Part II – 1958-1965

DanPedrottiGen2My first stop on my 50 year career, during the last week of February 1958, was The Texas Company Division Offices in Houston for orientation and processing. I also visited the Houston District Office where the geologists I met laughed when I said I was going to Corpus Christi. Several of them had been promised transfers to Corpus that had never materialized, however the following Monday we were on our way to Corpus Christi as promised.

Corpus Christi was definitely an oil town in 1958. It was the hub for oil & gas exploration in South Texas, and every major oil company had complete exploration offices here including geology, geophysics, land, scouting, well spotters and in some cases engineering. There were also many independent companies and a number of independent geologists busily trying to compete with the Majors.

Regional maps, scout tickets and log files were our main tools for exploration with some analog seismic that was of a rather primitive vintage. Every major company maintained a complete set of well files, and a set of scout tickets for each county in Railroad Commission Districts 1, 2 & 4 and some also carried District 3. These tickets were updated each week after “Scout check”. Log libraries, available to independents, had the old tickets on microfilm, a fair collection of logs, county maps and a subscription to Rinehart’s weekly drilling reports. The local paper carried a fairly complete daily report of new locations, completions and significant oil related activity, however it was important for independents to know someone from the majors where they could swab tight logs and get the latest scout ticket data.

By the late 50’s and through the 60,s, with the level of technical knowledge and procedures, few on shore oil fields large enough to attract the majors were to be found, except on the King Ranch. Natural gas was barely economical, and there were three factors that made exploration viable and exciting despite low prices and few elephant size prospects that were successful. These were proration, a maximum income tax bracket of 90 percent coupled with the full write off of intangible drilling costs and the 27.5 percentage depletion allowance.

Proration was important because each month the Texas Railroad Commission would put out the schedule of how many days you could produce an oil well at full allowable, that was set based on depth of production. At this time it was usually 10 to 12 days, which greatly limited old oil wells. As an incentive to encourage new exploration, a rule was adopted that allowed newly discovered oil fields to produce full allowable every day for the first 18 months or until the fifth well was completed in the reservoir. Even at $3.00 per barrel the low cost of drilling and completing made new oil discoveries payout quickly and quite profitable. Finding wildcat and step out prospects was thus very exciting and rewarding for both majors and independents.

The 90 percent tax bracket coupled with the write off of intangible drilling costs made huge sums of capital available from wealthy easterners, Hollywood actors, pension funds and even shoe clerks eager to become oil tycoons and join their rich Texas millionaire friends. Someone in the uppermost tax bracket could literally participate in oil and gas exploration activities for ten cents on the dollar, otherwise he would be paying that ninety cents to the government in income taxes. Most of these funds came through legitimate channels, but there is no telling how large the promotion was on the individual investor after overrides to the generator, carries by the prospect developers and operators, commissions to brokers and kick backs to promoters. At any rate drilling activity continued at a brusque rate.

The depletion allowance of 27.5 percent provided for in the tax code, commonly referred to as a “loop hole” and despised by liberal congressmen from the eastern nonproducing states allowed the producer to recapture capital from a depleting asset in order to continue exploration activities to replace reserves that he had already produced. This was a very important economical incentive in these times of low prices, proration and shortage of pipe lines for gas production. It was also fair and similar to deprecation schedules that allowed manufacturers to provide capital for outdated and worn out equipment. So this is the economic climate and challenges in our industry as I began my life long career as an exploration geologist, trying to find oil and gas in South Texas.

Our offices (The Texas Company) were on the 15th floor of the Wilson Tower and except for the District Geologist who had an office with a door, consisted of open cubicles with each geologist assigned a drafting table and a stool. Fortunately shortly after I arrived, The Texas Company merged with Seaboard, and we moved to the Sun-Seaboard building where two geologists shared a real office with desks, chairs and drafting table. Most of the Seaboard people declined to work for The Texas Company, so we soon had new recruits from college coming to work with us.

Although South Texas Onshore was bursting with activity, few oil discoveries were being made that were of significance to the Majors except by Humble on the King Ranch. There were still big land plays, and a lot of analog seismic was being shot. Quiet a few wildcats were drilled, but very little success was achieved. Since I started out working the Jackson-Frio strand line trends, our goal was to find another field similar to Prado Field that had recently been discovered in Jim Hog County. Incidentally this was the last major shallow oil field found in South Texas until much later when Big Wells Field was found by Sun Oil Company in Dimmit County of RR District 1. I was soon moved to working the Wilcox trend across Bee, Live Oak and Duval counties where our Company was conducting a regional seismic project.

By 1962 our district exploration office consisted of nine geologists, one geophysicist and a district geologist. Four of these were assigned to exploitation of older producing properties and the development of the few wildcat discoveries that were made. I can recall only two decent discoveries made by our district prior to 1965 – Vicksburg gas in the Encinitas Field of Brooks County and Miocene gas at Holly Beach Field in Calhoun County. Some significant Vicksburg production was found around the flanks of Driscoll Field in Nueces County. The Wilcox trend was still being evaluated by seismic.

Gas transmission lines were very sparse, especially in the western counties of District 4, despite the development around the big inch line that ran from Zapata County to the eastern seaboard. Intrastate gas marketing was tightly controlled by the FPC, and the few transmission companies were able to set very low prices and restrict allowables. These companies also demanded long term fixed price contracts that really became onerous when marketing conditions got better and demand increased. The discovery of natural gas at the Thompsonville Field in northwestern Jim Hogg County, not only sparked interest in the Wilcox trend but promised the development of much needed pipeline development.

I inherited the job of seismic coordinator of the Wilcox project when its leader, Jim Eiffert, was transferred to the Houston District Office. I also became manager of our portion of a regional study of the Wilcox structure and stratigraphy that extended from the Louisiana border to the Rio Grande River, our Border with Mexico.

Working conditions for me at Texaco were very satisfactory, and I got to drill quiet a few wells. In fact I drilled my first well within three months of my arrival in Corpus Christi. Of course it was a dry hole, but I knew I was on the way to succeeding in my life’s ambition. However after five years of a few meager raises, I realized that out of some fifteen or twenty fellow geologists who had worked with me in our offices in Corpus only one had got promoted to District Geologist. There were numerous side transfers to other districts and staff jobs, but only one genuine promotion so I decided to look on the other side of the fence.

During my first interview with an independent company, I became convinced that I was not ready for the independent world when I saw their geologists scrambling for information using a microfilm reader to copy well information that was so readily available to me at Texaco. I wasn’t sure a career change was in the cards for me, but I knew that I needed to become more acquainted with other independent geologists and how they worked, gathered information and put prospects together. My involvement with the Corpus Christi Geological Society thus became very significant. Then on a fateful day in September of 1965 my decision was made for me. I got a call from the Division Geologist inviting me to move to Houston to be a district geologist in a newly formed Texas Offshore District. My response was “Is that THE District Geologist?” His reply was no, you will be working for a District Geologist coming from New Orleans. I replied I would have to think about that.

After talking this situation over with Carolyn and several of my respected friends in the independent world the decision was made to stay in Corpus Christi. I immediately took two weeks vacation and started looking for a job. Well as you might expect, there was not one single opening for a geologist with seven years major company experience (deja vu). I was offered a job by Tenneco, but decided that was like jumping out of the frying pan into the fire, so I turned it down and opened an office in Vaughn Plaza building (now The American Bank Plaza), joined a log library and became an independent geologist. I did manage a small six month retainer with Texas Oil & Gas, working for Bernard Dietz, that provided bean money for my family.

In our next issue I will describe my perceptions of the independent world in the late 60’s.

Dan Pedrotti

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