Special EditionJuly 2007INDEPTHBAKER HUGHESVolume 13, No. 2, 20072EditorRon BittoManaging EditorPramod Kulkarni ContributorsMichael BeyelerSoraya BrombacherNoel AtzmillerIsaac KerridgeBrenda SharpSheila LuebbertHoward BattCraig FlemingSusan BourgainTom HaynesKathy ShirleyArt DirectorEric OlsonDesign Team LeaderShirley LeongArtistsJody CockrellSummer GarnerVictoria QuijanoBeth PreteOscar SajcheBAKER HUGHESApril 15, 1922. Te Mexia Field was discovered in Texas. Hobson, Blackstock and their crew drilled the well with a 133/4 Hughes Simplex bit. Special Centennial Issue July 2007Published byBaker Hughes IncorporatedP.O. Box 4740 Houston, TX 77210-4740www.bakerhughes.com 2007 Baker Hughes Incorporated. No part of thispublication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means (electronic, mechanical, recording or otherwise) without the prior written permission ofBaker Hughes Incorporated.Requests should be addressed to:EditorInDepth magazineBaker Hughes IncorporatedP.O. Box 4740 Houston, TX 77210-4740Contact us by e-mail at indepth@bakerhughes.comVolume 13, No. 2, 2007INDEPTH3AcknowledgmentsHouston Public Library, Joel Draut; R.C. Baker Memorial Library, Stephanie McHaney; Peter Bogniez, Oil & Gas Journal, World Oil,Hart Publications. BibliographyMaterial in this brief history of Baker Hughes came from numerous sources, including:Baker Story, Baker International, 1978.100 Most Inuential People of the Petroleum Century, supplement to Oil & Gas Investor, Hart Publications, 2001.50 Years of Offshore Oil & Gas Development, Hart Publications, 1997.A Century of Houston Energy, Houston Business Journal, 2001.Baker Hughes annual reports, 1987-2006.Baker Oil Tools and Baker International annual reports, 1975-1986.Brantley, J.E.: The History of Oil Well Drilling, Gulf PublishingBook Division, 1971.Carestio, Michael; Cipriana Mecchi, Andrea: R.C. Baker of Coalinga: A California Story, R.C. Baker Memorial Museum,Inc., 2005.Clark, J. Stanley, The Oil Century, University of Oklahoma Press, 1958.Directions, Eastman Christensen newsletter, 1987.Eastman Survey, Eastman Oil Survey Company, 1956.Flowline, Milchem newsletter, 1982.From an Idea to an Industry: 50 Years with Dresser Atlas, Dresser Atlas, 1982.GEMS, Christensen Diamond Products newsletter, 1953-1975.Hughes Rigway magazine, Hughes Tool Company, 1976.Hughes Tool Company annual reports, 1973-1986.Hughes Tool Company catalog, 1965-66.Knowles, Ruth Sheldon: The First Pictorial History of the American Oil and Gas Industry, Ohio University Press, 1983.PetroliteLegacy of a Pioneer, 75th anniversary newsletter,Petrolite, 1991.Solutions, Baker Hughes INTEQ magazine, 1993.Additional sources include numerous brochures, catalogs andpublications produced by companies that have been incorporated into todays Baker Hughes.ACKNOWLEDGMENTSDrillers on the rig oor after a successful run with a Hughes drill bit in the 1920s.41907-1917A Century of Innovation Begins1918-1927Oil Boom during the 1920s1928-1937Oilfield Services Emerge1938-1947Modern Manufacturing, Supporting the War Effort1948-1957Post-War Growth1958-1967International and Offshore Markets1968-1977Broadening the Product Lines, Diversification1978-1987Boom, Bust and Consolidation1988-1997A Decade of Acquisitions1998-2007A New Century and a New Millennium6142842807060203450CONTENTS5In 2007, Baker Hughes is proudly celebrating 100 years inthe oileld service industry. This special issue of InDepth magazine tells the story of the individual pioneers and the companies that shaped todays Baker Hughes. We trace our beginnings to the technological innovation andentrepreneurial spirit of Reuben Carl Baker who patented aninnovative casing shoe in 1907, and Howard Hughes, Sr. whose roller cone bit revolutionized rotary drilling in 1909. Other innovators who contributed to the Baker Hugheslegacy include:William S. Barnickel, who founded the oileldchemical industry and whose company would become Baker Petrolite.Melvin DeGroote, Chief Scientist for Petrolite, whoheld 969 U.S. Patents, second only to Thomas Edison.Bill Lane and Walt Wells, who invented well perforating and built a wireline service company that would become Baker Atlas.H. John Eastman, the inventor of controlled directional drilling, which is now offered through INTEQ.Frank and George Christensen, who pioneered diamondbit technology, and whose vision established the rstCelle Technology Center fty years ago. Their legacycontinues in both Hughes Christensen and INTEQ.Cicero C. Brown, founded Brown Oil Tools andinvented the liner hanger, now a major product linefrom Baker Oil Tools.Max B. Miller and George Miller, two drilling uidspioneers who founded Milwhite Drilling Mud andOil Base Inc., respectively. Their innovations are nowincorporated into Baker Hughes Drilling Fluids.Vern Jones and the co-founders of ExplorationLogging Company (EXLOG), providing surfacelogging, which is now an INTEQ service.Ralph Spinnler and the Teleco engineering team, whodesigned and built the rst commercial measurement-while-drilling system. Their vision is now realized inINTEQs Answers-While-Drilling service.All of the predecessor companies that are part of theBaker Hughes heritage were born from innovative ideas that could be broadly applied in the oil and gas industry. These companies were driven by entrepreneurs with vision, dedication and great personal energy. They focused on their customers needs and they werent satised until they exceeded their customers expectations. And their companies continued to innovate year after year, even after their founders retiredor passed away.Baker Hughes hasrecognized recent innovators with Lifetime TechnologyAchievement Awards for their careers of innovation and for mentoring generations of younger technology professionals. John L. (Lindley) Baugh served for more than 40 yearsat Baker Oil Tools and received more than 60 U.S.patents for completions and liner hanger technology. During his 38-year career at Hughes Christensen, Rolf Pessier has advanced the companys drill bit product linesand was awarded more than 55 U.S. patents.In a career that has spanned three decades, Volker Krueger has been instrumental in developing all of INTEQs drill-ing systems including drilling motors and rotary steerable systems, accumulating 37 U.S. patents along the way. In the 21st century, Baker Hughes people continue thecompanys tradition of technological innovation and service, helping our customers achieve the reliable performance they need to efciently nd and produce hydrocarbons. I believethe brief history in this issue of InDepth magazine is just apreamble to even greater achievements for Baker Hughes aswe strive to deliver what matters most to our customers,shareholders and the communities where we live and work.Chad C. Deaton, Chairman and CEOBaker Hughes IncorporatedA CENTURY OF INNOVATION61907-19177A Century of Innovation BeginsR.C. Baker1872-1957Howard Hughes, Sr.1869-1924The Baker Hughes story began in the early 20th century, when two young menset out to make their fortunes in the booming new oil elds of California andTexas. Initially both men worked as wildcatters, but they achieved lasting success through technical innovations that would improve operations for the entire industry.In 1907, R.C. Baker received a patent on a casing shoe that advanced well cementingso much that it launched Baker Oil Tools. In 1909, H.R. Hughes, Sr. patented a roller cone bit that made it possible to drill through deeper, harder rock. This inventiongave birth to the Hughes Tool Company. A century later, Baker Hughes carries onthe tradition of technical innovation not only by its two founders, but also by themany other industry pioneers whose inventions and business lines became part of a global oileld service leader.BAKER HUGHES: 8In 1895, 22-year-old Reuben Carlton Carl Baker left hisfamilys marginal farm in Northern California, planning toprospect for gold in Alaska. When he reached the nearest trainstation, in Redding, California, he had no money to buy a ticket. To earn the fare to Alaska, he went to work in a stone quarry and slept in a nearby barn. After two weeks in the quarry, he had earned $24, but when he returned to the barn after work, he found that his clothes had been stolen. That night, an acquaintance cheered him up by telling him that oil had been discovered in Southern California. He wouldnt have to wait to earn more money to travel to the Klondike. His $24 would be just enough to buy new clothes and a train ticket to Los Angeles.Carl Baker arrived in Los Angeles on April 4, 1895 with a newsuit, 95 cents in his pocket, and dreams of making his fortune in the towns oil boom. First he hauled oil for drillers with a team of horses, and then he worked as an oilwell pumper, and as a tool dresser for a contract driller. When his employer, Irving Carl, couldnt pay R.C. Bakers wages, he made Baker his partner. By 1897, they had two rigs and a protable business. In 1898, they divided their assets, and R.C. Baker started his own contractdrilling business. R.C. Baker contracted to drill a well in Coalinga, California in 1899, the year that the Blue Goose gusher discovered a major eld and sparked a boom in the area. Mr. Baker settled in the dusty boom town, and his contract drilling business prospered with steady work in the newly discovered Kern River oil elds. As a town leader in Coalinga, he helped organize several small oil companies, a bank and a local power and gas company. An early casing shoe advertisementTe original Baker casing shoe, 1907R.C. Bakers Inventions LaunchOilfield Equipment Business1907-1917R.C. Baker on the rig oor, 1940s9While drilling around Coalinga, Baker encountered hard rock layers that made it difcult to get casing down a freshly drilled hole. To solve the problem, he developed an offset bit for cable tool drilling that enabled him to drill a hole larger than the casing. In 1903, he received his rst U.S. patent for this invention.On July 16, 1907, Carl Baker patented his secondinvention, the Baker Casing Shoe, which improved the driving of cable tool casing, and led to the founding of a small royalty-collecting company that would eventually become Baker Oil Tools and Baker Hughes Incorporated.Because R.C. Baker had no facilities to manufacture his invention in 1907, he licensed independent machine shops to fabricate it on a royalty basis, and the BakerCasing Shoe was marketed nationwide.In 1912, R.C. Baker patented the rst Baker CementRetainer, which was designed to pack off between thecasing and tubing when pumping cement throughtubing. This invention made cementing more efcient and effective.During his time in Coalinga, Carl Baker also grew as a businessman. Although he continued as a contract oilwell driller until 1917, drilling oil wells occupied only a part of his time. His business interests included farming and oil production companies (which he sold in 1920).In 1913, R.C. Baker organized his own corporation the Baker Casing Shoe Company in response to the new U.S. income tax law, to protect his patents, and to collect royalties. For the next ve years, royalties, mostly fromthe Baker Casing Shoe, ranged from $600 to $1,500per month. Te Baker Cement