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| Rotarians Shawn Powell (top), president of Eastern New Mexico University-Roswell, and Jerry Grizzle, superintendent of New Mexico Military Institute, will address the Roswell Rotary Club this Thursday on the land grant status of NMMI, the Severance Tax Bond Capital Outlay, and the state General Obligation Bond proposals. |
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Kyle Armstrong, president and CEO of Armstrong Energy Corp., addresses the Roswell Rotary Club at its March 24 meeting.
EDITOR’S NOTE: Rotarian Betty Young, chairman and CEO of Read & Stevens Inc. oil production company in Roswell, on March 17 spoke to the Roswell Rotary Club about the history of the oil and gas industry in Roswell and southeastern New Mexico. The speech, entitled: “Permian Basin: The Heart of America’s Future,” is reproduced in the Roterrier in two parts. This is Part 2.
By BETTY YOUNG
The oil and gas industry in Chaves County was impacted by national and international trends throughout its history.
Late 1948-late 1973
Post World War II
Lee Harvard and Tom Beall mentioned the Texas Railroad Commission had restrictions on how much you could produce.
According to Wikipedia, from the 1930s to the 1960s, the Texas Railroad Commission largely set world oil prices, but was displaced by OPEC.
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| Betty Young |
At that time, the United States was the world’s largest producer and consumer of oil; and the world market was dominated by a group of multinational companies known as the “Seven Sisters,” five of whom were headquartered in the United States. Who were the “Seven Sisters?”
• Anglo-Iranian Oil Co. (now BP)
• Gulf Oil (later part of Chevron
• Royal Dutch Shell
• Standard Oil Company of Calif (SoCal, now Chevron)
• Standard Oil Company of New Jersey (Esso, later Exxon, now part of ExxonMobil)
• Standard Oil Company of New York (Socony, later Mobil, also now part of ExxonMobil
• Texaco (later merged into Chevron)
Preceding the 1973 oil crisis, the Seven Sisters controlled around 85% of the world’s petroleum reserves. Then industry dominance shifted to the OPEC cartel and state-owned oil and gas companies such as Saudi Aramco, Russia, China, Iran, Venezuela, Brazil, and Malaysia. These are now called “the new Seven Sisters.”
1969-70
Lee Harvard started Harvard Exploration Co., which is now Harvard Petroleum, LLC. He commented what a terrible time to start the business because of the downturn.
Lee had to convince outside investors to invest in the oil business. Bankers did not have the money to lend. At this time we were importing 60% foreign oil.
The Arab Oil Embargo
1973, the first spike
The 1973 oil crisis began in October 1973 when members of the Arab members of OPEC proclaimed an oil embargo. By the end of March 1974, the price of oil had risen from $3 per bbl to $12 bbl globally. This embargo caused an oil crisis called the “first oil shock.”
1979-80 second spike
Lee and Pat Gratton mentioned the Iranian revolution in 1979 caused the second oil spike.
This revolution refers to the overthrow of the Pahlavi dynasty, which the United States supported. The dynasty was replaced by the Islamic Republic under the Grand Ayatolla Ruhollah Khomeini, who led the revolution, supported by various leftist and Islamist organizations, as well as Iranian student movements.
In the 1980s, Charlie Read and Norm Stevens Inc. got into the drilling business. It was the absolute wrong time. Around 1985 when the price dropped to $29/bbl from $68/bbl, the Penn Square Bank failed and First National Bank of Midland failed. Read & Stevens, got thrown into the FDIC.
Beall was involved in meetings which turned out to be a liquidation with the FDIC. “If FDIC could not liquidate you, they would bankrupt you,” he said.
According to Beall, Charlie got tenacious and didn’t allow the FDIC to bankrupt him. He said Charlie withstood that test.
1990 third spike
Iraq occupied Kuwait for seven months. This led to direct military intervention by U.S.-led forces in the Gulf War and Iraq setting 600 Kuwaiti wells on fire. Iraq accused Kuwait of stealing Iraqi petroleum through slant drilling.
2007-08 Financial Crisis
Known as the global financial crisis, it is considered to be the worst financial crisis since the Great Depression of the 1930s. It began with the crisis in the U.S. subprime mortgage market and developed into a full-blown international banking crisis.
Massive bailouts of banks were performed and policies were employed to prevent the possible collapse of the world’s financial system. The Dodd-Frank regulatory reform bill was enacted in the United States to lessen the chance of recurrence.
Libyan dictator Muammar al-Gaddafi was killed by his own people in October 2011 after a protracted uprising. Libya fell into chaos and factions divided the country. Oil prices became unstable and began to rise again. In 2015, oil started to crash again; there had been no economic growth for 7 to 8 years!
2015
Saudi Arabia increased production, while the United States quit drilling new wells. The bottom line is peaks are due to war in Arab countries.
EDITOR’S NOTE: Rotarian Betty Young, chairman and CEO of Read & Stevens Inc. oil production company in Roswell, on March 17 spoke to the Roswell Rotary Club about the history of the oil and gas industry in Roswell and southeastern New Mexico. The speech, entitled: “Permian Basin: The Heart of America’s Future,” is reproduced in the Roterrier in two parts. This is Part 1.
