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Interview with: Michel T. Halbouty
Interviewed by: Amanda Whitaker / Betty Cartwright
Date: January 29, year unidentified
Archive Number: OH JL 06
MH: Michael T. Halbouty
AW: Amanda Whitaker
BC: Betty Cartwright
AW: We wanted to start with Beaumont, and how growing up in the middle of that oil boom in Beaumont has had an impact on your career and your life and your getting started and your interests?
MH: (00:25) Oh, yes. But the Spindletop discovery, actually, could have had a great impact on Beaumont if the Beaumont had wanted it, which is not in this book, of course. And unfortunately, Beaumont could have been Houston.
AW: How do you—what do you think that’s all about?
MH: Beaumont didn’t want to be Houston and when the discovery came in, you’ve got to bear in mind, as we have stated in the book that 50,000 people came in within a very short period of time. When I say “short period of time,” I mean days, not months. And in three weeks we had 50,000 people in Beaumont that didn’t belong in Beaumont, so you can see the impact that it had on the people.
MH: A nice, East Texas town, 10,000-8,000 people, very few churches, very few businesses, very few hotels, and here the impact of 50,000 people coming in, swarming all over the place. It disrupted the lives of families who had lived for years-
BC: And property.
MH: In solemnly and then in the conditions that were to their liking, and so this went on for seven years, and then after the boom first started dying, then those people left except those who decided to stay in Beaumont. But during that seven year period-
AW: Which seven years are we talking about?
MH: From 1901-1908, 1909. During those years, industrialists all over the world thought that Beaumont would be the site for expansion. Why? Because Spindletop introduced the industrial age as well as the liquid fuel age to the world. Prior to that, a little oil that we got from seeps out of China and other places around the world--you might say we were living in the lamp age because then there were very few barrels of the stuff to obtain and they couldn’t use it for any other purpose besides put it in lamps. And then when the Titusville Field came in, discovery came in on the 27th day of August, 1857. From 65 and a half feet, and when the bale of that oil came out of the ground, it went from the lamp age into the lubricant age.
AW: That’s a wonderful metaphor.
MH: (03:30) So you had enough to go ahead and lubricate the wheels. And then Spindletop came in because of a tremendous impact of potential that it had, meaning that Spindletop had a potential of producing in one year more than the world’s production at that time.
AW: Oh, my. That’s just hard to imagine.
MH: At 100,000 barrels per day, and so it created a surge in the industrial revolution all over the world because industrialists said, “Well, gee! We’ve got an energy source!” In Baku in Russia, they were producing 25-30, 50 barrels a day—that was one of the largest fields in the world. Russia, prior to Spindletop, was the largest producing nation in the world. America—the United States was either second or third to even China producing a little bit more than the United States, and there were little productions all over the world, so no one paid any attention about petroleum production because of the fact there was so little of it. But Spindletop created an impact on the thinking of the industrialists, so the first refinery was built in Beaumont and Port Arthur.
AW: How quickly was the refinery built?
MH: Immediately. I would say within a few months.
AW: Was it built independently?
MH: Oh, everything was independent then, honey. I mean, they didn’t have any major oil companies—no such thing as a major oil company then. You had Standard Oil, but Standard Oil was a company that did not even—didn’t interest themselves in the Gulf Coast at that time. In fact, the chief geologist to Standard Oil Company stated that oil would never be found on the unconsolidated sides of the Gulf Coast, which we have in this book. You have that statement in that book.
AW: And when you were that boy in high school getting interested in this stuff, where had this boom come to at this point if Beaumont already-?
MH: Well, I wasn’t even born by the time they had the first boom.
AW: No, but by the time you got to high school-?
MH: (05:26) Yeah, I was in the second boom, in 1925. Yeah, I was just a shaver.
AW: That you were just—the deeper driller?
MH: The deeper drilling, yeah. But let me go back to my point. I said this in speeches and I’ve even gone up before the Beaumont Chamber of Commerce and made this statement—that Beaumont could have been Houston. Beaumont had everything necessary to become a great city. It had the 50 foot river to the sea. It didn’t have to be dug out like we did it over here-
AW: That’s right.
MH: We dug everything out in order to make a 50 foot channel to the Bay and we even have to channel the Bay in order to get into the Gulf of Mexico. So all that was not necessary.
AW: Even supertankers-
MH: So when these companies decided to go to Beaumont, those who ran Beaumont were completely bitter to have anybody come in and disrupt their life again. They didn’t want it anymore. They didn’t want any growth.
