and arc-light pencils. Fuel oils obtained as by-products of petroleum refining satisfy the fuel needs of many industrial plants, railroads and ocean steamers. Road oils, as the name implies, are employed for minimizing dust on streets and highways; and artificial asphalt, a product of certain types of petroleum, has in many localities superseded the use of other forms of asphalt for paving purposes.

For illuminating purposes, animal fats, oils distilled from coal, natural gas, artificial gas, acetylene gas and electricity may be substituted for kerosene.

For certain types of lubrication carefully refined vegetable and mineral oils are acceptable, but for lubricating high-speed bearings and for all lubrication in the presence of high temperature and of steam no satisfactory substitutes for mineral lubricants derived from petroleum are known.

Substitutes for petroleum asphalt are available in the form of native asphalts, bituminous rocks, and coal-tar residues. For petrolatum, animal fats and vegetable oils can be substituted, and for paraffin wax, ozokerite might be made to satisfy such essential requirements as could not be met by refrigeration or by vegetable and animal oils.

CHANGES IN PRACTICE

Probable changes in practice that may be expected to affect the petroleum industry within the next ten years include an increased dependence by oil producers on geologic investigations in advance of drilling, the development of methods for deeper drilling than is now practicable, and the more efficient handling of individual wells and of entire properties, with a view to the ultimate recovery, at minimum cost, of a higher percentage of the oil originally present.

The tendency toward amalgamation of individual producing, transporting, refining and marketing interests into strong units capable of competition in domestic and foreign markets on relatively equal terms with each other and with pre-existing combinations of equivalent strength will doubtless increase, and with the growing strength of the several units will come an efficient and thorough quest for petroleum in all parts of the world.

In the refining of petroleum it is probable that methods will be devised and perfected for recovering more of the light-gravity products from low-grade petroleum and for the conversion of the less-salable products of petroleum into products of greatest current demand. Moreover, it is believed that internal-combustion engines will be so modified as to run successfully on petroleum products of lower volatility than gasoline. The use of petroleum as railroad, marine, and industrial fuel is destined to increase enormously in the next decade.

Although an important contributor to the oil-supply of Great Britain, the shale-oil industry has received little attention in recent years outside of Scotland. Investigations by the United States Geological Survey have demonstrated that the United States contains vast deposits of oil shale in Utah, Colorado, Wyoming and Nevada, much of which will average higher in oil content than the Scottish shale. Efforts already begun to develop methods for the recovery of shale oil on a commercial scale in the United States will undoubtedly result in the establishment of a shale-oil industry in this country within the next two or three years. The future growth of this industry will depend largely on the rapidity of the decline in the domestic production of petroleum.

GEOLOGICAL DISTRIBUTION

Commercial accumulations of petroleum are everywhere restricted to strata of sedimentary origin. In the United States petroleum is produced commercially from strata of all periods from Cambrian to Quaternary, the most prolific sources being in strata of the Carboniferous and Tertiary systems. The geological age of the chief sources of petroleum production in each of the other oil-producing countries of the world is indicated in the table following:

TABLE 1.--GEOLOGIC AGE OF PETROLEUM-BEARING FORMATIONS

From the foregoing table one might conclude that a direct relation exists between the distribution of Tertiary rocks and the supply of petroleum, but in the United States, which produces two-thirds of the world's current supply, the quest for petroleum has, under scientific direction, included the entire range of the stratigraphic column, and has found petroleum in considerable quantities in the rocks of each geologic system younger than the Cambrian.

The fact that seeps and other surface indications of petroleum are generally more pronounced in the relatively younger Mesozoic strata than in the older Paleozoic formations, and the further fact that geologic exploration for oil and gas in countries other than the United States has been restricted in the main to areas containing the most pronounced indications of petroleum, tend to account for the predominance of the Tertiary system in the foregoing table and to indicate the fallacy of attempts to estimate the world's reserves of petroleum on stratigraphic evidence alone.

Despite the broad geologic range of petroleum, its occurrence in specific members, formations, groups, series or systems is by no means universal. On the contrary, its occurrence is restricted to specific localities in which are fulfilled certain variable relations, as yet but little understood, that involve the constitution, sequence and content of organic matter of the sediments; the nature and degree of metamorphism they have undergone; their structure; and their degree of saturation with salt water. Because the most detailed geologic work is insufficient to provide a basis for the appropriate evaluation of the numerous factors involved, and because only a relatively small percentage of the areas of sedimentary rocks in the world have been examined geologically in appreciable detail, any estimate of the future supply of petroleum in the world is peculiarly hazardous.

GEOGRAPHICAL DISTRIBUTION

The geographical distribution of petroleum is as wide relatively as its geologic range. The oil fields of present commercial significance are situated, in the order of their importance as contributors to the world's production of petroleum in 1917, in the United States, Russia, Galicia, Mexico, Dutch East Indies, India, Persia, Japan and Formosa, Roumania, Peru, Trinidad, Argentina, Egypt, Germany, Canada, Venezuela and Italy. Small quantities of petroleum have also been reported from Guatemala, Honduras, Costa Rica, Panama, Haiti, Porto Rico, Bolivia, Chile, Spain, Arabia, China, Australia, Papua, Philippine Islands, Nigeria, Belgian Congo, Gold Coast, Madagascar, and elsewhere. The geographical distribution of petroleum in the world is shown on the accompanying map.

