The boom and bust of Scottish oil and gas
Craig Durham CEng FIMMM looks at the first Scottish oil industry boom and draws parallels with the present day.
Most people think about the beginning of the Scottish oil industry, and current downturn, within the context of North Sea oil and gas development, but in actual fact the first Scottish oil industry was around 150 years earlier. In 1851, Scottish engineer James ‘Paraffin’ Young patented a process in which cannel coal was heated within a retort to release an oil vapour, which was then condensed and distilled into oil-based products.
During the 1850s, Young and his partners prospered on their virtual monopoly of the mineral oil trade until the patent expired in 1862, by which time local supplies of cannel coal were close to exhaustion and cheaper US petroleum was flooding onto the market. Young realised that the future of the Scottish oil industry lay within the development of oil shale rather than cannel coal. This black mineral, very different from coal, was found beneath much of West Lothian and was first used in 1860 to produce oil at the Broxburn Oil Works.
In the latter half of the 19th Century, mining of the relatively near surface, kerogen-rich shales of the Lothians, lying between the southern shore of the Firth of Forth and the Lammermuir Hills, for refined oil products was economically more thorough than importing liquid petroleum. A paper on the Broxburn Oil Works was presented at a Mining Institute of Scotland (MIS) meeting in September 1901. At the time, Broxburn comprised a crude oil works, sulphate house, refinery, acid-works, candle factory and cooperage – the oil produced being stored and transported in wooden barrels, which is the origin of the commonly used unit of oil volumes today.
The paper records that around 1,600 tonnes per day of oil shale were put through the 750 retorts, which required around 400 tonnes per day of coal to heat, demonstrating how energy intensive the industry was. This produced a yield of 100 litres of crude oil and 19kg of sulphate of ammonia per tonne of shale. The crude oil was pumped from condensing towers to the refinery and stored in a 227m3 tank from which it passed to the stills. The first distillation produced naphtha, used to produce shale spirit, still coke and green oil. The green oil was further fractioned into light and heavy oils, the latter used to make candles while the light oils were further distilled into different brands of burning oils – petroline, paraffin, lighthouse and sperm oil. The latter being the main source of lighting oil, and the Brent crude oil benchmark of the day.
At the same MIS meeting, Henry Cadell, a geologist known for his seminal work on Moine Thrust theory, presented a paper in 1901 entitled The Oil Shale Fields of the Lothians. Introducing his paper, Cadell praised the ingenuity of Scottish engineers and lamented the vagaries of nature. ‘It has been the writer’s lot to have wandered among the oil-fields of Pennsylvania, Ohio, the Caspian and Burma, and to have seen the liquid fuel spouting high into the air. While gazing at the oil fountains of the east and west, the foremost thought to rise in one only accustomed to seeing the crude yellow fluid trickling from the high retorts of the Lothians is a feeling of despair at the apparent hopelessness of the unequal contest. Scottish oil, in its dry matrix of black shale has to be laboriously won, blasted out of mines, hauled by machinery to the light of day and broken into small pieces, then carried to the retorts where it is carefully distilled and separated from its earthy casing before it reaches the condition of the crude petroleum that spouts up in other countries ready-made.’
Oil possibilities in Scotland
The First World War saw a huge increase in the use of petroleum-derived fuels for cars, aviation and shipping, not least as a result of Winston Churchill's decision as First Sea Lord to switch the Royal Navy from coal to oil fired turbines. As a consequence, the UK had been heavily reliant on petroleum imports and attention turned to whether liquid petroleum may be found in the same areas of the Lothians, where oil shale had been extracted. To answer this, in October 1919, Cadell was invited back by the MIS to present his paper Oil Possibilities in Scotland. This specifically addressed the question of whether liquid petroleum was likely to be found in Scotland. In a review of the facts known at the time, Cadell strongly argued that it would not, citing five key reasons:
- Petroleum deposits in Carboniferous rocks of similar age to Scotland's are the exception, not the rule.
- Oilfields are found in porous beds of sandstone or limestone, covered by an impervious bed of clay or shale – few porous beds are found in the Lothians.