AW: Who do you think were the key people?
MH: Oh, I’ll tell you. I’ll tell you—let me finish!
AW: Excuse me.
MH: So they backed off, but they wanted to come to this area because they felt like oil would be found in this area because oil was found in Spindletop and they figured more oil would be found, and during the seven year period, more oil was found, all in Louisiana and also in Texas, so they said, “We’ve got to stay in this area, so where can we go? Where can we have a channel to the sea?” And so they looked around and they either had to go Lake Charles or they had to go to Houston, so they decided to go to Houston.
BC: And influential in that-
MH: Houston gave these people 10 years, 15 years, 20 years free taxes. Beaumont wouldn’t give them any free taxes.
AW: Who were the people-?
MH: (07:24) Beaumont wouldn’t even sell them the land, so I’ve always said that Beaumont would have been Houston only if they had had--early--about a dozen very, very expensive funerals.
AW: (laughing) That’s wonderful! Tell me which funerals!
MH: No, I’m not going to tell you. (laughing) What do you—you think of the names now that control-
AW: I’m thinking, I’m thinking—I’d love to talk about that!
MH: Well, you think of the names, you think of the McFaddin, you think of the Smythes, you think of the Wises who already came here to Houston and made great names for themselves. And the Keats-
AW: Was Yount part of that group? Or he was later?
MH: No, no. No, no, no. Yount came in later. He came in later. He came in 1925-26. So-
AW: You know, that happened again later with NASA. NASA kind of looked at Beaumont, I heard, and the McFaddins wouldn’t sell that land.
MH: They didn’t want to do anything with that land, you see? And so they came to Houston and look what’s happened to Houston. Of course. Maybe Beaumont feels that they should still be that small town. Have you been to Beaumont lately?
MH: Have you gone to see what Pearl Street off Main Street looks like?
AW: Oh, I saw it maybe five years ago. It was terrible.
MH: It looks like there has been a war.
AW: Daddy couldn’t wait to move, it was something terrible. The minute he retired, he moved to Houston.
MH: So now the independence started all—let me say this—that the modern day petroleum industry started with Spindletop. Gulf Oil Company was formed there because of the production that they had there. Texaco, City Service-
MH: Sun, yes. You’re right.
AW: I’m thinking of the chapters in your book.
MH: (09:24) Yes. Humble started later but the people there became wealthy because of Spindletop and they came to-
AW: The Cullinans and that group?
MH: Cullinan--Joe Cullinan? Yeah. He formed—he came over and formed the Houston Oil Company, and the Houston Oil Company sold out to Sinclair about 25 years ago. And the Cullinan family, of course, are still here—Joe, named after his daddy, is still here, and so is-
AW: Nana? Nana Cullinan?
MH: Yeah. And I’m thinking of a boy-
AW: Was there a time in your life when you made a concerted choice about what you were going to join the big companies or whether you were going to be an independent? Was there a time-??
MH: I had a choice. I had a choice when I graduated from Texas A&M where I had three offers at the time. I had graduate degrees and it was during The Depression. I could have gone to be a cadet at old Brooks Field to become a pilot in the Air Force if I had that, because the DROTC training I had at A&M, I was high on the ranks and they gave me that opportunity. I had a chance to go to work for the United States Geological Survey as a hydrologist in Oregon; I turned that down. I turned the other one down and I also had a chance to go ahead and pursue--and I received a fellowship to pursue my doctor’s degree, which I got later. But anyway, I turned that down at the time. And so I went to Beaumont and I wanted to go to work for an oil company. And I went to the Yount-Lee Oil Company and they put me on the payroll.
AW: How’d you pick them?
MH: Being in Beaumont, and because they were the largest independent company in the entire Gulf Coast. In fact, if Mr. Yount had not died when he was 52 years old, there was no question in my mind he would have been as big as probably Exxon is today. Now, that may be a big thing to say, but I know that if he and lived to be 75 years old—which he probably should have lived—we would have had a great, great company.
AW: Tell us about him a little bit. His character seems to be a big influence on you.
MH: His character was—he had an impeccable character. He was extremely innovative. He had a mechanical mind. He would tell me things that I would marvel at because I would get all this out of my years of schooling and master’s degrees and doctors degrees, and here this man without a third-grade education was teaching me geology. He and I became very close and I would ride with him continuously in the fields.
