Almost everybody who writes anything on the history of Aramco seems to think that the 'frontier days' were the only exciting times in the company's history. Not me. I think those first chapters, colorful though they now seem, were just a prelude to the real Story: how the sons and grandsons of a tribal society in a distant land came to manage what is the largest oil producing company in history. As the story of the 30's is largely an American story, so the story of the 80's is an Arab story. But
But that came later, and I certainly didn’t expect anything like it when, in 1946, I left Aden, got discharged from the U.S. Army Air Force and made my way to the new oil community called Dhahran to join Aramco; at that time, like everybody else, I was immediately captivated by the Twitchell-to-Hoover-to Steineke legends. More to the I was also swept up in the heady boom town excitement of the first post-war expansion programs. That's my first memory of Aramco: the excitement.
At that time, at the end of Aramco's first 13 years, the company was producing 58,000 barrels of oil a day. That was a trickle compared to later production - it would take another 13 years to reach the million-barrel-a-day level recorded in 1958 - but already, you could see, Aramco was getting ready for the big time. In Aramco's 1946 Report of Operations, for example, the company said that it had nearly tripled the average daily production of the of the previous year. It also said that its new refinery, designed to process 50,000 bpd, was handling 100,000.
That refinery, which replaced the frontier period's 3,000 bpd 'teakettle,' had been started while World War II was still in progress - partly because in 1943 the U.S. government realized how important Saudi Arabian Oil could be in the planned invasion of Japan. And its formal opening on September 19,1945 - 17 days after the terms of surrender were signed in Tokyo Bay – brought to a close an extraordinary burst of war-time activity that had built the refinery, a new oil pier and a submarine pipeline to Bahrain that for a very short time was the longest submarine pipeline in the world.
The opening of the refinery also sparked another visit by King 'Abd al-'Aziz; though he didn't actually come until 1947, he came specifically to see the refinery. And when he did, he underlined the changes that had already taken place in Saudi Arabia since his first visit in May, 1939. Then, he and a retinue of 2,000 had driven 320 miles (520 kilometers) from Riyadh in a great caravan totaling 500 automobiles. Now, in January 1947, the aging king and his entourage arrived in a fleet of six airplanes.
In some ways, though, the king was just the same and to many who had been there for the first great visit, there were similarities. One was a tent city erected on the site of today's University of Petroleum and Minerals; though he had been expected to stay at a new guest house - completed just in time - the king announced that he was moving to the tents, where, evidently, he felt less confined, closer to his friends and more available to his subjects. As before, the king toured Aramco installations in Dhahran and in Ras Tanura, and once again played host to an amir of Bahrain, now Shaikh Salman bin Hamad Al Khalifa, who had assumed power in 1942 when his father died. To mark the occasion the amir brought as presents 14 mares, two stallions and 32 riding camels.
During the five-day visit, the king also gave and attended banquets. For one, Amir Sa'ud ibn Jiluwi, governor of al-Hasa, bought practically all available silverware and china in the eastern region and Bahrain. For another, when the king entertained the ruler of Bahrain, the menu included 925 chickens and 320 sheep. In magnificent displays, the meals were served under six large tents erected end-to-end, with bolts of white broadcloth unrolled to provide one long tablecloth, 10 feet wide and 225 feet long.
One of the most agreeable events on the program was the audience King 'Abd al-'Aziz granted the women and children of the Aramco community. The king met and talked through an interpreter with each of the women, several of whom brought along babes in arms. It was a photographer's dream and in a precedent-shattering event David Douglas Duncan, then of Life, obtained a dramatic picture over the king's shoulder of the king chuckling over the antics of the children assembled before him where they were served cookies and juice. At the same time, he was interviewed by Clifton Daniel of The New York Times - another indication of development in the kingdom, and the world's attitude toward it.
Meanwhile, important changes in the company's corporate structure had occurred. Much earlier, in 1937, Socal (the Standard Oil Company of California), needing market outlets for Saudi oil, had transferred an interest in Aramco to the Texas Company (later Texaco). Now, in late 1946, after seeing that development of Saudi Arabian petroleum reserves called for enormous capital investment, the partners arranged for the Standard Oil Company of New Jersey (now Exxon and called 'Jersey' by us), and the Socony-Vacuum Oil Company (now Mobil) to join Socal and Texaco as owners of Aramco. The arrangements, in fact, were not completed until 1948. But from then until January, 1973, when the Saudi Arabian Government acquired a 25% interest in Aramco - later increased to 60% and in 1980 to 100% - the shareholdings in Aramco were: Standard Oil of California 30%, Texaco 30%, Exxon 30% and Mobil 10%. Between 1975 and 1979 Mobil increased its stockholding to 15%, with other companies' interests correspondingly reduced.
For Socal and Texaco, the 1948 changes meant extensive new marketing outlets, particularly in Europe. It also provided the capital for what would become the largest project ever tackled by private enterprise: construction of an overland pipeline to carry crude oil from Saudi Arabia to the Mediterranean.
By then it was pretty clear that the postwar world was going to need a lot of oil - and that we had it. But it was also clear that getting it to Europe or wherever wasn't going to be all that easy. In those days, after all, we didn't have those huge 200,000 - to 500,000 - barrel supertankers that we have now. Tankers then were still measured by the war's T-2 tankers, which were only 16,600 deadweight tons and had a top speed of about 14.5 knots. In those days, as Tom Barger wrote one time, supertankers weighed in at 28,000 dwt.
As a result, moving oil from Saudi Arabia to Europe involved a nine-day, 3,600-mile voyage (5,790 kilometers) from the Arabian Gulf down through the Strait of Hormuz, out into the Gulf of Oman, out across the Arabian Sea and the Gulf of Aden, up the Red Sea and through the Suez Canal to the Mediterranean Sea. It was a long voyage and an expensive one: Suez Canal tolls alone took close to $40,000. So naturally, Socal and its new partners began to look around and see if there were a cheaper way of moving the oil and decided to build the Trans-Arabian Pipeline (Tapline) - what Aramco World in 1964 called the long steel shortcut - across northern Saudi Arabia, Syria, Jordan and Lebanon.
Tapline, a 30-31 inch pipeline, may not compare with today's mammoth 48-inch east-west line - from the Eastern Province to Yanbu’, but even now, when you've got crude-oil and gas pipelines crisscrossing areas like Siberia and Alaska, the construction of the Trans-Arabian Pipeline still strikes me as a monumental achievement. When it was completed in 1950, Tapline was the longest pipeline ever built, as well as the biggest project ever financed and built by private industry. After the story of the discovery well, in fact, I think, it's the most exciting story to come out of that period.
At the planning stage, the problems confronting Tapline's engineers must have seemed enormous: a route close to 1,060 miles (1,700 kilometers) of sand desert, pebbled plain and rocky plateau, two mountain ranges, temperatures that went from 10 degrees Farenheit to 121 degrees and, along vast stretches of the route, an almost total absence of water, roads, ports or people. And to build it, some 550,000 tons of pipe equipment and materials would have to be shipped halfway around the world, then trucked into the hinterland.
Then of course, the war in 1948 intervened, when the State of Israel was set up in Palestine, and that changed everything. Because of pre-war tensions, the start of construction at the northern end had already been delayed, and when war broke out the site of the pipeline's terminal was shifted from Haifa - in Palestine - to Sidon in the southern part of Lebanon. This, ironically, is the place that was invaded and occupied by Israeli troops in the early 1980's just as the Tapline operations were being phased out.
By 1949, however, work started and on Sept. 2, 1950, the two ends were welded together. Three months later, to the day, Tapline opened the valves in its undersea loading hoses in Sidon and began to ship oil to Europe and beyond. The Tapline shortcut provided a valuable outlet for Saudi Arabia's petroleum - as well as a training ground for such executives as Bill Chandler, who came from Alaska and later became Tapline's president. Another such executive is John Kelberer, a communications engineer in Tapline's early days but now Aramco chairman of the board.