Retainer, invented by R.C. Baker in 1912, allowed operators to cement wells under pressure.A California oil eld near CoalingaSouthern Pacic Railroad Depot, Coalinga in 190710Howard R. Hughes, Sr. Solves the Problem of Rotary Drilling1907-1917Howard R. Hughes, Sr. was born in Missouri in 1869 andattended Harvard College and the State University ofIowa law school. By 1899, he was practicing law with his father in Keokuk, Iowa. Howard soon lost interest in the legal profession,and he moved to Joplin, Missouri to pursue a career in the leadand zinc mining industry.In 1901, Mr. Hughes heard news about the Lucas gusher atSpindletop near Beaumont, Texas. Oil seemed to hold better prospects than lead for making his fortune, so he hurried to Texas to enter the drilling business.Mr. Hughes formed a partnership with Walter Sharp in a contract drilling business operating in Texas and Louisiana. Although cable tool (impact) drilling was still prevalent, many drillers along theGulf Coast used the rotary drilling method with shtail bits that scraped through clay and soft shale. Penetration slowed or stopped, however, when the bit reached harder formations. By 1906, Mr. Hughes began working on ways to use the rotary method to efciently drill through harder rock.Sharp-Hughes Tool Co. plant in Houston. Walter Sharp (inset) was Howard Hughes partner until his death in 1912.Prior to theinvention of theHughes rotary bit, wells were drilledwith shtail bits.Employees operatebelt-driven lathes at the original Hughes Tool Company plant, 1909.Te original two-cone rotary drill bit that launched the Hughes Tool Co. 11Then one day in 1907, Hughes visited a machine shop in Sour Lake, Texas where his drilling tools were being repaired. There he noticed an emery wheel with two outer wheels moving in one direction and an inner wheel moving in the opposite direction. He realized that the same concept could be applied to a multi-cone rock cutting tool. He conducted experiments and built a wooden model of a drill bit withtwo cone-shaped, rolling cutters.Then in 1908, Hughes and Sharp built the rst two-cone bit made of steel. Rather than scraping against the formation as shtail bits did, the new roller cone bit was designed to crush and grind the rock. The partners conducted two secret tests on a drilling rig in Goose Creek (now Baytown), Texas. Each time, Hughes asked the drilling crew to leave the oor. Then he pulled the bit from a locked wooden box, and his associates ran the bit into the hole. The drill pipe twisted off on the rst test, but the second was extremely successful. In 1909, the Sharp-Hughes bit was granted a U.S. patent. In the same year, the partners formed the Sharp-Hughes Tool Company in Houston. The rst plant occupied a rented space of 20 by 40 feet in the corner of the old Houston Car Wheel and Machine Company on Washington Avenue. In 1910, the Sharp-Hughes company established the rstdrill bit research lab where bits were tested on a steam-drivenhydraulic rotary machine. Numerous advances followed,making drilling more efcient and reducing the cost per foot. The Sharp-Hughes bit was so successful that by 1911 the plant was moved to a larger shop equipped with modern tools, where the company operated until a new, larger plant was needed in 1918. Walter Sharp died in 1912, and Howard Hughes purchased Sharps half of the business. The company was re-named Hughes Tool Company in 1915.By 1914, roller cone bits had been successfully run in 11 states in the U.S. and 13 other countries. One customer of the period wrote, I feel sure that you have reached the solution of a problem, which has long been the chief drawback in the rotary system of drilling.During World War I, Howard Hughes, Sr. invented anddeveloped a horizontal boring machine for undermining enemy strongholds and artillery positions. He was assisted by ofcers of the Russian and British armies prior to the entry of the United States into the war and by U.S. Army engineers after America joined the ght. The war ended before the machine was used. (The original device is kept in the drilling simulator lab at the Hughes Christensen facility in The Woodlands.)Goose Creek oil eld, adjacent to the Houston Ship Channel, where Howard Hughes, Sr. rst tested the two-cone steel bitHughes with his horizontal boring machineHughes Tools rst research lab. Note the blocks of rock drilled in this derrick laboratory. Bits were tested on the steam-driven rotary drilling machine, purchased in 1911.12William S. Barnickels Demulsifier Recovers Oil from Basic Sediment1907-1917William S. Barnickel received a U.S. patent for the process to chemically recover oil from basic sediment and launched the company that is now Baker Petrolite.A Ford Model T car used by Tret-O-Literepresentatives to service the earlyoil eldsIn 1907, a 29-year-old chemist named William Sidney Barnickel traveled from St. Louis to visit the Glenn Pool oil eld inOklahoma where large quantities of oil were wasted because they were mixed with water that had been produced along with it.Such cut oil, known as basic sediment, was either burned or dumped into creeks near many of Americas oil elds. Seeing this waste and contamination, Barnickel began working on the problem of separating oil from water. In December 1911, he discovered that a chemical agent, a sulfate of iron (copperas), could efciently do the job, and in 1913 he applied it to recover 56,000 barrels of oil from basic sediment at the Caddo eld in Oklahoma. After several tries, he was nally granted a U.S. patent for the chemical treatment on April 14, 1914. Determined to manufacture large quantities of his chemical that could be readily shipped throughout the country, Mr. Barnickelreturned to St. Louis to outt a factory. He sold the rst two barrels of Tret-O-Lite on November 17, 1917. On that day, the company that would become Baker Petrolite had begun commercial operations.William S. Barnickel (left) with one of the rst barrels of Tret-O-Lite demulsier13First underwater telegraph cable between North America and Europe, 1,686 miles long.Charles Darwin publishes Origin of Species.Commonwealth of Australia formed.Marie Curie announces her discovery of radium. First electric washing machine invented. Picasso introduces Cubism. Henry Ford builds the first Model T. U.S. has 1.26 million automobiles. Henry Ford creates the assembly line. World War I commences. Charles F. Kettering develops an electric automobile starter so gasoline powered cars no longer need a crank. Greenwich Mean Time adopted.British steamship Lusitania is sunk by a German submarine, leading to U.S. entry into World War I. Henry L. Dougherty installs nighttime lighting for the Statue of Liberty in New York Harbor.Russian revolution leads to Communist state.S.S. Titanic sinks. Boy Scouts established in the U.S. Halleys comet makes an appearance. 200,000 Americans own cars. Plastic is invented. Robert Peary becomes the first to reach the North Pole.R.C. Baker introduces offset bit for cable tool drilling. R.C. Baker receives a patent on a casing shoe that launched Baker Oil Tools. William Barnickel begins work on the problem of saving waste oil (water/oil emulsion).Howard Hughes secretly tests first roller cone bit at Goose Creek, Texas. R.C. Baker organizes his own corporation Baker Casing Shoe Company. Barnickel reclaims 56,000 barrels of oil from Caddo field waste, but is cheated out of his share of the profits. A. Wright dies, leaving B.D. Adamson as PETRECO president. Barnickel receives a patent for his demulsifying agent.William Barnickel discovers that a sulfate of iron (copperas) can demulsify oil and water.The Sharp-Hughes company is re-named Hughes Tool Company.Barnickel builds his first factory in St. Louis. First two barrels of Tret-O-Lite chemical treatment are sold. Hughes introduces reaming cone bit. R.C. Baker patents the first Baker Cement Retainer. Walter Sharp dies. Howard Hughes purchases Sharps half of the business. Sharp-Hughes Company establishes the first drill bit research lab where bits are tested on a steam-driven hydraulic rotary machine.H.R. Hughes, Sr. patents a roller cone bit that made it possible to drill through deeper, harder rock. Worlds first oil wells are drilled on the Aspheron Peninsula northeast of Baku. Col. Drake drills Americas first well to discover oil in Pennsylvania.Digboi field discovered in northeast state of Assam in India.Oil is discovered in Persia. Charles Gould presents theory of petroleum geology based on anticlines. Standard Oil of Indiana adopts cracking process to refine gasoline. Venezuelas first gusher drilled near Lake Maracaibo. Standard Oil Trust broken up. Beldridge field discovered in California. Ventura field discovered in California.Name "Pennzoil" trademarked by Pennsylvania Refining Company. The first long-distance high-voltage transmission line is built by American Gas & Electric.Cushing field discovered in Oklahoma.Lakeview Gusher blows in near Taft, California, and becomes America's greatest oil gusher.First transcontinental auto trip completed.Spindletop discovery at 1,020-ft depth creates Texas oil boom.Drake well was drilled with a 40-ft wooden derrick to a depth of 69 ft. The well produced 20 barrels of oil per day.Diamonds discovered in South Africa.Marconi broadcasts the first transatlantic radio message from Cape Cod to England.First tubular steel derrick built.Hydraulic rotary rig introduced in California fields.William Meriam Burton receives a patent for his cracking process, which converts oil to gasoline. W.S. Barnickel patents an oil/water demulsifier.Schlumberger brothers invent electric well logging. Rotary table with square kelly and bushings comes into use. All-steel sprocket chain introduced.Two-speed drawworks hoist with brake becomes standard.Standard tool joint and Acme tool thread developed. J.B. Speed and F.G. Cottrell introduce an electrostatic oil/water separator in Coalinga, California.Fishtail bits used to drill wells.1848186619011859190319171916191519141913191219111910190919081907The World YearBaker Hughes MilestonesTechnologyEnergyIndustry141918-192715during the 1920sThe 1920s were an exciting time for the oil industry. In 1921, oil was discoveredin the Los Angeles Basin at Signal Hill, Huntington Beach and Santa Fe Springs. To meet the increasing demand for drilling equipment, the Baker Casing ShoeCompany started manufacturing operations and Hughes Tool Company launchednew products to improve drilling and reaming in deeper and harder formations. Bythe end of the decade, both companies had expanded their operations in California, the Mid-continent and Texas. Meanwhile, Tret-O-Lite and PETRECO were competing with each other to separate water from produced oil in the California oil elds.Oil Boom16Baker: Entrepreneur to Manufacturer1918-1927In 1918, Mr. Baker became a manufacturer, when Baker Casing Shoe Co. bought a machine shop in Coalinga, California, for $52,000. The early manufacturing facilities were meager, with 3,400 square feet of oor space, two lathes, a drill press, a power saw, a shaper and one pipe-threading machine. The new plant manufactured Baker casing shoes, dump bailers, clean-out bailers and cement retainers, as