BC: Can you tell us about how you became close to him? It’s a leading question.
MH: (12:40) Well, it’s a long story, but I think you ought to read Wildcatter. You’ll get it.
AW: There’s that wonderful story in the book, you know, about Paderewski playing and you arriving with the core in the middle of the night and he won’t let you in—that’s a wonderful story! (laughter) But you all must have had a special spark for each other.
MH: We did. Of course, this was after Spindletop, which you read with the Wildcatter.
AW: Oh, that’s right. I’ve got that here, too.
MH: Yeah, the Wildcatter.
AW: Well, one thing that actually we were referring to-
MH: We did. We had a very good relationship. And for instance, I’ll never forget, we walked into a room and I was telling him about making these locations and I’d discussed these locations with him and he had a table just about half this size round, and I said, “Well, Mr. Yount, I think we can make the location right here. I think it’ll be alright.” He said, “What makes you think so?” I said, “Well, we’re going to get the same sign that we got over here.” He said, “You think that?” I said, “Well, I really do.” He said, “Well, let me teach you something.” So he took his shoe off his foot, he took the heel and hit it right in the middle of that glass, and it broke into hundreds of pieces, and it broke this way mostly.
AW: In a circle with spikes going out?
MH: And these we refer to as faults. Slippages in the earth.
MH: And he said, “You see, Mike? You see that?” And I said, “Yes.” And he said, “Well, this location that you say is good is over here, and the location that you want to make is over there, so it’s across this fault. You don’t know what you’re going to get.” I said, “How do you know it’s there?” He said, “Because I know that when the domes come up, it breaks the formations.” And he was so right.
AW: How did he get that?
MH: (14:30) He just knew. He was—he knew the earth. He was a self-taught geologist, and a good one.
AW: Is this from studying coring, or from-?
MH: Well, from just knowing something about the earth and knowing something about how these diastrophic actions take place and what happens. And I described very thoroughly in the back of this book—(telephone rings) the geology of the salt domes. Take a look at it. (inaudible, he walks away, telephone rings again).
AW: Talking about Yount, we were really struck—both of us—about your description about meeting with him, with Dad Kellum down at Highland, and Dad Kellum’s description of the difference between wildcatters and independents.
MH: That’s in the Wildcatter, not in this book.
AW: Right. And we were interested in what you had to say about that subject—about those guys in the early days who you’d call “wildcatters,” and then the development of the independent oil men of today, and how those people are different and how they’re the same?
MH: Well, the independents started off—you’ve got to bear in mind that when Spindletop was discovered, there were no geology that determined how these domes can be found. There was some surface indications. For instance, at Spindletop, we found out that they had a mound that rose above the surface of the plain, about fifteen to sixteen feet, and that the soil was a little bit different. You had dirt that was a little bit more paraffinic—it felt like it was paraffinic. You had water wells drilled on the area there that were brackish and so when those indications first were known by laypeople, everybody went around looking for those same indications all over the Gulf Coast and they found these domes in Salt Lake, Batson, Jennings, and all over the Texas and Louisiana coast, they were sticking up like a sore thumb, and they didn’t have to have any geology to determine whether to drill the well there. And so that-
AW: Then some people went after it?
MH: Well, yes. Some—that’s what I’m trying to tell you. The people who went after it were those who were bold enough to put money together and put a rig together and drill, and they’d drill those wells by the seat of their pants. They didn’t have any engineer, no scientific ability. None whatsoever.
AW: Is that how Yount got started?
MH: Yount started the same way. Yes.
AW: And he’s a wildcatter with some natural knowledge?
MH: Yeah. He was a wildcatter who—he was working in the field—in the rice fields, as a young man, when Spindletop blew in. And we say that, I think, in this book.
MH: (17:22) And so he started off at—Spindletop triggered his interest and exploration. And so he could put a rig together—here was a man that didn’t finish the third grade—put a rig together and start drilling a hole, and he hit this first fracking hole. And Mr. Thelan—I think we printed in there—Mr. Thelen was in a barbershop and Mr. Yount wanted to raise the money to drill that well, and he told Joe the barber—he said, “Joe, do you know of anybody who’s got the money, would like to put in to drilling of the well?” And he said, “No, Mr. Yount, I don’t know.” But Thelen was—had a towel over his face in the next chair, overheard the conversation, and after he got through, he stopped Yount and said, “Just a second. I’d like to talk to you,” when Yount started to leave. And that’s how the Thelens got involved in the Yount-Lee oil company.