By BETTY YOUNG
Here are the facts on New Mexico. We are the second-largest producer of oil and the seventh-largest gas producer in the United States.
In 2021, the oil and gas industry paid New Mexico $5.3 billion in state and local taxes. Oil and gas provided $2.9 billion to the state General Fund, accounting for 35 percent of the fund.
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Betty Young holds chart showing oil price history. |
Oil and gas provide 134,000 jobs in New Mexico and pay one-third of the cost for schools, roads, public safety, and health care in the state.
Because of the horizontal boom which has taken place, oil and gas were able to give a huge surplus for New Mexico. Isn’t that amazing? And last but not least, the United States is the largest crude oil producer, surpassing Russia and Saudi Arabia.
Have you ever wondered how we got there?
What is the price of oil today? $101.73 per barrel for WTI (West Texas Intermediate crude oil). What was the price of oil in the 1950s and ’60s? Take a guess — .
• $2.83/bbl in October 1953
• $3.07/bbl in July 1957
• $3.56/bbl in July 1973
And today’s price is hovering around $101.73/bbl. What made the big difference?
I have always been fascinated with this price sheet, which shows crude oil prices for 70 years. After looking at it, I always wondered what contributed to the fluctuations in the price of oil. In 1950 it was $2.82/bbl and then today it is around $101.73/bbl.
Where am I going to get that info? I did Google on the Internet. That info was OK but not as exciting as interviewing seven oilmen whom I greatly admire. I have had the privilege to talk with these gentlemen.
They are Charlie Read, Lee Harvard, Pat Gratton from Fort Worth, Eddie David, Bob Armstrong, Fred Yates, and Tom Beall. I pulled out my history sheet with the oil prices for the past 70 years that I have been intrigued with. I don’t know who had more fun doing this interview. The person I interviewed or me! I want to share those stories with you.
I went to the experts who have been in the oil business for quite some time. Oh my, what an interview I had. I thought 30 minutes with each individual would do it. Oh no, most of them were 2- 3 hours long. I was fascinated with their talk and their knowledge for the past 70 years.
In the 1950s every major oil company, according to Lee Harvard and Eddie David, had an office here in Roswell in the Petroleum Building. Each office was staffed with a geologist, a landman, and draftsmen.
Back in the ’50s, we did not have computers or cell phones. Everything was done with paper and pencil. The major oil companies wanted a piece of the action in the Permian.
Lee Harvard was with Sinclair, which is now Exxon; Eddie David was with Texaco and my dad, Charlie Read, was with Gulf. As Eddie David said, all the majors were here in Roswell. Texaco, Sinclair, ESGS, Magnolia, which is now Mobil, ARCO, Pan American, and Standard Oil.
Charlie Read
Charlie Read graduated from the University of Oklahoma in 1943 with a degree in petroleum engineering. After graduation, he was on the boat to Germany to fight in World War II. However, the treaty was signed while he was on the ocean and he ended up doing cleanup work for two years in Germany for the Army.
When he returned to the US., he went to Tulsa, Okla., and got a job with Gulf Oil as a petroleum engineer. He married my mother on June 21, 1947, and they were living with my mom’s parents for 6 months before they got shipped out to Hobbs, N.M. They lived there for 6 months and then moved back to Tulsa for 6 months.
After Tulsa, they were shipped to Lovington, N.M. My grandmother came out to visit my mom and my dad and was horrified to see that the streets were not paved and there were no curbs. She came from beautiful Tulsa, which was built on oil money.
Gulf was getting ready to move my parents back to Tulsa and my dad said, “No, I am not moving again.” He had set his eyes on Roswell, N.M., and wanted to start his own business acquiring leases in Eddy, Lea, and Chaves counties. His passion has always been in southeastern New Mexico.
Lee Harvard
Lee Harvard had a very interesting story. He was born in Georgia in1932, right after the Depression. His father had an uncle in Corpus Christi, Texas, who offered his dad a job to make more money to support his family. At the age of 4, his family moved to Corpus.
There were people in the oil business and Lee was impressed with their businesses. He made a goal to go to Texas A&M to major in geology, engineering, and business. He put himself through college by working summers in the oilfield. He spent three years at Texas A&M and then the love of his life, Joanne, convinced him to move to the University of Texas for his senior year.
In 1955 Lee graduated from UT. He satisfied his goal of a college degree. His next goal was to work for a major for 5 years, 10 years with independents, and then start his own business. He went to work for Sinclair, which is now Exxon, in 1956. Guess where he was stationed? Roswell, New Mexico.
I asked him what Roswell was like back then. He commented socializing was a big thing. People had parties in their homes and entertained one another. Ranchers, farmers, attorneys, accountants, merchants, and oil people got together to socialize. Remember, there were no restaurants like Peppers, Cattle Baron, Farley’s, Pasta Café. The Country Club was there and that was it.
