Chapter Preview: From Pearls to Oil

The following is excerpted from From Pearls to Oil: How the Oil Industry Came to the United Arab Emirates, a testament of the challenges contended by extraordinary men who initiated the search for oil in the UAE, in the years between the two World Wars. The book features never-before-published copies of letters, notes and reports from the archives of the Abu Dhabi Petroleum Company (ADPC) and other literature recorded by British Government officials. With rare photographs, maps and diagrams alongside the in-depth narrative, this book is a great resource for scholars, residents and visitors interested in the history of this land.

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Chapter Two

HOW THE MIDDLE EAST OIL INDUSTRY STARTED

Oil before the motor car. What use was it?

When I was young, living in England, my generation was familiar with the products of crude oil imported from many parts of the world, but as children we only gradually learnt where these liquids came from and how they reached us. We had stoves burning paraffin, which kept us warm in the school room but smelt terrible. We had asphalt on the roads, which melted in the summer sun and was impossible to get out of our clothes, or off our hands. And occasionally the doctor gave us a clear oily fluid to ease the bowels: ‘liquid paraffin’. We had petrol for cars; there were not so many on the roads in those days. I remember that petrol was briefly in short supply and ration cards were issued in 1956 after the ill-fated British–French Suez adventure. We did know from the Bible about the furnaces of Babylon and the pillar of cloud in Sinai, but we never connected these diverse matters.

Since time immemorial, people have observed the seepage of crude oil and natural gas from deep down in the earth, working its way up to the surface in many countries of the world, including those in the Middle East. In Iraq, Iran and Sinai, to name some of the most well-known, oil and gas have been escaping from rocks deep in the earth for thousands of years. These seepages to the surface were frequently ignited by lightning and these are the fires that we may read about in the Bible. Wherever oil or gas is visible on the ground it is possible that a large accumulation may lie in the rocks below. Usually, the quantity of oil reaching the surface of the earth by seepage was quite small, but not without significance to the petroleum geologist and of interest to the entrepreneur.

In some places, throughout history, people found that there was enough oil flowing up onto the surface for them to collect and establish relatively small local industries. These people constructed stills to heat the oil and to separate the lighter from the heavier parts. The lighter oils that came out of the stills were used in lamps for lighting or were burnt in stoves for cooking, or even used for medicinal purposes; while the heavier parts were used as tar or pitch and had wide applications such as for the caulking of boats and water tanks, or applying to roofs.

Industry in Europe and America was advancing fast over a 100 years ago at the end of the nineteenth century and people were seeking new sources of raw materials and fuel. One far-sighted entrepreneur was the wealthy Armenian businessman, Calouste Gulbenkian who, in 1890, drew the attention of the Sultan in Constantinople to the possibility of augmenting his income by awarding concessions for the development of petroleum seepages near Kirkuk.

Gulbenkian knew that the oilfields further north beside the Caspian Sea at Baku in Azerbaijan had been exploited for decades. It is unlikely that, in his conversations in Constantinople in 1890, he was thinking about fuel for billions of engines the world over. But he probably did see that the oil, which had been extracted for millennia for local use, could have a significant and growing market beyond the boundaries of Mesopotamia. Today, Calouste Gulbenkian is honoured with a statue in the centre of Lisbon on a grassy lawn in front of the museum named after him, which contains a fabulous collection of pieces of art that he assembled from diverse cultures over many years. We will return to Gulbenkian later in this story.

William Knox D’Arcy, the financier and armchair speculator

At the same time as Gulbenkian was whispering in the ear of the Sultan, another entrepreneur, the lawyer William K. D’Arcy, was about to risk his fortune and reputation in the same part of the world and where many had already gone before and failed. D’Arcy was born and educated in England before he emigrated to Australia with his father. After he accumulated a large fortune as a shareholder in a gold-mining company, he returned to London to live in comfort. He became interested in oil, knowing that Britain had no domestic oilfields of any significance to provide the power for the internal combustion engine that was about to dominate transport. He endeavoured over several years to obtain oil rights in Mesopotamia from the Sublime Porte in Constantinople, and kept an agent there for a decade, without any success.

