UNITED .STATES 

DEPARTMENT OF THE INTERIOR 

HAROLD L. ICKES, Secretary 

GEOLOGICAL SURVEY .. . w. ·c. MENDENHALL, Director 

---0---

CIRCULAR 11 

.. -~o--~ 

. t 

- '~-

REVIEW OF THE PETROLEUM INDUSTRY 

IN THE UNITED STATES 

APRIL, 1934 

Compiled by 

, HALE B. SOYSTER 

'I 

' i.n collaboration with 

G. B. Richardson, R.W. Richards :· Foster Morrell; U. S. Geological Survey; · 

H. C. Fowlery G. R: Hopkins, A. J . Kraemer, A. c. Fieldner .. U. S. 

Bureau of Mines; and H. J. S'truth, Petroleum Administrative Board, 

Department of the Interior 

' ' 

Washington 

1934 
UNITED STATES 

DEPARTMENT OF THE INTERIOR 

HAROLD L. ICKES, Secretary 

GEOLOGICAL SURVEY 

W. C. MENDENHALL, Director 

---0--

CIRCULAR 11 

-o---

REVIEW OF THE PETROLEUM INDUSTRY 

IN THE UNITED STATES 

APRIL, 1934 

Compiled by 

HALE B. SOYSTER 

in collaboration with 

G. B. Richardson, R.W. Richards, Foster Morrell, U. S. Geological Survey; 

H .. c. Fowler, G. R. Hopkins, A. J. Kraemer, A. C. Fieldner, U. S. 

Bureau of Mines; and H. J. Struth, Petroleum Administrative Board, 

Department of the Interior 

Washington 

1934 

J 83874 

:illVI:SW OF THE PETi.lOL:EUH Il!DUST:ztY IH THE U1HTZD STA~ES 

Compil~d by Hale B. Soyster 

.P, "'"lowled~"lUents 

Tno ~riter wishes to acknowl~dge the helpful assistance and advice 

of Dr. ~. c. Mendenhall, Director, United States Geological Survey; . Mr. Scott Turner, Director, United States ]3'1.1reau of Mines; Mr. Herman 

Stabler, chief, Conservation Branch, United States Geological Survey; 

Mr. ,J. D. Northrop, assist&"1.t chief, Conservation Branch, United States 

Geolo2_~ical Survey; Mr. LeRoy H. Hines,. assistant le€._;al advisor, United 

States Geological Survey; Mr. Hugh D •. Miser, geologist in charge, 

Section of Geology of Fuels, Geologic Branch, United States Geological 

Survey~ and R. A. Cattell, chief engineer, Petroleum and Natural Gas Division, U.S. B"1.1reau of !viines. 

Petroleum :xr.eserves 

Distribution 

~1e oil-producing areas in the United States are widely distri~ 

uted.!J Production is obtained in 20 States, which for statistical 

purposes are &rouped into 8 major districts: 

1. Appalachian (l!ew York, :Pennsylvania, eastern and south .... 

eastern Ohio, West Virginia, Kentucky, and ~ennessee.) 

2. Lima-Indiana (northwestern Ohio and northeastern Indiana.) 

3~ Michigan. 

4. Illinois-Indiana (lllinois and southwestern Indiana) •. 

5. Mid-Continent (Kansac, Olr..lahom.a, . A.rka."l.sas, Louisiana excluding Gulf coazt, Texas eAcluding Gulf coast, southeastern New Mexico). 

6, Gulf coast (in Texas and Lo~isiana). 

7 • :aocky Mountain (Monta..'1.a, Wyoming, Colorado, Utah, and 

:northwestern New Mexico). 

s. California •. 

Q,uarJ.titatively, however, the distribution is not so widespread. 

Of 'vhe nore than 15 billion barrels of petroleum that have been produced 

· Y Uap of oil and gas fields of United States, u.s. Geol. SUrvey, 1932. . 
, 83874 

in the United States from 1859 to 1933, 66 percent has come from 

California, Oklalwma, and Texas, and of the current output 83 percent 

is s~~plied by these three States, according to statistics of the 

Bureau of Mines. 

~he United States may be classified into proved, prospective, 

unfavorable, and impossible oil and gas areas on the basis of production and of the factors that control the occurrence of thes.e hydrocarbons. Four factors are of major importance: (~) Source deposits--

beds containing the remains of certain aquatic pla~ts and animals from 

which oil and gas are generated: (b) reservoris -- porous, fractured, 

or cavernous rocks in which oil and.-gas are stored; (.£) traps or structures constituting barriers to prevent the escape of the hydrocarbons 

from the reservoirs; (d) absence of geologic disturbance of the rocks 

sufficient to destroy ;il or gas that may have been stored in them. 

Several such classifications of the United States for oil and gas 

have oeen made, notably by the American Petroleum Institute in.~925,~ 

by David White in 1928,~ and by Arnold and Kemnitzer in 1931.~ The 

fact is patent, however, that the location and productivity of fields 

to be found in the future remain unknown in advance of discovery by 

the drill. 

In considering the reserves of petroleum, it should be borne in 

mind that (1) the reserves are irreplaceable, and production is a 

record of exhaustion; (2) because of the unknorm number and unknown 

productivity of the fields yet to be discovered it is impossible to 

predict with assurance the quantity of these reserves; (3) it is 

essential that the reserves of the uroved fields be distinguished from 

the reserves of the fields yet to b~ discovered. 

Provec1_ fields 

Estimates of reserves in known sands in proved fields, recoverable 

by current methods,are on record as follows: 

knerican Petroleum Supply and Demand, American Petroleum Institute, 

1925, PP• 58,59. 

Vfuite, David, Address (unpublished), Second International Conference 

on Ettuminous Coal, Pittsburgh, Pa., 1928. 

Arnold and Kemnitzer, Petroleum in the United States and Possessions, 

1931. 

2 
1922 United States Geological $urvey and 

American Association of Petroleum 

83874 

Billion bbls. 

Geologists §./ ••••••••••.••••••••••••••••• ~, 5, 0 

1925 American Petroleum Institute§/ •••••••• ~., 5,3 

1926 Federal Oil Conservation Board 7.} •; •.•••••• 4~5 

1932 Federal Oil Conservation Board §}, •.. • ..••• 1o.o 

1933 Valentin R. Garfias ~ ••..•......••.....•••• 12.0 

Undiscovered.fields 

Consideration must be given to the uncertain but.very important 

problem of production from undiscovered fields, because the 11 flush11 

output of new fields is depended on to meet our needs. An unknown 

field of today may become a proved field tomorrow. 

The reserves of petroleum in the United States l1ave long been 

debated. Some have held the s~~ply to be practically inexhaustible; 

others have predicted early exhaustion. 

Arnold and Kemnitzer forecast a total reserve of 39. billion 

barrels for the United States as of January l, 1929. ~ 

Vfuether our r~serves of petroleum prove to be 12 billion, 39 

billion, or some other figure of comparable magnitude, the reserves 

are indeed limited. 

Tne oil sup~ly of the United States: Dept. Interior Press 

Notice, 1922. 

American petroleum supply and demand; p. 3, Americ~ Petroleum 

Institute, 1925. 

Federal Oil Conservation Board Report I, P• 8, 1926. 

Federal Oil Conservation Boar~ Repor~ V, P• 7, 1932. 

Am. Inst. Min. Met. Eng. Trans., vol. 103, P• 253, 1933. 

Arnold and Kemnitzer, op. cit., p. 5. 

3 
83874 

Depletion of reserves 

Rapid depletion of reserves and wasteful utilization of petroleum 

through necessity to dump excessive output upon tho market at demoralized prices are clearly recorded throughout the history of tho oil 

industry. 

Facts recorded by annual reports of tho United States Bureau of 

Mines show a tremendous rise in petroleum production since 1859, when 

the American petroleum industr,r had its beginning with the discover,y 

of oil at Titusville, Pa.. 

Official statistics of petroleum production from 1859 to 1933, 

collected "I?~ a these Bureaus, place. the total recove:cy of. crude ~il at 15,70o,ooo,~arrels, During this period the annual oil productlon 

increased from about 2,000 barrels in 1859 to 1,007,323,000 barrels 

in 1929. · Production in 1933 was reported by the Bureau of Mines 

as 898,874,000 barrels. 

A review of facts recorded by annual Bureau of Mines reports 

places particular amphasis upon the discover,y and development of_new 

fields. Competitive practices attending eaCh new discover,y are Shown 

to have resulted not only in premature depletion of oil reserves, but 

also in successive economic disturbances that contribute to physical 

waste of natural resources through uneconomie utilization becaU$e of 

extremely low market prices. 

Usually when a aew pro4ucing area is discovered, competitive 

development brings an orgy of drilling that quickly brings a peak 

output of oil, in excess of normal market requirements, followed by 

. sharp recessions in priee and subsequent premature decline in productivity of the particular area. Moreover, the facts show not only local 

price demoralization, but also a decidedly general downward revision in 

values that extends into ever.y producing area of the United States. 

The effect t!}f uncontrolled development of new, flush oil-producing 

areas ean be clearly visualized b,y Charting the course of production 

ensuing during the fluSh stage of eaCh new field, in relation with posted 

prices of crude oil. More particularly since 1901 proctu.ction peaks of 

new oil fields have consistently had a demoralizing effect upon' ... :the 

industrJ 1s market structure for both eru.de and refined oil. Yet tho 

records reveal the adverse market influence of new oil finds from the 

ver,y beginning of the industry. In fact, from 1859 to 1879 prices of 

crude fluctuated violently under the influence ot alternate periods of 

feast and famine. Since 1901, however, when tho famous Spindletop oil 

field was discovered in the Texas Gulf coast region, the advent of new 

Producing areas, each accompanied b,y !ronzied development and excessive 

supply, has bee~ distinctly marked by low prices, wa~teful utilization 
83874 

of petroleum and its products, and premature deple~ion of oil reserves 

and natural underground energy. As a matter of fact, every flush oil 

field ·broug·ht into conu"!lercial prod"t\ction since 1901 has had a relatively 

short life of i·';;s flow·ing wells, ov:inb to wasteful, 1.lllControlled, acutely 

competitive operation. Many such fields undoubtedly would have yielded 

creat~r quantities of otl u.""1Cier careful, orderly development and control 

of proQu.ction. At the same time, extreille fluctuations in market pric.js 

could have been avoid.ed. 

Statistics indicate that comnetitive development of such fields as 

Spindletop, Sour Lake, Bat.son, Hu;ble, ~ennings,~nd Glenn Pool, broueht 

into production between 1901 and 1908, had a se'verely depressing effpct 

1..::.pon t:le oil industryts price st:r-11cture. In fact, in the period from 

1903 to 1909, du.riHg which the flush fields mentionE?d contributed succcssi ve peak periods of production, the average price per bar;r. ... el of 

Mid-Cc·ntinent crude declined from $1.02 to 33 cents. Later, there was 

a gradual :rise in pl .. ices, which carried the average for 1913 to 94 cents 

per barrel. 

Meanwhile, the rise of flush ·oil production at Cadclo, La., and the 

disco\Tery and competitive development of the CushiM area, Okla., bro1J.6ht 

a sharp recession in posted cr11de prices, loweri.ng the average value to 

58 ceuts in 1915. 

In the lack of any important new discoveries until Mexia-Powell 

duplicated t!1.e c-u.shi:t:lg peaJc in 1923, e:nbracing the period when the 

United States eng~~ed in the Worlcl War, oil prices advanced to an averago of $3.30 in 1920. The peak production at Me:<ia-Poweli, in 1923, 

again adversely affected tho crt'l..de market, lo·wering the aver(3f:~e price 

in 1924 to $1.45. Another decline in production of flush areas carried 

the cru.d.e price average to $2.31 in 1926. 

T.n.e report of the Federal Oil Conservation Board., No. 5, October, 

1932, states: "Wnen lar[.e ciiscovcries of oil an~i gas were mad·e in the 

North Dor..1e of tb.e Kettleman Hills oil field, California (1928), threaten .... 

ing to der::10ralize the oil industry in C~lifornia, the Secretary of the 

Interior, with the ascent of Congress, took the initiative and with the 

cooperation of operators secured the aJoption of a plan of unit operation 

in.tnat field which drastically limited production, conserved the oil and 

gas.resources ~~d which will, it is believed, prolong the life of the 

fi8ld to the advantage of the State, the Nation, and the owners or lessees. 

Tne ouccess of this experiment resulted in the enactment by Congress of 

a general and pennanent act, March 4, 1931, authorizing the Secretary of 

t~w Interior to enter into unit or cooperative plans of developmept on 

a;n;y~ oil or t:as field in the public domain. Several such ·~mi ts have been 

established and others are under consideration." 

5 
83874 

The benefits cleri ved by the :[)ro cedure thus followed with respect 

to the public domain are not confined wholly to the conservation of · 

the resources nor the reJ.uction of output at a time when it is neither 

needed nor profitable. 'lne drilling on leases and on prospecting pennits 

that 1vere outstru:J.ding or wo-uld have been a:ppliod for had not the order 

of March 12, 1929, been issued, would have involved u very large outlay 

of money which, during the era of low prices, would have yielded no 

adequate ret·urn even if discoveries had been made. The adoption of the 

unit plan of development materially lessens the number of wells that are 

required to be drilled to extract the oil and gas from the land, thus 

effecting a large saving, ancl the limited and scientifically regulated 

production followed under such a :plan prolongs the life of the field and 

results in the ultimate extraction of a much larger q1.1.anti ty of oil and 

gas from the underlying sands. 

Alt~10ugh the existing conditions warra.::1ted the drastic limitation 

of exploration and production from the public and !ndi~1 lands, it is 

nevertheless tFoE that the various States containing public lands or 

reservations subject to the leasing act naturally feel that they are 

entitled to have the oil and. gas resources within their borders developed 

under proper methods. 

Therefore, after the unit-operation law had been enacted by Congress 

and the procedure thereu.:."1cier determined by the Department of the Interior., 

an order was issued m1der date of April 4, 1932, again opening the public 

domain to the filing of applications for prospecting permits - with the 

condition, however, that each applicant shall expressly agree to produce 

no oil or gas in comaercial quc1.11tities e;ccept pursuant to a plan of unit 

operation or other cooperative plan approved by the Secretary of the 

Interior, and with tho further exnress condition that the applicant shall 

comply wit;h nll State and Foderal ... la';:s, regulations, and orders, affecting production and proration. 

Developments in Oklahoma led to a renewed outburst of competitive 

drilling in the Seminole area, which registered an Uilusually high peak 

output in 1928, causing crude prices to drop sharply to an inter.mediate 

averase level of $1.39. About this time oil was discovered in large 

qu.~ntities at Q}~~1o~a City. Also, the effect of previous onslaughts 

of flush production upon oil prices began to crystallize thought and 

effort in the oil industry in the direction of soQe form of control of 

development and production. Groups of operators in new fields, such 

as Oklahoma City and Seminole, organiz.ed proration cor!h"'littees and launched 

concerted efforts to attain some degree of control of production that 

would act to stabilize the industry's price structure and prevent unnecessary waste of the natural reso~ces. 

