Letter

Socialist Oilfield Service

By Jason W. Smith, Ph.D.
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A key question in my mind for some time has been will it be possible to build a true socialist oilfield service company in the Western Hemisphere. There are several factors to be considered in this regard. One is the historic role of Schlumberger. Another is the role of other imperialist companies such as Dresser, Halliburton and so forth. Finally, what specific experiences do we have with oilfield service of national petroleum companies in Mexico and Venezuela?
(1) Taking these in their order of presentation let us begin with a quick review of the Schlumberger monopoly. The Schlumberger brothers invented modern electrical well logging in the early 1900's and in the course of developing their technology they spent the nineteen teen s and nineteen twenties traveling from one oilfield hot spot to another in North America, South America, Asia, and of course to the Czarist Empire and then the Soviet Republic and finally the Soviet Union. The truth is that most of these were ground survey's done electrically and only much later was actual down-hole borehole electrical measurement undertaken. About this time in 1929 Stalin notified his managers that failure to meet their quotas would result in a mandatory death sentences; for oilfield managers this meant that casing a dry hole would be followed in a matter of days if not hours by a visit from NKVD shooters. In panic they convinced themselves that putting a buffer between themselves and the firing squad would be the thing to do and in the course of this upper level managment convinced Stalin to bring in the Schlumerger company full force.
Before this was over Schlumberger trained a new generation of Soviet managers in their e-logging techniques and the modern oilfield logging age was created. Along the way this steady flow of Red gold made the Schlumberger family the wealthiest family in France as they still are.
(2) US competitor companies would never spend anywhere near as much on research and development so they fell steadily behind. Giving Schlumberger an unchallenged monopoly that continues to the present day on deep (below 14,000 feet) and ultra-deep (below 20,000 feet) well logging. Along with it of course they developed the most modern next generations of equipment for what is called pipe recovery and well perforation.
(3) In Mexico a special form of corruption exists in the form of the STPRM (Union of Oilfield Workers of the Republic of Mexico). So special it has its own specialized scholars in the USA. Hundreds of billions of dollars have been extorted from the Mexican oilfield in both legal and illegal forms for six decades by this Mafia type of union elite. Several wives of the leaders were my closest friends twenty years ago so that in addition to working with the STPRM in Villahermosa on a professional basis I did so on a highly personal basis as well - not to mention my historical studies undertaken for the US oilfield conglomerate NL Industries in the early and middle 1980's.
(4) The Venezuelan PDVSA is a carbon copy of the same type of oilfield union corruption and will have to be dealt with in the very special way that Hugo Chavez and his group are dealing with it. Since the STPRM and its PEMEX allies have never been dealt with at all in Mexico, Chavez is starting anew and Mexican reformers and revolutionaries are watching closely.
(5) What we do know is that it should be possible to combine our knowledge of both the technical and political histories of oilfield service in the USSR, North America, Cuba, Mexico and Venezuela in such a way as to create a Schlumberger equivalent in an altruistic socialist mode. This is the challenge. Is their a cadre up to the task?

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