well as other equipment that the company had been licensed to manufacture. The oil boom in the Los Angeles area in the early 20s was a periodof rapid growth for the Baker Casing Shoe Co. In 1922, Baker builta new plant and headquarters in Huntington Park, California. Inaddition to other Baker products, this plant produced tool joints, which were in great demand in the new oil elds. By 1924, much of the companys sales came from the Mid-Continent area, and a branch ofce was opened in Tulsa to handle the increasing business. Branches were also established in Bakerseld and Taft,California in 1924, and an export representative was established in New York. By 1927, Texas provided a signicant sales volume, anda warehouse and ofce were established in Houston. In 1927 Baker gained industry leadership in cementing-related tools with the introduction of a complete line of guiding, oating andcementing equipment, including a drillable cement oat shoe andcollar and a cement guide shoe. Baker Casing Shoe Co. started manufacturing in this building in 1918. Oce and factory in Huntington Park, Los AngelesDuring the 1920s, Baker added variations to the casing shoe and new products for cementing.17Hughes bit with self-cleaning cones wasused to drill through Austin Chalkin the Luling Field.Hughes Tool Company plant in 1917.Howard Hughes, Sr.: Advancing Rotary Drilling As wells were drilled deeper through harder formations, the Hughes Tool Company added reamers to the two-cone bitsto help maintain full gauge hole and to stabilize the bit. In 1917, Hughes introduced a reaming cone bit equipped with two regular cones in addition to a reamer built into the body of the bit.In 1921, the Simplex bit was introduced. The design hada replaceable wash pipe down the center of the bit thatallowed for the use of more powerful mud pumps. Thenew bit achieved dramatic improvements in the rate ofpenetration. The concept of footage drilled per bit wasintroduced at this time.In 1924, Howard R. Hughes, Sr. died at the age of 54, and left his fortune and the Hughes Tool Company to his only son. Howard. R. Hughes, Jr., then an 18-year-old student at Rice Institute, would use the prots from Hughes Tool Company to pursue his interests in aviation, motion pictures and real estate. In 1925, the company opened a branch in Los Angeles andintroduced self-cleaning cones that more than doubled thepenetration rates of rock bits.Hughes 13 bit used for a Burmah Oil Company well, 1927Howard Hughes, Jr. during one of his few visits to the Hughes Tool Company plant18Tret-O-Lite and PETRECO Growthrough Competing Technologies1918-1927By 1921, William Barnickels Tret-O-Lite business had outgrownhis initial manufacturing plant, so he built a new one inWebster Groves, Missouri. The new facility had six times thecapacity of the old plant and was built on a hillside so that rawmaterials were unloaded from a railroad line on the top of the hill,and the uids owed through the plant using the force of gravity.Finished product was loaded on rail cars at the bottom of the hill. In 1922, the company sold 10,815 drums ofTret-O-Lite demulsier, representing a recovery of 50 million barrels of oil from producedoil/water emulsion. In 1923, Mr. Barnickel died at the age of 45,and John S. Lehmann succeeded him as Tret-O-Lite president.Meanwhile, Frederick Cottrell and James Speed were developing electro-static methods for separating oil from water. In 1910, Allen C. Wright formed the Petroleum Rectifying Company of California (PETRECO), which built electric dehydrating plants based on Cottrells and Speeds inventions to serve California oil elds. By 1922, PETRECO had 417 treaters in operation.Tret-O-Lite demulier barrels ready for shipment to oil eldsA worker makes a barrel test with Tret-O-Litedemulsier in the Cushing Field in 1918.Melvin DeGroote: The InventorIn 1924, Melvin DeGroote (1895-1963) joined Tret-O-Lite as chief research chemist. During his career, the companys laboratoryconducted more than a half-million experiments on more than93,000 compounds. By the time he retired from Petrolite in 1960,DeGroote had earned 963 U.S. patents, making him the mostprolic inventor of his era (second only to Thomas Edison in thenumber of patents). Under his leadership, the company becamean industry giant. DeGroote invented and patented many of the demulsifying agents that separate crude oil from salt, sulfur and water (a process necessary before raw petroleum can be rened into gasoline and other products). Without demulsication, most of the oil pumped in the United States for the last century would have been too corrosive for pipelines ortankers and would have been discarded. DeGrootes inventions ofchemical demulsiers contributed to the development of the modernoil industry by making more types of crude suitable for rening.19 Women gain the right to vote in the U.S.A. League of Nations established. Jack Dempsey knocks out Jess Willard for theheavyweight crown.Prohibition starts in U.S., banning sale of alcohol. Tsar Nicholas II, his wife, and children, are murdered by the Bolsheviks. World War I ends.First stretch of the Autobahn completed in Germany.British Egyptologists unearth King Tutankhamen's tomb in the Valley of the Kings.Talking movies invented. V. I. Lenin dies. First Olympic Winter Games Lindbergh flies solo across Atlantic. First demonstration oflong-distance television. Airmail service begins in the U.S. Robert Goddard successfullytests first liquid-fueled rocket. Hitler publishes Mein Kampf. The Scopes (Monkey) trial1918192019211919192219271926192519241923The World YearBaker Hughes MilestonesTechnologyEnergyIndustry First curbstone gas pumpintroduced in 1918. First U.S. gasoline pipelinecarries gasoline 40 miles, fromSalt Creek to Casper, Wyoming. Earle Halliburton establishes acementing service in Oklahoma. The first state gasoline tax ofone-cent per gallon levied byOregon for road construction. Mexia field discovered in Texasbased on W.E. Pratts theorythat faults trap oil. Elk Hills field discovered in California. Giant field found in Burbank, OK.Oil discovered at Signal Hill,Huntington Beach, Santa Fe Springs, California, expanding Los Angeles oil boom. Oil discovered in Venezuela. U.S. Geological Survey predictsthat the U.S. only has enough oilsupply to last 20 years.Howard Hughes, Sr. invents a horizontal boring machine to place explosives under WW I trenches, but war ends before it is used.Rotary rigs begin replacing cable-tool rigs. Mud-laden drilling fluid used. First core barrel sampling toolsused in California and West Texas. Steel derricks begin replacingwooden derricks.Thomas Midgley Jr. discovers that tetraethyl lead prevents "knock" in gasoline engines. Teapot Dome scandal Ford introduces the Roadster. Garrett Morgan invents the traffic signal. Oil found in West TexasPermian Basin.Seismic method is used in Mexico for the first time to search for petroleum.Baker Casing Shoe Company starts manufacturing shoes and other products.Hughes Tool Company establishes a new manufacturing plant and general offices in Houston.Tret-O-Lite establishes a new manufacturing plant in Webster Groves, Missouri.Hughes introduces the Simplex drill bit. Baker float shoe introduced to improve cementing. W.S. Barnickel dies at age of 45, of a perforated ulcer. John S. Lehmann takes over as Tret-O-Lite president. Howard Hughes, Sr. dies, at age 54, leaving Howard, Jr., age 18, in charge of Hughes Tool Company. Melvin DeGroote joins William S. Barnickel & Co. Eventually he would hold963 patents, making him theworlds greatest living inventor.Tret-O-Lite Co. sells 10,815 drums of demulsifier. PETRECO has 417 treaters in operation.Borger field discovered in Texas Panhandle. Oil discovered in Kirkuk, Iraq. Seminole field discovered in Oklahoma.Hughes introduces Acme Self-cleaning cones, for improved drilling in soft formations.Baker introduces complete line of cementing equipment. Also manufactures tongs, core barrels, bailers and other tools.Spindletop production reaches its all-time annual high of 21,000,000 barrels. 201928-193721The oil industry has ridden the boom-to-bust cycle many times during itshistory, but the stock market crash of 1929 and its impact on world economyincreased the impact of these energy demand cycles. The Depression affected the growth of Baker Hughes edgling companies as survival became the watchword of many industry entrepreneurs who had invested heavily in start-up operations andmanufacturing capabilities. Oilfield Services Emerge Baker Oil Tools started oering coreing services during the 1930s.221928-1937Bakers Growth and DownturnIn 1928, Baker Casing Shoe Company was renamed Baker Oil Tools, Inc. to reect its broad range of products and services. By 1929, Baker Oil Tools had grown to 96 employees with its best year ever of $868,000 in revenues. The future looked bright. But Baker did not escape the crash unscathed. Only three years later, BOT reached alow point when income dropped to $299,000 and Carl Baker was forced to lay off employees who had been with him from the start of the company. But there were also bright spots within the industry during the Depression years. One of the brightest was early recognition that services could be offered protably to the oil eld in additionto building equipment and selling it directly to individual oilcompanies. This concept of professional expertise in the eld tosupport manufactured products would create a whole new sector of the industry...oileld services. Services became even more important as oil companies expanded operations throughout North Americaand to growing overseas markets. With far-ung operations, oil companies grew to depend upon service companies to provide local expertise and technically sophisticated products demanding special knowledge and skills. Effectively providing this service would differ-entiate Baker Hughes throughout the companys history. H. John EastmanService Becomes a Science with EastmanA prime example of oileld services was the evolution of controlled directional drilling. In the late 20s, H. John Eastman went intobusiness for himself with a truck, a winch, a built-on darkroom and 7000 ft of cable. He used an acid bottle as the primary drift indicator and went up and down the California coast soliciting survey business. Alexander Anderson, a local inventor and watch maker, helped him build the rst multi-shot survey instrument, and then they invented a single-shot survey instrument. These instruments were the basis of a science that made controlled directional drilling possible. In 1929 Mr. Eastman introduced the concept in Huntington Beach, California, of using whipstocks and magnetic survey instruments to deect the drill pipe from shore-based rigs to reach oil deposits offshore. For the rst time, the oil industry could drill angled wells on a controlled trajectory instead of drilling only straight wells, which were often deected by subsurface geology. In 1934, Mr. Eastman gained further acclaim and industry-widecredibility for directional drilling techniques when he drilled the worlds rst relief well to control a blowout in Conroe, Texas that An Eastman automobile at a California oil eld with directional