AW: Well, the Thelens were in the food business, weren’t they?
MH: They were in the food business. My daddy used to buy groceries from them. That’s right.
AW: I still use Seaport Coffee—I don’t know whether they’re connected with that.
MH: That’s how the Thelens got their money, and so the Yount-Lee Oil Company grew very rapidly under Mr. Yount’s tutelage.
AW: As a wildcatter, though.
MH: As a wildcatter. Certainly, as a wildcatter.
AW: So when he met you-
MH: He brought ships in to—on the Natchez River and he was one of the first—in fact, I think he was the first--independent exporter of oil in the United States. He exported oil to France.
AW: Whose ships did he use? Did he lease ships to bring them in, to come into Beaumont?
MH: The French sent the ships in to pick up the oil and he sent them the oil.
AW: So he was doing international wheeling and dealing from Beaumont?
MH: (19:21) Yes. Absolutely. Absolutely. And he built the laboratory for me to gauge the oil that would go—that went into the ships.
BC: And to also study the mud.
MH: That’s right. So Mr. Yount was a great man. It was a shock when he died. It was a shock to me. It was a shock to Beaumont.
AW: Well that was a real crossroads for you.
MH: Oh, absolutely. Right in the middle of The Depression and he was the man who gave—who helped when Beaumont could not pay its employees—when the City could not pay its employees—Yount was the one who put the money up.
AW: What different did—what did his untimely death do to you and your development?
MH: Well, I was so shocked—this is going back to your question, did I ever work for—did I ever go with a major oil company? I stayed with the company, but I could see the handwriting on the wall. Those who were in charge of the company really wanted out, so they made the sale for $48 million to Stanolind, which is now Standard Oil Company of Indiana. In fact, it was Standing Oil Company, but they had a company called Stanolind--abbreviation. So when they took over the company in 1935, they wanted to know—they called me for an interview. They wanted me to interview with them, and so there were three or four of the interviewers—all of them in higher capacities at the time with the company. And so they said, “Mr. Halbouty, you’ve got these credentials—graduate this and these degrees and so forth—and you’ve got degrees in geology and you’ve got degrees in petroleum engineer, and separate degrees—and you’ve been practicing with this Yount-Lee Oil Company as a geologist and a petroleum engineer. We’d like to keep you in the company,” and I had every intention of going and staying with the company. And they said, “We want to keep you in the company.” And I said, “Fine.” And they asked, “Do you want to stay?” And I said, “Yes.” And so they said, “Well, you have to give up one of your disciplines.” I said, “What do you mean I have to give up one of my disciplines?” He said, “In our table of organization, we don’t have any setup for a geologist and a petroleum engineer. You’ve either got to be a geologist and pursue that in the company or you’ve got to be a petroleum engineer and pursue that.”
BC: The rigors of your offer-
AW: Isn’t that incredible? Just one or not.
MH: (22:10) And I said—and I told them, I said, now, “let me tell you people something. I spent a hell of a lot of time and a hell of a lot of money and hell of a lot of work getting these degrees, and I’m going to be a geologist and a petroleum engineer until the day I die, and I’m going to practice with both hats.” And I said, “If you think I’m going to give up one of my disciplines just to go to work for your company, you’re mistaken.” And I said, “Forget it,” and I walked out.
AW: Yeah, and that was that.
MH: And so I never went to work for another major oil company.
AW: So from that time on, you were-
MH: I was an independent.
AW: Out doing things.
MH: And I went with Glen McCarthy. I stayed with Glen for a year and about nine months.
AW: What was that like?
MH: I think just like I guess Godzilla and King Kong getting together! (laughs)
AW: Which was which?
BC: Who won?
MH: Well, you know, I could say this. I like Glen very much. I still like him today, but unfortunately, there was some differences in character, both of us, and differences of way of life and I decided, well, I just didn’t want to put up with it any longer and I got out. But I’ll say this—that I think if Glen and I had stayed together and worked together, we would have had a hell of a big company.
AW: How did you all hook up? Was that through Mr. Lee?
MH: Through Mr. Lee. Mr. Lee—I presume you know the story that he married Faustine?