In the opinion of the author the most conspicuous developments of the world's supply of petroleum in the next decade will take place in the countries that border the Caribbean Sea and the Gulf of Mexico. The trend in this direction is unmistakable. From 1913 to 1917, the annual production of petroleum in Mexico increased from 21,000,000 barrels to 56,000,000 barrels, and the potentialities of future production in that country have been demonstrated to be almost beyond comprehension. The output, originally considered valuable only as a source of fuel oil, is now yielding, by modern refining methods, increasingly important percentages of illuminating oils and gasoline. The only obstacles to enormously increased production are unsettled political conditions and inadequate facilities for marine transportation. These obstacles will doubtless be overcome within the next few years, and barring unforeseen contingencies Mexico will soon rank second among the oil-producing countries of the world. Judged by the results of exploratory work already done in Venezuela and Colombia, both of those countries are destined to contribute appreciably to the world's supply of petroleum within the next decade. Recently Colombia has given enough evidence of ability to furnish high-grade petroleum from wells of large individual capacity to warrant the large interests holding concessions there to exert every effort to overcome the adverse natural conditions that have so long barred the way to exploitation. Enough drilling has already been done in Venezuela to demonstrate that the resources of heavy-gravity asphalt-base petroleum in that country are large, and the recent installation of a modern petroleum refinery for the treatment of these oils on the island of Curacao, off the Venezuelan coast, has provided the market necessary to active field development.

Mexico ranked second in 1918 and 1919.

In Trinidad the production of petroleum exceeds 1,500,000 barrels a year and has doubled in the last few years. With the increased facilities for ocean transport of petroleum that are becoming available, a large output is assured.

Cuba is not expected to become an important producer of petroleum, and present knowledge concerning the petroleum resources of the Central American countries is not such as to warrant the belief that oil fields of material consequence will be developed in any of them.

Petroleum production in the United States is expected to reach its maximum within the next two or three years and to decline steadily thereafter, although this country is expected to remain the leading oil-producing country of the world for the greater part, if not all, of the coming decade.

As regards those oil-producing countries of North and South America that have not been already mentioned, no significant changes in their present status are anticipated.

The petroleum resources of Russia are believed sufficient to assure that country retaining its position as the leading producer of petroleum in the Eastern Hemisphere far beyond the next decade. During the last few years the output has been obtained under increasing difficulties, and as a consequence there has been no measure either of present productive capacity or of potentialities. Concerning the future of Russia as a source of petroleum Arnold says: "Such large areas, both in European and Asiatic Russia, yield unmistakable evidence of the presence of oil in large quantities that it is to this country, among those of Europe and Asia, to which the future must look for a supply."

ARNOLD, RALPH: "The World's Oil Supply": Report Am. Min. Cong., 19th annual session, 1917, pp. 485-486.

Russia being endowed with petroleum reserves, both proved and prospective, of great magnitude, the ultimate position of that country as the leading oil-producer of the world seems reasonably assured. Its immediate future is too intimately dependent on the progress from political turmoil to warrant a forecast.

The oil fields of both Roumania and Galicia are believed to have passed their maximum yield, and the possibilities of opening new fields of consequence in those countries are not considered large enough to justify a forecast of anything but a moderate decline of production in future years. No material change in the status of the negligible oil fields of Italy or of Alsace is anticipated at any time in the future.

With regard to the situation in Asia, the writer believes that the next decade will witness a steady increase in the output of petroleum in India, and the probable development of one or more important oil fields in Persia and possibly of fields in Asia Minor, Turkestan and China. In Oceania the same period will doubtless witness a material increase in the production of petroleum in Japan and Formosa and in the Dutch East Indies, together with the possible opening of new fields in Papua. Africa will doubtless receive considerable attention from oil operators in the next ten years, but on the basis of available evidence the results obtained in that period will probably not be large enough to affect the petroleum situation of the world.

POLITICAL CONTROL OF PRODUCTION

The status of the political control of the world's output of petroleum in 1917, as determined by the best data now available, is indicated in the table following.

The accompanying diagram shows the proportion of the world's production of petroleum contributed annually by each of the principal producing countries in each of the last ten years.

TABLE 2.--POLITICAL CONTROL OF THE WORLD'S PRODUCTION OF PETROLEUM IN 1917

Aside from the control exercised by Great Britain through its protectorate relation over the petroleum resources of Egypt, control of the petroleum resources of the various countries is mainly by virtue of state sovereignty. This political control is in proportion to the strength of the government in the country exercising it. Recent developments whereby the British government becomes the majority stockholder of a corporation controlling the oil resources of Persia, practically transfer the political control, as well as the commercial control, of Persian petroleum from Persia to England. Mexico's recently attempted firm political control of her vast petroleum resources depends for its success upon her diplomatic ability in dealing with the stronger governments of England and the United States, whose nationals have acquired a commercial control that is threatened by Mexico's new and decided nationalistic policy.

COMMERCIAL CONTROL OF PRODUCTION

The commercial control of the world's production of petroleum, as far as nations are involved, is determined in the main through direct ownership, of lands, leases and concessions, or by the control, through holding corporations, of subsidiary companies holding fee, leases, mineral rights or concessions of petroleum land. Except in Argentina, where the domestic petroleum industry is owned and operated by the state; in Germany, where the government participates directly in the financing of petroleum enterprises through the Deutsche Bank; and in Persia, where the British government owns a substantial interest in a company owning and operating extensive concessions, the commercial control of the petroleum industry is determined almost wholly by aggregations of private capital acting in their own interests.

TABLE 3.--NATIONALITY AND EXTENT OF CONTROL OF DOMINANT INTEREST

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