Like most Tapliners, Kelberer has rich memories of life on the line. 'It was a real pioneering effort,' he said, 'little to work with and much to accomplish. It was great to be able to work with the total aspects of all the projects - from design through implementation and operation.'
As happened in Dhahran, Kelberer went on, Tapline construction had an instant impact on Saudi Arabia. 'The Saudi contingent working with us were mostly young men from Bedouin tribes, since there was no real settled population in the area. It was marvelous to see these men learn and develop...'
This was true up and down the line. In less than 20 years, 75 percent of Tapline' jobs were filled by Saudi Arabs - almost the offspring of nomads - and as early as 1964 two of the three shifts on all five pump-stations were manned exclusively t Arabs. This was equally true of divers on there in the harbor, and in downtown Beirut, where a staff of dispatchers controlled the daily flow of oil into what eventually would be a 4,600,000 barrel tank fan in Sidon.
In Saudi Arabia, in the mean time, and long before Tapline was completed, Aramco had also assumed responsibility for still another massive project: the construction of a 360-mile-long railroad (580 kilometers) between Dammam on the Arabian Gulf and the capital city of Riyadh deep in the interior. Even for a company getting used to thinking big, this was stretching its capacity a bit - since the first part of the project included construction of a deep water port with a two-berth wharf connected to the mainland by a seven-mile-long causeway and trestle (11 kilometers). Enlarge over the years by the Saudi Arabian government, this port, by 1980, had berthing facilities for 40 ships.
Aramco did not actually build the rail road and port. It contracted the job to consortium of firms headed up by a major United States firm which had also played a major role in the construction of the Ras Tanura refinery, and was even then working on the Trans-Arabian Pipeline. Starting in 1947 the railroad slowly pushed its way from Dammam to Dhahran, Abqaiq, Hofuf, and al-Kharj, until, in October 1951 King 'Abd al-'Aziz and Crown Prince Sa'ud, at traditional ceremonies, drove a golden spike into the last tie and a new diesel locomotive pulled into the Riyadh station to inaugurate the new service.
In the late 1940's, Aramco also had to use up to the fact that many of the countries wanting to buy oil had neither dollars no other convertible currencies to pay for it. Many countries, moreover, were committed to buy so-called 'sterling oil' produce by British companies, so Aramco, to compete, worked out arrangements to sell oil for the so-called 'soft' non-dollar currencies.
But the company also had to find ways to use those currencies to buy supplies and services. Its most important step in this regard was the formation, in November 1948 of a subsidiary company called the Aramco Overseas Purchasing Company, late called the Aramco Overseas Company (AOC). Initially headquartered in Rome AOC was moved to The Hague in The Netherlands in 1954. For years after, AOC also maintained international purchasing offices in London, Sydney, Cairo, Rome, Tokyo and Beirut, but by April 1984 all but the Tokyo office were closed. In the late 1940's, Aramco was also expanding the search for oil. There had been times during World War II when exploration had slowed to a crawl. But now, the war over, Aramco went quickly back to fundamentals. In June 1948, we discovered the Ain Dar field and in 1949 the Haradh field - over 100 miles to the south. Although it was dear to the geologists that both fields fell within a single geological feature, it was not until 1956 that Aramco was convinced that they and several other adjacent fields were really all one: Ghawar, the world's largest field ever, 160 miles long and 25 miles wide (256 by 40 kilometers). Almost simultaneously, a wildcat brought in the Safaniya field, the world's largest offshore field. Clearly, Saudi Arabia was going to be in the oil business for a long time.
Changes were taking place in Aramco's executive suite as well. One was the arrival and departure of James MacPherson, easily the most colorful oilman in the Middle East. A Scot, and a veteran of the First World War, MacPherson came to Saudi Arabia in July 1944 after stints with Socal and the War Production Board in Washington D.C. MacPherson, who was vice-president and chief officer in residence of Aramco, strove for effect and got it. He kept a cigar at the ready as constantly as Winston Churchill. He signed his name with a theatrical flourish. And when attacked he defended himself. One man, for instance, learning that MacPherson was being put in charge of Aramco's Saudi Arabian operations, got annoyed. 'What does he know about the desert?' he asked - and got a quick answer. You tell that guy,' MacPherson snorted back, 'that I... walked all the way from the Suez Canal to Jerusalem. And I carried a pack and a gun.'
Up to then, Aramco's headquarters were still in New York. W. F.' Bill' Moore, president from 1947 to 1951, maintained a Dhahran residence briefly, but it was not until 1951 that F. A. 'Fred' Davies, chairman of the board and chief executive officer, and R. L. 'Bob' Keyes, president, officially moved to Dhahran. As executives go, these two men made a good team. Fred Davies, bright and hard working, had been one of the geologists who recommended that Socal drill for oil on Bahrain and attempt to obtain a concession for Saudi Arabia. A great 'detail man,' he read a copy of practically every letter and report produced in the company. Not surprisingly, he got on well with Keyes; a big, but gentle man, Keyes refused to compete for power and executed his duties with quiet competence.
From the start, Aramco's executives were a varied lot, each making a different kind of contribution. Davies' executive assistant and eventual successor was Norman 'Cy' Hardy, a 'clean desk operator,' who refused to read almost anything longer than one page and who helped bring Aramco into the corporate big leagues. Shortly after his arrival, he strengthened Aramco's budgetary controls, and in 1953, as a vice-president, established the Aramco Management Committee, told company executives to let their subordinates run their organizations, and said, in effect, 'let us think, plan, and coordinate...' A man who did not suffer fools gladly, Hardy poked his ever-present pipe at holes in arguments, cheered on those who aimed high and hit their targets, and admonished and taunted the foolish and faint of heart.
Hardy, who had worked for Socal in what was then the Dutch East Indies and had learned Malay, was determined to learn Arabic. He had a talent for languages and he took his lessons seriously - with the result that long before his retirement in 1960 he had initiated the practice of addressing Aramco employees over the company's television station - in Arabic.
One of Hardy's favorites was Tom Barger. No sooner was Barger made manager of government relations - he never did go back to either geology or mining - than Hardy spirited him away to work on a variety of special assignments. One was the company's 'New Home Ownership Plan.'
Earlier, Barger had been on a committee which visited oil companies in Iran and Venezuela to study various approaches to employee housing. From this developed a plan - instituted in 1951 - under which employees could acquire ownership of land made available by the government and developed by the company, then get a long-term subsidized loan to pay for construction of houses.
Indeed, the Home Ownership program is one of Aramco's outstanding social achievements.
Home Ownership came at an important time in Aramco's history. In 1950, the Korean War had started, and in 1951 Iran had canceled the Anglo-Iranian Oil Company's concession and nationalized its oil industry. Together, those events exerted increased pressure on Aramco to produce more oil and that in turn meant more people. Aramco's work force swelled to more than 24,000 in 1952 - a total never reached again until 1977, 25 years later.
Inevitably, growth like that creates problems. It had in 1944 and it would again when the expansion of the l970's was getting underway. In the early 1950's, however, there was a difference that Aramco didn't immediately appreciate. In the 40's, the work force was a mix of some 600 American roughnecks, 1,300 Italian colonists and soldiers from Eritrea, and other itinerant internationals. But the 1950's expansion involved Saudi Arabs and that wasn't at all the same. When you're housing and feeding roughnecks you can make do with bunkhouses and chow lines; roughnecks, usually transients, prefer it that way. But a Saudi work force needed permanent housing for families, plus medical care, schooling and buses. In addition, there was inflation - which always goes hand in hand with sudden growth - and the fact that new currents of thought, not always friendly toward either the country or the company, were sweeping through the Middle East.