AW: I didn’t make that connection until-
MH: Well, no. He married Faustine, who in fact, Faustine was fifteen or sixteen years old. I don’t think she was much older than sixteen, probably, and Glen was working at a filling station and so they got to know each other because she used to go there all the time, and one thing led to another, and so they eloped and got married. And of course, the Lee family was a little bit upset about it. And I knew the Lee family very well because of having worked with Yount-Lee Oil company and the Lees being in production and some of the other enterprises—why, I got to know Mr. W.E. Lee better than I did T.P.—they and W.E. and T.P. And W.E. Lee was the father of Howard Lee, who just recently died. He was married to-
AW: Gene Tierney?
MH: Gene Tierney, and before that it was to Hedy Lamarr. And Donny Lee and Ronny Lee and Tom Lee and the girls—oh, I can’t—Mrs. Isaac I think—I can’t think of her first name. But anyway, all of them are dead now except the girl and Donny, is the last one left. And I used to visit with their house at La Porte. They had a summer so-called “home” at La Porte, and so-. But anyway, when they got married, Mr. Lee wanted to do something for his daughter, naturally, and so he decided that he would try to stake Glen a little bit in doing some drilling and so forth, so he gave him—he opened doors for him and Glen was able to put a rig together. And at that time, I had been—we just started drilling, and since he knew that I had worked for the Yount-Lee Oil Company for so long and for the few years I had been with them, they thought that I would make a good connection with his son-in-law. And so Glen came to see me and I got—I liked Glen very much and he asked me if I would come with him. I said yes. So we worked out a deal where I’d come on up with him, and I stayed with them for I’d say a year or nine months, and we found a lot of oil together.
AW: You know, somehow, talking about that brings John Meakem to mind because he was from Liberty, wasn’t he?
MH: He was from Liberty.
AW: Did you all—did you bump into him?
MH: Oh yeah. We bumped into John all the time.
BC: In Alaska you did, didn’t you? Many years ago.
AW: I was thinking about these days at the filling stations—you know, Glen would call--where was that filling station?
MH: Gee, I don’t know. Somewhere in Houston.
AW: Oh, it was in Houston.
BC: One question we wanted to go into, I think will be an extensive question, which is involving your next step I think in your development was the organization of the lease, and how in those did you put a lease together?
MH: (26:36) By the shake of a hand.
BC: That’s what we thought.
MH: You can’t do that now; you’ve got to have forty lawyers.
AW: Well, that’s what we wanted to ask you; how that developed over time. Like how you put it together before the war, and then how you did it in the ’50s, say after the war, and then how you do it now. How that’s changed?
BC: Involving everything, including technology?
MH: Well, I mean, to go out and get a lease in the old days—the younger days—you’d go check to the ones who owned the land and you’d ask him for a lease and you gave them the terms and he accepted those terms, and you signed that lease and that was it. He trusted you and you trusted him, but the lease carried certain stipulations—not many. And then through time, because of crooks and shysters and everybody else coming into the business and the leasing game particularly—then people decided that they’d better go to lawyers, and then these lawyers put in a lot of stipulations in the lease form. And today, the lease form is very thorough. It covers the aspect and responsibilities and obligations and the rights of both the lessor and the lessee.
BC: Probably some very wealthy attorneys, too.
MH: Yes, it is.
AW: I imagine that the financing has changed over time, too.
MH: Oh, yes. Prior to East Texas, you could not go anywhere and borrow money from a bank on an oil property. You had to have other resources.
I: What date are we talking about here?
MH: We’re talking about everything prior to 1930—discovery was in ’31 and it took about two years or three years for the banks to realize something could be done. It was about ’34 or ’35.
AW: Which discovery are you speaking of?
MH: (28:40) I’m talking about the East Texas—that’s described in our book The Last Boom. Do you have that?
MH: You see, up to that time, there were no pro-ration; no control on production. Everybody produced whatever they wanted to. The banks never knew how long the production was going to last. They had no petroleum engineers, no reservoir engineers. They’d had no studies made. Petroleum engineering came in after that time, you might say. And so later, about ’34 or ’35, there were engineers who were able to take a lease—a number of wells on the lease—and they would be able to tell you based upon proration that was set by the State of Texas--that those wells on that lease would produce for so many years, because they were able to estimate the reserve of oil and gas in the ground and on the rate of production, how long it would take that reserve to be depleted. So banks became a little bit secure in their thinking, that they could be able-
AW: That was really the technological development that brought the banks in?
MH: That was the technological development—that was the technological analyses that brought the banks in to loan billions and billions and billions of dollars since that time. And without that, they wouldn’t have been able to drill the wells.
