Search For Oil In Papua

Why the Search Has Been Resumed With Prospects of Success

Part Iv.

\ NUMBER of expeditions, hacked hy •t*- powerful companies and subsidised liberally by British Governments, are now seeking an oilfield in Papua and , probably, will succeed. This article, ivritten by a resident of Papua, telling the story of the discovery of petroleum in the Territory and of the subsequent attempts at development, is the conclud ing instalment of a series of four.

T'HE Vogel (Papua) Petroleum Co. Ltd. * was attracted to the Cape Vogel peninsula in the first place by the report of E. R. Stanley, geologist to the Papuan Government. The geological indications were very similar to those on the Vailala River; the rainfall equally heavy and constant; and the danger of malaria as great.

The site selected by F. L. Dolton, the energetic originator of the Company, was a 4ozen or so miles from the coast; and a road had to be made and graded from Giwa, the landing place, over rough and rising country to the top of the anticline near the village of Kukuia.

The erection of a breakwater on the coast, roadmaking, and the heavy task of transporting 18 tons of machinery in addition to building materials, heavy casing, and accessories, occupied nine months of hard work. The drilling plant eventually reached the Kukuia site on December 6, 1926. Six weeks later it was in place, bedded down, and stayed; and drilling commenced on January 18, 1927.

From the beginning the outlook was encouraging. At 147 ft. there was a strong flow of gas from a stratum of sandy shale and shell, the prelude to a show of oil at 150 ft. As had been the case on the Vailala, this was not looked upon as the true oil horizon; and drilling was continued through grey shale with bands of fossiliferous shale and hard lime stone. These strata continued until, after six months of drilling, the bit was down to 390 ft. in grey shale and limestone.

Progress was far from rapid up to this point, due not so much to the dif ficulty of the strata as to continual sick ness among the four white men who formed the staff.

But, during the next half-year, matters improved considerably. By the end of July the well was down* to 565 ft. in calcareous sandy shale, giving a grati fying show of oil which continued down to 618 ft. A big flow of water and gas came in at 568 ft., and persisted until the casing was down to the 600 ft. level.

Then followed 18ft. of sandy shale, fol lowed by various shales alternating with limestone and hot mud to 851 ft. Caving was very troublesome at this point, and the casing was kept as close as possible to the bit to minimise the danger.

By the end of 1927 the drill was down to I,oooft. in sandy shale, after passing through calcareous shale and carbon aceous shale with bands of crystalline

limestone intervening. A foot of coarse light sandstone followed, then shale and shell to 1018 ft., which depth was reached on January 22, 1928.

The Company’s financial year ended on January 31, and the financial situation had to be reviewed. The staff left for Australia on vacation for three months, and during their absence a party of geologists attached to the Anglo-Persian Oil Co., headed by Dr. Papp, visited Kukuia to make a geological and topo graphical survey of the district.

Drilling was resumed on May 5, 1928.

The bore was cleared of silt and cavings to 1005 ft.; but when that point was reached the hole caved again badly, bury ing the tools under 100 ft. of debris, and breaking off the rope at the socket clips.

Rather than lose time in the almost hopeless task of fishing for tools I,oooft. below the surface, and buried beneath some 50 tons of rubbish in a hole notori ously given to caving, Dolton acted upon Dr. Papp’s advice, and abandoned the bore, removing his plant to a site that Dr. Papp had recommended, with the intention of cutting the known oil-horizon already encountered at 568 ft.

Dr. Papp had to leave the district to carry on the work of his Company else where; but his real interest in the Vogel

area was proved by his undertaking to return and advise as soon as the oilhorizon was reached in the new bore.

But it never was reached. The cost and time involved in moving the plant, drilling difficulties in the new well, and the accumulated non-success of other oil-seeking Companies in Papua, determined the shareholders to cut their losses rather than invest further sums in so costly and speculative a venture.

The Vogel Company persevered until

the end of 1929, and was the last con cern to give up the contest. But at that point hope, not of the existence of oil, but the mone y whereby to win it, was at ast abandoned.