In the summer of 1953, as a result, workers petitioned for cost of living adjustments, better housing, additional transportation facilities, and schools. In response, a concerned government appointed a high-level committee to investigate the problems.
Actually, the Saudi employees had solid grounds for their petition. Though you might justify giving precedence to refineries and pipelines over housing and schooling in the 1940's, you couldn't justify it in the 1950's - as the company tacitly acknowledged by adopting certain new policies and making some very real improvements. Home Ownership helped, of course, but the company also increased the pay rates of all Saudi employees by 12 to 20 percent, shortened the work week to 40 hours and agreed to construct schools for workers' children. About then, too, on November 9,1953, King 'Abd al-'Aziz died and Crown Prince Sa'ud became king. Since he was aware of the workers' concerns, King Sa'ud visited Aramco installations himself and, as a result, established a new system of government labor offices.
One indication of the Saudi Government's desire to increase its control over Aramco in matters touching on the kingdom's national interests, in particular the pace of Saudi development and resource conservation, was its appointment in 1954 of Abdullah Tariki director general of petroleum and mineral resources and, in 1960, minister of petroleum and mineral resources. From 1944 through 1954, Tariki, schooled in petroleum geology, had headed the Dammam inspection office of Saudi Arabia's Bureau of Mines, and later became one of the founders of the Organization of Petroleum Exporting Countries (OPEC). In October, 1959, with Hafiz Wahba, he also became one of the first two Saudis elected to Aramco's Board of Directors.
During this period, the government began to place great stress on training programs for Saudis in the petroleum industry and started to seek a larger share of oil revenues for the kingdom. It also pushed for ways to fully use the associated gas produced with crude oil - a goal realized when the government's Master Gas System was launched in the 1970's.
Though most accounts tend to overlook it, the Saudi presence in the Aramco story was vital from the start. King 'Abd al-'Aziz, after all, launched the whole process entirely on his own and Abdullah Sulaiman, his advisor-treasurer-oil minister, extracted a quite acceptable concession agreement from an international oil expert.
Even as early as the 1950's the Saudi presence was unmistakable. In 1957, to give just one example, Saudi Arabs made up 70 percent of Aramco's 18,325 employees, and by 1967 held 57 percent of the company's 1,373 management or supervisory positions.
This was no accident. Almost from the day they arrived, Socal geologists and drillers had began to share their skills on a person-to-person basis with any Saudi who was interested - and most were. In addition, though, Aramco decided to implement on-the-job training with formal schooling. As early as May 11, 1940, the company established a school for Saudi Arab adults in al-Khobar in a rented house furnished with odds and ends. It started with only 19 pupils, but grew so fast that a second had to be opened within two months. Then, in 1941, discovering that employees such as telephone operators and office boys couldn't attend school because of their schedules, the company opened still another school - the so-called 'Jabal School' - and by 1941 there was a total of some 300 pupils enrolled in the schools.
This, wrote Wallace Stegner in Discovery, was 'the germ of something momentous' - the first stage of an extraordinary program of training, education and scholarships - an opinion enthusiastically endorsed recently by Abdullah S. al-Saif, vice president of Southern Area Manufacturing. Years later, he said, Aramco called in consultants to see how the Industrial Training Program could be improved. They said, 'Nothing, you've got the best.'
In 1946, the Jabal School officially became 'The Arab Preparatory School,' but everyone continued to call it the Jabal School until it was, in effect, absorbed into the Industrial Training Center of Dhahran. In 1948 enrollment was cut from 174 boys to 68 when the government ordered that all boys under 15 years of age be dismissed, but they were soon readmitted when they turned up with documents attesting to the fact that they were 15 - a remarkable growth spurt, though perhaps not too surprising in adolescent boys who wanted to learn.
Among the early teachers - often foreigners - was a Saudi Arab named Abdul Hafiz Nawwab. A chemist, and the first Saudi college graduate to join Aramco, Nawwab taught several pupils who, today, are company executives. Ali Naimi, now president of the company received his first formal education at this school.
By the 1950's, these initial efforts had blossomed, as increased production made rapid training imperative. To speed up on-the-job training, Aramco adapted an American war-time measure for training industrial workers: it set aside one eighth of all production time for training - with phenomenal results. The company not only achieved production targets, but developed a Saudi Arab work force numbering more than 13,000 capable employees.
Later, when it became evident that higher level technical and management skills were required, Aramco centralized most of its employee training in three Industrial Training Centers and three Industrial Training Shops - although Aramco programs went far beyond vocational improvement. The Industrial Training Shops did provide skills - how to read blueprints, wire a house, fix a faucet and run a lathe - but the Industrial Training Centers supplemented that training with arithmetic, algebra, history, language training and general science.
To enable workers to benefit more fully, class hours were pretty flexible. Workers could take two hours out of their working day, attend class in the evening, or, if they were really on the ball, go full time. There was another prize too: if they were really good they could go on to advanced training abroad.
We could see the effects almost immediately. Between 1953 and 1963 the number of skilled Saudi workers shot up from nine percent to 57 percent and by 1969 there were 1,300 Saudi employees in the company's three Industrial Training Centers, 346 of them in Management Training. In addition, Aramco had picked and sent abroad for advanced training 209 other employees of whom 58 were in universities. And by 1977, those figures had increased even more.
By then, some 500 Saudi Arabs held supervisory positions, 833 Saudi Arab employees were taking management training, in three Management Training Centers, there were 5,799 others enrolled in the company's Industrial Training Centers and shops, and 12,818 enrolled in one of the 47 on-the-job training programs. In addition, Aramco was sponsoring three employees who were working for their master's degrees in the United States and 364 others who were studying in Saudi Arabia and abroad, including 159 in U.S. colleges and institutions. Now, of course, the figures are still higher: some 1,400 Saudi employees are in college either in Saudi Arabia or abroad.
Some Saudi employees about this time began to peel off - talented, ambitious employees who either persuaded the company or were persuaded by the company to go into business for themselves. For Aramco, for Saudi Arabia and for the entire Middle East, the results were remarkable.
The reason for this development was summed up in 1957 - in part by me, as it happened - in a booklet entitled Aramco's role in the Development of the Eastern Province:
…not many years ago... every expatriate Aramco employee had to send his own wash to company laundry facilities and have his shoes repaired by a company cobbler. All the food he ate was imported and warehoused by Aramco. Fresh vegetables... were flown in ... on company planes. Individual banking... had to be transacted in a company cash office. Saudi Arab employees traveled ... in Aramco buses ... a company publication ... was turned out in the company print shop. Almost all cars... were company owned and maintained...
Today, by contrast, there's virtually nothing expatriate employees can't buy from local businesses, and very few items or services, that Aramco can't get arrange from a Saudi supplier or contract thanks, to an extent, to another Aramco program called today, 'LIDD' - Industrial Development Department. LIDD's functions were broader than the name implies. It was responsible for encouraging local industry and for the community Development and Home Ownership programs. Its Agricultural Assistance Division later grew into a department complementing the Ministry of Agriculture and Water's efforts by working with local farmers.
Since the mid-1970's, LIDE assistance has focused on collecting business and economic information on Saudi contractors and manufacturers and disseminating it to company organizations to encourage local business.
'Over the years Aramco has encouraged the Saudi manufacturing sector through policy of purchasing locally manufactured items which meet international standards’, explained Ismail I. Nawwab, general manager, Public Affairs. To ensure that this policy is implemented on a sound basis Aramco assists these manufacturers by qualifying and listing their products in a comprehensive catalog detailing technical information. Also, primarily for its own use, Aramco publishes other directories of local manufacturers and contractors.'
'The Aramco directories,' Nawwab added, 'are a basic ingredient in industrialization and are perhaps the first of their kind in the kingdom. The technical catalog is similar in intent to Sweet's Product Catalog and is thus very useful to non-Aramco designers and engineers requiring ready access to this valuable information.'