- Most oil reservoirs are overlain by gas. Cadell observed that, ‘In Scotland, there are no places where oil-gas issues regularly from the rock in any quantity, and the gas that is occasionally found gives no indication of oil in the underlying rocks.’
- Oil reservoirs occur in anticlinal structures, not much interrupted by faults or dykes, allowing the free flow of oil through large areas of rock. In the Lothians, Cadell noted, ‘It would be difficult to find an area of three-or-four square miles that shows no signs of fracture (faulting) in the locality.’
- The presence of liquid petroleum is generally indicated by seepages of oil or bitumen deposits, and with the exception of the Balm Well south east of Edinburgh, rarely seen in the shale mines and outcrops of Scotland.
Cadell noted, ‘The evidence is against liquid oil being found in the oil-shale fields or Carboniferous districts of the Lothians and Fife. As to other places in Scotland, the evidence for oil is not any better. Thousands of deep boreholes [from mining] have been made during many years and if there had been any indications of oil or gas in these boreholes, it would doubtless have become public property long ago.’ The results of further onshore drilling over the next 40 years were disappointing and proved him right. Cadell died in 1934, long before the first discovery of North Sea oil in 1969 and the many more thousands of deep boreholes since.
By the mid 1920s, Scottish shale oil production was on the decline and a Royal Commission under the chairmanship of Sir Herbert Samuel was established to look into the problems besetting the UK mining industry – falling production, reduced exports and industrial unrest. The Commission's report was published in March 1926. James Balfour Sneddon, former president of the Association of Mining Engineers and a past president of the Scottish Institute of Mining Engineers presented his thoughts on the findings in his MIS Presidential address.
Snedden noted, ‘The [Commission's] remarks have a special interest to those of us connected with the [shale] oil industry, wherein it is stated that a reduction in the use of coal by an increased use of imported oil is likely to be progressive. If this means that the price of oil may be further reduced, it is easy to forecast that the Scottish oil industry will very soon disappear out of the competition.’ For those within the North Sea oil industry, his words sound wearily familiar.
One way to meet the increase in demand for oil would be by treating coal for oil extraction. However, Sneddon went on to observe that ‘the Commission has given close attention to the question of low-temperature carbonisation [of coal] without finding any evidence that the system has yet been established on a commercial scale, and it may be left at that.’ And so it proved. Although the Germans developed coal-to-liquids technology during the Second World War, the technology has never overcome the fundamental inefficiency of the energy-in to energy-out ratio when compared with conventional petroleum production.
Despite a brief respite during the Second World War, the Scottish coal and oil-shale industries continued their respective declines in the 1950s at the hands of a rapidly expanding global oil industry. This was a theme at the 82nd MIS AGM, held in May 1960. John Caldwell, a member of the Institute of Petroleum, UK, as well as the MIS, commented, ‘The shale oil product cannot compete with imported petroleum. In spite of all our efforts, the oil industry has had to bow before harsh economic facts and recognise that in a free economy any industry that by nature has inherently high costs in relation to its competitors must inevitably decline.’
Words that are no less valid for the North Sea oil industry today. Scottish shale oil production ceased in 1962 but the oil works diversified into other petrochemical products with the last,Pumpherston detergent plant, remaining in operation until 1993. But the legacy remains at Grangemouth refinery on the Firth of Forth, UK, which imported the first cargo of ethane from US shale gas in September 2016, more than 150 years after the first shale oil products were refined at Broxburn.
This article is an abridged version taken from Hidden Riches, a history of the Mining Institute of Scotland, UK, and is reproduced with permission from the MIS.
Craig Durham CEng FIMMM is a Production Engineering Advisor with Nexen Petroleum, UK, and has worked in the North Sea oil industry for the more than 30 years. He is a past-president of the MIS and is a current board member of the IOM3 Oil & Gas Division. He wrote the Material Matters column for Materials World between 2010–14 and co-authored Hidden Riches, a history of the Mining Institute of Scotland, published in 2014.