TO return to the Anglo-Persian Oil Co. * at Popo. Finance was still, as it had been from the beginning, a constant source of worry; and, in addition, a sus picion grew in the minds of Ministers that no real effort had been made to win oil. Allegations of the most serious

nature were made under the cloak of parliamentary privilege both against Dr.

Wade and against the officers of the Anglo-Persian Co.

But, to those whose close acquaintance with the work done and the methods employed in Papua entitles them to judge, there seems to have been no adequate ground whatever for the suspicions that were so unreservedly expressed. Instead, the uneasiness appears to have been due to Parliament’s failure to appreciate either the extreme difficulties of oil search in such a country as Papua, or the wide scale on which the work, to be successful, must be carried out.

Early in May, 1925, a Parliamentarv narty consisting of five members of the Public Accounts Committee arrived at Port Moresby to enquire into the affairs of the oil-field. They devoted a fortnight to the task, and it would appear that they, at least, found nothing to cavil at; for after their visit it was decided to continue the work.

It has been mentioned that the third Anglo-Persian bore at Popo was taken down to a depth of 2707 ft., and then abandoned, owing to difficulties that the existing plant could not overcome.

There was a pause in drilling activity, though the geological survey continued until it had covered the whole of the coast line and a wide belt of country inland.

A new bore, the fourth, was started in 1927. Constructional work was started in March and completed in August, when drilling was begun. In this bore the trouble that eventually stopped the drillers was that of soft mudstone, similar to that which had hampered the New Guinea Oil Co . making the control of the drilling flush a difficult matter.

This was overcome, though the difficulty of dealing with it slowed down the rate of drilling considerably: and the bore was pushed down to a depth of 895 ft. There casing trouble developed, and it was decided to abandon the bore and start another in what it was hoped was a better position.

The lifth bore was started late in February, 1928, and difficulties presented themselves almost from the first day.

The strata were very much broken, and there was great difficulty in holding the seat of the conductor string. Eventually this string was cementedj but new trouble developed owing to the alternation of hard and soft strata inclined at a very steep angle.

Under such conditions, with the hard steel drill impinging on hard limestone at an acute angle, the greatest difficulty was experienced in keeping the hole vertical. Progress was very slow; but the Company’s men were keyed up to a high pitch of keenness bv the knowledge that unless results could be shown before the end of the year there would be no further opportunity for achieving them. The second period of five years was drawing to a close, and there was every indication that the agreement would not be renewed without good grounds. The Company rushed its best men to Popo, taking its

star driller from an important job in Persia that he might devote his skill to the problem in Papua.

The whole staff was as efficient and as experienced as the most particular critic could wish.

The main difficulty was overcome, and the bore went down more quickly and more steadily than any other in Papua.

Enthusiasm gripped the staff. Every member of it devoted all his energy and thought to the work in hand, and the geologists examined with constantly growing hope the cores extracted from the bore. By August, indications were so good that the drillers expected to strike a gusher at any moment. Geological forecasts were more than fulfilled; and the queer sixth sense of experienced drillers kept men keyed to constant alert ness and expectation.

By the beginning of October the thing seemed a certainty to all the operatives, as well as to the clerical members of the organization who could read a geo logical report with understanding.

Another Anglo-Persian expert was rushed to the field—this time a man with a reputation for uncanny skill in shutting off the flow of a gusher from the bore head. Reports of daily, almost of hourly, progress were telegraphed in to Port Moresby and relayed to Canberra and London.

Right up to the last day of the term of agreement the excitement continued.

But it would have taken more than mere confidence to persuade the Common wealth Government to continue the costly experiment. For 18 years they had been paying out good cash, and in return had reaped nothing but confident reports and the heart-sickness of hope continually deferred.

Ministers were fed up. There were many directions in which the money spent on the oilfield would be welcome. At five o’clock, on October 24,1929, the work ceased.

THE total Commonwealth expenditure * on the search for oil amounted to £553,290, in addition to the sum of £25,000 contributed by the British Government. Of this amount, all but a small proportion was spent in Papua during the years 1912 to 1929; the balance going to subsidize oil-research on the mainland of Australia.