6 
838?4 

Partial success in control plans was attained, only to meet \nth 

complete dis:ruption on the discovery of the largest oil-producing area 

in t!1e history of tho .American oil ind.ustry-East Texas, in the later 

l)a.rt of 1930. Sporadic a.t'Gempts to enlist the cooperation of operators 

in ~~e Eust Texas area in effecting proration and control of development 

mot '::ith continual reverses. Meanwhile, both the OlrJ.8-L,.oma City field 

D ... 'Yld the East Texas area comtined to show a record-brea}~irl6 peak production that completely de~oralized the industry's general market structure. 

Adcli tional new oil finds • such as Conroe, in the Tex.as Gulf coast region 

and UlJ..'Tierous sal t-clor.1e fields extending along the entire Texas-Louisialla 

Giilf coast, served to complicate proration efforts still further. 

Co<.1ffiensurate with e1..1Jerience of the past, the combined peaks of 

flusl;. fields broU£~ht into the picture between 1928 and 1931 carried MidContinent oil prices do..,m to 18 cents a barrel, and East Texas oil was 

posteJ for a short time at 10 cents a barrel. 

It has been stated ill th'at new flush fields when allowed to produce 

·wi tl1.out restrictior.. si1ow a ra:!id decline in production in the first 3 

years of their life. In the first year after reaching the peak of :production, these fields fall of:L on the average from 60 to 66 percent. 

Two years a:::'ter the pea1: the avorat;e decline is more t!1an ?0 IJerce:nt, and 

after ~) years p:-oduct ion has declined. about 80 pel"'Cent. Some large indi vidl.l3.l ±'ielclz sho 1

:: declines of as nru.ch u.s 92 percent within a year after the 

peak of ~reduction has been reached, and a·maximum decline of 94 percent 

at the end of the third ;;tear. It is generally estimated that during the 

first year of the life of a well, if made to produce normally, it yi~ld.s 

from 30 to 100 percent of its recoverable oil. 

There is a general ten<lency to overestimate ultimate production of 

fields. Many estimates are extr-?.v'fgant, and so::ne of the earliest estir:lates he..ve little :factU<.."ll basis.1..0 

7_le few large flush fields hn.ve created a fictitious picture. It 

rnit:;l::.t be supposed tl:at there is a veritable flood of oil, but statistics 

s}low ti1at most of the wells that are drilled and find oil are small wells. 

ll./ .:?<1cts and figures, pp. 111-112, .American Petroleum Institute, 1928.· 

W S:i.licle::::, L. C., \A. com;}arison of old anc' .. new fields :. .Am. Inst. Min. Met. 

:S:G~S· Trans. 1 vol. 103, PP• 71-86, 1933. 

7 
83874 

The following figures represent a11 annual average over a period of 

7 years, 1920 to 1926: Of the total oil wells co~pleted in a year in 

the area of the United States 0ast of the lloch."Y Hotmtain5, 31.7 percent 

had an initial daily production of 25 barrels or less; 8.2 percent produced between 26 and 50 barrels; 4 percent between 51 and 75 barrels; 

3. 9 percent between 76 and 100 barrels; 6·. 3 percent between 101 and 

200 barrels; 2.7 percent between 301 and 500 barrels; 1.3 percent between 

501 and 750 barrels; 1.2 percent between 751 and 1,000 barrels; 1.5 percent between 1,001 and 2,000 barrels; and 1.3 percent oyer 2,000 barrels. 

It is significant that the estimated proved reserves of California 

January 1, 1933, were 180;880,000 barrels less than the estimated reserves 

January 1, 1932. During 1,932 about 85 percent of the oil :produced in 

California was from old. reserves and only 15 percent from the more recently 

discovered reserves.l3/ Known petroleum reserves in California do not appear adequate to sustain heavy withdrawals over a long pe~iod of time. 

In 1932 California! s prod.uction was considerably greater than the reserves 

of newly discovered fields. 

Dissipation of reservoir energy by blovring gas into the atmosphere 

results in increased costs of nroduction and a reduced ultimate recovery 

--therefore a reduction in rec-overable Jmown reserves .14-1/ 

As .the flush output of nev1 fields is depended upon to maintqin the 

current reserves, it is clearly apparent that planned and controlled 

development are needed, in order that the Nation's oil and gas resources 

may be conserved. Such a conservation progra'n is essential, not alone 

because of the continued economic advance of the Nation but also because 

of the necessity of maintaining a.'Yl. adequa.te supply inunediately available 

for national defense. 

13/ Wilhelm, V.H., and Miller, H.Yl., Developments in the California 

petroleum industry during 1932: .Am. Inst. Min. Met. Eng. Trans., 

vol. 103, p. 345, 1933. 

14/ Hawthorn, D.G., Subsurface pressures in oil wells and their field 

of application: Idem, pp. 148-169. 

Additional references: Pratt, Wallace, Industry must drill 20,000 

wells yearly: Oil and Gas Journal, July 16, 1931. Barnes, R.M., and 

Bell, A.H., Proration of an oil field based on uniform allowable gas 

production: Am. Inst. Min. Met. Eng. ro.ns., vol. 103, P• 142, 

1933. 

8 
83874 

Supply and demand 

Production 

The raw materials of the petroleum industry are crude petroleum, 

natural gas, natural gasoline, and benzol. Crude petrolemn is by far 

the most important, constituting 96 percent of the total production of 

raw materials in 1933. 

The first comnercial production of crude petroleum was recorded 

in 18:59, after the di:scovery of the Drake well on .August 29, 1859. 

The output for that yec:~r a'!lounted to the modest quantity of 2.000 

barrels.l5J The ann:w'll production increased by leaps and bounds, however, so that by 1900 it was 63,621,000 b~~rels.~ However, this increase over 40 ye~rs was small compared with that which has occurred 

during the first third of the present century. IAuring-that 33-year 

period the ~reduction of cr~de increased from 63,621,000 barrels in 

1900 to about 900,000,000 bexrols in 1933, or more than fou.rteenfold. 

This sensational incroaso \V[i,S not co:1t~nuous 8 as in 1906, 1924, 1930, 

1931, and 1932 there was no increase over the proc-~d.ing year. The 

pe::ili: yea:r WD-S 1929, whca tho prcclucticn was 1,007')3::::;3,000 barrels.~ Except in 1929, when produ.ctivn was unus-u.ally high, c:u1d 1932, when it 

was unusually low, our ar.mue.1 :production for the last 7 years has been 

about 900,ooo,ooo barrels~ or a daily average of 2,466,000 barrels. 

During the 7-year period. 1927-33 Crllde-oil stocks increased 

99,258,000 barrels, or an average of 39,000 barrels a day. Deducting 

this average from the average daily production (21 442,000 barrels) for 

that period leaves 2,403 1 000 barrels as a rough measure of the normal 

daily requirements for cl~de oil. The production rate for Februar.yf 

1934, a period of relatively low consumption, as reported by the Bureau 

of Mines, was 2,338,000 barrels. The present rate (March 30, 1934) is 

about 2,440,000 barrels, or not far above the average of 2,403,000 given 

above. 

The total of nearly 15,700,000,000 barrels of crude oil produced 

in the United States during the entire period 1859-1933 is equal to 65 

percent of the total production of the world during that time, 

1E./ Mineral Resources of the United States,Pa.rt II. U. s. Geol. Survey. 

9 
83874 

Tho elements in the new supply of all oils are the production of 

cn1de, just described, natural gasoline and benzol, WhiCh at 

present amou "1t ... to about 100,000 baJ."rels daily, ancl imports of crude 

oil ru1d refined products. 

Imports 

Oil has been irrtDorted into this country since about 1905. Crude 

oil has always cc:1sti tuted the bulk of the imports, a1 though the dispari t;r between receipts of foreign crude ancl foreign refined oils has 

lessened in recent years. The peak of imports \Yas reached in 1921 and 

1922, r;hen Mexican production was .at its height. In 1922, 127,308,000 

barrels of crude oil and 8,665i000 ba~rels of refined products were imported into the United States._§/ Since 1922 the trend in imports of 

cru.cle oil has been down\·rard,a.lthot'lgh.· a. material gain occurred in 1928, 

follovving the ro:pid. rise of productiqn in Venezuela. In June, 1932, 

when tariffs were placed on imports of mineral oils, the quantities 

brousht in declined. about 50 percent. Under an order pupp1emental to 

the oil code, irrqJorts were restricted to the average ftor the last six 

months of 1932, and in 1933 only 32,773,000 barrels of crude oil and 

13,498,000 barrels of refined products were imported, a decline of 

38 percent from 1932 and the lowest total since 1927. The total of 

imports from the beginning through 1933 has amounted to about 

1,250,000,000 barrels of crude oil and 285,000,000 barrels of refined 

products, a grand total of 1,535,000,000 barrels. The latest official 

fiGUres1J) give imports of cru.de as averaging 86,000 barrels daily and 

imports of refined oils as averaging 10,000 barrels daily. The latest 

wee::d;{ report of the .American Petroleum Institute shows that for the 

week ended M~rch 24, i934, crude imports averaged 49,000 barrels and 

refined products 40,000 barrels, indicating a downward trend in these 

operations. In general, it crm be said that imports of all oils constitute about 5 ~porcent of oul .. total new s1..1.pply. 

Exports 

]zcept during tho period 1920-22, exports of crude oil and refined 

products from the United States h~~ve exceeded the imports, as is illustrated. by the fact that up to and including the year 1933 a grand total 

of a·oout 3,000,000,000 barrels of crude oil and refined products has 

16} ~J.reau of Foreign and Domestic Commerce. 

!1/ Bureau of Foreign and Domestic Commerce, data for February, 1934. 

10 
8!3874 

been exported from this COtk~try, as compared with total imports Of 

1,535,000,000 barrels. Of the total exports, about 83 percent has 

consisted of refined products, whereas crude oil has constituted 81 

percent of the total imports. In recent years exports of refined 

oils have declined, cuing l~rgely to the growth of the refining 

industry in foreign countries. On the other hand, exports of crude 

oil have beon stimulated by this growth in refinery capacity abroad, ·.so 

that the total for 1933 of 36,703,000 barrels constituted the hi~1est 

rumual total ever recorded. The mB.jor portion of our crude oil 

ex.:rorted is consigned to Canada, although Japan, France and 

Germa..~ are also large p"ltrc.hasers. 

Prior to 1923 kerosene and fuel oil were the principal prqducts exported, but since that year gasoline exports have exceeded 

kerosene exports, and since 1929 they have been roughly equal to the 

combined exports of kerosene and fuel oil. In 1933 the exports of 

gasoline amountqd to 29,186,000 barrels. whiCh, though equivalent to 

only 45 percent of the hit!;hest record for such shiJ?IIlents, established 

in 1930, comprised 7 percent of our total demand for motor fuel. 

The latest data available~ indicate that at the present time 

average daily exports are as follows: Crude oil, 90 1 000 barrels; gasoline, 75,000 barrels; other refined productiJ, 1251 000 barrels; total, 

290,000 barrels. 

Summary of ~ports and exports 

Present imports of all oils average about 96,000 barrels daily, 

or 4 percent of the total new supply. Exports of all oils average 

290,000 barrels daily, or 11 percent of the total demand. The imports 

consist primarily of low-gravity crude of low gasoline content and 

fuel oil; the exports consist primarily of gasoline, kerosene, and 

lubricating oils, or oils of a comparatively high unit value. The 

tariff of 1932 curtailed imports roughly 50 percent, but the oil thus 

shut out has displaced a material portion of our e~orts. 

Domestic demand 

The total demand for all oils comprises the domestic demand for 

refined products, losses, crude used as fuel, and exports of crude oil. 

and refined products. Althou@1, as shown above, our exports are considerable, the domestic demand for refined products constitutes the 

1§1 Bureau of Foreign and Domestic Commerce, data for February, 1934. 

11 
83874 

major portion of the total demand. In 1933, the total domestic demand, 

excluding losses and crude used as fuel. amountE3d to 830,405,000 barrels, 

or 85 pe:ccent of the total demar .. d. 

In ~;eneral, the cons1.l.L'1ll)tion of oil in this country has shown a 

growth cor:n:iensurate with the ra.pid rise in crude production already 

describerl. ]'rom the rise of the refinine industry in the last half 

of the nineteenth centu.ry until about 1908, ker·osGne was the primary 

refined T•rocluct; fro:n 1908 until 1S29, fuel oil. led in quantity, though 

the lirhter products had a hL~::ht3r total value. Gacoline assumed the 

l0ad: in qlJ..anti t~r in 1930, althougl1 it had long been the primary refined 

:prodD.ct. From a total of less than 5,000,000 barrels in 1900, the con ... 

~umption of f;asoline or r:1otor fuel grew to 403,418,000 barrels by 1931, 

a rain of roughly G,OOC percent in a third of a century. The consumption of ;asoline declined 7 1jercent in 1932, beca;u.se of the decrease in 

car re:ti stro.tions :ros,_ll ting from tho depression, ·but recovered slightly 

in 19:33, when t!'..e contin1:cd decline in registrations was more than counterbalanced b;yr an increa::.;e in the average u.ni t consum})tion~ The consumption of fuel oil increased rapidly from 1900 to 1930, but this 

growth had little influence on the production of crude oil, as fuel oil 

is es;:.entially a b:r-product obtained incidentally to the refining of 

crude oil for kerosone in the earlie~ years and gasoline later. The production of cru.dc oil has been adeuuate to keep pace with the increased 

domand for gasoline, mainly beccru;e the refine:-s have i!lcreased their 

average yield of gasoline from e.bout 10 percent in 1900 to 44 percent in 

1933; in other worl(8, the refiners are now (19~54) getting about five times 

as much gasoline out of a barrel of crude as t!1.ey did in 1900. 

Stocks 

Stocks of cru.de oil and refined proc1ucts have increased materially 

durinG the last 15 years, a.n.1ounting at the present time to about 

600, 0,.)0, 000 barrels, of which about 40 percent consists cf refined 

procblcts and 60 percent of crude. .Although those data indicate that 

total stocks have almost trebled in the last 15 years, in terms of 

da~.rs 1 s·v-~!Ill;:t (ratio of stocl:E to demand) they are now practically on a 

par with stocks of Januar~t l, 1918, when there was roughly 220 days' 

suppl~- on hand. 

12 
i33874 

Petroleum Products and Their Uses 19/ 

11 The United States, with the largest production of petroleum and the 

gree.tv:st :.--c~fine:t;r CD:IJaci ty, consn.mes mere oil than any country in the world. 

In l1C sr:-.tll :'-·art the relatively hieh con~tion in this country has been 

due to the necessity of meeting the demand for gasoline for the motor car." 

11 Pl'oduction of petroleu.rn. in America c.atcs back to 1859, and from the 

earliest c~ays the United States has supplied tho bulk of the worldl s oil." 

11 'rhe first inmnrtant use to ·be discovered. fer petroleum was as a burning cil in lp.r,~r)s •... Befcre the: general introduction of electricity, kerosene 

or its prcd.ecessor, 1 coal oil, • gave the world light; and the world had to 

come to the Ulli ted. States for a l2rge :part of its sUpply .n 

ns::1e iEdustrL:..lization and mechanization of Europe created a vast 

market for hioricants ·" 

11 In the early days of the twentieth century automotive develo:pment 

in the United States began to nake grer~t forward strides, and by 1910 the 

automobile wo.s cre<J,ting a new demand for gasoline - a petroleu..-rn produ.ct. 

