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As the time allotted is short, we can present only a general idea of the oillaws in the Latin-American republics, as a supplement to Bulletin 206 of theDepartment of the Interior compiled under the direction of J. W. Thompson ofthe Bureau of Mines and entitled "Petroleum Laws of All America." Weshall not discuss the European colonies in Latin America nor the islandrepublics. As to the countries discussed, we shall attempt to give the mainfeatures of such special petroleum legislation as has been adopted prior to theearly part of this year; where no special petroleum laws exist, we must look tothe mining codes for light on the petroleum policy.
As the laws and regulations for the extraction of the metals are oftendifficult of application to, and are lacking in many essentials for, thepetroleum industry, it is best for persons or companies desiring to enter, on alarge scale, into the petroleum exploration and development of countries nothaving special petroleum legislation, to obtain a concession contract from theexecutive of the country under consideration, and to have the concessionapproved by the congress. If this concession, which would then be a speciallaw, contains nothing contrary to the constitution of that country and does notinfringe on vested rights of third parties, it should be reasonably safe. If insuch country there is some doubt as to whether the petroleum subsoil is ownedby the nation or the private surface owner, only public lands should be coveredwith the concession.
Guatemala is the only republic in the group that discriminates directlyagainst foreigners. Bolivia, Ecuador, Mexico and Venezuela require waivers ofdiplomatic protection. Colombia requires foreigners to agree to be bound by itsalien law.
Colombia has an almost ideal situation with respect to the world's markets,being only a short distance from the Panama Canal and the West Indies. Thesailing distance from its Caribbean ports to New York is less than that fromTampico.
Geographically, Colombia consists of three systems of broad mountain rangesseparated by two long narrow valleys. The Cauca River valley separates theWestern or Coastal range from the Central range. On the west side of theCoastal range are the Atrato and San Juan Rivers. The Central and Easternranges are separated by the Magdalena River valley. In the department ofSantander the Eastern range divides, one branch continuing northward as theCordillera of Perija, the other turning eastward across Venezuela as theCordillera of Merida. Between these ranges is the great basin occupied by LakeMaracaibo.
These valleys consist mainly of long narrow reentrants or tongues ofTertiary sediments between the older rocks of the mountain ranges. The lateMiocene and younger sediments seem to have been deposited in separated basins,but the Cretaceous and possibly some earlier Tertiary strata were laid downmore or less continuously over a great part of Colombia and Venezuela. Thesestrata were subsequently folded into the present ranges. The deposition of theCretaceous and of some of the Tertiary was in a great sea, the main land massbeing in Brazil, with land probably along some of the cores of the presentmountain systems. The sediments, except the Lower Cretaceous, vary markedly incharacter and thickness. An illustration is seen in the massive series ofnon-marine conglomerates and sandstones of the upper Magdalena River valley,near Honda, which are almost wholly wanting in the coastal sections wheremarine sediments prevail.
The oldest rocks bearing on the search for oil are the black carbonaceousand bituminous shales, limestones, and cherts of the upper part of the LowerCretaceous. These probably are the main source of oil in both Colombia andVenezuela. They include thick bodies of true "oil shale." Above thecarbonaceous and bituminous beds, lies a series of many thousand feet ofclastic sediments. The most noticeable and easily recognizable formation amongthese clastic sediments is the" coalbearing series," which may beeither upper Cretaceous or Eocene.
In the early nineties, the Negritos field, in the Department of Piura, 'allle into prominence, and by 1905 had attained an annual production of 335,160 bbl. In 1900 and 1901, the Lobitos field became the scene of marked aetivity. In 1905, its total production amounted to 75,000 bhl.; it has continued to increase, as has Negritos. From 1897 to 1902, there was prospecting in the region of La Brieta (or Fernandez), on the Mancora River, about 25 to 30 km. from the coast. Small production of a heavy oil was obtained from three different sands. There are thus four distinct fields in the north end of the Peruvian ('oastal plain. The remaining productive locality of Peru is the Pirin or Pusi field, at the northwest end of Lake Titicaca, Department of PUI10, in southern Peru.
The Colombian highlands consist of three parallel mountain ranges (Fig. 1)called respectively the eastern, central, and western cordillera of the Andes.A segment of the range that forms the backbone of the Isthmus of Panama alsoextends into Colombia, along the Pacific coast, as far southward as the mouthof the San Juan River.
These four mountain ranges furnish the key to the varying climaticconditions and vegetation of the country. The river valleys are hot and coveredwith dense tropical growth. This is also generally true of the coastal plain,although in the northern portion there are some fairly open stretches wherecattle are raised and even small districts where semi-arid conditions prevail.The population of this heavily wooded wet lowland depends almost entirely onriver transportation for all intercourse.
The elevated mountainous plateaus of the three ranges are more open and moregenerally cultivated; all traffic is by means of horses, mules, and the burro.The canoe and river-steamer transportation systems of the valleys are connectedwith the highland system of trails and roads by short cross trails and the fewshort railroads of the country. As these cross trails must pass through theintermediate foot-hill region, where the heavy rainfall reaches its maximum,they are exceedingly bad and the life of pack animals is short. The oildevelopment of the Magdalena River valley is in this intermediate region,between the river and the sierras, north of Bogota.
