Yanchang Oilfield

Chapter 3 China’s First On-Land Oilfield: Yanchang Oilfield

1 Yanchang Oilfield Established, 1905

Yanchang Oilfield is situated in the vast area east of Yan’an in northern Shaanxi Province and west of the Yellow River. Geologically, it belongs to the Ordos Basin, which covers the provinces of Shaanxi, Gansu, Ningxia, Shanxi, and Inner Mongolia. Its topography, with abundant gullies and ravines, is typical of the Loess Plateau. The existence of oil in northern Shaanxi has been well- documented in Chinese historical records since early times. In 1905, the Qing dynasty Governor of Shaanxi Province, Cao Hongxun 曹洪勋, wrote a memorial to the throne, requesting permission to establish the Yanchang Oilfield. Although the Qing court granted his request, it did not give him any funding. He boldly used 81,000 taels (= 2,331.25 kg) of the local government’s silver originally intended for wasteland reclamation to build the oilfield. He appointed Expectant District Magistrate Hong Yin 洪寅 to oversee the operation. After two years of preparation, they hired a Japanese technician, Satō Hisarō 佐藤弥朗, who started drilling at Yan-1 Well, in Qili Village 七里村, on June 5, 1907, using a percussion rig brought from Niigata, Japan. Drilling was completed at 81 m on September 10, and the well had an initial daily out- put of 1 to 1.5 tons, which it maintained for ten years. The crude oil from Yan-1 was processed in small copper pots and produced 12.5 kg of lamp oil per day. It was sent for analysis in Xi’an, and it was found that when burnt, it produced a small amount of white smoke. It was as good as imported kerosene. In October 1907, the refinery started production and filled 14 cases with lamp oil (approxi- mately 344 kg), which were sent to Xi’an for sale. People liked the product, and the news spread. Yanchang Petroleum Plant had caught the attention of the Chinese people. Production at Yan-1 gradually dwindled until it dried up in 1934. The 28 years of Yanchang Oilfield’s existence spanned the last years of the Qing dynasty, the rule of warlords, and the Republic of China era. After it signed the “Agreement for the exploration and operation of petroleum oil fields in Chihli and Shensi Provinces” with the Republic of China government in February 1914, Standard Oil sent geologists and a drilling crew to northern Shaanxi. Since they had little success there, the agreement was rescinded in June 1917. Afterward, rumors of “oil-poor northern Shaanxi” began to spread. In response, Chinese geologists expressed their opinions on the issue, which we shall discuss below.

2 The Geologists Who Argued That Northern Shaanxi Had Oil

The noted geologists Ding Wenjiang 丁文江, Weng Wenhao 翁文灏, and Xie Jiarong 谢家荣 sped up their survey in northern Shaanxi. In 1919, Ding Wenjiang was the first to point out: “Standard Oil’s work in northern Shaanxi has proven to be a failure.” In 1921, Ding Wenjiang (also known as V.K. Ting or Ting Wen-chiang) and Weng Wenhao (Wong Wen-hao) jointly published an article entitled “A Brief Record of Minerals in China.” In it they pointed out that in the past, the oil industry in China had attracted the world’s attention, but since the joint exploration with Standard Oil in 1914, the disappointing results had tarnished its image. They argued that the oil-producing region was vast, and that the exploration was not detailed and thorough. They went on to write that oil remained a promising industry in China. Weng Wenhao, China’s first Ph.D. in geology and the director of the government’s Central Geological Survey, sent the geologists Wang Zhuquan 王竹泉, Pan Zhongxiang 潘钟祥, Xie Jiarong, Yang Gongzhao 杨公兆, Hu Bosu 胡伯素, Zhou Zongjun 周宗俊, Yan Huimin 颜惠敏, and others to northern Shaanxi Province. Their many im- portant discoveries proved the presumption of an “oil-poor northern Shaanxi” to be false.

3 Sun Yueqi Appointed Director of Northern Shaanxi Oilfield

In the spring of 1934, the Nationalist government appointed the noted businessman Sun Yueqi 孙越琦 to be the director of the Exploration Division of Northern Shaanxi Oilfield. Sun Yueqi organized and led personnel to move three percussion rigs as well as 99 tons of support equipment from Shanghai to Yanchang, in northern Shaanxi. In September of the same year, Yan Shuang

Figure 3.1 Geologist Weng Wenhao, Ph.D. (1889–1971)