The amount is large; but it represents only a small proportion of the sums that have been expended on other fields. In British North Borneo, for instance, over £6,000,000 was expended on prospecting before a payable well was found; and the geological prospects there were no better than those in Papua. Also, in the opinion of those competent to judge, it is likely that far better results would have been achieved by more rapid expenditure over a shorter term.

It would be far from true to state that interest in Papuan oil, or faith in its existence, is dying. On the contrary, the interest is greater now than at any time since the first discovery in 1911.

The outbreak of war in 1914 diverted attention from Papua; and the big Com panies that had been eager to test and develop its oil resources lost their eager

ness. But when the war ended in 1918, keenness revived for a time.

By 1923 it had subsided again, owing to the fact that existing wells were more than adequate to supply the world’s markets. Many wells were closed down, while others were producing at only part capacity.

To-day (the end of 1936) the position has changed again. The world demand for oil is increasing rapidly; while there is evidence that the existing fields in Borneo as well as in America are becom ing exhausted. These facts, together with the insistent danger of have re minded the British Government that there are practically no oil supplies actually within the Empire; and the important part that the Pacific must play in any war that breaks out makes it more than ever desirable that a source of supply in the Pacific possessions of the Empire should be discovered and exploited.

As a result of this feeling of urgency the Petroleum Ordinance of 1934 was rushed through the Legislative Council of Papua towards the end of that year.

The Bill was not of local origin, but was dictated by the Commonwealth Govern ment at the instance of the Government

of Great Britain; and its object was to offer sufficient inducement to the great oil Companies to devote serious efforts to the discovery of pavable oil wells in Papua.

When the granting of prospecting

licenses was first considered in 1911-2, the conditions under which licenses would be granted were specifically de signed to exclude large companies from the field; the statement being openly made by responsible Ministers that any project requiring large capital in Papua would be undertaken by the Common wealth itself. This was quite in accord with the policy of the Labour Govern ment of that time; but in the case of oil it proved unworkable.

In 1923, when the experiment had proved a costly failure, an attempt was made to interest capital. The area to be covered by a prospecting license was increased from 320 acres to 1,000 square miles; but even this was not enough to attract oil companies, and neither the prospecting areas nor the area of the working leases that might be selected from them were long enough to give scope to big capital or to make the allocation to them of adequate resources worth while.

The 1934 Ordinance was designed to remove these disabilities; but it still failed of the desired effect. Although the areas were largely increased, the Ordinance embraced restrictions that threatened to destroy an operating Com pany’s freedom of action and might very well deprive it of adequate reward for its investment of money and effort. No applications followed the passing of the

Ordinance, and no indication to accept the conditions was shown by the big companies.

In March, 1936, still under instructions from Canberra, the Ordinance was amended so as to make the conditions altogether acceptable.

The principal amendments provided for the granting of exclusive prospecting rights over areas up to 20,000 square miles in extent; for the increase of area of working leases from 8 to 20 square miles, with the right of one person or 1 company to take up five such leases; and for the selection of land comprising such leases in a succession of small blocks of a quarter-mile each, thus per mitting the lessee to follow closely the desired geological structure and to avoid the inclusion of unpromising ground.

At the same time clauses were intro duced that were designed to ensure hona fide effort on the part of permittees.

Prospecting permits were to be granted for one year only, with the riglit of renewal subject to the full approval of the Papuan Government. Permittees were required to expend a large specified sum on development during the currency of the permit, and were required to deposit with the Papuan Treasury a large sum in cash as a guarantee of their fulfilment of the conditions.

The effect of these amendments was immediate. They were passed by the Papua Legislative Council in March. In April they were assented to by the Governor-General of Australia and be came law. Before the end of May the delegate of “a Company to be formed” was in Port Moresby negotiating for prospecting rights. On June 22, a peimit was granted to him for 12 months over an area of 20,000 square miles; and on July 9 the Papua Oil Development Co.