~he obvious snccess of the petroleW!l industry's efforts to supply this 

hitherto unprececentcd de::1and for casoline, created by the phenomenal growth 

of the automobile, ha.s resulted in the parallel growth of these two giant industries, whose y1rosperi ty is so vi tal to the economic welfare of the United 

States. 11 

nr.::hc norld was brought to ;:::, full realization of the essential importance 

of petrole-arn in ev8ry day life, in in.iustry, and in safeguarding nation~l 

sec11.ri ty DJ the World Vhxr. Tb.e gre2.t 0.evPlopment in the use of fuel oil in 

f8.ctories and in ships, tho rcmark:able strides of aviation -·.·with its att'endant domancl !or specialized fuols and lubricr::..nts - also had their inception during the war • 11 

11 '.rhe (c.::rowth in the use of fuel oil for industrial and marine purposes 

has been only less scnsB.tional tha.n the increase in tho use of gasoline. 

The great :power3 began to convert b:~ttlesli.ips into oil burners just preceding tho World War and the conversion bocruno complete during and after the 

war. All the navies of tho groat powers are now on an oil-burning basis. 

19/ All parQ.Gr~~phs within quotation marks ·9.XC directly quoted from Pet:: oleum 

facts and figures, 4th edition, .tunorican PctroleuJn Institute, Publl.c Relations Dcp2,rtment, copyJ."ighted in 1931. Q.uotations used by permission. 
83874 

Of even more significance * • * is a similar conversion to an oil burning 

basis of the merchant shipping of the world." 

"Motor vel.1icles, with an enormous n.ppeti te for fuel and lubricants, 

increased rapidly in number. C2he Wo~ld Wax s tinru.la~ed the demand for fuel 

oil for ir .. d:ustrial and marine uses. .Avie.tion e;rew from a dream into an industry with a craving for more gasoline and more oil. '!'he oil burner was 

transformed from a_ novelty into an accepted menns of providing domestic 

and industrial heat. New uses were found for refined petroleum products. 

New IIU1rkets were de'V'elo-ped nt home and abroad. The age of machinery definitely established its dependence upon the products of petroleum.u 

11 It was perhaps only natural that an industry called upon under the 

urgency of sudden demand, .;md much of it a war-time demand that brooks no' 

delay, should in cxpn.nding production of its raw material 400 percent in 

lens th~! a score of years perform its task too well and create a condition 

of overproduction. n 

u Overproduction in the field was acco~a:nied by overproduction in the 

refining branch of the industry. Capacity began to surpass demand. Highly 

efficient refining processes produced. constantly increasing proportions of 

products in d~~nd from given ~mounts of crude oil and intensified the overproduction problem. The flood of petroleum p~od~cts spre~d to the market, 

necessitating dumping, unloading, and diversion to inferior uses of a valuable commodity, causing waste of a precious natural resource." 

}J 

The growth of the petroleu~ industry is indicated by data collected 

by .the Bureau of the Census. u. s. Department of Cot.riDl~rce. The petroleumr-efj,ning industry, according to the Census of Manufactures, ranked 24th in 

the value of products manufactured· in 1909 ~ 16th in 1914, and has. varied 

from 7th_ to 2d_during the period 1919 to 1931. The wholesale value of 

petroleum products in 1909 was $236,998,000; in 1914, $096,361,000; and 

from 1919 to 1931 it rar~ed from $1,500,000,000 to $2,500,000,000. 

The parallel growth of the automobile industry is also sho\vn by the 

reports of the Census of 1~~nufactures. The motor-vehicles industry ranked 

77th in 1909, 8th in 1914, 3d in 1919 and 1921, and either 1st or 2d in 

l923 to 1931. The wholesale va.lue of motor vehicles, including bodies and 

parts, was $193,823,000 in 1909. Since thB.t time motor-vehicle bodies and . 

parts he.ve been computed separately, and the wholesale value of motor vehicle~ 

only-was $503,230,000 in 1914 and ranged from $1,567,526,000 to $3,722,793,000 

in 1919 to 1931. 

The petroleum refineries in the United States have steadily increase~ in 

capacity from 1,186,155 barrels a day in 1918 to 4,023,388 barrels a day ~n 

1931. 20/ 

20/ Statistics from official records, u. s. Bureau of Mines. 
83814 

the overexpansion in the refining capacity is indicated by the erude oil 

runs to refinery stills, ·which amounted to 893,219 barrels a day in 1918 and 

increased to a peak of 2,706,049 barrels a day in 1929. In 1931 the run to 

stills amounted to 2,450,981 barrels a d~. 

11 In response to changing demands for different petroleum products, refining operations have had to be adjusted so that the products in greatest 

demand could be supplied in sufficient quantity. The most strildng and 

revolutionary adjustment crune with the tre1u.0ndously increasing requirements 

for ga.soline, previously a waste product.n 

. Gasoline, kerosene, gas and fuel oil, and ~ubricating oil represent 

the _major petroleum products of refining operat.ions. Gasoline produced in 

1904 amo1mted to 6, 920,000 barrels; in 1914, 34,9151 000 barrels, and by 

1929 it had increased to a peak of 435,078,000 barrels. In 1931, ~31,510,000 

barrels of gasoline was produced. In the same years the profraction of 

kerosene amounted t9 32,304,000, 461 078,000, 55,940,000 and 42,446,000 

barrels respectively. The peak production of kerosene occurred in 1926, 

amounting to 61,768 1 000 barrels. Gas and fuel oil ha.d a remarkable increase 

in production similar to that of gasoline and amounted to 8,583,000, 

88,193,000, 448,9481 000 and 336,967,000 barrels in_l90~, 1919, 1929 and 

1931 respectively. The production of lubricating oil during these same 

years was 71 4981 000, 12,329,000, 34,359,000 and 26.704,000 barrels 

respectively. 

"By improvements a..11.d new processes - among the latter the 'cracking: of 

gas oil and fuel oil to make gasoline - the industr,y has been able to great~ 

increase the yield of gasoline. The yield of gas oil and fuel oil [was until 

1930 the largest of .any of the petroleum productsJ, and a market has had to 

be found for it, largely in competition with coal. 11 

In 1899 on~ 5.4 gallons (12.9 percent) of gasoline was derived from a 

42-gallon barrel of crude oil run through American refineries. ~ How the 

petroleum industry has squeezed 1nore gasoline out of a barrel of crude is 

indicated by the increase in yield, amounting to 7.6 gallons, or 18.~ percent, 

in 1914; 11.0 gallons, or 26.1 percent, in 1920; 14.7 gallons, or 34.9 

percent in 1926; and 18~6 gallons, or 44.3 percent, in 1931. On the other 

hand, the yield of kerosene per barrel of crude decreased from 24.2 gallons, 

or 57.6 percent, in 1899 to 2.0 gallons, or 4.8 percent, in 1931. The yield 

of gas and fuel oil from a barrel of crude oil increased from 5.9 gallons, 

or 14.0 percent, in 1899, to a high of 22.5 gallons, or 53.5 percent, 1918. 

After 1918 it decreased to 14.8 gallons, or 37.7 percent, in 1930, although 

it has constantly increased in total volume except during 1930 and 1931. 

Motor fuel is produced at refineries by three methods - (1) straight-run 

distillation of crude oil, (2) craCking, and (3) blending natural gasoline.~ 

~ Statistics from Petroleum facts and figures, 4th edition, American 

Petroleum Institute, 1931, based on official rec.ords of the u. s. 

Bureau of Mines. 
83874 

Since 11 crc_cking11 was first aprlied some 18 yer;;.rs ctgo, it has been widely 

adopted ancl llc.s become one of the guarantees of adequate future supplies of 

motor f"L~el. The a.ver::1ge gasoline y·ield on straight refining is about 25 percent. Tne rcsul t of cracking opere.tions is clearly shown by the steady in~. 

crease ~ .. bove that figtu·e - from a. total gc:.soline yield ·of 25.3 percent in 1918 

to 44.3 :per cent in 1931. In 1918 n crackedll gasoline produced by refineries 

in the Urlited St2.tes Dmounted to an estir.1ated 8,500,000 barrels,or 10.0 percent of the total gasoline yield.. By 1931 11 crackodll gD..soline had increased 

to 176t000t000 bo.rrels, or 40.9 percent of the tota.l gasoline yield. 20/ 

The Uni tod St,::.tes Burer'l.U of Mines sto..tes that crncking plo,nts in the. 

Unitotl S~n.tes hD.ci :-.rated do.ily charging capo.city of 2,031,395 barrels ~/ J ,.,n:u ..... .,.. ..,,. l 1° ~z rz m, • t t 1 " f t · 1 t · th b · d ':..<. '·""' ·' -' ,Jo..;v• .... .n.1s o a wns maa.e up o opera J.nt; p an s w1 ~ com J.ne 

do.ily chP..Tging c;_--:p:_'.city of 1,580,05111o,rrels, shut-down plants with a capacity 

of 417, 69t:~ barrels, o.nd plants being bu.i.l t with combined ca.pn.ci ty of 33,650 

bnrrols. Al thmJ.[:h tn[:ny of the sh,lt-dov.rn pl~~nts o..rc technologically obsolesCm1t., tho~r cr-.:n novcrtholcss convert heo.vy oil into gasoline and under war-time 

conditions waul d. be available almost inunediately and wOi~ld be extremely useful 

to supply increased clemand for motor fuel. 

St2.tistics of the United States Bu.reau of Mines indicate that erode oil 

runs to stills in United States refineries in 1933 averaged 2,359,600 barrels 

a d2y. If this quantity of crude oil had been treated by modern cracking equipment, it cmlld probably have yielded 70 percent of gJJ.so1ine, or 1,651,700 

barrels a day. T~'lis would be 619,900 barrels of gasoline more than the daily 

average :prod.uction in 1933 of 1,031,800 barrels, an increase of 60 percent. 

Cr~cking plants are a much nore promising source of additional motor fuel than 

oil shale, coal, n.lcohol, or other mo.terials, provided that intelligent conserv3.tion of petrolmu-:J is practiced to insure the supply of raw material. The 

technique for tho process has been devolopecl and is in daily use, many such 

plr.tnts f\!'8 alroo.dy in existence, and o..ddi tional fo.cili ties can be provided 

re0.d.ily by adding to or duplic~ting plants. An 2oddi tionrtl advantt:\ge of petrolm.un motor fuel is that users n.re fa.vnilir'X with it and operating difficulties 

need not be anticipated. It would be exceedingly optimistic to assume that 

oper~~ting difficulties would not be enc01mtered with new and unfamiliar fuels 

such as sho..1e gasoline or alcohol ble!;.ds. 

Another imnortant faetor in increasi~ the efficiency of utili.za.tion of 

petroleurn is tlt~ u.se of tetraethyl lead and bromine in gasoline, to ·reduce the 

22/ 

-1 Hopkins, G. R., and CocllXAne, E. w., Petrolelun refineries including 

cracking plants in the United States, January 1, 1933: u. S. Bur •. -.. 

~.Unos Information Cira. 672t3. 
83674 

tendency of gasoli~e to detonate when it is burned in the automobile engine 

cylinder. The power 01.1..tp1.,.t of e. sra.rk-ie;ni tion motor is proportional to the 

compression ratio. An engine with a low conpression ratio has a lower power 

output than one requiring the same a~ount of fuel but having a higher compression ratio. However, a ga:>oline that will operate satisfactorily in an 

engine of low comp:·es-:ion ratio will detonate in a similar engine of higher 

compression ratio. O:~e metl10d of eliminf!.ting this tendency of a gasoline to 

detonate is to 1tre-fcr::-£ln the gasoline - that is, crack it so as to change 

its chemical structur8 and render it nondetonating at usual compression 

ratios. However, the :t·e-forming process is destructive of material. For 

example; in re-forming gasoline, about 3 gallons of re-formed gasoline is 

produced for each 4 gallons of straight-run gasoline charged to the reforming equipment. The fourth gallon in converted almost entirely to gas 

and coke, which are of little value. By the addition of a small amount of 

certain chemical correctives the tendency of ordinary gasoline to detonate 

c~1 be so modified that it is equal to the best cracked gasoline. This 

effect is achieved witU.·ut loss of material by destructive cracking. 

Although lead and b·romice, the import~~t elements in the correctives 

now in use, are essential war materials, the q"..lantities required would be 

relatively minor, and zu~i:~ use would properly be regarded as preferential. 

The .American Petrol·~1.""om Institute (Petroleum facts and figures, 4th 

edition, lJage 136, 1931) states that ".An increasingly important source of 

gasoline is natural gas, \"vhich is supplementing the supply derived from 

crttde petroleum." In 19~·n the production of natural gasoline, according 

to the U. S. Bureau of lH.nes, amounted to 43,617,000 barrels, as compared 

with 9, 161,000 bar:i.:'els p~:-oduced as recently as 1920. 

"The development of t~1i s source of supply ranks only second to 'cracked' 

gasoline, derived from n~el oil and gas oil, in its importance in supplying_ 

the tremendous demands o;f the motorist. Commercial natural gasoline production ·dates from 1911. T!ho gas from petroleum and natural gas wells is treated 

by two principal methods - absorption and compression. The raw gasoline 

derived is a very volati 'le product. New methods of rectification have b_een 

developed which now make it possible to produce natural gasoline sui table 

for use in high-compress.ion airplane motors, but the major portion of the 

natural gasoline prodnce~d is used for blending with petroleum Gasoline of 

low volatility, thus ma"B;:i:ng available for motor use a quantity of motor 

fuel in excess of na~urf3.l production." 

In 1919, 2,957,000 barrels of natural gasoline was run to stills or 

blended at refineries. 21/ This volume increased to a peak of 46,457,000 

barrels in 1929 and thEUn decreased to 35,265,000 barrels in 1931. In 1919, 

3 percent of the total f'Lsoline produced was obtained from natural gasoline. 

This percentage increatsed to a peak of 10.7 percent in 1929 and decreased to 

8.1 percent in 1931. 

17 
83874 

11 The utilization of natural gas for making gasoline constitutes one 

of the most important aChievements of the industry toward conservation. 

Formerly most of the gas coming out of oil wells was permitted to escape 

into the air. In recent years the building of natural-gasoline plants to 

take care of this gas has become an integral part of lease operations throughout the country.n 

· "Making gasoline. from natural gas is an industry apart from the manufacture of gasoline from petroleum, although closely r~1a ted. 11 

The enormous growth in use of gasoline began with the advent of the 

automobile. ~ Beginning in 1895 with 4 motor vehicles, the number of 

motor-vehicle {passenger car and motor truCk) registrations increased to 

32,920, in 1903, 1,711,339 in 1914, a peak of 26,545,281 in 1930, and · 

4ccreased to 24,1361 879 in 1932. ~ Of tho motor vehicles registered 

in 1932, 20,903,422, or 86.6 percent were passenger cars and 3,233,457, 

or 13.4 percent, were truCks. There'were also 180,141 tax-exempt United 

States, State, and local official cars in 1932, whiCh are not included in 

the motor vehicles registered for that year. 

