by Paul R. Spitzzeri
The volatility of the oil markets with the Russian war in Ukraine as well as the ever-worsening matter of climate change are stark realities for us now when it comes to fossil fuel production and use, but just about a century ago, greater Los Angeles was one of the major oil producing centers on the planet and there was a totally different attitude then in a sort of “ignorance is bliss” way. After all, this cheap and abundant fuel was helping to drive an American economy that was rising rapidly to world preeminence and this region was undergoing the latest in a series of development booms that propelled Los Angeles to the top tier of cities in the nation.
The featured object from the Museum’s collection for this post is the 12 July 1923 edition of the industry newspaper California Oil World and there was a direct tie to the Homestead in the sense that its owner, Walter P. Temple, was the beneficiary of a substantial fortune thanks to oil found a half-dozen years prior on his Montebello-area ranch, while he was engaging in his own petroleum prospecting business, with wells in Whittier, Huntington Beach, Signal Hill (Long Beach) and elsewhere at this time.
As the regional book was at its peak, so was Temple’s financial situation, in 1923, and, having used his oil royalties for the purpose, he also was delving deeply into real estate development, having just, at the end of May, launched his biggest project, the Town of Temple, renamed Temple City five years later. Moreover, after a delay following the death of his wife, Laura González, at the end of the previous year, construction on their “dream home,” La Casa Nueva had resumed.
In mid-1923, the big story locally in the oil world was the phenomenal success of the Santa Fe Springs oil field, southeast of Los Angeles, which proved to be a massive producer. The headline in the paper was in bright red letters that output in that field was up by 19,000 barrels over the prior week, which, because of a drop at Long Beach, the second largest local field, meant that statewide production had a net 5,000 barrel increase, to 835,000, for the week ending the 7th. Meanwhile, national production dipped slightly, even with a uptick in central Texas, as there were loses in Oklahoma, Arkansas and in other locations, though it was also noted that “the national production for the week ending June 30 established the highest record to date.” The drop was from over 2.209 million barrels to 2.199.
In this region, a committee of the Southern California Oil Producers called for and major companies like Associated, General Petroleum and Union agreed to “cut their runs of oil from their own wells and from the wells of independents from whom they are buying oil at an additional 15 per cent.” Because such wells were operating at 70% of capacity, the reduction obviously brought that down to not that far over half.
The three major fields, Santa Fe Springs, Long Beach and Huntington Beach, were generating more than 80% of all the output in California, and the problem was that overproduction from those operators trying to cash in quick meant that the association “believed that a curtailment of 30% in production would enable the pipeline and marketing companies to transport, market and store the remainder” of what was deemed reasonable for the market to handle.
That project, though, was made when the three big fields were yielding not too much north of a half-million barrels a week and it was expected that production would leap to over 820,000 by September, a staggering 60% increase in a few months. The committee added, “as new wells came in, however, many of them drilled into lower productive sands, the production continued to climb and it became impossible for the marketing companies who were cooperating with the committee to continue to take the full 70%.”
After examining the three major fields closely and taking a detailed survey of pipeline, storage and market conditions, the body went on that “it is apparent that the marketing companies cannot handle during the months of July and August in excess of 55% of the production” even with planned storage facilities being rushed to completion and new ones developed beyond expectation. These were “the bare, bald facts” and the conclusion to move to 55% capacity was an endeavor to engender equity among producers.
The committee thanked producers for their cooperation “under trying condition” and expressed confidence that
there will be only a few months of this overproduction period and it behooves every producer to do his part in holding production in the ground that there may be no large quantities of oil thrown on the marketing companies beyond their ability to handle.
A table of estimates showed that peak by September and then a drop of “total potential production” of over 10% in October and another 13% in November, while “new potential production” slated to peak at over 230,000 barrels in July would slide to 170,000 by September and then drop by over half in October and nearly as much so by November.
With respect to completed wells in those three major fields, it was estimated that Huntington Beach would reach nearly 250 by November with new completions falling from 26 to 2 from July to then, while Long Beach would peak at 338, but the new completions fall from 42 to 14 from August), and Santa Fe Springs hit 295, with new completions going from 41 to 14 from September.
Separately, it was reported that Standard Oil Company (California) “has shut down hard on its customers who seek to rush production by announcing last week that it will no longer accept any oil whatever in excess of the maximum of its contract in each case.” This shortly followed a statement that the firm would not accept more than 50% in excess of contract amounts after limiting these to 75% in April. This was because production by the end of June was “far in excess of any previous wee” and topping 800,000 barrels for the month, while company scouts in the field found that “the outlook [was] for still further increase or at least no early relief.”
Another front page feature discussed the heroism of crews in fighting a massive fire the previous Thursday that “threatened to sweep through Signal Hill and all its environs.” The incident occurred when the pipeline of Union Oil broke and oil on the ground was ignited, while it was considered very fortunate that a gas line was not effected because “if it had it might have been goodnight for Signal Hill.”
Flames raced over to a Union well and the derrick was consumed, while nearby wells owned by Shell and Petroleum Midway were threatened, along with others, leading the paper to conclude that “the danger was terrible and almost justified the reports that went forth to Los Angeles that al Signal Hill was being wiped out.
Firefighters and field workers, however, kept the conflagration away from those flowing wells, while one well that was reached was shut down in time and a few others were saved as “workers climbed up into the derrick with hose and chemicals and several times extinguished flames that threatened to burn away the derrick below the.” Elsewhere, sand was spread on oil on the ground, even as there were “men working in blistering heat.”