He mentioned how in 1956 every major oil company came to Roswell to set up shop. Humble, Shell, Gulf, Continental Oil, Texaco, Phillips Petroleum, Pan American, Ohio Oil, Marathon, Sinclair, Mobil Oil. City Fathers got together to build the Petroleum Building. The J.P. White Building and the Hinkle Building already were there.
Eddie David
Eddie David graduated from Texas Tech in 1956 with a degree in Petroleum Geology. He worked for Texaco in Midland, starting in 1956. He claims the best 4 years at Texaco were because of the discovery of the Central Basin Platform. He was responsible for the drilling of 50 wells and helped Texaco jump to No. 3 in production from No. 5 or No. 6.
Then Texaco opened an office in Roswell. Colin McMillan and Eddie David came to Roswell in 1962 due to the downturn in the Sprayberry in Midland. They had one-half the floor in the Petroleum Building. There was a geologist, geophysicist, landman, and two draftsmen. Eddie commented, ‘We did not work together as a team. We all worked independently and did not share our work.’
Eddie said all the majors were here in Roswell in the ’50s and ’60s: Texaco, Sinclair, ESGS, Magnolia, which is now Mobil, ARCO, Gulf, Pan Am, and Standard Oil.
I asked him, “Was it booming in Roswell?” He said, “Yes, because the missile sites around Roswell were being built in 1962.”
The majors moved out in 1967 and 1968. The majors were cutting expenses and shutting down offices in Roswell. The employees of those companies did not want to move to Dallas, Midland, or Houston. What did they do? They became independents! Harvard Petroleum, Read & Stevens Inc., David Petroleum, and many others. The best thing that happened to Eddie after the majors pulled out was the interaction of the independents, bringing deals to one another to help their business grow.
Fred Yates
Fred Yates graduated from the University of Arizona in 1970 with a Master’s in Business Administration. He joined his dad and worked with him in the oil and gas business until 1981. That is when he started Yates Energy. He told me many deals were made in the Hotel Artesia, the 8-story building, located on First and Main. And they were made in the coffee shop, the bar, and the lobby.
Tom Beall
Next, I interviewed my brother-in-law in Midland, Texas, Tom Beall. He graduated in 1974 with a degree in Industrial Engineering. He went to work for Ethyl Corp. in Baton Rouge, La.
In 1976, he worked for Samsonite in Denver, Colo. In 1979, he moved to Tulsa, Okla., to work for Fuel Products, a pipeline-gathering system. In 1983, he worked with my dad.
Tom said Charlie Read was his father-in-law, but he was more than that. “We had several businesses together, so he’s my partner, and because of our age differences and his experience, he was my teacher and mentor in the subject of entrepreneurialism. On top of that, he considered himself my fly-fishing instructor.”
Charlie Read was never shy about offering a bit of advice to Tom. Tom remembers one time when he was fishing, “Charlie was watching me.” Charlie came over to Tom and said, “Now, I know you probably have more fish in your creel than I do in mine, but let me tell you how you are holding your rod wrong.”
Tom watched my dad make the best of many bad times in the oil industry. Tom has been through $11/ bbl oil, with Charlie, after $40/bbl. Tom also has been through $30 oil after $100, too, and Charlie’s optimism never broke. Tom said he was a very tenacious businessman and certainly rolled with the punches.
In 1995, he purchased V-F Petroleum in Midland with Jerry Garh.
Bob Armstrong
I interviewed Bob Armstrong, who graduated from Washington and Lee in 1970 with a law degree. He went to work for Jennings, Christie, and Copple, doing oil and gas title work.
He was fascinated with the work involved and wanted to start his own oil company. He started Armstrong Energy in 1977. He mentioned the majors here in Roswell during the ’50s and ’60s. By 1975 there were only one or two major oil companies left.
Bob remembered in the early ’70s when Richard Nixon was president; there was talk we would be out of oil in five years. The speed limit was lowered to 55 mph to preserve oil. Besides lowering the speed limits, smaller and more energy-efficient cars and appliances were being produced, year-round Daylight Saving Time was started, reduced usage of heating and air conditioning, better insulation, increased mass transit, national emergency stockpiles, and greater emphasis on coal, natural gas, nuclear and other alternative energy sources, according to Wikipedia.
I asked Bob what he thought about the robust drilling that is going on. He commented that had he known 30 years ago, he would be retired today! As we talked more about his business, he said his passion for oil and gas development grew over the years. And I can tell you this man will not retire because it is too exciting.
I remember as a child, my dad would be gone for 4-5 days at a well site.
Lee said the same thing. They slept in their cars during those times. Or in the doghouse or tool pusher’s house. Roads were terrible, not like today’s roads. They took their own food to eat like cheese, Vienna sausages, and crackers for meals. There were no fast-food restaurants in Artesia, Hobbs, Lovington, and Tatum.
Every morning they had to drive to town to go to the local café to call in their reports. They had to get in a long line with everyone else to use the payphone. There were no cell phones, computers, etc. There was one rig phone which everyone could listen in to, and you did not dare give your reports on that phone.
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| Patton |
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 Jim Winchester, executive director of the Independent Petroleum Association of New Mexico, discusses the future of oil and gas in the state during Thursday’s Rotary club meeting. |
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| Winchester |