On the basis of net gallons of gasoline taxed and used divided by the 

average of motor-vehicle registrations for the first and last of eaCh year, 

the u. s. Bureau ofMines estimates that· the averege consumption of gasoline 

per motor vehicle increased from 538.5 gallons in 1927 to 596.9 gallons in 

1931. 

The extent to which agriculture and the farmer are now dependent upon 

petroleum products is indicated by the number of motor vehicles on farms 

determined by the United States Census of Agriculture. Of the motor vehicles 

registered in 1930, a total of 5,035,060, or 19.2 percent, were on far.ms. 

The farmers had 900,385 trucks, or 25.8 percent of all registered. 

The rapid increase in the consumption of gasoline by civil aeronautics 

in the United States is shown by dat~compiled by the Aeronautics Brancl1, 

u. s. Department of Commerce. Gasoline consumed in sCheduled air transportation and miscellaneous flying operations in 1926 amounted to 78,324 barrels. 

B,y 1932 the consumption had increased to 809,061 barrels, an increase of 933 

percent in a period of 7 years. 

~ Stati~tics from official records, u. s. Bureau of Public Roads, Department of Agriculture. 

~ Facts and figures of the automobile industry, 1933 edition, National 

Automobile Chamber of Commerce. 

18 
11 The principal consuming agencies for fuel oil and gas oil are the 

merchant marine, the railroads, the oil producing and refi~ing industry 

gas and electric power plants, the iron and steel industry; ?-nd homes, apartments, etc., using oil for domestic and commercial heating. The U. S. Na~J, 

now on an oil-burning basis, is a large consumer of fuel oil; while the use 

of fuel oil in industry embraces almost every field employing heat and power.*** 

Food industries, ceramic industries, cement and l~e pla~ts, logging and lumbering, paper and wood pulp manufacturers; the textile, chemical, and automotive industries are some of these ·employing oil fuel for which statistics 

of consumption are available. 11 

.According to the U. s. Bureau of Hines, the total domestic deliveries 

of gas oil and fuel eil amounted to 327,306,000 barrels in 1931, and the 

principal uses were as follows: Steamships (including tankers) ?5~5 percent; 

railroads,.l7.8 percent; oil companies for fuel, .15.6 perc?nt; domestic 

heating, 7.5 percent; gas and electric p9wer plants, 7.5 percent; commercial 

heating, 4.8 percent; iron and steel products, 3.9 percent; and United States 

~avy, Army transports, etc., 2.8 percent. 

"Before the war (1914), of the world t s total gross tonnage of ships 

(steam and gas) amounting to 45,404,000 tons, less than 4 percent burned oil. 

In 1920 the world's tonnage had increased to 53,905,000 tons, of which oil 

burners represented about 17 percent. In 1930 the total tonnage was 68,023,804, 

of which 26,259,208 tons, or 38 percent, was listed as oil burning." 

ttThe .American merchant marine has an oil-burning tonnage of 8,774,043 

gross tons, the largest of any country." 

11 The Diesel is an internal-combustion engine, in general similar to the 

automobile engine in construction, but so designed as to operate under high 

pressures and to burn nonvolatile fuels without pre-mixing them with air. In 

other words, it burns fuel oil, or Diesel fuel oil, instead of gasoline.** Tne 

Diesel ship has been called the automobile of the seas.** Diesel power for 

~arine service, like aviation, received a great impetus during the World War, 

when various navies demonstrated the success of the Diesel engine.** About half 

the ships being constructed in the world are Diesels. 11 

The rapid growth of the motor or oil engine ship is revealed by data 

complied by the Bureau of Navigation, U. s. Depa~tment of Cormnerce, whiCh 

show that the gross world tonnage of such ships increased from 693,334 tons, 

or 7.7 percent, in 1920 to 7,002,201 tons, or 26.7 percent, in 1930. 

Sidney A. Swensrud, assistant to the president, Stan~ard Oil Co. of Ohio, 

in an article entitled "Factors affecting the demand for gasoline and crude 

-:>il over the next few years- a study of automobiles in use," presented at the 

:rew York meeting of the .American Institute of Mining and Metallurgical Engi-

~eers in February, 1933, stated that he has been interested for some time in 

trying to appraise the petroleum industryls prospects for gasoline consumption 

over the next half dozen years or so and that anyone who has even approached 

the problem knows the intimate relation to it of the number of automobiles 

(passenger cars and trucks). 

19 
83874 

Swensrud after stud~.ring the annual sales of new car registrations and 

estimated number of cars scra:!:ped ertch year, estimated that there were 

23,150,000 cars (passenger cars and trJ.cks) 11 available for use" at the begin--

ning of 1932 and 21,200,000 at the end of 1932. The total registrations during 1932 were 24,136,879 cars. 

The average life of a car today appe.~s to be about 7 years. Swensrud 

estimated that 9,364,000 units were scr~pped during the years 1930 to 1932, 

which figure is 46.3 percent in excess of the estimated number of new units 

produced during the same years. By reason of the 11 death11 rate exceeding the 

11 birth11 rate and on the basis of a formula of 11 cars scr~pped and in use according to lifo of car," wor:tced out by c. E. Griffin, of the University of 

Michigan, in 1926, Swensrud further estimated that even on a very liberal 

assumption of new-car production during the :period 1933 to 1938, the number 

of cars in use would continue to decrease during 1933 and 1934 and that the 

1930 level of cars in use cannot be reached until at least 1938. 

The intimate relations between the automobile and the petroleum industry 

may be further indicated by the following facts relative to. the ·consumption of 

crude oil and gasoline by automobiles in 1931. According to the u. s. Bureau 

of Mines, 95 percent of the crude oil produced was consumed at refineries; 

44.3 percent of the crude oil used by refineries was converted into gasoline; 

90 percent of the gasoline produced was used in automotive vehicles (passenger 

cars and trucks). Multiplying these percentages indicates that about 37.9 

percent of each barrel of crude oil produced in 1931 was used by automotive 

vehicles. 

20 
83874 

Waste of Petrole1.1m and its Products 

Various Definitions of Waste 

Waste in the petroleurn and natural-gas industries is subject to wide 

definition and interpretation. In the general sense, the verb waste is 

clefined.: 11 to diminish by consistent loss; to suspend or expend unnecessarily, 

carelessly, or without valuable result; to apply to useless end; to squander."?;/ The 'ITebsterian definition, hoYrever, is not specific nor inclusive 

enoup)1 to be completely applicable in matters concerning oil and gas conservation. 

MnilY varying definitions of waste have been written into the oil and 

gas sto.tutes of the several States 26/ and have been the basis of e:x:tensi ve 

li ticatior;. and court proceedings. 27T 

The Oklahoma conservation law has been sustained by the SUpreme Court 

of Oklahoma, by several Federal district courts, and by the Supreme Court of 

the United States. :::38/ J3eca1.1.se the Okl2l1oma law specifically includes i terns 

that pertain to engineering and economic conditions which do not appear in 

the statutes of other States, the following sections defining waste are 

excel1!ted.W 

11 Section 2. The tenn 'waste' as used in this act, 

as applied to the production of oil, in addition to its ordinary meaning and in addition to the meaning given thereto 

by any other provision of this act, shall include economic 

waste, undergro·~d waste, including water encroachment in the 

oil and/or gas bearing str~ta, surface waste, and waste incident to the production of oil in. excess of transportation or 

marketing facilities, or reasonable market demands.*** 

-~-----

25/ 

26' --' 

27/ 

28/ 

29/ 

Webster 1 s Hew IntE::~enational Dictional";} .... 

The oil t:Uld gas conservation stat·u.tes (annotated), 432 pp., Federal 

Oil Conservation Board, 1933. 

(Note: The following St~tes specifically define waste 

in their statutes or set fortl1 conditions under which oil 

and/or gus shall not be wastefully used: Arkansas, p. 33; 

California, pp. 59 and 80; Colorado, p. 85; India..'1a, p. 116; 

Kansas, p. 121; Louisiana, pp. 150, 161, 168; Michigan, 

}Jp. ::~oo, 202, 214; Mississippi, p. 268; Oklahoma, pp. 279, 

288, 239; South D~cot~, p. 317; Texas, pp. 331-335; West 

Virginia, pp. 401-402; Wyoming, p. 412.) 

For citations sea notes in Oil ~nd gas conservation statutes 

(annotated), Federal Oil Conser-v~::,tion Board, 1933--.California, 

P• 59; Colorado, p. 85; Indiana, p. 116; Oklahoma, pp. 288, 

289; Texas, pp. 332-335, 358~359. 

See footnote 27, Oklar~ma, pp. 288, 289. 

See House Bill 481, Oklnhoma, approved April 10, 1933. 

21 
83874 

11 Section 3. r:t:he tenn 'waste' as ap})lied to gas contained 

in or produced from a COI111:r.on so~rce of supply of oil shall, 

in addition to its ordinA-ry ruea:ai":J.g, include the unreasonable 

production a:nd/or the inefficient or wasteful utilization 

of gas in the operation of oil wells ~_rilleC!. therein, the 

escape, directly or in<iirectJ.y, of gas from oil wells drilled. 

therein into the open air in excess of the t.uno·unt necessary 

in the efficient drilline, completion, or operation thereof; 

the escape, blowing, or releasing, directly or indirectly, 

into the open air of gas produced from wells productive 

of gas only, or of gas and gasoline only, drilled into any 

such co~~on source of supply, save only such as is necessary 

in the efficient drilling and completion thereof; ?Jld the 

UU.."1.ecessary o.epletion or inefficient utilization of the gas 

energy contained in such common source of supply. In order 

to prevent the waste or to rettQ~e the dissiration of the gas 

energy contained in any such corrmon source of supply, the 

Commission. in addition to its other powers in respect 

thereof, shall have a1.1.thori ty to lirni t the production of gas 

from wells producing gas only or gas and gasoline only to a 

percentage of the da.ily ope.~.1-flow ca;paci ty of such wells that 

is less than the percentage of oil production allowed to oil 

wells drilled therein. 

11 Section 4. 1JVhen.ever the full pro·iuction of any common 

SQurce of supply of oil in this State can only be obtained 

under conditions constituting waste, then ar,y person having 

the right to drill into and produce oil from any such common 

source of supply may, except as otherwise authorized and/or 

in this act provided, take therefrom only such proportion of 

all oil that ma;y~ be -produced therefrom y.;i thout waste a.s the 

production of the well or wells of any such person bears to 

the total production of such com:non source of supply. 11 

The Texas law, 30/ al thoU[h reciting a number o·f i terns that shall be 

included as waste, states specifically that the term 

11 shA..ll not be construed to mean economic waste, 

and the Commission shall not have the po-vyer to attempt 

by order or otherwise, directly or indirectly, to 

limit the production of oil to equal the existing 

market demand for oil. 11 

In California the act of June 4, 1931, to pi'oh:Loi t the waste of 

crude petroleum and defining such waste and to l:mit production to 

current requirements, never became effective and was rejected by referendum May 3, 1932.31/ The State has, however, a statute lmown as the Lyon 

30/ Act of Aug. 12, 1931 (Act, 1931, 42d Leg., 1st C. s., chapt. 26, 

sec. 1, art. 6014). 

31/ The oil and gas conservation statutes, p. 80, Federal Oil Conservation 

Board, 1933. 

22 
83874 

act, enjoining unreasonable wo.ste o;f gas.32/ The so-called 

California plan is complicc:-ted by the use of the word ttreasonable" 

waste as ~pplied to gas.~ 

Although the definitions given in the Oklahoma statute, cited 

above, include several items, particularly waste of gas energy 

and economic waste, that will be discussed later, it is important 

to note here tl1at the essence of this la.w is not new. In 1915 

concerted thought was given to the subject of preventing waste 

with the aid of adequate legislation i~ the Mi&-Continent field, 

and after :t~1eetings were held r;i th various State agencies, the 

:Bureau of Mines 34/ ma.de the follo·wing statement regarding the 

essential req_uirt~ment of a wise oil and gas conservation measure: 

"The la\'!S not only protect against waste but also insure a market for nat'l1.Tal gas and thus induce producers 

to conserve gas instead of allowi:1g it to escape, a rateable marketing of all oil and natural gas offered for sale 

being provided for. In case production becomes too large 

for the erailable transportation and marketing fa.cil~ ties, 

the tr2nsportation facilities must b8 increase(l or the oil 

nnd gas must be co~fined until they can be utilized. This 

provision will r>revent large quanti ties of oil and natural 

gas from being brought to the surface and stored with a 

re su.l ting waste of gas and a lowel .. ing of oil price s. 11 

Interrelated Factors Of Waste 

Regardless of the varying definitions for waste, the subject 

may be treated under the following general divisions: 

1. Physical waste 

a. Surface losses (visible) 

b. UndergroLU1d losses (invisible) 

2. Waste of energy (required to propel oil through the containing roCks to the wells and thence to the gurface). 

3. Economic was to 

The three subjects are so intcrrelatea. and interdependent that 

each one involves ~~d influences the others. For similar reasons, 

waste o~ liquid petroleum, because of the very nature of the hydroIdem, p. 70.--·-----.... Lombardi, M. E., Present economic situation of the oil industry; 

Mining a:nd. Metallurg-.r, Vol. 12, p. 232, MaY, 1931. 

Fifth A."1.nual Report of the Director of the Bureau of Mines to the 

Secreta.J."Y of the Interior, for the fiscal year ended June 30, 1915, 

P• 80. 

23 
83874 

carbon cnmpounds found in the earth, must be considered in co~ 

nection with waste of those fractions occutii~ i.n the gaseous 

state.35/ Certain wastes of natural gas not associated with oil 

are set forth in subsequent sections of this paper. 

Physical Waste 

In presenting facts concerning past and present waste in the 

petroleum industry no definite date line can be drawn that marks 

a radical change in thought and practice. The evolution has been 

gradual, but it would be erroneous to state that dumping oil on 

the gro'Wld or into creeks or otherwise ncarelessly applying it to 

useless ends 11 is at present a serious problem. "The actual physical losses of oil at the surface· are relatively small compared with 

the total production of oil. n & 

The fluid and mobile characteristics of petroleum, the lack of 

knowledge regarding its behavior, the early, court rulings pertaining 

to it, and in fact the whole spirit of the period shortly after the 

Civil War combined to create a condition that not only condoned but 

accentuated the profligate physical waste of petroleum. 

The wasteful conditions attending the exploitation of oil in 

Pennsylvania along Oil Creek, at Fithole; the great oil fire at 

Titusville in June, 1880; and other examples of destruction by fire, 

spillage, and other careless practices are an important part of the 

history of that time. 

As to gas wastage, Arnold and Clapp 37/ state: ttThe history 

of the natural-gas industry of the United States is an appalling 

record of incredible waste. n. They cite the example of a well at 

Mu~rayville, Pa., in 1878 1 having great volume and pressure, which 

was allowed to blow to the air for 3 years without any effort being 

made to check it. 

In an effort toward reduction of the unnecessary wastes of oil 

an~.gas, the ~reau of Mines in 1913 began to write extensively on this 

fro.uJ?JCt•37/§i[ . 

