OIL: The Biggest Treasure Hunt

The greatest treasure hunt in U.S. history is in full cry. Above the green of North Dakota wheatfields rise the spidery towers of oil-drilling rigs. On the plains of Utah, shirt-sleeved crews set off dynamite blasts and, from the vibrations, map the subterranean oil-bearing strata. Over Alabama cottonfields fly planes with strange; antenna-like tails, which pick up magnetic waves and thus record geological formations below. In West Texas, wildcatters, trucks loaded with tools, inch across the prairies like gypsy caravans.

By turning up oil where it has never been found before, the hunt is transforming whole regions. Denver, center of the furious drilling activity in the new Denver-Julesburg oilfields (see map), is already talking cockily of eclipsing Houston as the oil capital of the world. In Montana and North Dakota, whose saucerlike Williston Basin contains immense oil treasures, the Big Sky country’s cattle and wheat economy is getting ready for a tremendous upsurge of industry. Men in the area foresee pipelines, refineries and plants turning out “petrochemicals” (TIME, May 12), oil’s new frontier.

The great oil boom has also churned up a parallel treasure hunt in the nation’s securities markets. For investors, oil’s lure is threefold: 1) as wealth in the ground, where its value is likely to keep abreast of inflation, 2) as the raw material of the new petrochemical industry, and 3) as the beneficiary of a “depletion allowance” which permits 27½% of income from producing wells to be plowed back before taxes are computed, thus giving oilmen a tax edge over most other industries. As a result, in two years the stocks of some of the biggest & soundest U.S. companies (Standard of Indiana, Socony, Texas Co., Shell, etc.) have more than doubled in value, while riskier Canadian “penny” oil stocks have made incredible climbs (one stock rose 4,700%, from 23¢ to $11.25). Many a wary trader thinks the speculation in stocks has gone too far. But, while almost every other industry is worried about its sales and profits, the oil industry (whose profits climbed 21% last year) finds its market growing.

The Big Gamble. Not even at the peak of World War II was the U.S. using as much oil as it is now. Since war’s end, U.S. oil consumption has risen 60%, from 4,912,000 barrels a day to 7,915,000, and is continuing to rise on an average of 7% a year. To keep pace, the oil industry spent a record $3 billion last year, drilled more wells (44,516) than ever before, and proved up 2.2 billion more barrels of new oil reserves than the nation consumed during the same period. To meet the still greater demand this year, the industry will spend an alltime record of $3.9 billion, drill 45,446 new wells.

Since the best way to find new oil is to drill unproved territory, one out of every four of these wells will be a wildcat. Every wildcat, costing anywhere from $50,000 to $1,000,000, will be a gamble with 8-to-1 odds against it.

Prize Pop. No oilman is scared by the long odds. Amerada’s Alfred Jacobsen, one of the industry’s great pioneers in scientific oil exploration (TIME, March 24), decided to chance it in the Williston Basin, after other oilmen had been drilling there sporadically and futilely for about 30 years. Jacobsen drilled to 11,000 ft. before discovering that “core samples,” removed at 8,000 ft., indicated the presence of oil. By a new technique (using hydrochloric acid to flush oil out of close-pored limestone), Jacobsen found the oil that others had missed, and the great Williston rush was on.

Since then, lease prices have risen from 10¢ an acre to as high as $235. Such famed wildcatters as Texas’ H. L. Hunt, often called “the richest oilman in the world,” and Hugh Roy Cullen hustled in to get in on the play. Centers of the drilling, e.g., Glendive, Mont, and Williston, N.D., burst at the seams.

In Bismarck, N.D., where dozens of oil companies have now set up offices, April saw the biggest gain in business (12%) of any city in the U.S. Nobody yet knows how vast the basin’s oil pools may be, but Amerada, Shell, Texaco and others have already brought in wells as far as 115 miles apart. Since oil has also been found across the Canadian border in Saskatchewan, oilmen suspect that the Williston pool extends there, think they may find fields rivaling Alberta’s great Leduc and Redwater fields.

Excitement at Abner’s. Alabama had never thought of itself as big oil country until last January, when Standard of New Jersey’s subsidiary, Humble Oil, brought in the state’s first gusher on the cotton farm of Allen Moye. In short order, two other producing wells were brought in nearby. Last fortnight the fourth came in on L. G. Crosby’s farm. Last week land could not be bought in the area for any price. There is talk that the new pool may reach far into Georgia on the east and Florida on the south, and wildcatters are setting up new rigs to find out.

Even in oil-rich West Texas, the area around Midland (pop. 34,256) had once given up hopes for oil. The land had been drilled repeatedly without luck. In 1943, Seaboard Oil found a promising rock formation, but no oil, on Abner Spraberry’s farm. Not until 1948 did Wildcatter Arthur (“Tex”) Harvey discover that the “Spraberry Trend,” as the formation was named, was full of oil, though imprisoned in the fine-grained, hard-packed sands. Then, the new techniques of the industry came into play: soap & kerosene, pumped into the sandstone under tremendous pressure, loosened it enough to force the oil out. Last week Spraberry was the biggest single U.S. oil-drilling area; about one-fourteenth of the rigs in the country were drilling there, and 1,000 wells have already been completed. New rigs are rising at the rate of six a day. Farmer Spraberry and his wife have long since moved into town to live a life of ease on royalties.

The Mountain Boys. Denver is the center of the eleven-state Rocky Mountain Region, which was flooded by prehistoric seas that once covered most of the U.S. and laid down the oil-bearing strata along its shore and on its bottom. One Denver geologist talks sweepingly of “a great underground river of oil flowing from Northern Alberta to the Rio Grande.” More than $130 million was spent in the area last year tapping the “river.” Refineries are being expanded and new ones built; new pipelines are fanning across the mountains.

In two years, Texaco, Ohio Oil and Bay Petroleum have all put up new office buildings in Denver. Big new reserves have been turned up in Wyoming’s Pow der River and Big Horn basins. Promising finds are being developed in the Ute country of adjoining Utah, where the hunt for oil had once been abandoned. But Salt Lake’s determined Wildcatter J. L. (Mike) Dougan kept on trying, despite a heartbreaking series of dry holes. Finally, after two years, he brought in Utah’s first commercial well. But that wasn’t the end of his heartbreak. The oil is so full of wax that it is like Vaseline. But experts found that heating the well’s pipes for its last 1,200 ft. would make the oil flow. Now the major oil companies have leases in the basin, have proved up four producing fields (Ashley Valley, Red Wash, Roosevelt Pool, Duchesne).

Denver’s own Denver-Julesburg basin, where oil is found at such relatively shallow depths (3,000 -6,500 ft.), is a driller’s paradise. Sterling, Col., where British-American oil brought in the discovery well two years ago, has since jumped in population from 7,470 to more than 10,000, and 160 more producing wells have been brought in.

No Substitutes. Along with the new fields, the industry’s greater knowledge and growing technology have enabled it to get still more production out of oil fields. Some, like California’s Ventura, had been thought exhausted. Shell has proved up new reserves by drilling its old Ventura wells deeper. Oilmen are now drilling through the bottom of old wells in South Texas, looking for deeper pay sands. Use of gravity-meters and perfected seismograph techniques now enable prospectors to pinpoint formations which could contain oil. But to find out whether oil is there, no substitute has been found for the old-fashioned gamble of sinking a drill. Thanks to the tenacity of such gamblers as Jacobsen, Hunt and countless independent wildcatters, the industry is now finding it almost everywhere.