As a result of this policy, Saudi manufacturers and vendors supplied 82 percent of the more than $1.08 billion worth of materials purchased by Aramco in 1983.
In a sense, all this was an outgrowth of the independent Saudi Arab 'contractors,' who, years before, hauled goods on camels, and gathered rock from the Gulf. But even in the 1960's, it had gone far beyond that. By then, Saudi Arab contractors were constructing company pipelines, storage tanks, buildings and a whole range of complex oil operations facilities. Others provided bus transportation, car rentals, marine inspection, ferrying, engineering consulting, surveying and material hauling, food preparation and catering, painting and refuse collections.
Some of the contractors helped by Aramco went on to scale regional, national and even international heights, in what I personally have been calling the 'alumni program,' since Sulaiman Olayan, a distinguished Saudi businessman, summed up Aramco's contribution to his career: Aramco, he said, 'was my university.'
Taking advantage of Aramco's loans, advice and equipment some of these men started by providing Aramco with goods and services unobtainable in the Eastern Province, and then, later, started to provide the same goods and services to Saudi Arabia, and, in some cases, the whole Middle East. These men and many like them offer overwhelming proof, I think, of how Saudis, and other Arabs involved with Aramco, made important contributions to the company almost from the beginning.
This group includes men who have made their fortunes - and enhanced prosperity in the kingdom - in fields ranging from banking to baking, and from construction to equipment supply and cement manufacture. Some are internationally known; others have names that are well-recognized in Saudi Arabia today. Among them number Ahmad al-Gosaibi, Sulaiman Olayan, Abdullah al-Matrood, Nassir Hazza', 'Abd Allah Fouad, 'Ali 'Abd Allah Tamimi and Khalid 'Ali al-Turki.
Another category of Aramco alumni is those men whose company experience helped them make contributions to the government. They include Abdul Aziz al-Turki, deputy minister of petroleum and mineral resources; Mahmoud Taybah, governor of the General Electricity Organization; Dr. Jamil al-Jishi, deputy governor of the General Electricity Organization; Hassan Mishari, formerly deputy minister of finance and national economy and minister of agriculture and water; and Abid Shaikh, formerly Saudi Arabia Monetary Agency deputy director and Saudi Arabia's deputy governor of the International Monetary Agency.
As early as the 1950's, Saudi Arab entrepreneurs were also beginning to supply goods and services that a major oil company requires - and by the end of the 1950's Aramco was certainly a major oil company. Indeed, it came into the 1960's with almost unprecedented achievements in the records. Production was up to 1,095,399 barrels a day in 1959 - a daily total far in excess of any other producing company in the world - and exploration, still working on the peninsula's elusive structures, had outlined most of the giant Ghawar field and found still another off-shore field: Manifa. Facilities to move the oil, process it and ship it, moreover, were changing the skyline of the entire province.
In the 1960's, production continued to soar. In 1962, Aramco's cumulative total reached five billion barrels, in 1964, seven billion and in 1968, 30 years after going into commercial production, 10 billion barrels. That same year Aramco produced a full billion barrels in just 358 days.
To maintain such an enormous flow of oil, Aramco, of course, had to continue to find and produce new oil, and the Exploration Department, as it had done with methodical regularity since Dammam No. 7 came in, continued to score. In 1963 alone, the company's 25th year of commercial production, a new offshore field, 'Abu Sa'fah was discovered, the Fadhili and Khurais fields came on stream and work was started to bring in oil from Haradh, Hawiyah and southern Uthmaniyah - all segments of the vast Ghawar field. And in 1966 as the first sea island platform arrived from England, the exploration department also announced discovery of the offshore Zuluf field.
This discovery, about 40 miles northeast of shore facilities serving the offshore Safaniya field, led to a radical - if temporary - change in procedure. In 1959 Aramco had built a gas-oil separation plant (GOSP) offshore to separate gas from crude oil produced at Safaniya, another offshore field, but only to reach the first stage of separation. Now, for the Zuluf field, Aramco moved the entire gas-oil separation process offshore. Crude oil from Zuluf wells flowed into a plant mounted on piles above the sea, where the gas was removed, and sent on through underwater lines to an unusual 1,800,000-barrel floating storage tank. This tank, actually a stationary oil tanker named the F. A. Davies - after the late chairman -was anchored in the Gulf; after it was loaded, the oil was pumped to other seagoing tankers moored safely a mile away.
One result of the enormous production was development of economically feasible ways of using some of the 'associated gas' that was produced with the oil. Though some was used as fuel, much of it, because it is highly corrosive, was burned as a safety measure. By the 1950's however, studies indicated that associated gas might be a valuable addition to the world's energy sources and so, in 1960, the company constructed a plant in Abqaiq to compress and liquefy what are called natural gas liquids (NGL) - composed of propane, butane and natural gasoline. The initial components targeted for sale were propane and butane, known as 'liquefied petroleum gas' or LPG - which was processed at the Ras Tanura refinery and, on December 6, 1961, first shipped to customers.
Later, as demand climbed, LPG facilities were expanded. In 1962 LPG capacity stood at 4,000 barrels a day; it went to 35,000 barrels in 1967 and in 1972 to 89,000 barrels a day. By 1984, design LPG processing capacity had been increased to 600,000 barrels per day, the equivalent of 850 million standard cubic feet of gas.
In 1967, in response to growing market demand, Aramco began to export the natural gasoline portion of the NGL. The three NGL components - propane, butane and natural gasoline - plus sweet fuel gas and ethane derived from associated gas would, in the 1970's, have a tremendous impact on the future of Saudi Arabia.
Another sign of Aramco's growth was in the air. Indeed, from the day that Kerr and Rocheville landed the single-engine Fairchild monoplane in Jubail, aviation has been an integral part of Aramco life - if only because at first there wasn't any other way to get in and out of Saudi Arabia except a variety of rather slow freighters, tankers and launches.
By 1946, the company could boast that 'seven aircraft, either owned by or under charter to the company, were flown a total of 370,215 air miles.' By early 1948 Aramco was operating a fleet of 22 planes including eight Douglas DC-3's and two Douglas DC-4's that would immediately become part of the legend when Aramco opened its own air services between New York and Dhahran.
The first DC-4 put in service was called the Flying Camel, the second the Flying Gazelle. They had four engines, but were not pressurized and made, by today's standards, innumerable stops for fuel. Furthermore, the plane, crew and passengers, usually had a layover of one full day and night, usually in Lisbon or Rome.
Several times, these aircraft flew directly from New York to Jiddah with the British gold sovereigns Aramco needed to make its early concession payments, and I noticed once in 1948 on the Gazelle that the first two sets of seats on both sides of the aisle were unoccupied; there were just four little kegs tied to the floor between the seats.
In 1960, management decided that commercial carriers could provide more and better service. So, on New Year's day, 1961, the company's last "international flight left Dhahran - after completing 2,420 Atlantic crossings.
The Aviation Department, however, continued for operational reasons, to run scheduled flights along the Trans-Arabian Pipeline and across the peninsula to Riyadh, Jiddah and Asmara in Eritrea. Occasionally, flights were also sent to Europe and the United States. We never did go back to running our own airline, but in 1978, we initiated a Boeing 707 air cargo charter, and the following year introduced a chartered twice-weekly jet passenger service from Houston to Dhahran; in partnership with Saudia in 1981, Aramco contracted with Trans-America in the operation of a new 747 cargo-passenger charter linking Houston and Dhahran.
In retrospect, Aramco's flying and air safety record was remarkable. In fact, the air tragedy that shook the entire Aramco community on April 18, 1964, was not an Aramco flight at all. April 18 was the night that Middle Eastern Airlines Flight 444 from Beirut went down with the loss of 42 lives, 22 of them Aramco employees, Aramco wives and Aramco children.