35/ For a di;cussion of the interrelation of oil and gas production, 

see Minerals Year Book, 1932-33, pp. 497-498; Bureau of Mines; also 

Repnrt V of the Federal Oil Conservation Board to the President of 

the United States, Appendix VI, pp. 52-53, 1932. 

36/ Minerals Year Book, 1932-33, p. 498, Bureau of Mines. 

37/ .Arnold, Ralph, &.,_d Clapp,P •. G40 , Wastes in the production and 

utilization of natural gas and methods for their prevention; Bur. 

Mines Tech. Paper 38, p. 6, 1913. 

38/ Arnold, Ralph, and Garfias, V. R., The prevention of waste of oil 

and gas from flowing wells in California; :Rut.· }.1iiJ.es '):'e:ch.-. Pape~ 42 .•. J.914. 

See also Tech. Papers 45, 51, 68, 70 BJ.~d 130. 

24 
83874 

These initial reports were followed by many others dealing with 

the engineering phases of oil and gas conservation. ~ 

.Although the industry has been aware of wasteful conditions 

and of its own volition has reduced the actual waste of oil, 1Q/ 

unfortunately, methods and practices to control and save gas in 

the ground for future energy and fuel requirements have not improved in like proportion. The Federal Oil Conservation Board, in 

its first report, 41/cited the Cushing field, Oklahoma, as an e~ 

ample of wasteful development practices where at one period the 

average daily waste of gas was 300,000,000 cubic feet, or about. 

lOO,OOO,OOO,OOO cubic feet in one year. Heggem and Pollard~ 

cite specific examples of waste from wells iri the Cushing field. 

Other fields where vast wastes of natural gas occurred in the production of oil are Cromwell, Oklahoma; Burkburnett, Tex.; and El Do:t'-

ado and Smackover, Ark. Wastes of gas in the production of oil were 

equally evident in several fields in the Los Angeles Basin 43/and in 

the early development of the Kettleman Hills, California. 44/ 

The Cotton Valley oil field, in Webster Parish, La., which is a 

typical example of a textbook structure, is cited as typifying wasteful practices in the production of oil. Ross 45/ summarizes the 

condition as follows: 

11 In the early development of the :Blossom sand during 

1924 the importance of pressure conservation in the main gas 

reservoir and of its effect upon oil recovery and water encroachment was not fully recognized. Consequently, billions of 

cubic feet of gas were blo\v.n to the air in an effort to bring 

oil into the wells. The beneficial regults normally anticipated 

from a gas reserve, both as a commodity and as a propulsive 

agent, were lost, largely on account of the competitive methods, 

and the financial returns from tl:d s zone were disappointing. 11 

-----------------------------------·----·------

39/ Selected list of Bureau of Mines publications dealing with petroleum, natural gas, oil shale, and their products, pp. 1-13, 1932. 

40/ Memorandum regarding physical and economic waste in the oil industry (prepared for use of the Committee on Interstate and Foreign Commerce, requested in letter of October 11, 1932, from Hon. Sam Rayburn, 

chairman), transmitted by the Director of the Bureau of l!lines in a 

letter dated Nov. l, 1932. 

41/ Report of the Federal Oil Conservation Board to the President of 

the United States, Sept., 1926, Part I, p. 7. 

~ Heggem, A. C., and Pollard, J. A., Drilling wells in Oklahoma by 

the mud-laden-fluid method: Eur. Mines Tech. Paper 68, pp. 13-15, 1914. 

W_ Idem, p. 7. ~ Report IV of the Federal Oil Conservation Board to the President 

of the United States, p. 16, May 28, 1930. 

45/ Ross, J. S., Engineering report on Cotton Valley Field, Webster 

PariSh, La.: Bur. ~ines Tech. Paper 504, p. 1, 1931. 

25 
83874 

Crater wells 

Tremendous vnlumes ~f gas and oil have been lost frnm ~wild" and 

burning wells. It is true that many of these wells have gotten out 

of control through no fault of the operators, but the fact remains 

that each has been a very evident and spectacular source nf diminish--

ing the countryts oil and gas resources. 

Typical of the areas that are subject to extreme cratering conditions are tho high-pressure fields of Louisiana. In 1921 the Bureau 

of Mines reported on the Monroe gas field. Bell and Cattell 46/state: 

11 Gas is wasted in the Monroe field in drilling, in producing, in 

transmission, and in utilization. There is underground waste, which 

is invisible, and surface waste, much of which is visible.n The visible waste from four craters on April 1, 1921, was 3,000,000 cubic 

feet a day. Another well blowing wild and forming a crater was wasting 10,000,000 aubic feet a day. There was no way to estimate tho 

underground waste or damage from water infiltration, but it was known 

that one well which was wasting no gas at the surface was wasting 

about 10,000,000 cubic feet a day into a water-bearing stratum. So 

aaute became the crater problem in the Richland gas field, Richland 

Parish, La., that the Bureau of Mines made a special study; of that 

area and reported the condition of wells and methods used in attempting to eontrol them. 47/ 

Present waste nf natural gas 

It has been estimated that between 60 and 70 percent of the 

natural gas actually utili zed is produced in conjunction with. crude· 

oil operations. 48/ Therefore, as previously stated, the waste of 

these two hydrocarbon companions c~~ot be treated separately. Howover, there are certain phases of tho conservation problem that pertain especially to natural gas. 

The natural .... gas industry has been cogniant of the existing conditions, and in 1930 a resolution on conservation was adopted at the 

convention of the.Natural Gas Department of the American Gas Association. 49/ Since that time the work on the project by the natural-gas 

~.i·~·~~~l~,-H-.----W~, and Cat-~~-i-1,·· ~-. A., The 1i~~;~; ~-~s· fi-;id; DOuisiana 

Dep~ Conservation, Bull. 9, 99 pp., 1921, especially pp. 43-50, 

72-76. 

1Z/ Hill, H. B., Crater wells, Richland gas field, La.; Bur. Mines 

Tech. Paper 535, 37 pp., 1932. 

~ Turner, Scott, Conservation of natural gas in relation to some 

recent developments; Bur. Mines Information Cir. 6392, 1930 

49/ Resolution on concervation, adopted at convention of Natural Gas 

Dt=:partment of the .American Gas Association, Uew Orleans, La., 

May 5-8, 1930. 

26 
83874 

industry, as represented by the Association, has been conducted in 

general ac.cord with the report of the chairm9ll of the committee to 

which this natural~gas conservation project was referred. 50/ 

In the deliberations and written record pertaining to the foregoing natural-gas conservation project, reference was made to the 

need for data that would. show the total a.."111ual wastage of natural 

gas. 

Satisfactory data have not yet been gc.thered from which an approximation of the a~ount of natural gas wasted in the United States 

annually can be m~.de. The State of California has kept the best 

records, and even these figures begin only in 1920. A sTumnary of 

the net production, gas utilized, and wastB~e, in California from 

1920 to 1932 is give:.1. in a report of the Fecleral Oil Cons·ervation 

Board. 51/ Subsequent fi{:ures have been compiled by the Gas Administrator, Railroad Cownission, State of California. 52/ 

Appendix VI of the report of the Federal Oil Conservation 

Board just cited also gives factual information in some detail regarding gas losses under the following headings: 

1. Losses in production (a) associated with oil; (b) not 

associated with oil. 

2. Losses of residue gas (blown to the air at natural gasoline 

plants). 

3. Losses in transportation (leakage from high-pressure naturalgas transmission lines.) 

4. Losses in distribution and utilization. 

Texas Panhandle 

Report V of tho Federal Oil Conservation Board states that the 

Texas Panhandle is probably the source of the greatest loss of gas in 

that State. The condition in that area has g~own continually worse as 

§g) Report of the Technical and Research ~mmittce, Natural Gas Department, Amoric&~ Gas Association, addressed to the Advisory Committee and 

Managing Committe~, Natural Gas Department, American Gas Association; 

published in Natural Gas, vol. xi, no. 11, November 1930, p. 14. 

51/ Report V of the Federal Oil Conservation Board to the President of 

the United States, pp. 47-57, 1932. 

52/ WastB ga? in Califoinia for 1932 has been reported as about 

17,500tOOO,OOO cubic feet, compared with over 68,000,000,000 cubic 

feet in 1931; see Pipe Lino News, JUllC, 1933, p. 20. (Note-Reference 

to published figures for 1933 not available at this writing but can 

be obtained, if needed, from State Gas Administrator.) 

27 
83874 

regards gas wastage, and supporting evidence of the condition is no 

longer lacking. 

Of the original recoverable gas in the reservoir, estimated by 

reliable geologists 53/ to be of the order of 13,000,000,000,000 

cubic feet, about 4,ooo.ooo,ooo,ooo cubic feet has been produced. 

Of this amount Bredberg 54/ states that more than 60 percent, or 

about 2,400,000,000,000 cubic feet, llhas been wasted and dissipated 

into the air after being stripped of a small gasoline content co~ 

stituting less th_qn 3 percent of the heat-producing value of guch 

gas." 

Bignell 55/presents tabular data and graphs showing facts pertaining to the conditions in the gas fields of the Texas Panhandle. 

Throughout 1932 and 1933 the amount of gas blown to the air daily was 

never below 276,000,000 cubic feet and in November, 1933, was 

593,600,000 cubic feet. 

The original rock pressure was about 430 pounds to the square 

inch:. .A pressure contour map has been prepared 56/ showing the excessive drop in pressure in a large area surrounding the 37 or more 

natural-gasoline plants. Despite the evidently wasteful condition, 

additional plants are being built. 

Struth and others 57/ have given additional pertinent infor.mation on this enormous dissipation of natural gas and its contained 

energy in the State of Texas. 

53/ 

55/ 

56/ 

57/ 

Cotner, Victor, and Cru 'U, .. H. E., The Texas Panhandle: 

American Assoc. Petroleum Geologists Bull., vol. 17, no. 8, 

pp. 877~906, August, 1933. 

Eredberg, L. E., Oil men and landowners form association to 

curb prod"l1.Ction rate of Panhandle gas: Oil and Gas Jour., 

Feb. 8, 1934, p. 20. 

Bignell, L. G. E., lndustry alert to adverse conditions created 

in Texas Panhandle due to huge gas waste : Oil and Gas Jour., 

Feb. 8, 1934, p. 21. 

Suggestions for settling Panhandle problem come from many 

sources; Oil and Gas Jour., Feb. 22, 1934, p. 38. (Pressurecontour map of the Texas P~~andle oil and gas field.) 

Struth, H.J., Petroleum economic service, Houston, Texas, 

Feb. 14, 1934. Texas Panhandle producers, landowners, alarmed 

over gas waste; Oil Weekly, Feb. 5, 1934, p. 8. 

28 
83874 

Oklahoma City 

In the Okl~1oma City field the quantity of gas produced with 

oil t.;nd wasted without thou.ght of future needs has been tremendous, 

in spite of provisions of the Oklahoma statute. 58/ The chairman of; 

the Corporation Commission of the State of Oklahoma estimated that 

for a period of at least 2 years the average daily loss was 

300,000,000 cubic feet. 59/ 

Many of the wells have ceased to flow naturally, and water is 

present in parts of the field. 60/ Problems of meChanical lifting' 

now confront the operators 61/ because of rapidly declining gas 

pressures. These are evidences that a producing agency of great 

value has been lost through the dissipation of gas energy. 

After studying the gas reserves of the Oklahoma City pool, the 

:SU.reen of Mines 62/ concluded that "the gas reserves of the Pennsylvanian (upper ord~.r-gas) fonnation should be regard.ed merely as an 

auxiliary ~pply to aUc~ent the formation gas in the pre-Pennsylvanian (lower or oil-producing) zones when the oil wells stop flowing naturally. n 

Evaporation losses 

Although evaporation of crude petroleum and gasoline is unseen, 

it is a physical surface loss and. should be considered among the important preventable wastes of the oil industry. Studies made by the 

Bureau of Mines prior to 1928 §/ showed that the average loss per 

year from well to refinery was 6. 2 percent of the gross production. 

The evaporation loss at refineries was 2.1 percent, making a to tal 

58/ m; 

60/ 

63/ 

Sec foot~ote 30/. 

·Report V of the Federal Oil Conservation :Board to the President of 

t~.~.e United States, 1932, p. 50. 

Rlgnell, 1. G. E., Changed co~ditions in the aKlahoma City field 

create new problems for y.lrocluction men; Oil an~- G·as (Jour., 

July 2?, 1933. 

Beardmore, B:. F., and Earc~.er, H. D., Possible f1.lture 1Jroct11ction. 

methods, Okl.;u"lomn City. fisla~. o; 1 !~,·PF:-'"l··.·r 11'r.:>b 1° 19-~.<:4 ~ lr; ......., .... ' .. ~. -.J ~.l ...... ,.r ' .... '-" • ::.; t ' t...• ' J:l. u. 

(Pa:per presentee. bcfo!'e 1-une:ric~.>n Pet~::'olc:n:u:n I:nsti tute, Division of 

Produ.c t ion, Ol::lc:homa Gi t;.7, ]'e b. 15-16, 193 .. 1.) 

Hill, H. B., and Rawlins, E. L., :EJstiu;J,te of the gas reserves of the 

Oklolloma City oil :fi old, Okla1l0ea C01u-, ty, O~'.:la. ; 3ur. Mines Rep t. 

Investi;::: .. ~.tionB ~~21?, 1933. 

VTiggi:ns, J. E., Evapo!'ation lo~:>SC'3 of pctrole:Jr:J. in the Mid-Continent 

field: Bur. 1.1Lws Bull. 200, 115 pp., l~)21; Uothods of d.ecreasing 

OY[tparati.o:l losses of petro1eum: Tech. Pe.per 319, 57 pp., 1923. 

29 
83874 

loss of 8.3 percent. A recent survey of the Bureau of Mines 64/ 

~~ows that evaporation losses are still a source of waste in the 

petroleum industr~". .A1 t11o11gh improved equipment and methods have 

reduced the 8.3 percent total loss by evaporation, as determined in 

the earlier rrurvey, to 2.7 peTcent, and although the average evapor-. 

ation loss of crude oil from wells to refineries is now approximately 2 percent, in contrast with the 6.2 percent of the earlier survey, 

nevertheless the oil produced in the Unitecl States in one year, hav- · 

ing a gravity of 24 degrees A.P.I. or lighter, is still subject to 

an evaporation loss of about 14,000,000 barrels by the time it 

reaches the refineries. If the gasoline and other finished oils 

were considered, a much greater loss would be' reflected. However, 

the figure of 14,000,000 barrels indicates that the evaporation of 

crude petroleum is a continuing important economic factort and these 

losses can be reduced. 

Underground wastes 

The industry is definitely ar.arc of the underground wastes that 

attend the production of oil and gas. The deleterious effects of 

migration of oil and gas and of premature water flooding ce~sing 

underground waste have been studied and reported upon by Federal and 

State agencies, by all groups of the inoustry concerned with its 

engineering development, and by many individuals. It cannot be said. 

that the industry has been remiss in this matter, because the corr~ 

panies, indiviCI:u.ally ancl as a whole, realize better than anybody 

else that marginal profit, penni tting them to continue in business, 

depends upon protection against these unseen wastes, which are of 

great magnitude. 