(end of tape)
(Tape 2, discussion between M and I2 about interview and other interview subjects to 01:58)
AW: (1:58) Mr. Halbouty, in reference to the financing then, between 1901 with Spindletop and 1935, how was financing made by the wildcatters?
MH: It was made privately. Absolutely, tee-totally privately. When Galley and his partner needed the money to come drill Spindletop, you know where they went to get it? From the Mellons.
AW: That’s right. That was in your book. Yes.
MH: It was a private, private situation.
AW: Which was disastrous to Beaumont, too.
MH: (02:26) Yes. It was Guffey and Galey. They went and borrowed the money from Mellon and gave the Mellons an interest. That started the Gulf Oil Corporation.
AW: And not run by Beaumont people.
MH: Not run by Beaumont. Maybe Beaumont people may have had some interest in it, but the banks did not loan money on wells—on production—until after East Texas. It was the debacle in East Texas where they were stealing oil and everything else that caused the State of Texas to impose restrictions and regulations on production. This is when the Connally Hot Oil Act took effect because people were stealing so much oil and selling it that they had to pass a federal law making it a crime to do that. And the State of Texas at that time instigated regulations that controlled the production, and so when the banks realized that here was a well that had a reserve estimate made by petroleum engineers that had 100,000 barrels of oil and it was producing that oil at 100 barrels a day, it was easy to say that that well was going to produce for 1,000 days. And so they loaned money on that well, you see? Prior to that time, they had no way of knowing how long the well was going to last because there were no engineering studies being made. That was a great breakthrough for the industry and it was a great breakthrough for independents, particularly, because the independents then—I, particularly, am one among them—were able to borrow millions of dollars to drill wells and pay it back through production.
AW: (04:21) How did that change after the war?
MH: Oh, I think it became more sophisticated. In other words, we were able even to delineate practically to the month how long the wells were going to produce.
AW: But isn’t there a time somewhere between World War II and really just recently that the independents had a difficult time, versus the majors, in financing?
MH: No, not in financing. If they had the wells, they were able to get the financing. What happened was that from the period of 1957 or ’58 through the ‘60s into probably ’71, so that 12-year period there, the United States were receiving a tremendous amount of foreign oil, and there were very little explorations being conducted in the United States, and because of the fact that foreign oil was coming in at $1.25-$1.50, oil was selling at $1.80-$1.95. Pro-ration was keeping the well from producing the full amount that they were able to produce, therefore, a man would go out and drill a well, cost them say $50,000 in those days, that’s cheap--$50,000 to $100,000. He had to wait four more years or five years to get that money, to get that well paid out! You understand?
BC: Uh-hunh. (affirmative)
MH: So what he had to do, Amanda, is reach the point where he kept digging these wells and borrowing money, and finally, he couldn’t borrow anymore because the wells were not paying out fast enough. Because the influx of this imported oil was coming in here and the import was a tremendous amount at that time. It was ruining the independents! And this is when I start raising a lot of hell about it.
AW: Yes, we know.
BC: We know! (laughter)
AW: We’ve read quite a bit about that. We found that very interesting. How much influence do you think the majors had in that?
MH: (06:30) Oh, well, they did it all. There’s no question about it. But the majors—let me tell you something. It’s a funny thing about that question. The majors were not really at fault. It’s the damned independents who drew the majors into the position of having to do it.
AW: Yeah? How’s that?
MH: In the beginning, imported oil was voluntary, meaning that the major companies who controlled that oil overseas were bringing it in on a voluntary basis. And they were bringing in very little of it. Just a few hundred thousand barrels, and when I say a few, I mean really a few—300,000-400,000 barrels. But there’s always a redneck in the independent ranks—always. And there were a few of them that thought that that 300,000 or 400,000 barrels a day coming in was hurting them. And it might be--it might have been—but not to the extent that they hurt themselves later. And so they decided that what they wanted to do was to go to the government and have the government to have a mandatory—in other words, controlled—imports set up by the government. I opposed that vociferously. I thought it was wrong, and I said, “Now, you do that, you go to the government, you ask the government to help us, and the first thing you know, the government is going to cut our throats.” Because after all, Amanda, the government was responsible—the State Department of our country was responsible for the major oil companies to get involved in Middle East production because of the war. They wanted to be sure that they had enough production to move oil if the war lasted over a period of time. So they weren’t about to respond to the independents and that is to cut it back, and so some of us tried to warn these independents who had made a trek to Washington and finally got the government to put in mandatory controls, meaning that they would tell Exxon to bring in a half a million barrels and Amoco to bring in x number of barrels and so forth. So what they did, they spread it around, but when they spread it around, they had to increase it. And some years later when it reached the point where they were bringing in so much, the damned fool independents again—the same group, the same rednecks—wanted to go to Washington and have those controls put on the statute--make statutory controls. And once you get the statute written and approved, you’ll never be able to get it written off the books again. And I fought that part, and I won that battle.