survey instrument mounted on the passenger sideTe 1934 Conroe re and its crater23had been on re for more than a year. Mr. Eastman was soon called upon to use controlled directional drilling to kill blowouts around the world. Today, INTEQ carries on this leadership in directional drilling established by the original Eastman Oilwell Survey Company that H. John Eastman founded in Long Beach, California.Lane and Wells Invent Bullet PerforatingIn 1932, Bill Lane and Walt Wells developed the rst gun perforating system and started an oileld service business in Vernon, California. That year Lanes oileld experience and Wells engineering expertise were tested with Union Oils backing on La Merced #17, a 2500-foot well that had gone dry in the Montebello oil eld near Los Angeles. The new enterprise depended upon an ungainly looking contraption dangling above the wellhead, representing more than two years of engineering work for Lane and Wells. It was described as a stringof coconuts. Beneath the coconuts was the rst crude bullet gunperforating system. Eight days later, after 87 shots were red in 11 runs, the well owed 40 barrels a day of California crude. With this rst successful job on March 19, 1932, the Lane-Wells Company (which would become Baker Atlas) was in the perforating business.With the successful test, Lane-Wells faced a new challenge, laboring over ways to improve the cable and how to design a truck to carrythe service into the eld. At the end of 1933, Perforating Truck #1,a 32 Ford chassis and engine, rolled out of the Santa Fe Avenueofce/shop in Los Angeles with a new insulated conductor wireas a core for the cable. In spite of the Depression, demand wasbrisk for the innovative perforating services and oil tools offeredby Lane-Wells.Continuing improvements in engineering design led to thereplacement of the string of coconuts with a 10-shot perforatingcylinder, making jobs easier from a mechanical standpoint. The Lane-Wells reputation spread quicker than its ability to respondand its famous slogan Tomorrows Tools Today painted on the drivers side of cabs furthered the companys visibility in the oil eld while performing work. The company learned quickly that providing quality service to the nomadic oil eld would be a continuing challenge and in the mid 30s more perforating trucks were added to the eet as crewsworked 100-hr weeks to catch up with increasing business. In1935, truck #4 spent two days and nights ring 300 shotsworking in snow and high winds in New Mexico then continuedon to Arkansas and after another 24 hours of shooting headed forOklahoma. An ofce was soon established in Houston to improve logistics and in 1937 Lane-Wells expanded into the Mid-Continent with an Oklahoma City shop.Bill Lane (left) and Harry Quintrell withtheir rst perforating gun, 1932Eastman drilled a directional well in 1935 to helpkill a well blowout in Romania.Lane-Wells rst truck wascustom built in 1933.241928-1937Miller Finds the Right Mix for Drilling Fluids In the early years, the drilling uid used in cable-tool rigs wasmostly water to soften the earth and make it more pliable fordrill-bit penetration. As rotary rigs supplanted cable drilling androller-cone bits proved themselves, more elaborate drilling uids called muds, were developed and introduced into the boreholeto cool and lubricate the bit, circulate the rock cuttings from thebottom of the hole to the surface, and hydrostatically balance the drilling-uid column. With the expansion of the industry in the20s and 30s, opportunities unfolded to introduce even betterdrilling uids to enhance drilling efciency.Soon drilling muds were weighted up using barite or similarproducts to counter the higher pressures that were experienced asformation depths increased. This helped prevent the dreaded blow-outs. Initially, mud materials were low-cost waste products from other industries, but as oil companies drilled deeper, hotter holes, higher uid densities were needed and the industry began developing specialty chemical products designed for specic purposes.The Max B. Miller company originally began in New York to design, sell and construct patented oil-manufacturing processes. During the 20s, the company developed and held several patents in the eld of renery construction and in 1925 the company devised a process of contact ltration control using California clay as a lter medium. With limited applications for the process in the mining industry, the company began to look for a larger market. They found it in the oil- drilling business, and in 1931 moved to Texas to form the Milwhite Company. The Mil in Miller and the White from the color of the California clay were combined to name the Milwhite enterprise that continued its contact ltration clay operations. The companyalso started mining and grinding drilling mud clays, and exploredfor barite, which was used as a drilling mud weighting agent. Sourcing was key to the companys growth so Milwhite rst mined barite in the now famous Magnet Cove Area of Arkansas until the late 30s. Then, Milwhite and Magnet Cover Barium Corporation (later to become Magcobar) signed a contract to process Magnet Cove materials jointly.Baker Model K cement retainerA Milwhite representative testsuid samples from his mobile laboratory.25The Rebound Begins After retrenching during the worst of the Depression, oileld companies began to introduce new technologies and expansion plans. As the general economy began to recover, demand for oil also increased, especially as more cars were manufactured and train systems converted to diesel fuel.The Baker cement retainer product line achieved a competitive advantage during this period with the Baker Model K tool. It would have a major impact on the companys growth as high-pressure squeeze cementing became common practice.By 1936, Baker Oil Tools business had increased somuch, especially in the Mid-Continent, that the companybuilt a new manufacturing plant in Houston. By the end ofthe year, the company passed the $1 million mark in salesand the number of employees had grown to 160. First Tricone BitDuring the 1930s, Hughes Tool Company keptimproving on its technologies. In 1933, thecompany introduced the rst Tricone bit, whichfeatured intertting teeth and could be customizedfor specic formations. Hughes began hardfacing bit cutting surfaces and introduced anti-friction bearings, staggered teeth and cantilevered bearing shafts tomake hole faster and cheaper. The combination ofroller cone bits and better drilling uids hadsignicantly improved drilling performance.Baker Oil Tools manufacturing plant in Houston, 1936 Hughes Tool Company employees in front of themanufacturing plant, in Los AngelesInvented in 1933, the Tricone bit has seenmany improvements, but remains a workhorse of the drilling industry.26Petrolite is FormedThroughout the 1920s, Tret-O-Lite, Inc. (which usedchemical demulsiers) and PETRECO (which usedelectric dehydrating towers) competed to provide oil/ water separation services to recover oil from producedbasic sediment. In 1929, Tret-O-Lite, Inc. merged withanother chemical supplier Vez Company, to form TuxedoCorp. In 1930, Tuxedo and PETRECO merged to formPetrolite Corporation, which brought together theirradically different technologies to treat oileld and renery hydrocarbons. One early outgrowth of the union was therst electrical desalter, which was installed at the AshlandOil Co. renery in Cattlesburg, Kentucky in 1936. C.C. Brown invents the Liner Hanger In 1929, Cicero C. Brown founded Brown Oil Tools inHouston to provide oil tools and services. In 1937, hepatented the rst liner hanger. Liner hangers enabled drillersto lengthen their casing strings without having the linerpipe extend all the way to the surface, saving capital costand reducing the weight borne by rigs. Brown Oil Toolscontinued to advance liner hanger technology and alsomanufactured casing centralizers and other completionequipment. In 1978, Hughes Tool Company acquiredBrown Oil Tools. In 1987, the Brown liner hanger linebecame part of Baker Oil Tools, which by that time hadalso developed liner hanger systems. Today, liner hangersare the largest product line in BOT. From Bits to BeerOnce the prohibition ended in 1933, Howard Hughes, Jr.decided to take advantage of the repeal by getting into the brewery business. Hughes turned to Frantz H. Brogniez, amaster brewer, who had created the Southern Select beerprior to Prohibition. Southern Select had won the 1913Grand Prix in Belgium in a contest against 4,600 other beers. Hughes Gulf Brewing Co. held a contest to select Grand Prize as the name for the new beer to commemorate the Grand Prix. Grand Prize was a popular beer in Texas until 1963, when it was purchased by the Theodore HammCompany of Minnesota. 1928-1937C.C. Brown patented the liner hanger in 1937.Business in the California boom elds, like Signal Hill seen below, fueled PETRECO expansion elsewhere. PETRECOs D.C. Norcross would become Petrolites rst president.Grand Prize beer truck and can27 Sliced bread is available. Stalin collectivizes agriculture in USSR. Stock market crashes, leading to the Great Depression. U.S. has 27 million cars and trucks. Kellogg-Briand treaty outlaws war. Penicillin discovered.Empire State building completed. FDR elected. Scientists split the atom. Prohibition ends. Adolph Hitler electedChancellor of Germany. FDR launches the New Deal. Drought creates Dust Bowlin Oklahoma. Parker Brothers launchMonopoly board game.First flight of airship Hindenburg Amelia Earhart flies solo across the Pacific Ocean. Social Security establishedin the U.S.1928193019311929193219371936193519341933The World YearBaker Hughes MilestonesTechnologyEnergyIndustryTexas oilman Louis Giliasso launches offshore drilling by mounting a derrick and drilling rig onto a submersible barge. Dad Joiner finds East Texas oil field, makes H.L. Huntwealthy. E.L. DeGolyer proves the reflection seismographtechnique.Worlds oil markets flooded by the over production of East Texas oil fields. Schlumberger brothers commercialized electric well logging. Oil discovered in Bahrain.Lane-Wells Company introduces bullet gun perforating. H. John Eastman obtainspatents on multi-shot instrumentand whipstock, introducescontrolled directional drilling. Hughes first applies tungstencarbide hardfacing to cutting structures. Max B. Miller develops drilling mud based on white clay. Hughes Tool Co. introduces first drill bits with antifrictionbearings.Gas lift valves developed.Humble Oil Co. discovers Anuhuac field in Texas.Hughes introduces the first Tricone bit.Baker Casing Shoe Company changes its name to Baker Oil Tools, Inc. Eastman Oilwell Survey formedin Long Beach, California. W.S. Barnickel Co. is renamedTret-O-Lite, Inc., then mergeswith Vez Company to formTuxedo Corp. C.C. Brown founds Brown Oil Tools, a pioneer in liner hangers.Tuxedo Corp. merges with PETRECO to form Petrolite Corporation. Milwhite Company formed, moves from California to Texas. Gulf Brewing Company brews Grand Prize beer at the Hughes Houston rock bit location.Frank and George Christensen meet while playing professional football for the Detroit Lions. Their friendship leads to the formation of