The Bureau of Mines was among the first to point out the need 

for adequate safety measures against underground waste. §§../ As an 

64/ Schmidt, Ludwig, Applied methods and equipment for reducing ova"l>- . oration losses of petroleum and gasoline: Bur. Mines :Bull. 

(in press~ 1934). 

65/ Ambrose, A.W., Underground conditions in oil fields; Bur. Mines 

Bull. 195, 1921. 

SWigart, T. E., and Beecher, C.E., Manual for oil and gas opern:-

tions; Bur. Mines Bull. 232, 1923. 

SWigart, T. E., and Schwarzenbek, F.X., Petroleum engineering in 

the Hewitt oil field, Carter County, Okla., Bureau of Mines in 

cooperation with Ardmore, Okla., Chamber of Commerce, 1921. 

Ki~van, M. J., Rison, C. o., and Wardwell, D. P., Report on the 

Quinn dome, in the Lyons-Q;uinn oil and gas field, Okfuskec and 

Okmulgee Counties, Okla., with special reference to the migration 

of gas found below the Lyons oil s~~d and the regulting effect on 

the oil and casing-head gas production of this sand. Bureau of 

Mines in cooperation with the Office of Indian Affairs, 1924. 

30 
83874 

oxamplc, the judicious use of cement combined with proper casing 

programs was defilli tely recommended. 66/ The hi story of the Powell 

field, Texas, §1/shows clearly that the operators in that field 

were able to cope with their serious water problems and retard the 

encroaching water, which would have resulted in a much greater 

underground waste if they had failed to adopt the recommended corrective mearrures. 

Many similar examples might be cited, but it is a well-known 

fact that underground waste of oil through invasion or premature 

encroachment of water into producing strata is now only a snall 

portion of uhat it was in fonner years. 

The following genero~ statement summarizes the condition r~ 

garding physic.:U waste, both visible e..nd invisible: The history 

of the indust~J, as reflected in its technical literature, shows 

that during a period beginning about 1921-22 and extending to the 

beginning of the so-ca~led "proration period" (later part of 1926) 

the fear of an impending shortage of oil a,..'V).d the rapidly increasing engineering knowledge and better operating technique combined 

§.§/ cont t d Kirwan, M. J., Effects of extraneous gas on the production of oil wells in the Lyons-Quinn field of Oklahoma; Bur. 

Mines .. Rept. Investigations 2612, 1924. 

Wardwell, D. P., and others, Water problems in the north part of 

the Cushing oil field, Creek County, Okla., ·-~~ HL1.cs~. 1927. 

§§/Tough, F.E., Method of Shutting off water in oil and gas wells; 

:Bur. Mines :Bull. 163, 1918. 

§1/Hill, H. E., and Sutton, C. E., Production ~~d development problems in Powell oil field, Navarro County, Tex.; Bur. Mines 

Bull. 284, 1928. 

31 
83874 

to reduce by an ~ppreciable deerce the actual physical wastes of 

oil. 68/ As stated in another section, the wastes of gas were not 

decreased in like pro1)ortion. 

Growi1~ realization of function of natural gas 

and Relatior...s df fluid ener{!;f 

Engineers have realized for many years that "in the expansion 

of the gases, as the pressure is reduced[in the oil-bearing for.m~ 

tions] an enormous amoUl1t of energy is released which is the principal force in driving the oil from the sand into the wells. n 69/ 

It was before the ":proration period, n referred to above, that 

accurate knowledge based upon scientific research began to reveal 

the true nature ancl some of the properties and characteristics of 

petroleum and its associated g~ses as they occur underground. 70/ 

68/ Further discussion of physical wastes above and below ground and 

the industry's part in preventing them is gi von in Memorandum 

regarding physical and economic waste in the oil industry (prepared for use of the Committee on Interstate and Foreign Co~ 

merce, requested in letter of October 11, 1932, from HOn. Sam 

R~lburn, chainnan), transmitted by the Director of the Bureau 

of Mines in a letter dated Nov. 1, 1932. 

§2/ Lewis, J. 0., Methods for increasing the recovery from oil sands; 

Bur. Mines Bull. 148, p. 13, 1917. 

1Q/ Dow, D.B., and Reistle, C.E., Jr., Absorption of natural gas and 

air in crude uetroleurn; Mining nnd Metallurgy, vol. 5, PP• 336-

337, July, 1924. 

Dow, D.Bes 2nd Calkin, L. P., Solubility and effects of natural 

gas and uir in crude oils; Bur. Mines. Rept. of Investigations 

2773, FebruarJ 1926. 

Beecher, C. E., and Parkhurst, I. P., Effect of dissolved gas 

upon the viscosity and surface tension of crude oil; Am. Ih~t. 

Min. Met. Eng. Trans., Petroleum Development and Technology in 

1926, p:p. 51-69. 

Complete record of public hearings, Federal Oil Conservation 

Board, Fob. 10 ~~d 11, 1926, Washington, D. C. 

Report of Gas Conservation Committee of the American Petroleum 

Institute, E. W. Marland, chairman, meeting held at Ponca City, 

Okla., Oct~ 17, 1927. 

32 
83874 

As this knowledge developed and was applied, there was a growing 

realization of the function of natural gas in oil production. 

So complete a summing up of the knowledge on this subject, as 

of 1929, is given in a report published by the Bureau of Mine$ in 

cooperation with the .American Petroleum Insti.tute, thnt reference 

must be given to the volume in its entirety. 11/ _ 

Stimulated by this and subsequent writings, J.£} aJ.l concerned 

now recognize that the loss of energy needed to produce oil, through 

the blowing of gas to the air or othenvise dissipating it, is of 

equal and perhaps greater importance than the actual physical waste 

of gas available for fuel and other purposes at the surface. 

Miller, H. E., Function of natural gas in the production of oil, 

a report of the Bureau of Mines in cooperation with the Division 

of Development and Production Engineering of the American Petroleum Institute, 267 pp., 1929. 

W The following references are a few tYPical examples of work on 

the subject perfonned since 1929; 

Lacey, W. N., and associates, reported work on A. P. I. Research 

Project 37, conducted at California Institute of Technology. 

Reistle, C. E., and Hayes,E. p., A study of subsurface pressures 

and temperatures in flowing wells in the East Texas field and 

the application of these data to reservoir and vertical flow 

problems; Bur. Mines. Rept. Investigations 3211, 1933. 

Lindsly, B. E., A study of "bottom-hole" samples of East Texas 

crude petroleum; Bur. Mines Rept. Investigations 3212, 1933. 

33 
83874 

The fluid-energy attributes of oil, ga.s, and water mas they 

occur in undel~ground str1ctures and the responsibility for avoiding 

inefficient and wasteful application of that energy, which would 

prevent the recovery of maxiraum quantities of the hydrocarbon 

contents, constitute the present major problem of conserving the 

Nation's oil reserves. 74/ 

A striking and typical example of the recognition by exeautives as well as engineers of the demoralizing effects upon the 

industry and the lTatlon of unrestricted. dissipation of energy in 

the reservoir, attributable in the main to existing "piratei1 

methods of operation, is given in an aidress by W. s. Farish before 

the .American Institute of Mining and Met.allurgical Engineers, at 

Ponca City, Okla., in October, 1932. 1B/ 

Well Spacing a.nd .Allocation bf Production 

Conserving the energy in the reservoir and preventing its unwarranted dissipation is inextricably involved with well spacing and 

the capacity of wells to produce oil and/or gas. 76/ 

73/ Moore, T. V., APplication of the principle of volumetric wit~ drawal to the allocation of production; American Petroleum. 

Institute, section IV, Proceedings Fourteenth Annual Meeting; 

Production Bull. 212, pp. 11-14, (reprint), November, 1933. 

74/ Umpleby, J. B., Changing concepts in the petroleum indust~; 

Am. Inst• Min. Met. Eng. Trans., Petroleum Development and 

Technology in 1932, pp. 38 to 50. (with discussion). 

Umpleby, J. B.,Efficient utilization of reservoir energy (read 

before Petroleum Division, A. I. M. M. E., :Hew York, Febrt4'1.YY't 

1934~ Oil Weekly, vol. 72, no. 12, PP• 22-24, March 5, 1934. 

1§} Farish, W. s. 1 A rational program for the oil industry; 

Oil and Gas Jour., Oct. 6, 1932. 

76/ Minerals Year-Book, 1932-33, pp. 503-504, Bureau of Mines. 

34 
83874 

The problem of efficient well spacing is not new?JJ nor is it 

subject to exact mathem.:t.tical f30lu.tion. The varyint; c~laracteristics 

of the formations constitute th>J first difficulty. Of even greater 

complicating effects are. t:~:e eco:1omic con~;iderations that cannot be 

separated fro:n the p.lJ.ysical ·phasesof ti:1e ]Jroblem of the greatest 

ul ti:rrate recover.{ of oil. 

Not infrequently citations to :Bureau of Mines publications ?JJ 

have been made at hearings and court ~:Jro ceedL1g·s to SUJ.J.:--'Ol"t the claims 

of those who desire a close spacing of wells. .Al tli01J6h recognizing the 

permcu1ent importance of the earlier f.-'l.n·1 epoc!1al vvor'k, the Bureau of 

Mines has been carefu.l for E.ome tLne to point out the fact that the 

method of estimating ultimate recove:::·y by the curve of decline in production, which, as stated, is G.irectl~l related tc well spacing, is not 

generB.-lly aplJlicable without raodification in fielc1s L:tnCler :pror::1tion or 

other production control. Enginc:ers must study the subject far more 

intensively and. extensively than has yet been possible, in connection 

with operating conditions that are quite different from those' existing 

prior to 1924 and 192E•, before definite cri tex·ia fo:' woll spaci:1g can 

be determined. That ma..""ly more ':rolls than wore necessary havo been 

drilled is indicated i:'l many writings, t~rpica1 of which is the following: 

"UnforbJ.nately, even when engineering facts regarding the 

reservoir have bee:n kno1vn, it frequently has been impossible 

to work out rational SJ.?acing prot;rams due to c0no.i tions of competitive drilling calling for a multiplicity of 'offset' Tiells 

in place of a few carefully selected. wells which would have 

prevented attendant ph~rsical losses." 7J}} 

For some years the Bureau of Mines a..'1d representatives of the 

natural-gas industry have cooperated to develop a sounu method for 

gaging gas--;;ell co:paci ties in order th~t y;ells may be drilled and 

produced with maxi~~mrn efficiency, from the point of view both of 

proper spacins and of prevention of waste r-.ct the surface &"'1d underground. Such a method has bee·n ne!"fected to a noint where it is 

~pplicable in nearly all fields .... 79/ ~ 

-~------·------------

77/ :Seal, C.H., The decline and ultimate Jlroduction of oil wells, with 

notes on the valuation of oil properties: B~tr. Mines Bull. 177, 1919. 

Beal, C.R., and Lewis, J.O., Some principles-governing the production 

of oil wells: Bur. Mines Bull. 194, p. 18, 1921. 

Cutler, W. W., Jr., Estimation of undergt;ou..~d oil reserven by oil-nell 

production C"ttrves: :Bur. Mines Bull. 228, pp. 8t5-90. 105-10?, 1924. 

78/ Minerals Year Book, 1932-33, p.504, Bur. Mines. 

73} Pierce, H.R., and Rawlins. E.L., The study of a fundamental basis for 

controlling and gaging natural-gas wells: Bi.l!'. Mines Reports of 

Investigations 2929,2930, 1929. 

Rawlins, E.L., and Schellhart, M.A., :Back-pressure data on natural-gas 

wells and their application to production practices (marluscript Technical Paper of the 13-u.reau of Mines). 

~~5 
83874 

Many of the fundamental principles established in the natural-.sc.s 

work have been used receutly and found applicable in the production of 

oil, Ythich is a more diffic1li t problera because the substances dealt 

with are in both gaseous and liquid states. 

The essential engineering facto:-s in the allocation of production, 

in contrast with the many inaccurate and waste-provoking attempts to 

establish 11 potentials, u have been presented comprehensively in a progress 

report lli!d special papers by_the Topical Cocnnittee on Allocation of 

Production of the Central Committee on Drilling and Production Practice, 

American Petroleum Institute. ~ 

T.ne "proration period" has witnessed much paradoxical thinking and 

has given rise to many anomalous conditions pertaining to conservation 

measures in the oil and gas industries. In brief, knowledse has incroased rapidly as to effectual method.s of preventing physical ·wastes 

of oil and gas a"ld conserving the energy necessary for the economic 

recovery of these subst&"lces. On the economic side the pattern is more 

complicated, but some forms of economic vraste are easily recognized, together with their kno\m remedies. The reasons and remedies for others 

are more obscure • .Although the concomitant condition should be one of 

definitely decreasing waste throughout the industry, the ,eriod has been 

marked by wasteful competitive development and premature extraction of 

the Nationts underground petrolelTin reserves. The East Texas field offers 

an outstanding example. 

The conclusion is that engineering a~d scientific knowledge regarding waste in all its phases cannot be applied correctively to conserve 

the diminishing reserves of oil and E;as a.s long as the theory of "capture 

and reduction to possession" is recognized as controlling. 

§S)} .American Petrolellffi Institute, section IV, Proceedint;s Fourteenth 

.Annual l.leeting (Production); Production Bull. 212, ::PP• 2-21, november, 

1933 (reprint). 

36 
83874 

Substitutes for motor fuel 

Gasoline substitutes from coal 

The processes for obtaining motor n1el from coal may be grouped in 

four classes: 

(1) The high-temperature carbonization of coal, including the gasand coke---manufacturing industry. 

(2) The low-temperature caj_ .. bonization of coal. 

(3) The hydroc;enation and liquefaction of coal by the Bergius 

process. 

(4) The complete gasification of coal and conversion of the resulting gases by pressure synthesis into methanol, synthol, and other 

liquid combustibles. 

Supplernentarjr sources of motor fuel 

1. In coke and gas works about 2.5 gallons of refined motor benzol 

is obtained by the high-temperature carboniz-ation of 1 ton of CC?al. The 

total coal coked in the United States in 1926 yielded 112 million gallo:t:J.s. 

of motor benz?l, or 1.02 percent as much as the 11 billion· gallons of 

gasoline prodi..lced in 1925. If the entire output of about 500 million tons 

of bituminous coal in 1926 had been put through byproduct ovens the ~ield 

of motor benzol would hc,ve been only 1~1/4 billion gallons, or 12 percent 

as much as the gasoline produced in 1925. Today the motor fuel derived 

from this source is much less,owing to the decreased demand for coke and 

coal gas. Obviously coke-oven light oil can never supply more than small 

portions of future motor-fuel requireraents. 

2. Low-temperature co.rbonization is often cited as the process that 

will solve the problem of future motor-fuel supply. In this process conl 

is heated to 450° to 7oooc. instead of 1000° to 1300°. The tar yields 

are from 20 to 35 gallons a ton, or two to throe times that obtained by 

high-temperature c~:::bonization. Also, the tar resembles petroleum in 

some respects. From 1 to 2 gallons of light oil cnn be scrubbed from the 

gas, and another g~llon or two distilled from the tar, the total yield 

being from 2 to 4 gallons. 