AW: Do you think that your wartime experience gave you particular—oh, a position where you had broader vision of how the majors were operating and how the independents were operating?
MH: (09:39) Well, in my case, I consulted for some years, and I was fortunate to be—have a good rapport with the major oil companies, and after I went in and explored for myself, I had that same rapport.
AW: Do you think that dated to that wartime consultation that you did?
MH: Well, of course, I travelled extensively during the time that I was in the service, see? When I went into the service, I was an infantryman.
AW: Right. They wouldn’t let you—they wouldn’t let you go to battle.
BC: That’s right.
MH: (10:12) I was in the shell building when the—Pearl Harbor, and I was called immediately to active duty because I was a reserve officer, and I dropped everything and left. All I had to do if I wanted to stay out of the war is sign a piece of paper, state that I was involved in a very vital industry, but I didn’t do it. This country was good to my immigrant parents, and to ourselves, and I wanted to do everything I could for the benefit and welfare of this country, which I still work at. And so I went to Fort Benning and I was ready, I was a Battalion Commander, ready to go overseas when they moved me up to Washington, and then made all these trips. Yes, I did—I received a liberal education. That’s what it amounts to, because I became involved with the international aspects of petroleum.
BC: Which put you far above anybody else at your time.
MH: I think it helped considerably. You see-
AW: That was a unique position that that put you into, it would seem.
MH: (11:15) Yeah. I was responsible for the war effort to find enough oil, to fight the war. Yes. And we did a lot of good. I went to South America to raise that production, and then I recommended production to be raised elsewhere and I protected all the fields because we could have gutted our fields here and we didn’t know whether the war was going to last ten years, five years, or what. So I felt like under the circumstances, let’s gut somebody else’s fields. And I was directly over the Joint Chiefs of Staff, which was where all the planning was being done, and so before I was accepted, even though my name must have dropped out because of the geology and petroleum engineer and all this stuff—out of the records that they had up there. I was extensively—my family was extensively investigated by the FBI before I was placed in that position. But I was there, I could see the plan. I knew plans; I knew things that were going to exist long before just the common public or even some of the people in the military.
AW: Or other independents.
MH: (12:26) Well, yes. True. But after the war, well, I went back into exploring. I wanted to explore it myself. Before the war, I was doing work for others.
AW: Could you tell us a little bit—when you went back to exploring, well, it may even be before, but what were the key partnerships you’ve had during your career?
MH: (12:53) Well, an independent tries to go ahead and raise whatever money he can to drill a well, and that’s what I did when I was still in uniform. I had what they call “terminal leave” and to raise enough money to drill my first well at the (Natchitoches??) Parish.
AW: Was that New Year’s Eve?
BC: Yes, it was the New Year’s Eve story that was so wonderful.
MH: So—and then, if an independent is clever enough to stay in business, he will try to continue to drill wells with other independents with other independents and people helping him. And so when I became successful immediately after I started drilling on my own, well, then I became I would say a little bit more confident about what I was going to do and probably I would say a little bit more egotistical than I should have been, and probably a little bit more lacking the consideration and thinking that I should give to what I was doing, and I started drilling my prospects straight up, meaning I didn’t go out for any assistance. And it broke me. I was solid—I was just broke. I didn’t have enough money to take a nickel and put it in a telephone to use a call outside. I was just that broke. And so I realized I made mistakes, so I started all over again, and I got that way again, and I went broke again. And so I drilled fourteen straight discoveries and I had thirty-six dry holes immediately afterwards, and so I used all of my discoveries in order to drill dry holes and that broke me. And so I’ve learned now to just take it easy.
BC: Isn’t that an aspect of being independent, though?
MH: Why, yes. And I still, even now, you know, I want to drill one straight up without-
AW: Do you do that anymore?
BC: It’s something—it seems-
MH: Real straight up? No, honey. I don’t do it anymore.
BC: You don’t?