Christensen Diamond Products.Baker Oil Tools opens Oklahoma City branch.H. John Eastman drills the worlds first relief well to kill a blowout in Conroe, Texas.Lane-Wells Company formed in Vernon, California by Bill Lane and Walt Wells.Standard Oil of California strikes oil in Saudi ArabiasDamman field.Petrolite installs a desalter at a refinery in Kentucky.Baker Oil Tools opens Houston manufacturing plant. Texas Co. joins Standard Oil in Saudi Arabia, leading to the formation of Aramco. C.C. Brown patents the liner hanger. Horizontal drilling takes place in Yarega, USSR.281938-194729Supporting the War EffortIn 1938, Adolf Hitler occupied Austria, and Europe seemed headed towardanother world war. Meanwhile, the edgling Baker Hughes companies weretransitioning from small-scale shops to modern manufacturing facilities equippedwith machine tools and other processes. As Baker Oil Tools expanded from itsCalifornia base into the Mid-Continent and southwest U.S., Hughes Tool Companywas also expanding nationwide.Modern Manufacturing, 30Hughes Expands its HorizonsOver the decade, the Hughes product line was extended to corebits, tool joints and drill collars. Simultaneously, Hughes Toolsgeographic coverage was expanded virtually nationwide through regional ofces in California, Wyoming, Oklahoma and Midland.An export ofce was established at the Rockefeller Plaza in New York and international representatives were based in London, BuenosAires and Caracas. As Hughes Tool Company expanded, so did the interests of its young president. Howard Hughes, Jr. nanced his endeavors in aviation and motion pictures in Hollywood with prots from the company he had inherited.Christensen Diamond ProductsIn 1944, Frank and George Christensen founded the Christensen Diamond Products Company in Salt Lake City, Utah, and in 1946 introduced diamond core bits to the mining industry. Within a few years their business had expanded to helping oil and gas companies take samples from exploratory wells in the Rocky Mountains. By 1952, they were manufacturing and selling natural diamond drill bits for use in hard formations. The two men were unrelated, and had met in 1935 when they were teammates on the Detroit Lions football team. Before they joined forces, Franks family owned a machine shop and George had a business making diamond cutting tools. Howard Hughes, Jr. (center) waves to the crowds during a 1938 parade in downtown Houston to commemorate his ight around the world in record time.1938-1947Frank and George Christensen (left to right) were football teammates who combined their resources to launch the diamond bit company. Early Christensen diamond core bit31By 1938, Baker Oil Tools product range had extended to cement guiding and oating equipment, cement retainers, rotary wall scrapers, a portable hydraulic Kelly and a pipe straightener. These practical and dependable tools were on display at the International Petroleum Exposition in May. Baker had a rolling exhibit thatcovered some 40,000 miles and 24 states, providing oil tooleducation on wheels. In 1942, Baker Oil Tools introduced the Model D Packer, whichenabled multiple completions in the same well. The design was driven, in part, by the shortage of steel during World War II. The Model D Packer is still sold today. Growth at Lane-WellsBy 1938, the Lane-Wells Company had outgrown its originalworkshop and moved into a 10-acre site at 5610 South Soto Streetin Los Angeles. The company now offered three services: gunperforating, electrologging, and oilwell surveys. Products included packers, liner hangers, survey instruments, knuckle joints,whipstocks and mills. Perforating services were extended duringthis decade into the Mid-Continent region through a shop inOklahoma City. While Walt Wells was in charge of marketing,Bill Lane was supervising eld operations and engineering. In1938, Lane announced his retirement. He passed away in 1949.In 1939, Lane-Wells secured an exclusive license from Well Services Inc. (WSI) to build a gamma ray log that could identify the exact zone that should be perforated. The next major innovation came in 1944 with the deployment of the reverse concentric armored cable, which improved the accuracy of downhole measurements. A product of war ordnance the bazooka enabled Lane-Wells to introduce the precise shaped-perforating charge. The magnetic collar locater came in 1947. By this time, the company had expanded operations internationally to Lake Maracaibo in Venezuela and to Trinidad.Baker Broadens its BaseLane-Wells building at the Tulsa Oil Show, complete with the mockup of a perforator on top with sequentially ashing lights to simulate the ring of shotsBaker Oil Tools employees on the rig oor with the Kelly straightenerA Baker Oil Tools rig technician lowers theModel D packer into a well.32Eastman Extends Directional DrillingDuring the 1930s and 40s, H. John Eastman directed most of the shoreline drilling under the ocean in the Huntington and Long Beach Harbor areas. In 1941, the company headquarters were moved from Long Beach to Denver. In the Rocky Mountain region, slanted wells were drilled to reach sweet spots underneath mountain ranges.Oil Base Drilling FluidIn May 1942, Oil Base Drilling Company, headed by its founder George Miller, made the rst commercial application of its BLACK MAGIC oil-based mud. Contributing to the War EffortDuring World War II, Baker Oil Tools began dual operations tohelp the war effort, dividing its plant between oileld and defense manufacturing. Bakers war production included recoil mechanismsfor cannons, and parts for M-5 tanks. In 1943, the company earnedthe Army-Navy E Flag for its wartime contributions.The Hughes Tool Company established a Gun Plant in Dickson, Texas to manufacture howitzers and struts for military aircraftlanding gear. Lane-Wells Company also joined the war effort,producing electrical components for munitions. Part of its SouthSoto Street factory in Los Angeles was switched to the productionof projectiles, launching mechanisms, fuses for submarine rockets,and airspeed indicators. Meanwhile, Christensen Machine Company, a precursor to todays Hughes Christensen, manufactured precision tools and gauges for Army and Navy ordnance and radar at its machine shop in Salt Lake City, Utah. 1938-1947An Eastman orienting tool is unhitched from a car at a California oil eld.Oil Base Drilling Company introduced the rstoil-based drilling uid in 1942.Women join Hughes Tools Co. employees in making ordnance for the war eort.Baker Oil Tools received the Army-Navy E award for contributing toward thewar eort. Similar awards were presented to the HughesTool, Lane-Wells and Christensen Machine companies.33 Battle of Britain Leon Trotsky assassinated, 40-hour work week goes intoeffect in the U.S. World War II begins. First commercial flight over the AtlanticU.S. provides two-thirds of oil used by the Allied Forces. Broadcast of the War of the Worlds creates a panic. Hitler occupies Austria. Glenn Miller forms his jazz orchestra.Japan bombs Pearl Harbor, leading to the U.S. entry into World War II. Enrico Fermis team at theUniversity of Chicago producesthe first, self-sustaining nuclearchain reaction, leading to the development of the Atomic bomb. T-shirt invented.Warsaw ghetto uprisingAllies invade Normandy on D-Day. Dead Sea scrolls discovered. India gains independence from colonial rule. Winston Churchill makes Iron Curtain speech. ENIAC computer is built. Bikini introduced. Atomic bombs dropped on Japan. World War II ends. United Nations founded.1938194019411939194219471946194519441943The World YearBaker Hughes MilestonesTechnologyEnergyIndustry Oil is discovered in Saudi Arabiaand Kuwait. Drilling depth passes 15,000 feet. Catalysts used in refining to produce high-octane gasoline.Russia develops multisection turbodrills.First Texas offshore wellBaker introduces the Model D packer, which enables multiple completions technology driven by steel shortage during the war. Lane-Wells Co. commercializesthe Gamma Ray log developedby Well Survey, Inc. Petrolite develops a water clarifier. Lane-Wells Co. introduces the Neutron log. Petrolite begins production of monocrystalline waxes in Kilgore, Texas.Cities Service completesconstruction of the biggest,longest pipeline to help supplypetroleum for the war effort.U.S. refineries supply 35 million gallons of gasoline to fuel the war effort. Levelland field discovered in West Texas. Louisiana holds first offshore lease sale.Petrolite patents first organic corrosion inhibitor, KONTOL.John Eastman and John Zublin develop short-radius horizontal drilling tools. Bill Lane, co-founder ofLane-Wells Co., retires. Howard Hughes, Jr. flies aroundthe world in record time 3 days, 19 hours, 8 minutes and 10 seconds.Petrolite installs first chemical desalter in a Texas refinery.Baker Oil Tools revenues reach $2 million.Petrolite builds castor oil plant in Rhode Island to address wartime supply shortages; begins operations in Canada.Christensen Diamond Products Co. founded in Salt Lake City, Utah.Lane-Wells Co. incorporates armored cable in wireline units. Baker Oil Tools begins dualoperations, helping the war effort. Hughes Tool Companymanufactures howitzers andaircraft landing gear struts. Lane-Wells Co. makes electroniccomponents for the military. Oil Base Inc. formed, firstoil-based mud company.First marine seismic survey conducted in the Gulf of Mexico. Petrolite applies first corrosion inhibitor at a gasoline plant in Illinois. Christensen introducesdiamond bits in Rangely,Colorado oil field.Lane-Wells Co. expands to Venezuela, completes 75,000th job. Leduc field discovery fuelsCanadian oil boom. First offshore well drilled out of sight of land off Louisiana. Baker Oil Tools expandsthroughout North America. Christensen begins to import diamonds directly from London.Lane-Wells introduces the collar locator.341948-195735After World War II, the industry re-focused on technology and geographic expansion, especially in North America. Discoveries in Nebraskas Gurley eld opened the Denver-Julesburg Basin and shortly afterwards North Dakotas Williston Basin came into play. In California, the rst commercial gas well went into production near Oakland, and a well was drilled over water from an island structure off Seal Beach. In Louisiana, the rst offshore well was drilled out of sight of land in 1947. By the mid-1950s there were 2700 active rigs in the U.S., drilling more than 57,000 wells through 233 million feet of bedrock. In Canada, the Leduc discovery set off an oil boom in Alberta, and soon after, gas was discovered in Nova Scotia. Oileld service companies debated which market to chase in a time of opportunity. Even with similar discoveries on other continents, including the worlds largest oil eld in Ghawar, Saudi Arabia and oil nds in Nigeria and Algeria, most chose to stay focused on North America where it was easier to operate. Post-war Growth36Baker Builds New Plant, ExpandsIn the U.S., Baker Oil Tools matched the industrys growth withan aggressive expansion of its operations. During 1948-59 a total of50 new branches were established in sixteen states and a Baker export ofce was opened and staffed in New York. Baker