The piece concluded with the observation that a sightseeing bus rumbled by after the blaze was put out and it stated “the conductor doubtless [was] explaining to his awed listeners what a narrow escape the field had had from destruction but all they saw where three ruins, two derricks and the pumpers home,” though it wondered if anything was said “about those heroic field workers and how they had risked their lives so freely to save the field from destruction.”
On the 11th, a Union well at Long Beach, emitting dry gas at some 100 million cubic feet a day, “blew in . . . shooting sand and gravel several hundred feet in the air with a roar that son brought hundreds of spectators to the field.” Drillers were down about 2,500 feet when they hit the gas pocket and it was noted, “fortunately, here is a steel derrick on the well, and it has stood the tremendous pressure with splendid results.” Still, oil flow lines and electric wires were cut “to prevent any chance of fire which is the greatest menace from such enormous quantities of escaping gas.”
Notably, the paper was delivered to Mrs. Ida Eagle of Whittier and a pencil inscription at the top of the front page has the words “Eagle Well” and a downward arrow to a small article that noted that Pacific Corporation’s Eagle lease well #1 at Santa Fe Springs came in at between 12,000-15,000 barrels a day after deepening, but, because of not enough storage, the well was cut to 5,500 barrels a day. The high-gravity oil was “the most important completion of the week for the field.”
The second well was actually the first brought into production, having come in the prior spring at 12,000 barrels a day. In late September 1928, a Whittier News article reported that Mrs. Eagle, a widower, was paid $100,000 in royalties to date from an abandoned well, but she filed suit to end a lease so she could try to find another firm to drill deeper, though it was not learned if she was successful.
Returning to Signal Hill in the Long Beach field, there was mention of the completion of the last of three wells by the Bartholomae Oil Company, with the new well coming in at 1290 barrels of oil daily. The first well on top of the hill generated 840 barrels and the third was the biggest producer at not quite 2,000. Bill Bartholomae purchased the 7,500-acre Diamond Bar Ranch in 1943 from its original owner, Frederick Lewis, and kept it until it was sold for development in the late 1950s—this, of course being the City of Diamond Bar now.
Another short article of interest concerned bootlegging, though not of alcoholic beverages as was common during Prohibition, but of gasoline. Even though it was offered at cut-rate prices of 13 or 14 cents a gallon, the average national price then was 22 cents (or $4.30 cents today), the paper noted, the cheap stuff “has proved itself often the most expensive motor fuel that its users have ever handled.” This was exemplified by the story of a Los Angeles banker who lined up for the bootlegged stuff only to find that the quality of the fuel was such that he needed expensive repairs—a sort of petroleum hangover.
With the dramatic increase in oil production, it was found that “while there is a big surplus of gasoline on hand as compared to previous years at this season, there does not appear to be any more than there was last year in proportion to the number of autos then and now.” With nearly 1 million registered and quite a few unregistered vehicles in California, not to mention some 12,000 registered motorcycles, it was estimated that this was a 20% increase from the same time in 1922, thus obviating at least some of the concern about overproduction.
A major merger was also reported in the paper as Richfield (now ARCO, or Atlantic Richfield) acquired United, though the latter was to retain its separate identity. With combined assets of $12 million, the new conglomerate was to build a new refinery at Long Beach where United was then a major player but Richfield had no presence, while its headquarters was to be in the Bartlett, former the Union Oil, Building (Union was completing its own new structure) in Los Angeles.
Another major local firm was General Petroleum Corporation which, unlike most companies then and now, built its refinery further from Los Angeles Harbor in Vernon and the extensive complex on Santa Fe Avenue and 37th Street went from “a mere topping plant built to separate tops from the bottoms of the crude into a refinery now capable of turning out all the principal products of the most up-to-date modern plants.”
The facility was growing and the company all the land east to the Los Angeles River, which curved to the southeast after coming south from downtown Los Angeles. It had a capacity of 50,000 barrels a day and, whereas before it sold refined crude to other companies, General shipped its own product and it also produced 15,000 barrels a day of gasoline with it going east to the Atlantic Refining Company of Pennsylvania (which merged with the aforementioned Richfield company in 1966 to create ARCO) and to Japan.
It was added that the facility was connected to and drew from all Southern California oil fields, while it was the only refinery with a direct line to the massively expanding fields of Kern County. Having made lubricants for its own use at the site, General was looking to expand into the line for commercial purposes. Within a few years, however, it was realized the Vernon property was not large enough, so the company moved its refining operation to Torrance, opening there in 1929. General was purchased by Standard Oil Company (New York), which later became Mobil, which then merged with Exxon, so the Torrance refinery became ExxonMobil.
Other notable content includes a short article about the battle between the state Corporation Commissioner Edwin M. Daugherty and the colorful and controversial oil operator, C.C. Julian and of which there is a series of posts on this blog; small oil companies being affected by Standard’s refusal to accept surplus production, as noted above; the state mining bureau’s report on operations in the state; detailed field reports of well drilling; and stock trading statistics.
There is even a section devoted to baseball scores in the Oil Belt League of company teams from Associated, Union, General Petroleum and Shell, along with the Union Tool Works, with the season two games in. There was also a scorecard for an independent game between Shell and the Pacific Electric Railway squad, with the former shelling the latter, 14-1.
We’ll continue to share other oil-related artifacts from the Homestead’s collection under the “Drilling for Black Gold” series of posts and other issues of California Oil World, as well by tacking on the “Read All About It” moniker, so be sure to check back for those.