On that night, husbands, wives, parents and friends had gathered, as was customary then, at Dhahran's striking new terminal. They were waiting for Flight 444 - an MEA Caravelle due in from Beirut. At first they thought it was late, but even when it didn't land at all, they were not alarmed; during shamals - violent sandstorms - planes were often diverted.
By the next morning, however, the rumors were starting to flash from house to house: 'Flight 444 is missing'... 'a search is underway'... 'management has set up a command post at Aramco's hangar'. .. 'there's a rumor that.. .' Slowly the hours ticked by. The tension grew. Then, about 11:30, a British Navy helicopter radioed in a report to the command post . . . found the plane . . . in the water . . . upside down. . .'
One reason that disaster affected Aramco so deeply, I believe, is that by then Aramco was much more than just 'an oil company.' We had become a community in the best sense of the word - which is why, I think, we were all especially pleased when, in 1962, Tom Barger became chief executive officer - and when, on January 1, 1984 Ali Naimi became president. They were ours.
Let me digress here, since we are talking about former executives, to mention some other presidents and chairmen of the board. Tom Barger, for obvious reasons, tends to be the one we talk about most; a sort of Renaissance man, Barger is undoubtedly a favorite of the old-timers. But that's not entirely fair to some of the other brass that came along after - most of whom, incidentally, Barger helped and encouraged: Liston Hills, Robert I. 'Bob' Brougham, R. W. 'Brock' Powers and Frank Jungers.
Aramco executives, as I said earlier, were a disparate group of men. Liston Hills, for instance, took a leave of absence from Casoc to serve as an officer in the U.S. Navy during World War II, and there was something besides his kindly looks that reminded you of Henry Fonda in the role of Mister Roberts. Liston was a kind and thoughtful engineer without an enemy in the world.
Then there was Bob Brougham, one of the few executive officers who was not an engineer. Bob, in fact, didn't even have a college education. But he was Wall Street and Madison Avenue rolled into one: good looking, a sharp dresser and a first-rate tennis player, with a talent for numbers matched by the wit and energy necessary for a big time oil negotiator. Brougham, furthermore, had worked his way up from office boy in the Jersey-Esso-Exxon organization, before coming to Aramco as vice president of Finance.
I must also mention Brock Powers, another of 'ours,' who moved up to the presidency, and, of course, Frank Jungers, who was called a 'great' engineer by his peers, and who was chairman from late 1973 to early 1978.
But back to Barger. As boss of Aramco in the 1960's, Tom Barger had his work cut out for him. For one thing, Aramco's average daily production had begun to outstrip anything ever seen before; in 1965 it reached the two-million-barrels-a-day-mark, by 1966 it was 3,548,865 barrels a day, and over the next four years made an average gain of 1,165,209 barrels per day each year, to arrive at 8,209,703 barrels a day by end of 1974.
To handle such massive volumes of oil, Aramco, earlier, had enlarged and increased the number of its facilities. Just to store the oil, for example, Aramco had to enlarge the capacity of its storage tanks. In the early 1960's, that capacity was 268,000 barrels per tank - but the size went quickly to 322,000 and then, a big jump to 500,000 barrels. And even those sizes were not the ultimate. By 1975, Aramco had erected five tanks big enough to accommodate a football stadium - they have a capacity of 1.25 million barrels - and by 1980 had put up five 1.5 million-barrel tanks which went into the Guinness Book of World Records as the largest oil storage tanks ever built. The tanks stand today in Ju'aymah - now the company's second oil port.
In the 1960's, of course, Ju'aymah didn't even exist. But then, in 1967, when the 'Six-Day-War' broke out, mines, sunken ships and unexploded bombs put the Suez Canal out of commission for what would be a total of eight years - a closure that would transform petroleum transport and, as a consequence, demand more deep-water ports and a revamping of Aramco's terminal operation.
Actually, Aramco's marine terminal specialists had been enlarging its facilities regularly since they were opened. From a single pier able to dock two small tankers, the terminal had grown to two piers with a total of 10 berths, and by 1966 we had ordered, received and put in operation what was called the 'Sea Island,' a series of steel loading platforms welded together and standing in deep water. The island's first platform, with two-berths, was jacked into place a mile off-shore from the Ras Tanura terminal and one of the first tankers to call was the Tokyo Maru - a VLCC (meaning 'very large crude carrier'). Then the world's largest ship, the Tokyo Maru loaded more than a million barrels of oil. By the spring of 1967, the second platform was also ready for use, adding two more VLCC berths.
Despite the disruptions caused by the war, therefore, Aramco continued to push oil through the terminal. Aramco, moreover, continued to add platforms, so that when it was completed, the Sea Island measured 1.1 miles in length (1.7 kilometers), could load a total of 439,000 barrels of oil per hour and could accommodate eight tankers.
At that time - the end of the 1960's - we thought construction of facilities like the sea islands was a major undertaking. But then came the 1970's, the decade of development.
Within Aramco, the 1970's also brought the first fruits of those industrial training and educational programs introduced years before. As I said, Saudi Arab employees had begun to move up through the supervisory and managerial levels long before, but now, on September 1, 1974, Faysal al-Bassam became vice-president of Public Relations - Aramco's first Saudi Arab vice-president. A year later, the second was chosen: Ali Naimi, vice-president of Producing and Water Injection, a man who, in the Horatio Alger tradition, started as an office boy, and in 1984 became the company president. By 1984, management ranks included two Saudi senior vice presidents, 17 vice presidents and executive directors, 14 general managers and the comptroller and assistant comptroller, 74 managers and directors and 268 administrators, supervisors and coordinators - in fields such as industrial services, refinery, producing, budget planning, public relations, industrial relations, power systems, computer science and engineering.
Similarly, the influence of Saudi Arabia in the 1970's began to reach throughout the world.
Although few in the West were aware of it, the economic importance of Saudi Arabia had been growing quietly throughout the 60's as, year by year, Aramco geologists continued to find more and more reserves. As a result, the kingdom came into the 70's as the single most important source of potential oil production in the world - and one of the four top producers. Simultaneously, King Faisal, who succeeded his brother Sa'ud, began to press for an increased share of oil revenues - initially through his newly famous oil minister Ahmed Zaki Yamani.
Yamani is a household name today, of course, but in 1962, when he became Saudi Arabia's second minister of petroleum and mineral resources, he was relatively unknown. Born in Makkah (Mecca), he studied at Cairo University, New York University and Harvard, served as advisor to the kingdom's Council of Ministers and as chairman of OAPEC (the Organization of Arab Petroleum Exporting Countries). During those assignments, and many others, Yamani quickly mastered the details of the petroleum industry. When King Faisal, in the early 1970's, decided to press for price increases, therefore, Yamani quickly caught the West's attention as an eloquent spokesman and brilliant strategist on energy. This was to prove important with the so-called "energy crisis" in 1973 and an extraordinary expansion of our production: from less than three million barrels of oil a day in 1969 to a production average of 7.3 million barrels a day by 1973.
To those of us who had been through it before, expansion wasn't all that exciting anymore. But to up-and-coming Saudi executives it was meat and drink - as Abdullah S. al-Saif told an Aramco World reporter in an interview in January.
Vice-president of Southern Area Manufacturing al-Saif came to Aramco as an accountant, but quickly realizing that it was 'not what I wanted,' moved toward petroleum engineering. He won a place in the first group of Saudis to be sent by Aramco directly to the United States - rather than via Beirut - for higher education, and gained a B.S. in petroleum engineering from the University of Oklahoma in 1970.
It was a good year to do just that. Soon after al-Saif returned to Saudi Arabia, Aramco took off - as the kingdom and the company, becoming what we called 'partners in growth,' began to work to the beat of industrial growth at its most exciting: making, revising and re-revising plans, estimating and re-estimating budget items in a leapfrogging process summed up wryly by one exasperated engineer coming out of a meeting: 'Well, there's another two-week job they want in two days.'
