A Far-Flung Search for New Reserves
With U.S. crude oil supplies depleted by the Allies' military needs during World War I, Standard Oil Co. of California (Socal) began seeking oil and gas reserves beyond U.S. shores in the postwar years. The long, intrepid quest would take more than 10 years before the company made its first international discovery in June 1932.
As the growing highway system encouraged longer car trips during the 1920s and 1930s, Standard service stations attracted motorists by adding such amenities as clean, well-appointed rest rooms and drinking fountains. With the introduction of the Standard Lubrication System, as well as Atlas tires, headlight bulbs and standardized battery service, the stations offered a complete one-stop service. (Chevron Photo)
The search began in December 1920, when a 25-person exploratory team sailed from San Francisco to Bondoc Peninsula in the Philippines, followed by a freighter carrying 1,000 tons of equipment. Meanwhile, other Socal crews were deployed as far afield as Alaska and Colombia in the quest for oil. Despite each location's geological promise, the quest proved elusive.
Undeterred, Socal next focused on the Middle East, an area with no history of discoveries and no obvious petroleum prospects. The company gained its first foothold in the region in 1928 when Gulf Oil Corporation offered its Bahrain concession to Socal (in a move that unknowingly foreshadowed the merger with Gulf by more than half a century).
After surveying the island, geologist Fred Davies and producing superintendent William Taylor selected a 12-mile-long oval-shaped depression called Jabal ad Dukhan, or the "Hill of Smoke" because its 453-foot mound was the highest point on the island.
Working in searing heat, the team met with success on June 1, 1932, after the bit pierced a layer of blue shale and the crew smelled oil.
Next Stop, Saudi Arabia
"Though only modest in production, the Bahrain discovery was a momentous event, with far wider implications," wrote historian Daniel Yergin of the 1932 strike by Socal. "After all, the tiny island of Bahrain was only 20 miles away from the mainland of the Arabian Peninsula where, to all outward appearances, the geology was exactly the same."
In June 1932, Socal began a year-long series of negotiations with the Saudi government before the two sides signed a concession agreement providing the company with exploration rights for the next 60 years over an area of about 360,000 square miles.
In November 1932, the company assigned the concession to its newly formed subsidiary, California Arabian Standard Oil Co. (Casoc), later to become Arabian American Oil Co., or Aramco.
After geologists surveyed the concession area, they identified a promising site and named it Dammam No. 1, after a nearby village. Over the next three years, the drillers were unsuccessful in making a commercial strike, but chief geologist Max Steineke persevered.
He urged the team to drill deeper, even when Dammam No. 7 was plagued by cave-ins, stuck drill bits and other problems, before the drillers finally struck pay dirt on March 3, 1938. This "stunning news" opened "a new era," in Yergin's words.
Fourteen months later, when the first tanker, Socal's D.G. Scofield, arrived at Ras Tanura's newly constructed deepwater port to load crude for international markets, Saudi Arabia's King 'Abd Al-'Aziz turned the valve to fill the tanker.
The Birth of Caltex
Socal had already found a potential market for its Middle Eastern oil by creating a historic partnership with Texaco in 1936. The joint venture, which became known as the California Texas Oil Company, or Caltex, melded the company's Middle Eastern exploration and production rights with Texaco's extensive marketing network in Africa and Asia.
Though it began as a modest operation with a single "teapot" refinery, a piecemeal transportation system, and fuel and lubricant sales of just 22,500 barrels a day, Caltex would emerge as a major international marketer and refiner with operations in some 60 countries in the years following World War II.
The joint-venture partners also agreed to share exploration rights in Central Sumatra, Java and Dutch New Guinea, which had been granted to Socal in 1935. Just after the company discovered the Duri Field in 1941, the Japanese incursion in World War II suspended activity until the postwar years.
During the pre-war years, Socal's aggressive exploration program extended to the Southeastern United States, where the California Company, a Socal subsidiary, made its first discovery at Bayou Barataria, Louisiana, in 1939. Socal subsequently made discoveries in the U.S. Gulf Coast, the U.S. and Canadian Rocky Mountains, and eastward to the Atlantic.
The company entered the Canadian market in 1935 when Standard Oil Co. of British Columbia was launched in a two-room suite of the Hotel Vancouver. That same year, the company moved quickly, purchasing local oil distribution companies, acquiring service stations, establishing dealerships, starting a new refinery and acquiring a tanker, the B.C. Standard.
Moving Forward in Difficult Times
During the 1930s, Socal expanded its operations in Central America, building upon its leadership position in Mexico. It added a road-surfacing plant and constructed a bulk plant in El Salvador in 1935 before expanding into Guatemala, Nicaragua, Honduras and Costa Rica.
To offset the Depression's dramatic impact on earnings, the company stimulated sales by bringing out solidly researched new products, including Standard Gasoline in 1931, Flight and Standard Penn motor oils in 1932, Standard Unsurpassed Gasoline with Tetraethyl Lead in 1934, DELO (Diesel Engine Lubricating Oil) in 1935, and RPM Motor Oil in 1936.
Fueling the War Effort
The onset of World War II changed everything for the company - from the product line to the lives of its employees. With the entry of the United States into the war in December 1941, Socal became a key supplier of crude oil and refined products for the Allies in the Pacific.
Meeting a key need for a more efficient aviation fuel, the company spent more than $57 million to expand 100-octane plants at the Richmond and El Segundo refineries and converted the Bakersfield Refinery almost exclusively to 100-octane production. Company research scientists also developed compounds that enabled U.S. Navy submarines to triple their cruising range.
World War II also created a boom in petrochemical demand. Socal invested more than $9 million to boost production of synthetic toluene - the second "T" in TNT. When the supply of natural rubber from Southeast Asia was cut off, the company erected a plant at El Segundo to supply butadiene for synthetic rubber.
Supporting the War at Sea
With the United States at war, Socal's fleet came under command of the War Shipping Administration. Its tankers towed large concrete barges to the South Seas and sometimes served as floating service stations, fueling other vessels in the open ocean.
During the war, Socal built two new ships, the J.H. Tuttle and the R.C. Stoner, which became, by far, the largest ships in the Standard fleet. At 18,000 tons each, they could transport almost 154,000 barrels of cargo.
Two company ships failed to survive the war: the Storey was sunk in the South Pacific, causing the death of two men; and the Collier sank after a submarine attack in the Arabian Sea, killing 30 men. In all, almost 9,000 Socal employees served in the Armed Forces during World War II; 232 lost their lives.
In the face of adversity, employees summoned up their "Standard Spirit" and pressed ahead. During this time, women broke new ground, playing increasingly important roles in offices, laboratories, refineries, service stations and, occasionally, oil fields.
The efforts of employees received many kudos from U.S. military and government leaders, such as General Douglas MacArthur, who wrote: "To the men and women of Standard of California: We, the soldiers of the fighting line, give thanks to you soldiers of the production line for the sinews of war that made our victory possible."