Ltd. was registered in Port Moresby with a nominal capital of £50,000. That the capital is not larger is accounted for by the fact that it is a prospecting company only, and is an off-shoot of the powerful Shell Company, by which, if promising sites are discovered, the expensive boring operations will be undertaken.

Under the requirements of the Ordin ance the Company is committed to the expenditure of not less than £15,000 during the first six months of the permit’s currency, and an equal sum during the remainder of the term. On the other hand, the Commonwealth Government will subsidize boring operations on a pound for pound basis, though all the expenses of prospecting and survey must be borne by the company.

Meanwhile, on June 30, 1936, Islands Exploration Co. Proprietary Limited was registered as a foreign company in Port Moresby; and on September 16 a permit was granted to its representative over three areas aggregating 21,000 square miles.

On September 29 yet another permit over 12,000 square miles was granted to Oriomo Oil Co. Ltd., the same energetic concern that operated in the west of Papua from 1925 to 1928.

Thus the whole of the Territory west of Cape Possession was under permit

within six months of the amendment of the Ordinance.

The Papua Oil Development Co., ob viously guided by the exhaustive report of the Anglo-Persian * Oil Co., had no hesitation about the area for which they applied. It includes a strip of low-lying coast in the Delta Division, then broadens and runs north-west to cover the heart of the great Western Division, touching with its westernmost corner the boundary between Papua and Dutch New Guinea.

Islands Exploration Co. hangs closely on its flanks to north and to south-west, and includes all the remaining country west of the Purari River, with the area that was unsuccessfully prospected by Oriomo Oil Ltd. in earlier years, and also the broken mountainous region of the Star Mountains in the extreme north west.

Oriomo Oil Ltd. have taken the area between the Purari River and Cape Possession—an area that includes the Vailala River and Popo, the two scenes of Commonwealth activity, where sur face indications are extremely rich, but where drilling conditions are known to be very difficult.

Both Islands Exploration Ltd. (which is under the aegis of the Vacuum Oil Co.) and Oriomo Oil Ltd. have been required to give guarantees similar tc those given by Papua Oil Development Co. Ltd.; and the scope of these guaran tees is such that little doubt remains that the question of payable oil in Papua will bte solved one way or the other within a very few T years.

The Papua Oil Development Co., in particular, is already (December, 1936) very vigorously at work. It has already its own steamer on the coast, manned and equipped for communication between Port Moresby and its field headquarters at Daru; it has also two large motor vessels, and another steamer is on its way to Papua. It has launches on the rivers, and 11 geological survey parties busily examining the country. A sea plane has been chartered to help in the work pending the arrival of more suit able air-craft that are on order; and

everything' points to the determination of the Company to do everything that can be done to prove or disprove, the existence of payable oil at the earliest possible date.

In Papua, hope runs high. For it is fully realized that the negative results obtained during the years 1913 to 1929 were not conclusive. On the contrary, every foot drilled in the many bores that were started and abandoned during those years helped to strengthen the opinion that oil in large quantities exists, and that it can be found if those searching for it have sufficient financial stamina to stay the distance.

Furthermore, it seems certain that two such Companies as Shell and Vacuum would need very solid grounds for con fidence before embarking on the lavish expenditure of money and of effort to which they are now committed; and it seems equally certain that such en couragement was found in the full report of the Anglo-Persian Oil Co. It is a very hopeful sign that, on the strength of the knowledge gained by their pre decessors in the field, and despite their lack of success, these two big concerns had no hesitation in their choice of ground, and none with regard to embark ing on the heavy effort and expenditure (Sailed for by the need of rapid progress.

Throughout the long-drawn history of oil search in Papua there has been noth ing whatever to weaken the belief ex pressed by Professor David and many other eminent geologists that profitable oil wells are to be found in Papua. On the contrary, in spite of the failure, to date, of every concern that has made the finding of oil its object, every scrap of evidence accumulated by geological sur veys and by drilling has gone to strengthen it.

Mr. A. J. Healy, who has been a planter at Norfolk Island for over seven years, arrived in Sydney by the Morinda in April to join his wife who had come to Australia by the previous boat. They left Sydney later on a visit to New Zealand.