Such comments came to be common. Virtually everyone involved was overworked - and loved it. As one executive put it then, 'there's too much to do and not enough people or time to do it, but I have learned more in six months here than in 10 years in the US.'
The emphasis, naturally, was on production, but expansion touched every other department too. What we called 'Community Services', for example, felt the pressure as soon as the first wave of new engineers tramped into Dhahran looking for beds to sleep in and desks to work at - and found that both were in short supply.
To us, veterans of earlier expansion programs, this was amusingly familiar. Back in the post-war period, Aramco's engineers, gearing up for that expansion, designed a completely portable camp: squarish wooden buildings of the same size, which could be jacked up on wheeled dollies and moved from place to place.
In the 1970's, history repeated itself: Aramco again started building camps for the great numbers of contractor employees expected for expansion. This time, though, the company was able to turn to other kinds of portables: housing derived from the mobile home industry and - a sensation in Arabia - the housing barges. These were multi-storied living accommodations constructed on barges in Japan and then towed to various moorings near construction sites along the Arabian Gulf and the Red Sea.
Engineering Services, naturally, was the group on the firing line. Charged with designing oil facilities and then either building them, or seeing that they got built, engineers faced not only the same dizzy growth as the rest of the company but also uprecedented responsibility and drastic change.
Early in the planning stage, for example, company management, in a radical reorganization, created a new corps of 'project managers' each of whom took on a project at the study stage and proceeded to develop the economic concepts, supervise design, define the engineering, arrange the flow of supplies and materials, set up cash flow and accounts, oversee the selection of contractors and run the show right to going on stream. As the expansion projects got bigger, this system was to prove invaluable, and Aramco has it still.
Outside Dhahran, expansion soon began to transform the Eastern Province - literally. On a plane tour with an Aramco World writer one day, he and I could actually see what was happening and this is the way he described it in 1973: 'Out in the field... expansion is a giant tangle of concrete and steel pushing up from a post-construction clutter of churned sand, broken pipe, fragments of timber and carbon, old rags and paint cans. It is overlapping waves of high decibel hissing breaking over helmeted workers in sound-proofed earmuffs. It is batteries of 48-inch silvered pipe looping in and out of a concrete trench 120 feet wide ... a stabilizer twice the size of any stabilizer built anywhere before... a Kenworth 953-A truck, loaded with pipe, creeping slowly up a long grade toward construction sites in places called Shedgum, 'Ain Dar and Uthmaniyah.'
Changes arising from expansion went even deeper than physical change however. By 1972, to give one example, contracts for local services reached 7,700 and a significant portion of purchases were being made from vendors' stocks: up $17 million between 1969 and 1973.
One of the most dramatic signs of Saudi Arabia’s impact on the local economy dates from the year 1975 when the government announced its plans to construct the Master Gas System - and the value of contracts let by Aramco to local enterprises for construction and services began to leapfrog. Some 400 major contracts with Saudi firms worth $250 million were awarded in 1975; one year later 620 major contracts valued at $1.7 billion went to Saudi firms; and in 1977 the value of major contract awards to Saudi companies came in just shy of the $2 billion mark.
Impressive expansion in the numbers and levels of skills at the grass-roots level also came about - the result of huge training programs that both Aramco and Aramco's contractors instituted at the request of the government. But even so, according to Aramco's director of training at that time, the company's training programs could not keep up with demand. 'In January, 1971,' he said, 'we hired 118 apprentices, and by 1972 it was 457. Then, in 1973, 800 contractors working on expansion projects also opened training programs for Saudis at all levels of craftmanship: welding, pipe-fitting, electricity, etc.'
'It was part of a gigantic effort,' as one contracts expert put it at the time, 'to give Saudis the hands-on-the-throttle skills they will need when expansion is eventually completed. We cannot depend on foreign workers indefinitely, and these programs should ensure that we don't.'
To a great extent, that hope has been fulfilled. Expansion opened up promotion possibilities for veterans, attracted promising newcomers, and gave all a chance to try their hand on important projects.
Esam Mousli, manager of the Communications Technical Support Department, was one of the first home-grown Saudi graduates to join Aramco. Having attended high school in Jiddah and earned a degree in electrical engineering at the University of Petroleum and Minerals (UPM) in 1974 in Dhahran, Mousli was among the first group to graduate from UPM.
By then, Mousli said, Aramco was not the only major source of jobs for specialists. But he chose Aramco anyway - 'I viewed it as a place to get real experience' - and later earned a master's degree in business administration at Drake University in Des Moines, Iowa. 'I came back in 1978 to find Aramco had suddenly taken a different shape larger departments, more people, more nationalities and a different approach to ... handling things. The results of decisions taken in 1974 and 1975 were beginning to appear.'
Hamad A. Juraifani vice president of Northern Area Manufacturing noted changes too - but over a much longer period. "There have been many changes. My father owned a camel caravan. I once went with him to Ha'il to buy young camels. It was a 15-day walk. And it took seven days to travel by truck from Unayzeh to Ras Tanura in 1951. There were no proper roads. Now we have six-lane high ways.
But, he added, Aramco's role hasn't changed, nor will it change. 'Aramco will continue to be looked at [by the government] as a company that can undertake big projects And, he added, it will continue to provide help in the development of Saudi Arabia. 'Aramco is an excellent source of trained manpower. Although we have lost a lot of experienced Saudis to the private sector, we Saudis [at Aramco] look at the big picture: what is good for the kingdom. So Aramco's loss is Saudi Arabia's gain.'
Salim Abu Khamsin, superintendent, Safaniya Offshore Producing, seems to typify the kind of independent spirit basic to upwardly mobile types everywhere, Though working in a remote area entailed 'some sacrifices,' he would never swap it for a desk job. ‘I’m a field man. I want to get involved in the operation. Here, I'm dealing with oil wells.'
A graduate of UPM in 1973, Khamsin first went to work for the Arabian Oil Company in the Saudi-Kuwaiti Neutral Zone, but, after earning a master's degree in petroleum engineering, joined Aramco in 1978 for 'knowledge, experience and lots of diversity.'
To this, in Khamsin's case, one must add 'responsibility.' His job, in his own words, is 'to keep the oil wells flowing,' and though it's 'tough work,' he finds it satisfying. Sometimes you feel bad because of the isolation of Safaniya... But some Saudi has to do the job; we don't want to be spoonfed by expatriates.'
Challenge, in fact, seems to be a motive for most of the Saudi Arab middle managers interviewed for this Anniversary issue. As Ibrahim Mishari manager of the Computing Technology Department says, 'I was attracted by the scope of work and the challenge. I was becoming more aware of oil and its future importance, and . . . I chose . . . petroleum engineering . . . because I thought it important to understand the oil industry as well as computers.'
A new breed of oil man, Mishari is a computer scientist with experience on a drilling rig, a background in production engineering and a one year assignment with Chevron, in the United States, working on reservoir simulation.
In the past, reservoir simulation for Aramco was largely done in the United States, but today sophisticated simulation work is done in Dhahran. 'The hardware, the software and the experience are all in place,' says Mishari who earned a Ph.D. in computer science in Great Britain, and who predicts that in 20 to 30 years new oil technology developed in Saudi Arabia will be exported to other oil producing states.
'Oil industry technology was developed in the United States because of the needs of the oil industry in that country. They had the problems and the resources to solve them. As our reservoirs mature (and therefore become more difficult to tap) we will have the problems, for which, because of our reservoirs' size, there will be no ready solution worldwide. The combination of this and the fact that we will have the resources make it [development of new oil technology in Saudi Arabia] inevitable. The first line of export [of this new technology] will be the Gulf because their reservoirs are similar...