Oil Tools also outgrew its Huntington Park facility and in 1952 the Los Angeles headquarters moved into a new plant and building on a 13-acre site on Slauson Avenue. The facility was built at a cost of $1,250,000, and Reuben C. Baker was proud to note that none of the money for the expansion was borrowed. In 1950, Baker introduced the Model E, the rst retrievable casing packer. Hughes Builds R&E Facility, Opens First International PlantReturning its attention from war production back to the oil patch, Hughes Tool Company expanded its operations to the newlydiscovered oil elds throughout North America and made majoradvancements in drill bit and tool joint technologies. During 1948-50, Hughes applied jet drilling research to develop integrated jets for rock bits, yielding improved removal of cuttings and higher rates of penetration. In 1951, the company introduced the rst Tungsten Carbide Insert (TCI) bits, which increased penetration rates and bit life in the hard and abrasive West Texas chert.In 1954, Hughes Tool Company established its rst manufacturing plant outside the United States, in Belfast, Northern Ireland.Baker Oil Tools Slauson Avenue plant was built in 1952.1948-1957A full-size drilling rig in the Hughes laboratory simulated eld conditions.05001000150020002500300035004000450019491951195319551957195919611963196519671969197119731975197719791981198319851987198919911993199519971999200120032005U.S. Rotary Rig CountTe Baker Hughes rotary rig count began at Hughes ToolCompany in the 1930s as an in-house production fore-casting and marketing tool. Noting that the information would be benecial to the industry, Hughes began provid-ing monthly counts of U.S. drilling activity to the public in 1944. Since 1949, the U.S. rig count has been published on a weekly basis. Coverage was expanded to include Canadian rig activity in 1964, and in 1975 a monthly International Rig Count was added. Today, Baker Hughes publishes three distinct rig counts: U.S. and Canadian Rotary Rigs (weekly); International Rotary Rigs (monthly), and U.S. and Canadian workover rigs (compiled by Baker Oil Tools, monthly since 1992). Te highest recorded U.S. rig count was 4530 rigs, during the last week of 1981. Te lowestU.S. rig count was 488, in April 1999. Extremes ofCanadian rig counts are a high of 715 rigs in February 2006, and a low of just 32 in April 1992. Te highest international rig count on record was 1497 in May1987, and the low point was 560 rigs in January 2000. Te highest North America workover count was 2407 in June 2006, and the lowest was 925 in May 1999.37Lane-Wells Advances Logging TechnologyThe Baker Atlas predecessor company Lane-Wells also grew steadily after the war with growth in all parts of the U.S. The boom areasof East Texas, the Permian Basin and NewMexico stretched resources, and by 1950 therewere a total of 249 Lane-Wells wireline units serving North America and Venezuela. Lane-Wells established its Canadian ofces in the early 1950s to end the long drives from theWyoming service base, and to establish apresence as a major contributor to futureCanadian oil and gas development. Lane-Wells also improved its technology with the introduction of the rst shaped-perforating charge in 1948 andlater the development of the density log. Because of strong growthprospects, Dresser Industries acquired Lane-Wells in 1954. Justsix months after the acquisition, the industry took a downturn.To survive, Lane-Wells focused on improved services andinstrumentation to provide a complete range of logging services.Success depended upon the development of resistivity systemsand ultimately the induction log. A merger with the ElgenCompany, which had built a logging business in North Texas,facilitated commercialization. Field testing took place at a desertedintersection on Westheimer Road in Houston, which years later would become the companys headquarters. Eastman Expands Services In the 1950s, Eastman Oilwell Survey Company expanded itsproduct line, which it marketed through principal ofces inHouston, Denver, Long Beach and Calgary. Eastman improvedmagnetic survey methods with the introduction of nonmagneticdrill collars, new single-shot and multiple-shot instruments, andbetter survey calculation algorithms. Improved whipstocks andorienting devices enhanced directional drilling operations andEASTCO reamers and stabilizers were designed for use indirectional drilling assemblies. Eastman also introduced the Star Drilling Recorder as a service to provide permanent records ofland rig operations and the EASTCO Drift Indicator, whichmeasured inclination in vertical wells. Eastman directional drillers, surveyors and technicians held a leading share of the North American directional service business.Christensen Diamond Products employees in front of the headquarters building in Salt Lake City, 1954. During this decade, Christensen Diamond Products expanded its manufacturing capacity in Salt Lake City, opened manufacturing plants in Hobbs, New Mexico, and expanded internationally with a plant near Paris, France.Introduced in 1948,Lane-Wells shaped-perforatingcharges were manufactured under bakery-like clean conditions (left). A Permeability Lab (right) was built in Houston in the early 1950s.An Eastman directional driller lowers a whipstock into a well.38Milwhite EvolvesAfter a hiatus that began during World War II, Milwhiterestarted its drilling mud business in 1952. To meet demandduring the 1950s, Milwhite mining operations and grinding plants were greatly expanded to keep up with increased demand. The company bought a Continental Oil clay plant in Riverside, Texas and also began to grind barites imported from mines in Nova Scotia. Milwhite products were sold on consignment in Canada and West Texas to companies that maintained their own warehouses and staff of eld engineers. In coastal Texas and east-ern Louisiana, products were serviced by Milwhite eld engineers, but warehouses were generally operated by appointed dealers.In 1956, St. Louis-based Mississippi River Fuel Company,purchased Milwhite.Start-up Companies Add Depth An important oileld chemical market rst surfaced in 1951 when four chemists and engineers left Chevron Research Corp to form Magna Corporation. Magnas founders had obtained the market-ing rights to a patented oileld corrosion inhibitor developed byChevron. Magnas early operations were in Brea, California with trucks delivering inhibitors to the eld and injecting directly intothe annulus of corrosive wells. As business grew, Magna added new products and services including scale inhibitors, demulsiers, biocides and surfactants. Magna eventually established a full-line manufacturing facility in Odessa, Texas and operations quickly spread through Texas, the Mid-Continent and Rocky Mountain regions in parallel with industry expansion. Baker International acquired Magna in 1976. The company eventually evolved into Baker Performance Chemicals and nally Baker Petrolite. In 1952, a group of Stanford University engineering and geology graduates formed Exploration Logging Company (EXLOG) to provide geologic mud logging services from wheeled logging units using technical innovations in hot-wire gas detection. EXLOG would become a world leader in surface logging, rig-site instru-mentation, and data acquisition services. Centrilift BeginsAs the industry expanded in the early 1950s and then contracted by mid-decade, oileld operators faced difculty raising capitalfor new wells. They searched for ways to increase their returnon investment in existing wells, opening the door for edgling companies to provide the technology that would increase recovery. 1948-1957Milwhite mud technician at work in HoustonLane-Wells logging truck and interior monitoring equipment39In the 1900s in Russia, Aramis Arutunoff invented the rst electrical submersible pump (ESP). The technology laysomewhat dormant for years until the 1940s when the advent of water ooding as a secondary recovery measure gave theESP industry an additional market.Building on the need to enhance production, a group ofengineers set up shop in Vernon, California in 1957. Herethey developed the Centrilift oileld electrical submersible pump. More than 20 prototypes would be built before therst installation took place in 1959 at Signal Hill in Long Beach, California, for Shell Oil Company. Centrilift would become a product line of Byron Jackson Pump, a division of the Borg-Warner Corporation. Technology Center Opensin GermanyIn 1957 Christensen Diamond Products opened a manu- facturing plant in Celle, West Germany to serve internationalmarkets. A friendship between co-founder Frank Christensen, Bob Lawe and local national Addi Baumann led to thebusiness undertaking. Initially, the facility built diamondcore heads and drilling bits. Later, it began producingstabilizers, drilling jars and other equipment, utilizing the talents of German engineers in all disciplines. Today, the Celle Technology Center is the leading research and engineering facility for Baker Hughes in the Eastern Hemisphere.New ProductsImprove EfficiencyDuring this decade Baker Hughes predecessor companiesexpanded their product lines through internal advances in technology, manufacturing, and materials and throughacquisitions and new business relationships.Te original Christensen manufacturing plant in Celle, Germany, 1957In 1949 Oil Base Inc. (OBI) introduced BLACK-MAGIC SFT (Sacked Fishing Tool), a drilling uid additive designedto free stuck pipe. The product was an immediate success and is still in use today. Also, in 1949, Whipstock, Inc. was founded in Louisianaafter Eastman directional drilling patents expired. Whipstock Inc. pursued international markets and would establishoperations in Nigeria and the Middle East. The company would later merge with Eastman Oilwell Survey Company to become Eastman Whipstock, and eventually part of Baker Hughes INTEQ. In 1952, Christensen introduced the rst non-coring surface-set diamond bit for oileld applications after developing aproprietary erosion-resistant matrix and powder metallurgy process for mounting diamonds in the bit crowns. Thecompany was also the rst to manufacture diamond washover shoes, and diamond reamers and under-reamers. For coring operations, Christensen developed the 250P and Rubber Sleeve core barrel systems, which soon became industry standards.In 1954, Baker Oil Tools licensed Fagro, a German manufac-turing concern, to manufacture Baker products in Germany and shortly afterwards Baker Transworld added divisions in Canada and Venezuela. Baker also developed an impressive list of new tools including Differential and Flexiow Fill-Up Equipment, Snap-Set Dual Packers, the Model A Tension Packer, the Model L Triple Packer, Tubing Anchors and the Three-Blade Wall Scraper.McMurry Oil Tools also started business in Houston in 1954 with a line of gas-lift equipment. In the late 1970s, the com-pany would become part of Hughes Tool to supplement its growing offerings of oil and gas production equipment.Bakers Model ATension Packer wasdesigned to supportwater ooding projects.401948-1957A Founder Dies Neutron Log Pioneer Arthur Youmans was an Iowa farm boy who managed toeducate himself