MH: (15:12) I have so many independents who want to look at my work and my geology and all, and I ask them to come in and they join me. And I join them.
AW: I was curious about the partnership with Friedman and the gamblers.
MH: That wasn’t me.
AW: Oh, that wasn’t you?
MH: No, that was Josey.
AW: That was Josey?
BC: Oh, that’s right, it was Josey.
BC: But you weren’t involved in that?
MH: (15:36) No, that was all production that I had that Josey was involved with me.
BC: He was involved—he was your link?
MH: Josey was family, and oh, I was very fond of him, and he was a gambler to the greatest extent. I was very fond of the Josey family—still am, for those who now exist. But Josey was my partner, and he gambled so much that he had to give--he didn’t have the cash to pay his gambling debts so he gave them interest in production-
AW: And so there’s the connection.
MH: And I had—and I operated, but I never used those names and that in the operation, always they were Josey’s friends, they were Josey’s obligations, so all my bills and everything else went to Josey and Josey paid for them.
AW: What influence do you think that the Paley paper had on production in the ‘50s? I guess that was really in ’57, and then-
MH: The Paley report is one of the best reports that ever came out of our government. It was a report that predicted the shortages that we finally incurred. I made my prediction in November 3, 1960 that we were going to run into this so-called “shortage” and which came out to be exactly true, but the Paley report even predicted it before I did, three years.
AW: It was ’57, wasn’t it?
MH: Fifty-seven, three years before I did. And it said that the government should just start doing something right away. The fallacy, or rather, the reason why the Paley report—let me put it that way—was not implemented was because it was submitted to Truman during the last stages—the last few months of his administration, and consequently, a new President comes in and he just forgets about the report, unfortunately. If Truman had received the report at least two, three years—say three years before—it would have been implemented. And we would not have had, probably, the heartaches that resulted after that, because it would have been a government-controlled thing. When I made—when I started going around the country raising hell about what was happening, nobody paid much attention to me because I was just a citizen who didn’t like what was going on. But the Paley report was a government-authorized report, and it was only after here, I’m going to break it- (interruption of a phone call)
AW: We’ve gone over our time.
BC: Yes, we have.
AW: You’ve been most generous-.
MH: (18:35) So when it occurred in 1973--when we had the embargo in 1973—then, the journalists started going back. Somebody remembered I said something in those days and then this is where my notoriety, you might say, came to be. But-
BC: Well, you got the ear of the President, we saw-
MH: Oh, yes.
BC: It’s a wonderful picture.
MH: Yes, thank you. Yeah, he and I are good friends—we’re friends, and we were friends before we ever started this business. But-
AW: Is there anything else? I guess our really last question--is there anything else that you would like to have known that has been left out about all that’s been written about you?
It’s a hard question, really.
MH: (laughs) Well, let me say this—that I think that--I had a little seven-year-old girl to interview me yesterday from school. She had an assignment.
BC: How wonderful.
MH: (19:38) And she asked me a question. She said, “Mr. Halbouty, what could you advise young people like me?” I said, “Well, I think that what I would tell you and others like you, and even those that are a little bit older than you are—is to try to learn everything about what the free enterprise system means—free market.” And I went on to tell her about the history of the United States, how the Constitution was formed, and why it was formed, and why the freedom to trade, freedom to live, freedom to do everything else is part of the Constitution, and I said, “I say this to you, Janice, because there has been a strong movement in the last 32 years to destroy that system. If we’d have had four more years of what we had prior to Reagan coming in, I am just as sure as I’m sitting here that we would have gone into Socialism,” and I explained what Socialism was to her. And I said, “That would have led into Communism,” and I explained what Communism was. So I said, “Most of my life is behind me. Most of your life is ahead of you.” I said, “People like you to survive in this country with the happiness and the pursuit of that happiness and to know that you’re going to live with the freedom, you must preserve the free enterprise system.” And that’s what I can tell you.
AW: That’s wonderful.
MH: Without it, we’ll never make it.
BC: Well, I can imagine you’re very, very proud of Reagan’s—pleased, also--with Reagan’s State of the Union address.
MH: Of course. Oh, yeah. I love the man. (inaudible) Governor, well he had fourteen consecutive weeks.
BC: And very serious, so you fly in on the weekends to work here now.
MH: That’s right about that one.
AW: Well, you know how long we’ve been after you, and you keep being in Washington, so it sounds to me like you haven’t slowed down, and we need to get you to sign this form, please, for the interview.