As recently as 1975, views like that might have seemed wildly exaggerated. Now, though, in the wake of the second Five Year Development Plan launched in 1975, such opinions sound not only logical but likely. To modernize and industrialize an entire. country in a few years, as that plan envisioned, required that Aramco and all its people work at the very edge of technology.
This was nothing new. Because it had such an enormous area to explore and develop, Aramco, even during the Kerr-Steineke-Barger period, always had to design, build or buy advanced equipment, break new ground, try new ideas, and test new methods. With the 1975-1980 plan, however, advanced technology became even more crucial. Although Saudi Arabia's 1975 program was really one of three five-year-plans, the earliest plan was mostly preparation and the latest plan is mostly consolidation. It was the 1975 plan that called for actual construction - the kingdom's unprecedented attempt to build such facilities as two of the world's largest airfields, two of the world's longest pipelines, two entire industrial cities, an enormous new oil port, a power grid capable of generating three times the electricity then consumed in Los Angeles and - the heart of the plan - the Master Gas System.
In Saudi Arabia, electricity has been both a symbol and a pillar of modernization since its first municipal generator was switched on in Taif in the 1940's. Back then, the kingdom left the provision of power to private local enterprise, though later helping out with loans. Then the government began to sponsor power projects - notably in 1,500 villages in Asir and the southwest - and then, its most decisive move, established the first Saudi Consolidated Electric Company (SCECO). Set up in the Eastern Province, SCECO, with Aramco's help, hoped to provide a massive amount of electricity on a regional basis.
The original SCECO involved consolidation of 26 private power companies in the Eastern Province - plus Aramco's own high voltage network and the bulk of its generating facilities - into a single efficient unit. By the end of 1983, nearly all of the Eastern Province's 110,000 square miles (285,000 square kilometers) was served by SCECO.
In the Eastern Province, the oil-heart of the kingdom, the oil industry and a host of other customers, plus the new industrial metropolis at Jubail, require a lot of power. Along with some 67 gas turbines, SCECO East employs four giant 400-megawatt steam turbines at the kingdom's largest steam generation plant at Ghazlan on the Gulf coast, hub of the provinces 5,595 circuit-kilometers of transmission lines.
A second major project for Aramco was a pipeline to carry NGL to the west coast. Along with a crude oil pipeline built close by - but not by Aramco - the NGL line, cutting across sun scorched dunes, cliffs, lava fields and rugged mountains, provides fuel and raw material for the giant industrial city being built at Yanbu', 300 kilometers north of Jiddah (186 miles). The two pipelines also provide Red Sea outlets for the export of gas and oil, the first new outlet, since Tapline's crude-oil throughput was reduced. Beginning in late 1978, the NGL pipeline was laid by a contractor's work force of 1,500 men, plus 100 support personnel, in less than 20 months.
Like Tapline, just 30 years before, the project roused excitement and pride in the men involved. Saleh Redaini, for example, the senior project engineer and now manager of LIDD, saw the job as memorable and exciting - and, again, innovative. ‘It was very exciting. Going across Saudi Arabia we had to drill our own wells for water supplies and build our own roads for transportation, especially in the west. The electronic survey work was unique and the pipeline design too had many unique features, such as automatic welding.'
Compared to the construction of Tapline, laying the NGL line was a highly sophisticated operation. Instead of having to wrestle the pipes into the trenches by hand, for example, Aramco, this time, strung two 39-feet lengths of pipe (12 meters) over the trench with mechanical sidebooms, and joined them, still suspended in the air, with automatic welders, one moving through the pipe, the other moving along it. Altogether, it took 45,000 welds to seal the 295,000 tons of the 26-28-and 30-inch steel pipe (66-71 and 76 centimeters) used in the project. The NGL line, in fact, was one of the first major pipelines to be built using totally automatic welding techniques.
Work on the NGL line began in November, 1978, when bulldozers first blazed a trail for backhoes to dig a six foot trench (1.8 meters) across the peninsula. About one-third of the trench - some 248 miles (400 kilometers) - had to be blasted through rock - a job requiring 2,000 tons of explosives, but it had little effect on the tight schedule. On July 28,1980, the final section was lowered into place in 'Gunsight Pass,' 3,550 feet (1.082 meters) up in the Hijaz Mountains.
By 1982, Aramco had also finished the crucial elements of the Master Gas System.
In my day, when you flew into Dhahran, you always knew when you got to the Eastern Province, especially at night, because you could see the gas flares: great flaming torches. We had to burn the gas off then; you couldn't process crude oil if you didn't, and it was ruinously expensive to remove it because there just wasn't a market for it. So we, like every other oil company in the world, flared it off. Before I left, however, those torches were going out as the various components of the Master Gas System were finished one by one.
Launched in 1975 and nurtured by King Fahd, then crown prince, since its inception, the gas-gathering project consists of various plants to separate the associated gas from the crude oil in Aramco's fields and process it so that it can be used as fuel for local industry, as feedstock for petrochemical plants and as NGL - natural gas liquids - primarily for export. It is projected that, by the end of this decade, the Master Gas System will have the capacity to collect and process more than 4.5 billion cubic feet (125 million cubic metres) of gas a day. With the primary components of the system already in place and operating, the Master Gas System is an extraordinary achievement. The minister of petroleum and mineral resources made that clear as early as October 1977, when the Berri plant - forerunner of the massive gas plants in Shedgum and Uthmaniyah - was officially opened by King Khalid. Minister Yamani said: 'The significance of these plants lies in the fact that they, firstly, magnify and reflect the world's highest levels of advanced technology; secondly, they preserve a great wealth that has long been wasted; and thirdly, they constitute a vital base for the industrialization of our country.'
Today, the gas system is powering 12 electric generating stations - source of most Eastern Province electricity and supplying fuel or feedstock to several huge water desalination plants, a glass bottle factory and lime plant, cement and fertilizer plants, refineries and petrochemical works. The system, still expanding into offshore oil fields, today has the capacity to provide 2.5 billion standard cubic feet (70 million cubic meters) per day of sweet fuel gas; 370 million cubic feet of ethane (13 million cubic meters) and more than 750,000 barrels of natural gas liquids.
In the early 1970's, eventual total control of Aramco by Saudi Arabia was a foregone conclusion. Indeed, most countries of the Middle East, in resuming control of their own destinies, had already begun to nationalize, or otherwise take charge of the petroleum industries within their borders. Saudi Arabia, however, was on record as considering Aramco a 'national asset' - and meant it. The Saudi government, therefore, opted for precisely the same methods that had worked successfully since the day Lloyd Hamilton sat down with Abdullah Sulaiman in 1933: negotiation. As one example, the government bought Aramco's bulk fuel plant in Jiddah, and, later, the company's local marketing system. Achieving participation, nevertheless turned out to be an immensely complicated task - Saudi Arabia, for example, wanted control, but did not want to lose the U.S. companies' invaluable expertise and skilled management. Effective January 1, 1973, however, the kingdom acquired a 25 percent participation interest in Aramco, increased it to 60 percent, effective January 1, 1974 and to 100 percent on April 15, 1980, with retroactive financial effect to January 1, 1976.
Simultaneously, Saudi Arabs were taking the hands-on-the-throttle control that my contracts friend mentioned. By 1984, the Saudi work force totalled 34,226 of which 3,343 held supervisory jobs – nearly 62 per cent of the supervisory jobs available.
This, as I keep saying, is the result of nearly 50 years of schooling, training and education - as well as the drive, determination and talent of individual Saudis. But, says Abdulaziz M. al-Hokail, senior vice-president Industrial Relations, it's worth it. 'Developing people is time consuming and expensive, but it pays off in the long run - both from the individual's and the country's point of view.'
Even if some employees leave Aramco after training, al-Hokail goes on, 'they are stars that shine in any company they go to. If you have been working with Aramco you are recognized. We have discipline and experience.'