Refining losses would bring the net yield of motor fuel from gasscrubbing and straight distil~ation of the tar to about 2.5 gallons a 

ton,or about the same as is obtained in high-temperature carbonization. 

However, this low-temperature tar may be subjected to the same pres~xrecracking processes that are used for petroleum and thus yield 20 to 30 

percent of motor fuel. It is therefore reasonable to assume a possible 

yield of 7 to 12 gallons per ton of coal carbonized at temperatures of 

450° to 7oooc. 

If 136 million tons of bit~ninous coal, about one fourth of the output in 1923, had been carbonized at low temperature, the motor-fuel yield 

on the basis of 10 gallons to the ton would have been 1360 million gal37 
838"14 

lons, or but 12 percent as much as the gasoline production in 1925. It 

is evident that the mnx~um probable development of low-temperature carbonization, while furnishing a material q·uanti ty of motor fuel, cannot satisfy 

the entire demand. We must turn to processes in v,rhich motor fuel is the 

principal product rather than a by-product. 

Primary sources of motor fuel from coal 

Of these the Bergius proce·ss of li.quefying coal is the most promising, as it converts from 30 to 60 percent of the coal into tar and oils, 

the yield varying with the type of coal and the conditions of hydrogenation. In this process pulverized coal mixed with oil or tar to form a 

thick paste is heated "at 4000 to 500°C. in an atmosphere of hydrogen under 

a pressure of 200 to 250 atmospheres. A catalytic ma.terial is added to 

speed ~p the reactio~. Under these conditions the coal is converted into 

a black tarry liquid," which on separation from the ash and undecomposed 

residue yields from 35 to 60 percent of crude oil, or 90 to 140 gallons to 

the short ton of coal. 

Synthesis of motor fuel from gases produced from coal or col5:e 

The synthesis of ammonia fram nitrogen and hydrogen became possible 

when chemists discovered that certain substances called 11 catalystsn greatly 

~eeded up chemical reactions, and the com.~ercial production of synthet~c 

ammonia became a reality when engineers devised gas-tight equipment in 

which the process could be conducted under pressures of hundreds of atmospheres a~d at temperatures approaching red heat. This accomplishment 

marked the beginning of a new epoch in chemical engineering. Useful 

chemical cor~ounds formerly obtained by ro11ndabout methods from plants or 

a~imals could now be synthesized directly from the elements carbon, 

hydrogen, and orJgen, or from simple compounds of these elements,. ~ch ~s 

carbon monoxide, water, acetylene, and ethylene. RQrope~~ chemists were 

quick to see the possibilities of making alcohols and hydrocarbon motor 

fuels from water gas or coke-oven gas. 

Fischer and Tr~sch 81/ reported the production of a mixture of ~drocarbons, alcohols, aldehydes, ketones, and orgonic acids by pressure synthesis 

from water gas, using an alkalized iron catalyst. Although the mixture, 

which they called 11 s;ynthol", was usuable for motor fuel it was obviously 

inferior to a straight hydrocarbon gasoline, and the pressure process was 

dropped in favor of the subsequently discovered atmospheric-pressure 

synthesis, wllich yielded r~drocarbons only. 

81/ Fischer, Franz, and Tropsch, Ha~s, Uber die Reduction des Kohlenoxyde 

zu Methane am Eiserikontakt unter Druck: Brennstoff-Che.m., vol. 4, p. 193, 

1923; vol. 5, pp. 201, 217, 1924. See also Fischer, Franz, The synthesis of 

petroleum: 1st Internat. Conf. Bituminous Coal,Carnegie Inst. Technology, 

1926,Froc~, pp. 234-246. 

38 
83874 

Patart 62/ and Audibert 83/ in Fra..L"lCe and the Badische Anilin und 

Soda Fabrik (now the I.G. Farbenindustrie) in Germany developed methods 

independently for producing methru1ol from carbon monoxide and hydrogen. 

Road.·tests in Germany with a 4-cylinder truck reported by Fischer 

and Trap sch 84/ and in France by Dumanois 85/ showed that the mileage 

per gallon of methanol was approximately half that obtained with gasoline. 

The manufacturing cost of methru1o1--12 to 20 cents a gallon--and its 

low thermal value make it much more expensive than gasoline. 

The production of synthetic gasoline from water gas at atmo~heric 

pressure, reported by Fischer ~1d Tropsch 86/ in 1926, has not reached 

commercial realization, al tho·ngh a semicom"'lercial pla.t!t at the Mulheim 

Coal Research Institute has been operating e}~erimentally during the last 

few years. The principal difficulties in large-scale commercial operation 

of the process are to dissipate the high heat of reaction and keep the 

catalyst at the proper temperature; also, the gases must be purified 

carefully to remove sulphur. It is believed that these problems may be 

near solution. The cost, however, promises to be considerably above that 

of uetrole\un ~asoline. 

82/ Patart, Georges, The inctustrie1l transformation of 1Ji tuminous coal into 

orgttnic technical products: 1st Interna t. Conf. 3i turninous Coal, Carnegie 

Inst. Technolgy, 1926, Proc., :P:P. 132-160; Une vouvelle conquete de la 

catalyse sous pression: lu production industrielle de l'nlcool methylique 

O.e synthese: Cl;.imie et ind1.1strie, vol. 13, pp. 179-185, 1925. 

~ Andibert, E., La fabrication des carbu.r~"'lts syllthetiques au.."C depends des 

melanges de carbone et d'hydrogene: Chimie et Industrie, vol. 13, pp. 186-194, 

1925; trans. in Fuel, vol. 5, p. 170, 1926; also A contribution to the study 

of the synthesis of methyl alcohol: ~1d Inte~nat. Conf. Biturninous Coal. 

Carnegie Inst. Technology, 1928, Proc., vol. 2, pp. 508-522. 

§1/ Brennstoff-Chern., vol 6, p. 233, 1925. 

85/ Compt. Rend., vol 181, p. 26, 1925. 

86/ Fischer, Franz, and Tropsch, Hans, Die Erdolsy;.1these bei gewohnlichem 

Druck aus den Vergasun.gsprod.uckten der Kohlen: 3rennstoff-Chem., vol• 7, 

p. 97, 1926; see also The synthesis of petroleLun; 1st Internat. Conf. Bituminous Coal, Carnegie Inst. Technology, 1926, Proc., pp. 234-246. 

39 
83874 

Appraisal of the fo1~ tJ~eo of processes for obtaining gasoline 

from coal 

A careful appraisal of tl:.e present t0cr.~.nical :-md economic status of 

the four types of processes fur obtaining gasoline from coal, described 

above, leads to the conclusion that the hyc~ogenution and liquefaction of 

coal is the only one thc.'\t as yet a:prea:r-s to be r.wailable for use in largescale production of gasoline if our petroleum resources ~hould fall off 

rapidly in the near future. lrei ther high-. nor low-temperature carbonization 

of coal can be economically operated for the rro<luction of the relatively 

small portion of byproduct motor fuel obtained. 

At the present time the synthesis of motor fuels from water gas 

appears considerably more ox:ponsive than the hydrogenation of coal; furthermore, the synthetic byil.rocar1:,<Jn processes hr .. ve not yet attained commercial 

development. However, even in the hydrogenation process the cost of manufacture at the ple.nt, ostimatcd .!.:'.t 12 cents a gallon, is far above the 

present cost of petroleum gasoline nt the refinery. 

So far as a national conservation of fuel is concerned, it is highly 

wn.steful to conmune a large portion of our present supply of petroleum for 

ordinary heating ond stationary po·.vcr genero..tion, when conl would c..nswer 

as well, and. then find it neccsso.ry in the futuru to ffi(_Jce our needed 

gasoline in a roundabout and cxoensi ve mo.."rlller from conl. The waste lies 

not only in the extra labor and. equipment involved, but, what is more important, in the energy- consumed in the ·oro cess of conversion. In round n1:unbers 

4 tons of coal is con~ed in making 1 t0n of gasoline. Only 40 to 45 

percent of the original heat 1mi ts in the coal used is found in the resulting gasoline. 

It is true that the United States has large resources of coal. It 

has been estimated that the reserves of coal, exclusive of anthracite, are 

3-1/2 trillion tons, but much of this is of low rank and may not be suitable for hydrogenation. It is estimuted that somewhe-.t more than our present annual production of coal would be required to yield our present 

annual requirement of c;asoline. Such dou-oling of our coal consumption 

would no doubt solve the ;i.mmedia te problem of the coal industry, but at 

a tremendous cost of national fuel resources. A forward-looking national 

fuel policy would seek to delay the day of making gasoline fra'IIl coal as 

long as possible, by reserving the higher-vQlue fuels of natural gas and p~troleurn for those uses t~~t c~n not be so efficiently met by the direct 

combustion of coal. 

40 
83874 

TLme required to put hydrogenation on a commercial basis 

It must ~e emphasized that the commercial plants obtaining gasoline 

from coal in England and Gennany are not,in a strict sense, on a commercial basis. Large subsidies.in the fo1~ of tariffs or excise taxes 

on petroleum or gasoline from petroleum are required to make their 

operation commercially possible. Neither of these countries has any 

~portant home sources of petroleum, but they do have extensive qoal 

deposits. In case of war and blockade, the production of motor fuel 

from coal would be of the greates_t importance to these coUlltries. The 

large internal petroleum resources of the Vnited States, if properly 

conserved, will defer this war need of converting coal, certainly for 

one and possibly for three or more decades. 

Although England is now constructing its first commercial coal 

hydrogenation plant, it cannot be said that it has solved all technical 

comnercial problems. Considerable development work wil~ be required to 

put this plant into smooth operation, and several years may elapse 

before the plant solves all of its development problems. 

Although the Ger.man plant at Leuna has been operating for several 

years, it has been working largely on tars and brown coal. The British 

plant now being built will be the first large-scale operation to use 

ordinary high-volatile bituminous coal such as we have in abundance in 

the United States. 

Large-scale hydrogenation of coal in the United States would require an extended period of research on our particular coals, in order 

to determine which coals would give the best yields and whiCh locations 

would prove most economically desirable. 

In conclusion, it is now proved that teChnical p~ocesses form~ 

ing gasoline or motor-fuel substitutes from coal are available if and 

when a failing supply of petroleum requires this step. But the product 

will be made with the sacrifice of much more of the original fuel 

energy than is lost in making gasoline from petroleum. Further.more, the 

cost of the gasoline to the consumer will be materially higher. The 

fact that gasoline can be made from coal is no reason for continuing 

our present wasteful exploitation of petroleum reserves. 

Refe;r-ences 

Fieldner, A. c., and Brown, R. L~, Future trends in automotive 

fuels: Ind. and Eng. Chemistry, vol. 18, P• 1006, 1926. 

Report II of the Federal Oil Conservation Board, PP• 5-9, 13-14, 

January 1928. 

41 
83874 

. . 

Field.ner, A. c., Recent developments in .the production of motor 

fuels from coal: :Bur. Mines Infonnation Circ... 6075, 18 PP•, July, 

1928. 

Field.ner, A. C., Recent developments in coal utilization; Minerals 

Yearbook, 1932-33, pt. 2, pp. 433-450, Bur. Mines. 

Gasoline substitutes from oil shale 

~ne enormous deposits of oil shale in various sections of the 

United States are often mentioned as possible future sources of motor 

fuel and fuel oil. The oir shale fields of the United States have been 

divided into three ge~eral classes - oil shale of the Rocky Mountain 

region, Devonian blaCk shale of the Eastern States, and cannel shale 

of the Eastern States. 

These oil-sh~e deposits can be made to yield large amounts of 

crude shale-oil ~and this oil can be used directly as bg!~er fuel Q§/ 

and cru1 be converted into motor fuel by known processes. ~ 

According to Gavin~-

11The production of oil from shale requires one more operc;ttion than 

does the production of pet~oleum. In the latter case, once the mine 

(well) is driven into the oil sand, the crude product is rec9vered with 

but relatively little cost. In the case of oil shale, the rock itself 

must. be mined ·and afterward treated to produce the crude oil. T.he character of petroleum is what it happens to be when the driller strikes the 

sand; the charac:ter of shale oil is largely dependent upon the process 

and conditions used in its manufacture. Once the crude shale oil has 

been produced, its refining is more complex and more costly than the 

equivalent refining of petroleum. 

"The oil-shale industry will uJ. timately be developed on as safe 

and sane a basis as other great manufacturing and mining industries. 

§1/ Gavin, M. J., and Desmond, J. s., Construction and operation of the 

Bureau of Mines experimental oil-shale plant,l930, and unpublished data 

in files of the Bureau of Mines. 

W Tests of shale oil produced by Bureau of Mines at Rulison, Colo.--

Evaporative efficiency runs with 5 types of fuel-oil burners: U.S. lJaval 

Boiler Laboratory, Philad.elphia. Navy Yard, Report 1075, Sept. 2, 1932. 

§2/ Unpublished data in files of Bureau of Mines. 

W Gavin, M. J., Oil shale, a historical, technical, and economic 

study: Bur. Minos Bull. 210, 1924. 

42 
. 839'74 

·, 

It is clear, howover, frotn..t~pe~ in othe1· countr:ites and !~m .t~ 

very nature of the mineral ru.Ld its cr-J.de :products that the i~t.a:y' \ 

can come to commercial :Lniporta.nce only as a type of larg&ot~e., 

low-grade ra'v materials mining and man:J.fact·\l!'ing indu.stry ,· ~ the 

profits derived from it 'lvill be of the order of those deniMed from 

other industries of the same general nature. 

~ "It is hardly believed tba.t ~hale oil, considered in a large way, 

will be a competitor of petroleum; it is more likely to be a slowly 

developed succes.sor of petroleum- .A general impression has arisen that 

the larger oil companies are seek.i.'lg to retard development of the oilshale ind~try, booause they fear the possible competition of shale oil. 

Thero can be little truth in this belief. The writer believes that the 

petr<>leum industry as a whole welcomes the advent o;f shal@ oil, as its 

lea.Gers are fully 'aware of the serious si tua.tion the .Ainericoo petro-. 

leum ind~try is facing. * * *' Competition of shale oil with petroleum 

cannot be regarded seriously, since, because of the many teChnical 

problems which must be solved in connection with the fo~er and t~e 

large amo"-111t of capital which will be required before the industry: csn 

hope to compare in production with the present petroleum indU£try, shaleoil will probably be sorely needed long beforo it is·. produced in quantities sufficient appreciably to relieve the impending shortage of 

petroleum. It will be much longer, as before noted, before it can go 

far in supplying the present demand for petrole,:Jm, which nonnally will 

grow at a much greater rate than dooestic petroleum supplies can support. M. L. Requa, former director of tho Oil Division of the United 

States Fuel Administration, at the Uovember, 1920, meeting of the 

American Petroleum Ins·titute, in an address, made a staterr1ent \Vhich is 

worth quoting in this regard: IThe oil-shale industry, the coal-refining industry, the power-alcohol industry1 with their potentialities 

and their iimitations, deserve our close consideration. While they 

may superficially appear as o·ur competitors, they are fundamentally 

our allies. When the time is ripe, I believe these supplemental sources 

of supply can be developed by the petroleum industry more advantageously tha~ by any other agency.1 

11 Shale oil appears to be the most natural and logical substitute 

for petroleum. The supplies of shale are so creat as to dwarf by comparison the quantity of petroleum already produced and still available 

for production in the United States. n1e writer believes that the oilshale industry will u1 timately be an :industry Qf great I!la€;lli tude and 

~romercial importance in this country, but many years and much money 

Wlll be required before it reaches this status. In its last analysis• 

it is an industry comparable with tho low-grade-ore mining industries·· 

of the Western Stft.tes and,. like them, will require the services of the 

highest types of business, executive, and technical skill, backed by 

large capital, and which can afford and be prepared to wa.i t a considerable t~e for a conservative return on the investment." 