during the Great Depression and had a penchantfor physics. He began his oileld career in 1948 as a StaffChemist at Well Surveys, Inc., a small oileld services companyin Tulsa, Oklahoma. His key project soon became the development of a pulsed-neutron logging tool capable of locating and assessingoil through cased boreholes. Over the next decade, his persistentwork and the help of a team of co-workers led to the NeutronLifetime Log in 1963 the rst commercially available pulsed-neutron tool. In the years that followed, the Neutron LifetimeLog discovered millions of barrels of oil that otherwise mightnever have been found.In 1960, Well Surveys merged with Lane-Wells and Youmans quickly advanced to senior research positions. He was acknowledgedas an international expert on well logging and by the endof his career had received over 75 U.S. patents. Arthur Youmans (right) with Richard Conner (left) and Erik Hopkinson during the testing of the Neutron Lifetime logI think I have lived in the most wonderful period of all time. Science and invention found their stride during my lifetime. I can remember the rst gasoline engine, the rst automobile, the rst electric light, telephone, wireless telegraph, submarine, airplane, radio, and now atomic development. R.C. BakerIn early 1957, during one of the most successful periods in the companys history, Reuben C.Baker retired as President of Baker Oil Tools.A few weeks later, Mr. Baker died after a briefillness. He was 85 years old. Mr. Baker left alegacy of creative genius, integrity, and dedica-tion to providing quality products and services to the oil and gas industry. Although he only had three years of formal education, Mr. Bakers inventions earned him 150 U.S. patents. He was succeeded as Baker Oil Tools president by his long-time associate Ted Sutter.41 Modern credit card issued. Korean War begins. China becomes Communist. NATO established.Denver-Julesburg Basin discovered. Berlin airlift delivers food supplies. Gandhi assassinated. State of Israel founded.Libya becomes a country established by the UN. Polio vaccine created. Princess Elizabeth becomesQueen at the age of 25. DNA discovered. Hillary and Norgay climbMt. Everest. U.S. has 58.5 million vehicles. First atomic submarinelaunched. Roger Bannister breaks thefour-minute mile. European Communityestablished. Soviet satellite Sputniklaunches Space Age. Arab-Isreali crisis closes Suez canal. USSR suppresses Hungarian uprising. Warsaw pact signed. Disneyland opens.1948195019511949195219571956195519541953The World YearBaker Hughes MilestonesTechnologyEnergyIndustryU.S. briefly becomes a net oil importer.Spraberry Trend discovered in West Texas.Discovery of Williston Basin in North Dakota.Six drain holes drilled from one well.Petrolite applies first rust inhibitor to a Pennsylvania pipeline. Hughes introduces jet bits. Lane-Wells introduces shaped-perforating charge. Petrolite applies first corrosion inhibitor at Illinois refinery. Petrolite patents ethylene oxidedemulsifier, chemistry that is still in use. Oil Base, Inc. introduces BLACK-MAGIC spotting fluid.Hughes introduces tungsten carbide insert (TCI) bits.Multilateral well drilled in Russia. First commercial acoustic seismic log First offshore jack-up drilling rig Soviets begin exporting oil. First oil discoveries in Gabon,Cameroon and Angola.Petrolite applies dispersant fouling inhibitor at an Illinois refinery.Christensen introduces industry standard 250P core barrel system.Lane-Wells completes 100,000th job on La Merced #17 well, same well perforated on job #1. Lane-Wells co-founder Bill Lane dies. Whipstock Inc. founded in Louisiana as Eastman patent expires. Baker Transworld formed for Venezuela operations.Magna Corporation founded,based on first oilfield corrosion inhibitor. Lane-Wells is acquired by Dresser Industries. E.D. McMurry founds McMurry Oil Tools to provide gas lift equipment. Hughes Tool Co. opensmanufacturing plant in Belfast, Northern Ireland.Lane-Wells introduces density log. Exploration Logging (EXLOG)founded by Stanford Universitygraduates. Milwhite Mud Companyorganized. New Baker Oil Tools headquartersestablished on Slauson Street in Los Angeles. Oil found in Nigeria and Algeria. 58,000 wells drilled in the U.S. First drillship and jackup rig go into service.Elgen Company develops the induction logging tool.Lane-Wells establishes Westheimer location, acquires Elgen Company.Subsea BOP stack and control system developed.Petrolite opens manufacturing plant in Kirkby, England. R.C. Baker retires. Ted Sutterbecomes President and G.M. of Baker Oil Tools. Mr. Baker dies at 85. Centrilift becomes a product lineof Byron Jackson pumps. Christensen opens a diamond bit plant in Celle, Germany.Centrilift pump developed in Vernon, California.421958-196743Offshore MarketsAfter a brief recession during 1956-58, the oil and gas service sector resumed sustained growth and expansion through the 1960s. In the continental United States, signicant discoveries were made in the Denver, Williston and Permian basins. Offshore, oil elds were discovered on the continental shelf of the Gulf of Mexico, bringing the oil patch to south Louisiana. Internationally, giant elds were discovered in the Middle East, leading to the formation of OPEC in 1960. The energy industry in Russia expanded with the discovery of major gas elds, and the giant Daqing eld was discovered in China. But these two Communist nations remained closed to Western operating and service companies. The 1960s boom cycle turned Baker Oil Tools, Hughes Tool Company, Lane-Wellsand Eastman into industry leaders and the period also fostered technological innovation that led to the formation of new oileld service companies. International and44Baker Oil Tools experienced one of its greatest periods of growth in this decade, rst under the direction ofTed Sutter, whobecame president in 1956, and then E.H. Hubie Clark, whowas elected president in 1961. This period also saw a gradual shiftof research and manufacturing operations from Los Angeles toHouston. The company installed its rst computer, a Univac, in1962 to improve inventory control, pricing and accounting. To meet growing international demand for oileld services, Baker Oil Tools opened a manufacturing plant in Edmonton, Canada, and established sales and distribution centers in West Germany, South America and Nigeria. A complete reservoir uid analysis lab was established in Port Harcourt, Nigeria. Baker Oil Tools (Nederland) N.V. was formed to service North Sea operations off the Dutch coast, while Baker Oil Tools (U.K.) Ltd. was established at Great Yarmouth to service the British sector of the North Sea.Baker introduced a number of completion products, including dual and triple packers, tubing anchors, and cement retainers. The rst retrievable packer, Model E, was introduced during this decade and improved upon through the Model G and R retrievable packers. In 1962, Baker introduced the rst external casing packer. Sutter, Clark Lead Baker Growth1958-1967E.H. Hubie Clark held 30 oil tool patents and led Baker Oil Tools through the growth and expansion period of the 1960s and 1970s.Baker Oil Tools Houston test lab facility was completed in 1961.Ted Sutter (center) and Hubie Clark (far right) shake hands with R.F. Ingold (far left) and C.J. Coberly after the acquisition of Kobe pump company.Baker Oil Tools introduced a number of packer innovations during the 1960s.45Innovation and Expansionat HughesHughes Tool Company remained a private enterprise throughthe decade, owned by Howard Hughes, Jr. While Mr. Hughes was engaged in his Hollywood and aviation enterprises, managers in Houston, such as Fred Ayers and Maynard Montrose, kept the tool company growing through technical innovation and international expansion. In 1958, the Engineering and Research Laboratory was enlarged to accommodate six laboratory sections that housedspecialized instruments such as a direct reading spectrometer andX-ray diffractometer. In 1959, Hughes introduced self-lubricating,sealed-bearing rock bits. After collecting data from thousandsof bit runs, Hughes introduced the rst comprehensive guidesto efcient drilling practices in 1960. The year 1964 saw theintroduction of the X-Line rock bits, combining new cuttingstructure designs and hydraulic jets.To support drilling activity in the North Sea and the Middle East,the company expanded manufacturing operations in Belfast,Northern Ireland. A new bit plant was set up in Buenos Aires,Argentina. Through licensees, bits and tool joints were manufac-tured in Canada, Mexico, Brazil and Germany. Product sales were made in oil elds throughout the Western and Eastern hemispheres with the help of manufacturers representatives. Hughes Tool Companys Research & Engineering laboratory was the most extensive in the industry, 1958.Hughes Tool Company introduced the X-Line rock bits in 1964.46Lane-Wells Survival and Successes Lane-Wells celebrated its 25-year anniversary in 1957, a period ofsevere belt-tightening and consolidation. In 1958, the companyvacated most of its Los Angeles ofces and moved the core group of employees to Houston. Convinced that the best way to turn aroundthe company was through improved logging services, Lane-Wells merged with Elgen, an openhole logging company based in Wichita Falls, Texas. Manufacturing capabilities were enhanced through S.I.E., a Dresser company, which supplied geophysical and analog instruments. As aresult of this reorganization, the company launched new formationevaluation services Electrolog electric logging, Acoustilog andNeutron Lifetime Log. With Lane-Wells Research at work in thenew Westheimer location, the company introduced the Induction log and conducted development research for the Minilog and Laterolog resistivity instruments.Activity picked up rst in the international markets with South America being the busiest sector. The company negotiated a contract with YPF, the Argentinian oil company in 1959 and serviced more than 4,000 wells over the next four years. Operations in Venezuela also contributed to the companys continued stability. Lane-Wells entered the Canadian acidizing and fracturing market by purchasing a small company known as Eskimo. Within a few years, the company became a separate entity within the Dresser Goup and was renamed Titan. Eastman Extends ServicesEastman Oilwell Survey Company continued to expand its businesses through the 1960s with headquarters in Denver, Colorado. Thecompany had eld ofces located in Houston, Lafayette, Odessa and both Edmonton and Calgary in Canada to handle controlleddirectional drilling and well survey jobs through local eld engineers.An Export Sales department was established in the Denver ofce tosupport international orders. Te Lane-Wells Companys Houston headquarters on Westheimer Road.1958-1967As Lane-Wells technology became increasingly complex, a Quality Control Department was established to maintain high manufacturing standards, 1959. 