The predominant sedimentary formations in Colombia are those of Tertiary age.They form the floor of the Magdalena River valley and the coastal plain thatborders the Caribbean Sea: this is also true of the southern part of the narrowcoastal belt of the Pacific coast.
In estimating the unmined petroleum reserves of Central America, it is notfeasible to employ the methods that have been worked out in the oil fields ofthe United States. No producing wells have been brought in and no drillingsections have been made public. It is accordingly necessary to fall back on acrude "barrels per square mile" estimate. The method chosen is acomparison of the structure of the foreign field of unknown reserves with thatof some supposedly analogous North American field of which the reserves havebeen estimated. This method makes no pretense at scientific accuracy, butfurnishes a working basis for an estimate.
The areal geology of Central America is illustrated in the map prepared bySapper and more recently in the geologic map of North America accompanying U.S. Geological Survey Professional Paper No. 71, "Index to the stratigraphyof North America." Disregarding for the present the narrow Quaternarycoastal plains and alluvial deposits of the river valleys, three chief zonesmay be distinguished. These are: A zone of late eruptive and effusive rocks; azone of highly folded preCambrian(?) or early Paleozoic crystalline schists andslates, considerably intruded by pre-Tertiary plutonic rocks; and a zone ofmore or less folded sediments, chiefly of Cretaceous or Tertiary age.
The zone of late eruptive and effusive rocks of Central America begins insoutheastern Chiapas, Mexico, and extends, with increasing breadth, acrosssouthern Guatemala, across practically the whole of El Salvador, and acrosssouthern Honduras to the valley of Rio Goascoran, where the igneous zoneattains a width of about 100 mi. (160 km.) East of the Goascoran Valley lateeruptives and effusives play a subordinate part, being confined largely to theDepartments of Valle and Choluteca. Dikes and sills of igneous rocks intrudethe sedimentary formations of central and northern Honduras.
The submission of carefully prepared estimates of the oil reserves of theUnited States calls for no apology or explanation. In this country, petroleumis a rapidly wasting asset and an occasional appraisal of the amount remainingin the ground is a simple business procedure to safeguard the general welfareand the prosperity of the republic. The rumored danger of failure, in the nearfuture, of the foreign supply on which we depend in constantly increasingamounts makes the immediate review of our available reserves the moreimperative.
The Director of the U. S. Geological Survey, in March, 1921, requested theAmerican Association of Petroleum Geologists to cooperate in the preparation ofnew estimates of the oil remaining in the ground. With the members of thiscooperative committee, state geologists, regional geologists, consultingspecialists, and geologists and engineers attached to many companies workedboth independently and through subcommittees. The reports for districts,counties, fields, etc., after review by local or state committees, werediscussed by the joint cooperative committee in conferences that, in someinstances, were attended by the original compilers of estimates for the statesor smaller areas. Finally the data were reviewed and the figures revised by thejoint cooperative committee, so that the totals given in Table 1 represent theopinion of the committee, which was composed of F. W. DeWolf, W. E. Wrather,Roswell H. Johnson, Wallace A. Pratt, Alexander W. McCoy, Carl H. Beal, C. T.Lupton, G. C. Matson, K. C. Heald, W. T. Thom Jr., A. E. Fath, Kirtley F.Mather, R. C. Moore, and David White, chairman.
Oil geologists and engineers understand well the speculative nature and thechances of error that must attend estimates of the petroleum in the ground whenthey cover not merely prospective territory, but possible territory. Neitherthe character nor the magnitude of the factors of uncertainty is to bedisguised.
In 1920, 531 million barrels of crude petroleum were consumed in the UnitedStates. As imposing as this figure is, the fact that the domestic consumptionof crude petroleum has increased at an average rate of 10 per cent. a year forthe past decade is more striking. Will this rate of increase in demandcontinue? If so, the year 1930 will call for 1260 million barrels of petroleum- a staggering volume. On the other hand, may we expect the demand forpetroleum to grow as rapidly as it did when the automotive industry was havingits most phenomenal expansion? If not, to what extent will the growth of oilrequirements decrease? When and to what degree will the petroleum industrybecome affected by the economic law of diminishing returns? Obviously, thismatter requires careful analysis, especially as both national and industrialplanning must be predicated upon present estimates of the requirements of thefuture. The purpose of this paper, accordingly, is to project, as closely aspresent limitations of knowledge permit, the course of the demand for petroleumin the United States over the next ten years.
At first, the problem of estimating the future of a demand as complex asthat for petroleum might appear insoluble. Fortunately, however, there areseveral scientific methods of approaching the problem, centering around a studyof rates of industrial growth, which lend considerable hope that therequirements of the immediate future in this field may be approximated withsufficient closeness to have practical value as a basis of action.
Growth of Petroleum Demand
The demand for crude petroleum is the resultant of the demands for theproducts made jointly from this substance - gasoline, kerosene, gas and fueloil, and lubricating oils.