When D’Arcy heard from associates in London of the oil seepages in Persia, he sent an emissary, G. W. Marriott, to Persia to negotiate with the Persians for a concession. D’Arcy had made one condition; Marriott was under no circumstances to pay any money. However, the Russians were active in Tehran and the only way to beat them was for Marriott to disobey orders and pay £10,000 in cash. He paid and secured the concession for D’Arcy from the Shah of Persia in 1901. In the following years, D’Arcy risked much of his capital, about £250,000, in financing the search for oil in Persia. He borrowed to raise more capital and, in the process, lost financial control of the venture to the British company, Burmah Oil.

But D’Arcy, still responsible for the operation in Persia, sent geologists, engineers and drillers there and the search for large-scale commercial quantities of crude oil commenced, but success did not come easily. During a number of years, many wells were drilled and one disappointment followed another. D’Arcy himself remained in London and never visited the Middle East. He employed a tough and experienced engineer, George B. Reynolds, to manage a team of Canadians, Poles and Azeris, who hauled the drilling equipment a couple of hundred miles from the coast over rough terrain and through a hostile environment before arriving at the oil seepages.

Dr. R. W. Ferrier, in The History of the British Petroleum Company, writes:

"D’Arcy was prepared to take the risk in floating an uncertain enterprise to explore for oil. It was simply a personal initiative for profit. It is a measure of the later fortuitous importance of D’Arcy’s concession that the most Machiavellian of motives have been presumed to account for his investment. In reality the skills of the geologist and driller discovered oil, not the imagination of the polemicist or the gamble of the speculator."

However, without D’Arcy’s money, and his willingness to risk it, the discovery of oil deep underground in Iran would have been delayed a few years.

George Reynolds: the engineer, the man on the spot and his roughnecks

In those days, drilling was a laborious process before modern transport and machinery were available. Reynolds had, after lengthy and very difficult negotiations with the local people, first to assemble the material to build the drilling rig and all the associated equipment, all of which had to be imported. Work gangs had to be recruited and trained, and then there were all the logistical problems of maintaining supplies of food, water and other consumables. Reynolds, and his international team of roughnecks, faced hostility from tribesmen, disputes with local officials and extreme heat in a parched land reeking of sulphurous gas.

The ground was penetrated by repeatedly dropping a heavy pointed tool in the hole to smash its way down. The tool was fixed to a wire and retrieved to be dropped again and again. The driller usually penetrated down to a few hundred feet using this centuries-old method. The power to lift the tool out of the hole was provided by a steam engine.

The wells that Reynolds drilled in Persia at Masjid-i Sulaiman using this primitive method were the first deep oil wells in the Middle East. At first, many of the wells that he drilled were dry holes (not commercial oil wells). There were many oil seepages around Reynolds, but they did not necessarily indicate a large oil field; however, at last, when he drilled to the unusually great depth of 1,180 feet, he produced the first Middle Eastern ‘gusher’ on 26 May 1908.

Reynolds was successful because he had decided to continue drilling even after he received a telegram from London informing him that no more funds were available to support him and therefore he should stop work.

Even though Reynolds had brought the company the historic commercial breakthrough it wanted, he eventually left D’Arcy’s successor, the Anglo Persian Oil Company (APOC) and, going his own way, he departed from Persia in 1910. In 1911 he was reported to have angered APOC by promoting Shell’s interest in a possible oil concession in Kuwait. Greenway, the Chairman of APOC did not rate Kuwait’s prospects high but, ‘dog in a manger’, he did not want a competitor in the area, least of all Shell which had connections with Germany.

Reynolds went on to Venezuela, where he again made major oil discoveries, but he was to die later in obscurity there in 1925. Dr. Ferrier, the BP historian, wrote of him: ‘He was the rudder and anchor of the enterprise, keeping it on course and off the rocks.’

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From Pearls to Oil is priced at AED 185.