47Christensen Goes InternationalChristensen Diamond Products businesses grew in international markets with manufacturing plants operating in Canada, Franceand Celle, Germany. Frank Christensen set up a NipponChristensen plant in Japan. In South America, Christensen bitswere used to drill wells at Lake Maracaibo in Venezuela andBrazils Amazon jungle. The company invented a rubber sleevecore barrel to allow recovery of unconsolidated cores. Patentswere obtained for drilling and coring bits with spiral waterways.Fluids and Chemicals Businesses During the 1960s, Milwhite took advantage of drilling activity in the Permian and D-J Basins to expand the distribution network in the West Texas and Rocky Mountain region. Newly discoveredoffshore elds in the Gulf of Mexico led to the establishment of supply depots and blend plants in Louisiana. Milwhites business growth potential attracted the attention outside the oil industry, leading to its 1962 acquisition by the Olin Group, a chemicals and metals company based in Missouri. In 1964, Milchem was formed to supply drilling uids and oileld chemicals. The new company launched THERMEX, an oil-based drilling mud system in 1965.Production and rening chemicals business saw increased activity by established companies such as Petrolite and the formation of new enterprises. In 1963, Milwhite acquired Aquaness, a provider of production and rening chemicals. In 1965, Amoco founded Wellchem, an oileld production chemicals business. In addition to its directional services, Eastman supplied the Star Recorder, a mechanical logging unit that could record drilling rig performance parameters, 1958.Christensen engineers runthe rubber sleeve core barrel in Venezuela, 1958.481958-1967In 1966, Centrilift moved its ESP manufacturing operations to the Byron Jackson pump facility in Tulsa.Milwhite used a seaplane to support drilling operations alongLouisianas inland waters during the 1960s.Centrilift: Tulsa to Tripoli In 1966, the Centrilift ESP business moved to a new plantin Tulsa, which was jointly occupied with Byron JacksonPump standard products division. Centrilifts sales andservice activities were expanded as units were added in Canada and other parts of the United States. To better serve these customers, a network of service centers was developed, which located service personnel and equipment close to the installations through North America. Centrilifts rst foreign installations were made inGermany, Austria and Brunei in the early 1960s. Work was also going on at this time in South America. The rst major export was to the Oasis Oil Company in Tripoli, Libya in 1965, a contract for 43 units.49 U2 spy plane shot down over Russia. John F. Kennedy wins U.S.presidential election.Cuban Revolution brings Castro to power.China discovers supergiant Daqing field. NASA founded. Hula hoop becomes popular. Berlin Wall built. Soviets launch first man in space. U.S. Peace Corps founded. Cuban missile crisis increases tensions between U.S. and Soviet Union. Algeria gains independence after France withdraws. John Kennedy assassinated. Martin Luther King makes his I have a dream speech. Beatles become popular in the U.S. Civil rights act passes in the U.S. First heart transplant Six day war in the Middle EastMao Zedong launches the Cultural Revolution.U.S. Marines land in DaNang, Vietnam, escalating the war.1958196019611959196219671966196519641963The World YearBaker Hughes MilestonesTechnologyEnergyIndustryU.S. drillers pass 25,000-ft barrier. Oil discovered in Qatar, UAE. OPEC formed.Major oilfield discoveries in the Gulf of Mexico.Baker introduces external casing packer. Baker Oil Tools introduces new packers, anchors, scrapers and workover tools. Christensen introduces rubber sleeve core barrel for the Mohole project. Centrilift installs first ESP system in California. Milwhite introduces UNI-CAL chrome lignosulfate drilling fluid. Hughes introduces self-lubricating sealed-bearing bit.Major discoveries in West Texas and Saudi Arabia.Three giant fields discovered in Iran. Discoveries in Alaskas McArthur River, West Texas and Oklahoma. Production begins in Egypts Gulf of Suez. Milchem introduces THERMEX oil-based mud. Lane-Wells introduces Neutron Lifetime Log. Petrolite applies first inhibitordispersant in a naptha HDSheat exchanger.Lane-Wells Co. moves headquarters to Houston. Centrilift moves operations to Tulsa. Petrolite opens blend plant in Estevan, Saskachewan and Frankfurt, Germany. Baker Oil Tools revenue tops $25 million. BOT Research Department moves to Houston. Petrolite patents anti-oxidant fuel stability additive for #2 fuel and diesel.Ted Sutter is named Chairman and E.H. Clark President of Baker Oil Tools. Milwhite purchases Aquaness, provider of production and refining chemicals. Baker Oil Tools acquires Kobe Inc., a major pump supplier. Lane-Wells founder Walt Wells dies. Milchem formed to market drilling fluids and oilfield chemicals. BOT International expands with locations in Canada, Germany, Bolivia, Libya, Iran and Nigeria.Hughes Tool Company introduces X-Line drill bits with improved cutting structure, fully sealed bearings and jets. Olin Group purchases Milwhite. Baker Oil Tools acquires Pressure Services Incorporated, a manufacturer of subsurface flow control equipment. Petrolite France commences operations. Major oil discoveries in Libya and gas discoveries in Russia Civil War in Nigeria disrupts oil operations.Russia develops multilobe positive displacement motor (PDM). Centrilift moves to new facility in Tulsa. Baker Oil Tools expands Latin American operations to Peru and Brazil. Arab-Israeli War causes oil crisis. First oil production in Oman BOTs Houston facilities match size of Los Angeles plant. BOT opens facilities in U.K. and Holland. Amoco founds Wellchem Inc., an oilfield production chemicals business.First 3D seismic survey shot over Exxons Friendswood field.501968-197751DiversificationIn the late 1960s and 1970s, new markets, new products, new applications, andcorporate mergers drove industry growth and diversication. The 1973 Arab oilembargo ignited exploration activity as oil discoveries on Alaskas North Slope andthe North Sea basin spurred development of large new reserves. Broadening Product Lines, 52Hughes Goes Public, Grows through Acquisitions In 1972, a corporation was formed to acquire the oil tool assets of Howard R. Hughes, Jr.s Summa Corporation. The new, publiclyheld Hughes Tool Company achieved extraordinary growth through the decade as revenues grew from $150 million in 1973 to $450million in 1977. To support international sales of its principalproducts, drill bits and tool joints, Hughes built manufacturing plants in Canada, Mexico, Venezuela and Brazil. The company also pursued an aggressive strategy of mergers and acquisitions underthe direction of Chairman Raymond Holliday and President James Lesch. Two of the major acquisitions during this decade wereByron Jackson Inc. (BJ) in 1974 and Regan Offshore Internationalin 1976. The BJ acquisition diversied Hughes operations intopressure pumping for cementing and well stimulation. Through Regan Offshore, Hughes extended its offshore services to risers and diverters for subsea production. Drilling expertise also enabled Hughes to diversify outside the oil industry. The company sold drill bits and boring equipment for mining, water-well, construction and demolition industries. Integration of Wireline ServicesIn 1968, Dresser Industries brought together Lane-Wells and the Pan Geo Atlas Corporation (PGAC) to form Dresser Atlas. PGACs expertise in openhole logging and its international operations made it an ideal merger partner to form an integrated wireline services company. Hughes Tool Companys 84-acre Polk Street facility near downtown Houston1968-1977During the 1970s, Hughes manufac-tured over 400 types of drill bits (left) and was the largest manufacturer of tool joints.53Since its inception, Lane-Wells had generated most of its income from perforating services, but log interpretation had narrowed down producing zones, resulting in fewer perforations and less revenue. Greatly expanded wireline logging capabilities helped the combined company continue to grow. The companys increased service capabilities in both loggingand perforating and the advent of modern computer technologyallowed research engineers to make major advancements in instrumentation during the 70s. Microprocessors and mini- computers improved the design and reliability of downholeA BJ-Hughes cementing operation (left). A Regan subsea production system under test (right)tools and gave eld engineers improved abilities to analyze data.Innovations included the Compensated Neutron, Spectralog,HC Acoustilog instruments and continued improvements in thecarbon/oxygen log. There were also vast improvements in cased hole offerings with the development of VertilogSM services, which Dresser Atlas purchased from AMF Tuboscope. The perforating side of the business also was buoyed withincreased technical expertise. In 1975, Dresser Atlas constructed the Pine Island facility for the manufacturing and testing ofshaped-perforating charges. Dresser Atlas facility in far west Houston on Westheimer Road was a center for the companys research, engineering and manufacturing operations.54Christensen Develops PDC BitSince its founding, Christensen Diamond Products had expandedits designs and applications for diamond drilling and coring bitsusing natural diamonds as the principal cutting elements. Theseindustrial diamonds were primarily sourced from South Africaand were sorted, sized and graded for mounting in diamond bitsthat would drill certain formation types in specic applications.In the early 1970s, diamond technology reached a major milestone when General Electric developed a process to make syntheticdiamonds by alternating carbon graphite and cobalt under highpressures and temperatures. Recognizing the potential opportunityto adapt this technology to oileld drilling, in 1972 Christensenbuilt a Diamond Technology Center in Salt Lake staffed with scientists and outtted with state-of-the-art equipment to pursue research and development. Ultimately the investment led to thedevelopment of a polycrystalline diamond compact (PDC) cuttingelements. Christensen quickly adapted the technology to oilelddrilling in the form of a xed cutter bit with the introductionof the industrys rst PDC bit in 1976. With cutters made ofsynthetic diamonds, the PDC bit had no moving parts and cut rock with a shearing action that increased rates of penetration comparedto roller cone and natural diamond bits drilling in the same forma-tion. PDCs subsequently opened a whole new application rangefor diamond bits, principally in softer formations. Materials, design and manufacturing processes continue to be improved and perfected and today, PDC bits account for more than 60% of the footage drilled worldwide. In 1976, Christensen developed the Navi-Drill downhole motor at its facility in Celle, West Germany. In January 1977, the rst run of a Navi-Drill Motor a 3 Mach 3 operated out of Celle wasinvoiced to customer, Preussag AG in Germany. Product offerings were continuously expanded to meet market demands, and theNavi-Drill motor line would become the industry leader in reliability, performance and worldwide use.Teleco Conceives Real-timeDrilling MeasurementsTo verify the direction of drilling, historically the drilling oper