43 
83874 

It is.a far cry from oil shale in the Green River fonnation in 

Colorado (Naval Fuel Oil Reserve No. 1) to gasoline in an airpla..."le or 

automobile. Shale oil has not been produced in the United States under 

commercial conditions. n1e plants that have been built h~ve been on an 

experimental basis. Gavin W says: · n _______ Up to the time of writing 

[.t\-pril, 1923] the only operations approaching a commercial scale are 

those being conducted by the Catlin S~ale Prod~cts Co. at Elkot Nev • 

.An oil-shale industry can hardly be said to exist in the United States, 

except in the literature of promotion concerns." ~rthermore, experience 

with these experimental plants does not form a basis for definite conclusions regarding costs of commercial operations. The Bureau of Mines 

has conducted probably the most consistent series of investigations of 

oil shale utilization that have been made in the United States and has 

published many of the results of its work.@ Detailed results of work 

done by the Bureau of Mines during 1928 and 1929 have not been published, 

owing to lack of funds. However, the original data and manuscript reports are available. in the files of the B'u.reau. 

On the basis of these data and an unpublished report by E. D. Gardner 

and C. N. Bell, entitled "Propo?ed methods and estimated costs of mining 

oil shale at Rulison, Colo.,n engineers of the Bureau of Mines estimate 

that 12 to 18 months would be require~ to build a plant with a retorting 

capacity of 10,000 tons of oil shale a day, taking its supply of oil 

shale from Naval Oil Shale Reserve Uo. 1, and to develop the mine to the 

point that that amount of oil shale could be delivered daily to the retorts. 

The cost of such a mine and retorting plant, prior to the time that the 

first ton of shale is delivered to the retorts,is estimated at $7,000,000. 

If this amount could be amortized over a period of years, the cost per 

barrel of oil produced might be a fairly reasonable figure, but if the 

plant were erected u.~der war-time conditions and closed after 3 yea+s 1 

operation, the capital cost alone of shale oil might easily be $1.05 

a barrel, to w!1ich wmJ.ld have to be ac1.ded labor and operating cos~s. 

Engineers of the Bureau of Mines estimate that during the development period of 12 to 18 months. required to bring the mine and retorting 

plant to the po.int of beginning retorting operations an average of 400 

men would be em~loyed. To operate the mine at c~pacity wo·uld require 

: 500 men, and for the retorting plant with 275 retorts 150 men. Each 

retort wo1..ud cost about $20,000. A plant of this size would produce 

abou.t 5,400 barrels of oil a day. Lieut. J. E. Hamilton, Bureau of 

ill Gavin, M. J., op. cit., p. 98. 

W. Karrick, L. C., Manual of testing methods for oil shale and shale 

oil; Bur. Mines ~ill. 249,1926; Jakosky, J. J.,Uses of water in the oil 

shale.industry;Tech. Paper 324, 1923; Finley, w. L., and Bauer, A. D., 

Coking of oil shales; Tech. Paper 398, 1926; Bulla. 210, 315, already 

cited; and many short papers. 

4.4 
83874 

Engineering, U. s. Navy, has stated informally that a naval cruiser 

traveling at full speed requires 6,800 barrels. of fuel oil in 24 

hours. 

From this recit3l it can be seen tha.t oil shale is by no means 

the ready source of fuel in an energency that it is often assumed to 

be.W A long period of time would be required to make the fuel available, much labor wou.ld be required, and costs would be extremely hir;h. 

Alcohol as motor fuel 

7.he case of alcohol as a constituent of motor fuel ha3 been argued 

extensively pro and con in the technical press and in the newspapers 

during the last 12 to 18 months and intermittently for many years prior 

to 1933.~jj ~cohol has been employed, either directly or as a constituent of a mixture, as a substitute for gasoli~1.o in various countries 

since the first introduction of the internal--combustion engine, 3-t such 

times B.nd in such areas as special conditions were conducive. to its 

use. The use o: alcohol as ~otor fuel under these conditions should be 

given consideration only to the extent that it indicates the possibilities of alcohol as a substitute for gasoline with regard to performance. 

Utilization of alcohol motor fu~ls to dispose of surplus agricultural 

products is a very different matter from the use during war time of 

alcohol made from. agricultural products that will themselves be in 

great dem~~d. In this connection it is importar-t to remember that alcohol is itself a military necessity in time of war. 

The use of corn a~d other grains or vegetables 2s sourc~s of alcohol for motor fuel cluring W'"dl' time may be dismissed from consideration. 

Such materials ·would be too urgently needed as food products. 

A recent Senate -:locument ~ shows tl:.at the total production of 

corn in the United States has not bee::-1 aclequate to repl.~ce the motorfuel requirements for t;asoline during any yea.r since 1923, assuming a 

yield of 2.36 gallons of alcohol from a bushel of corn. 

· Alcohol and other fuels c~~ be made from straw, corn-cq9s, cornstalks, agricultural dusts, a~d other &gricultural wastes.g§/ 

@ Bur. Mines Bull. 315, p. 3. 

W Graf, D. W., Power nlcohol, a partial list of references, u. S. 

Dept. Agr., 1933. 

~ Use of alcohol from fann products in motor fuel ; 7JiCong., lst 

sess., s. Doc. 57, taole 20, p. 55. 

~ The utilization of agricultural products for the production of 

motor fuels: Rept. II of the Federal Oil Conservation Board, .Appendix IV (by Bur. ChGmistrJ, u. s. Dept. of Agr.). 

45 
83874 

Work along this line has been nainly on an expe~imental basis, and 

a considerable time may ela:tJse ·before pl~ts for the production of 

fuels from such sources co:JJ.d be put on a production basis. How-

~ver, in view of the fact that economic deterrents may not be effective during war time, these ·wastes may be more practica-ble sources 

of fuel than primary agricultural products that require essential 

nanual labor for their production. 

~1e following excerpts from Report II of the Federal Oil Conservation Board, Appendix IV, cited above, indicate the limitations of 

these sources of alcohol: 

"Alcohol from cellular wastes 

11 (1) From waste sulphite liquor from paper pulp mills.-

The yield from this material is low, and several technicaJ. 

difficulties have been encountered in developing the process. 

O~ly one distillery in the United States is reported to have 

produced alcohol from this source con.uercially. Several p~per 

mills have investigated tl.1is possibility imd have ev~n gone so 

far as to eroct experimental distilleries for this purpose. 

11 (2) From mill a11d forest-wood waste and trees.-Two 

kind.s of alcohol may be obtained from these materials, methanol 

or meth~rl clcohol (~-;ood alcohol) and ethyl alcohol. 

"Methanol (methyl alcohol) .-Several substances of commercial importance, including methanol, are obtained from the 

he.rdwoods, S"J.Ch as calc, beech, and maple, by destructive distillation. Sawdust has not been used S"':lccessfully for this 

purpose because of the difficulty of securing good heat penetration in the closely :packed material. Methanol is less 

efficient th8Jl ethyl alcohol as a motor fuel; this and its 

higher cost (80 cents per g3llon in tarL1cs) as compared wi~h 

that of dena·~ura.ted ethyl alcohol (27 to 33 cents per gallon 

in tanks) elimin.~te it from consideration as a motor fuel. 

"Ethyl -alcohol.--At least two distilleries in the United 

States have attempted to produce industrial alcohol profitably 

from sawdust and other mill waste by hydrolysis and fermentation. Yields of approximately 12 to 20 gallons of 95 percent 

(190-proof) alcohol per ton of dry raw material have been 

reported. In order to justify the initial investment and 

overhead expense involved in the erection and operation of a 

distillery of appropriate size, it is necessary timt the plant 

be in the L"'lmediate vicinity of a mill of large capacity. It 

h~s been estunated that a qUEntity of mill waste at least 

equiv~lent to approximately 200 cords of wood per day would 

be required in order to justify the eA~ense of constructing 

and operating such a r-lont for producing alcohol from this 

46 
83874 

material. The fact that onl~y· a few mills in the United States 

produce enough waste to warrant the production of alcohol 

from this material has retarded tho development of tho industry. 11 

Senate document 57, above cited (p. 22),states that during the 

year ended .. June 30, 1932, 84.76 percent of the industrial alcohol produced was made from molasses, 9.69 percent was rp.ade synthetically, 

and only 3.75 percent was made from grains. The remaining 1.8 percent was made from other materials and mixtures. 

Consideration of the employment of alcohol as motor fuel during 

war time involves two major objections in addition to processing cost 

and raw material required. The first of these is that all existing 

equipment for producing alcohol would pro~ably have to be operated at 

capacity to su.-_pply urgent demands for alcohol needed in the manufacture of munitions and other war materials. The second objection is 

that the labor and equipment required to fabricate and erect additional plants would be urgently needed to provide munitions and other 

military necessities. The following extract from Senate Document 57 

(pp. 20-21) is enlightening on this question: 

"Manufacturing plant capacity 

11 In considering any proposal for the utilization of adeli tional quanti ties of farm :products in the manufacture of 

alcohol.for motor fuel, plant capacity ~~d the rate at which 

additions could be made to the capacity must be taken into 

account. The industrial-alcohol industry of the United States 

has never prod~ced more than 107,000,000 wine gallons in a 

year. At the present time. the industry is operating much 

below capacity. In 1932 only 78,000,000 gallons of 95 percent alcohol were produced. The capacity of existing plants 

is probably about 250,000,000 to 275,000,000 gallons. ~1e 

eJ1tifreeze and other industrial requirements for alcohol 

probably would continue to take about 75,000,000 gallons. A 

2 percent blend with all gasoline used wo·u.J.d require about 

300,000,000 gallons. Consequently, the producing capacity 

of industrial-alcohol plants would have to be expanded to the 

extent of at least 100,000,000 gallons to provide the alcohol 

for such a blend. 

11 The present capacity of alcohol production centers is 

estimated to be about as follows: 

Eastern seaboard • • • • • 

Southern districts • • • • • • 

Hiddle Western districts •.•• 

Pacific coast • • • • • • 

Total • • • • • 

. . . . • • • • • • • 

• • • • • • • . . . . . • • • • • • • 

47 

Gallons 

112,000,000 

60,000,000 

89,000,000 

6,000,000 

267,000,000 
83874 

"If alcohol to the extent of 2 percent of the annual 

consumption of motor fuel were required or desired for use 

within a year, this could be obtainea only by postponing the 

effective date of the requirement until stocks co,:t.ld be accumulated. * * * The production of a supply of alcohol equi ..... 

valent to 2 percent of the annual motor-fuel cons·umption 

would require additional plant ca:paci ty to the extent of 

about 110,000,000 gallons, and the operation of these plants 

1vm.1ld require an additional 47,000,000 bushels of corn or its 

equivalent. Additional capacity to provide alcohol to the 

extent of 5 and 10 percent of the annual motor fuel require .... 

me~ts probably could be developed within 2 or 3 years. 

ns-upplies of raw materials for alcohols 

".Anhydrous alcohol, for a 2 percent blend with 15,000,000,000 

gallons of motor fuel, would require equivalents of about 

112,000,000 bushels of corn and 23,000,000 bushels of barley. 

A 5 percent ble~d Tiould require about 280,000,000 bushels of 

corn and 57,000,000 bushels of ba.rley; and a 10 percent blend, 

560,000,000 bushels of ·corn and 114,000,000 bushels of barley. 

48 
Recapitulation 

The foregoing discussion points unmistaknbly to the conclusion that 

coal, oil shal~, and alcohol are not yet practical sources of motor fuels. 

Construction of equipment to produce oil from coal or shale and to 

provide additional supplies of alcohol would require an enormous amount 

of labor and material, and production would not begin until at least a year 

after plant const~ction had started. In war time alcohol would be urgently 

needed for the production of explOsives and other war materials and many 

additional plants would be required to provide for even as little as 10 pe~ 

cent of our normal requirements of gasoline. 

On the other hand, the American petroleum industry has a large potential capacity to produce additional fuels and other products. 

The United States Bureau of Mines reports the following quantities 

of petroleum and petroleum products in storage in the United States 

December 3ls 1933; 

Crude petroleum~--------.­

Natural gasoline~ - - - - - - - - -

Gasoline - - - - - - ~ - ~ - - ~ - Kerosene - - ~ - - ~ - ~ - - ~ - ~ 

Gas oil and fuel oil - - - - - - -

Lubricants - - - - - - - - - - - - Total, all oils 

Paraffin waa - - - - - "':'" ..... - - .... -

Petroleum coke - - - - - - ~ - - -

Petroleum asphalt- - - - - - - - -

Total - - - - - - - - - -

:Barrels 

355,394$000 

3,186,000 

52,240,000 

6,495.000 

122,287,000 

6,896,000_ 

5'46,498,000 

Short~ 

.• 34,400 

727,400 

254,500 

1,016,300 

These materials are owned by individuals and corporations. They 

constitute our real reserves of fuels lubricants, and other materials, 

nnmediately available in case of emer~ency. They constitute about 220 

days' supply at the rate of demand during the year 1933, and if these 

stoCks were to be conscripted for strictly military uses, they would 

probably be sufficient for a much greater number of d~s, pending the 

time that additional supplies were made available. 

011 refineries are widely distributed thro~hout the United States, 

their equipment and processes have had intensive development under the urge 

of competition, and therefore results can be predicated accurately. 21/ 

49 
63874 

Petroleum refineries are :potential emere;ency sources of alcohols and 

other chemicals required in tho prod.uction of e::plosives and othor war materials, and additional refin8ry operations to supply fuels and lubricants would 

furnish intermediate profr~cts for the manufacture of needed supplies of thcne 

essential war-time products. gzj 

Summary 

The preceding brief review of the petrol~~ situation in the United States 

and of the possibility of developing substitutes for petroleum as a source 

of a particular type of power that is so essential to our present national 

economic life ler~d to the .inescapable conclusion that every effort of 

Government and industry should be directed to the conservation of petroleum, 

This effort should permeate all phases of the industry, from the development 

of the crude product, through every stop in refining and manufacture, to 

final use. 

Tho resource is limited,although that vital fact is obsaurod by presen~ 

overproduction; satisfactory and economical substitutes are not yet commercially develop~; the conditions that the Nation will face when existing 

supplies approach exhaustion cannot be foreseen; and that dey must be deferred to tho utmost possible limit by the exercise of every conceivable 

waste-preventing meo.suro, from the drilling of a well to the final consump- . 

tion of the finished product. 

f!J :Brooks, :B. T., Alcohols a."ld related products from petroleum: 

World Petroleum Gong •. 1933.Proc., vol. 2, p. 840. 

50