Though production began in Canada only a short time after the discovery ofoil in the United States, it has never attained large proportions, and if wewere to judge entirely by the past the reserves of Canada would be put at avery low figure. There are only two areas from which oil is marketed at thepresent time; one, the old district around Petrolia in southern Ontario, andthe other is the small Sheep Creek field near Calgary in Alberta. The formerdistrict has produced between 200,000 and 800,000 bb1. annually for the past 40years, recent figures being near the minimum amount. Sheep Creek has producedabout 12,000 bb1. annually for the past five years. The known reserves inproved territory in each of these fields are exceedingly small, when consideredin terms of world reserves.
The chief hope of Canada for reserves of considerable magnitude lies in thewestern provinces. Sedimentary rocks similar to those in the productive fieldsof the United States occupy thousands of square miles in the western provinces,so that it seems likely that somewhere within this great area the peculiarconditions necessary for the presence of oil pools will be found. Prospectingis being carried on energetically by several large companies, as well as bymany independents. The Dominion Government, which controls most of the publiclands, is pursuing a fairly liberal policy toward the prospector, which shouldstimulate wildcatting, although the province of British Columbia, whichcontrols public lands within that province, is at present unwilling to giveadequate encouragement to make wildcatting attractive.
As there is really no assurance that any productive pools will be found inwestern Canada, the estimates of reserves are subject to a wide possibility oferror. In making estimates, the various areas within which geologic conditionsare more or less uniform are discussed separately; the estimates given for eacharea are not given with the idea that there is a reasonable probability oftheir eventually proving to be correct.
The various phases of the Mexican oil industry have received so muchpublicity that there is little to add to the discussion of present and futureproduction, extent and importance of prospective fields, and status ofpetroleum legislation, to mention but a few of the angles of the Mexican oilproblem. However, out of this wealth of information, which is generally ofcontradictory nature, the average petroleum man is at a loss to know somethingdefinite regarding the various questions involved; so, keeping the foregoing inmind, it has been the writer's aim to record in a concise form the mostreliable and up-to-date information regarding the salient features of theMexican oil situation.
Present Status of Mexican Oil Industry
Production During 1921
The Mexican oil fields, during 1921, produced in round numbers 203,000,000bbl. of which 176,000,000 bbl., or 86 per cent., were exported, the bulk ofthese exports, or about 73.3 per cent., going to the United States. The Mexicanexports were divided by grades as follows: Light crude, 47.0 per cent.; heavycrude, 22.0 per cent.; tops, 3.5 per cent.; fuel oil from light crude, 24.0 percent. The balance, or 3? per cent., includes the bunker fuel shipments and thecoastwise trade in Mexico, which is not classified as to grades. The figuresshow that, in importance, the light-oil fields form about 75 per cent. of theMexican petroleum industry.
The production of the Panuco field has followed the general history of theAmerican fields, and its gradual decline, which is at present foreshadowed, maybe estimated as well as its ultimate economic life. On the other hand, thebehavior of the light-oil fields to the south is unlike any in the world so fardiscovered, and as a result we have concentrated overproductions followed bysudden droughts, both sometimes equally unexpected. The coming in of two orthree gushers within adequate pipe-line facilities will flood the market with100,000 bbl. or more a day, while the flooding by water of a particular poolwill, in a few weeks, remove from the market one-half the total production ofthe Mexican fields.
One of a recent batch of samples from the Serra da Baliza, in the state ofParana, Brazil, contained asphalt and a dark heavy oil; and workmen on therailway from Porto Uniao to Uruguay discovered asphalt coming from eruptivesthat outcrop along the Rio de Peixe. The occurrence of asphalt in the triassiceruptives of southern Brazil, however, has been known a long time, according toDr. Gonzaga de Campos.
It is generally believed that the Botucatu sandstone is always a hard vitrifiedrock, from the metamorphic action of the overflowing eruptive contacts. In thisregion, however, the contact metamorphism is almost nil; the sandstone isslightly hardened in a narrow zone about 20 to 30 cm. wide. In many places, thesandstone is so friable as to be easily reduced to sand, which is used inmortar for building in Guarapuava and Palmas. South and west from Porto Uniao,this bench of sandstone is about 50 m. thick, and is capped by a heavy bed ofbasic eruptives, many of which are amygdaloids.
Nature of Rocks
Dr. Geo. P. Merrill, after studying the triassic eruptives collected by theCoal Commission, reached the conclusion that "All these rocks are oftypical basalt-diabases, not in any essential different other than instructure. An interesting mineralogical phase is its paucity in olivine, whichin many cases is completely lacking."
Professor Russak, who carefully studied these rocks and their accessoryminerals, decided that in the dikes they are granular (diabase) and that in thelava sheets, porphyritic (augite-porphyrite or melaphyre), and that the latterpass evidently to normal diabases and are always typical of effusive rocks. Theexamination of many slides from dikes and sheets leads us to adopt the opinionof Professor Russak; the rocks of the dikes are of ophitic structure, whilethat of the sheets show a great variety of structure and may vary from almostgranular to basaltic. The great paucity in olivine had been noted by Russak,who classes as melaphyres, the porphyritic triassic rocks in Brazil whichcontain olivine.