Today, says al-Hokail, 'Aramco has 18 training centers in Dhahran, Ras Tanura, Abqaiq, Hofuf, Udhailiyah and Safaniya [and] 'over 15,000 Saudis come and go through these ... facilities spending from two to eight hours a day. The programs are directed mainly at students who come to us with nine years schooling or more. Depending on their ability, they are routed to maintenance, operations or clerical positions.'
'Those [new employees] with high school diplomas continue their education and go to university or colleges. Currently we have some 1,400 in universities both in and out of the kingdom, specializing mainly in petroleum and chemical engineering, geology, computer sciences and some finance. We also send people for occasional "topping-up" training to bring them up-to-date.'
'In 1983 we recruited 3,600 Saudis - 1,400 high school graduates and the rest with nine years schooling or more. We try to be very selective in hiring. We have to be cautious because we are working in oil, which is the backbone of the economy. This is why we have this training program. We have the facilities, we have the resources, but we have to be careful not to over-hire or over train.'
Training does not stop at any particular level. Aramco even has a fast track training programs for young executives - as Khaled al-Nafisee is quick to describe and applaud.
'Because we are a relatively young industrial country we will depend a lot on the young. There is a danger in pushing people too fast, but all industry around the world depends on new thinking. Look at the computer industry - most of the executives are in their thirties.'
Himself in his 30's, al-Nafisee is one of a new generation of young Saudi executives assuming highly responsible positions in Aramco - fast. Seven years ago, when he joined the company, al-Nafisee was a chemical engineer with just four years work experience in design - two at a government factory in al-Kharj, and two with an engineering company in California. Today, he is terminal operations manager of the largest and busiest oil port in the world.
'I sure moved fast. I went through engineering (gas refrigeration plant) and maintenance (piers division) and made it to operations superintendent (NGL terminal) in three years. I then went on developmental assignment (oil terminal division) and made it to manager in another three.'
'It was hectic,' he said, adding that there is a limit. The company has to know who to push. Aramco is moving fast, but not too fast.'
Aramco is moving fast in employee development, agreed Nasir M. al-Ajmi, senior vice president of the Operations Service Organization. 'I would rank Aramco among the top companies with respect to management development,' he said. 'We are developing Saudis at full speed today.'
Al-Ajmi himself - today in charge of the support services that keep the giant Aramco operation going - is an example of how Saudia Arabs have developed in Aramco.
'I was born in a traditional black Bedouin tent not far from what is now the town of 'Udhailiyah. We didn't call it a "tent"; to us it was a house. My father joined Aramco in 1947 as a laborer in the construction department, and in the summer of 48 we came to the Dhahran hills. I was about 11 years old, we had no sheep or camels with us [to take care of] so I started looking around for something to do. I saw lots of kids working and going to school - they even paid you to go to school. I had no concept of what education was at that time. We learned by doing - when we were two or three years old we started doing chores, and our parents taught us things no school ever could like character and standards.
'I didn't want to go to school, I wanted In work. I went to al-Khobar to get my documents. They threw me out because I was too young to get a certificate saying I was l8 years old (the minimum working age). So we went to Hofuf where they issued then without pictures and I got one there.
‘I didn't intend to stay with the company - just work six months, get some money and go back to the desert. But their moved me to the Abqaiq garage and sent me to mechanics school. I began to have desire to learn. I went to school in my own time and then switched to school full time, was sent to the International College in Beirut and later earned a degree in business management at Milton College in Wisconsin. I am still going to school. I just came back from a 13-week advanced management program at Harvard.'
Such opportunities are still available today. Mohammed Yones, for instance, looks too young to be piloting a supertanker but he is, nonetheless, a harbor pilot at Ras Tanura. 'Captains look at me when I first go aboard and I can see some of them are nervous about handing their ship over to me," he says, cheerfully admitting that he is only 29.
Yones began his merchant navy career in 1975 with the Arab Maritime Petroleum Transport Company.
In 1980, after several months aboard a VLCC - very large crude oil carrier - Yones joined Aramco. 'I was the first Saudi with a ticket (merchant navy officer's certificate) to join Aramco.' And in 1982, after six months at Ju'aymah and one-and-a-half years at Ras Tanura, he became a fully qualified pilot.
Today, Yones is one of 34 Aramco pilots - half of them Saudis - responsible for berthing some 300 oil tankers a month at Ras Tanura. The largest tanker he has handled so far was 553,000 tons, one of the largest such vessels afloat.
Another young newcomer to Aramco is Haider al-Awami, a Saudi petroleum engineer who describes his job - production supervisor at Safaniya - as 'hassling with nearly half of Saudi Arabia's production.' It's only a slight exaggeration. In early 1984, Safaniya, the largest offshore oil field in the world, was producing a significant proportion of Saudi Arabia's total output.
Because Safaniya came on stream in 1957 al-Awami must also grapple with production problems associated with what are called 'maturing' oil fields: water encroachment, falling pressure, and salt contamination. 'The time when you just drilled a hole and produced oil is gone in Saudi Arabia. It's much more complicated today. Reservoirs behave independently, and as they get older they get rather crotchety.'
'If it was money I wanted I would go and open a supermarket in al-Khobar. If I wanted a name and prestige I would go into government. I see a challenge in what I am doing here.'
By the 1980's most of the early pioneers had been succeeded by either Saudi Arabs or Americans, in some cases, 'loanees,' men on loan from the U.S. companies.
One example is Bryce A. Blakely from Socal, who now heads Aramco's Facilities Planning Department. In 1970, Blakely was named advisor to Socal's Foreign Operations Staff, a job that included looking after Socal's involvement with Aramco. Then he was promoted to project design manager of the Aramco Gas Program (for Socal) in 1977, and came to Dhahran in 1978 as a Socal project director of Ju'aymah NGL Terminal and Fractionation projects, key ingredients of the Master Gas System.
Blakely, who oversees conceptual planning for all Aramco's new capital facilities, sees a change of pace ahead. 'I feel the company is going through a transition from a booming, growing concern to a more mature operating company.'
George Covey, an Aramco veteran who is senior vice-president of Exploration and Producing, has also seen far reaching developments.
An 'oil field child' in the U.S. Covey moved with his family virtually every year to keep up with pipeline construction by Northern Natural Gas, his father's employer. Then, with a B.S. and M.S. in petroleum engineering, he left for Saudi Arabia in 1953.
Covey admits that he was 'not really' aware of the important role Aramco had come to play in the kingdom's development until he landed, a bachelor, on Saudi soil. 'In fact, I was somewhat startled with my first look and impressions . . . '
In three decades, of course, things have changed markedly. 'The biggest change has to be size,' says Covey. 'Years ago Aramco was a small company . . . and you knew just about everybody and. . . who to go to find information. Now Aramco is truly, truly a large company. There is more of a bureaucracy now, more committees....'
But size, he is quick to point out, 'lets you do a lot of things you couldn't do when you were small.' One example is the new Exploration and Petroleum Engineering Center (EXPEC) and the EXPEC Computer Center - facilities inaugurated by King Fahd ibn Abd al-'Aziz Al Sa'ud on May 16, 1983. This, he says, is a 'one-of-a-kind facility that puts us right on the leading edge of technology.'
Despite such changes, elements from the early days seem to persist. For example, 36-year-old Roger K. Hadley, manager of lines Department, is too young to be a pioneer, but in our interview seemed to be imbued with the same spirit.
Hadley, who came to Aramco from Texaco in the United States in 1974, managed the world's largest seawater treatment plant - at Qurayyah on the Arabian Gulf shore - before being named to his post in which he now supervises 350 people, all but about a half-dozen of them in the field. His philosophy for success is one which company pioneers also had and which, he says, remains valid today. It's 'knowing how to work and not being afraid to make decisions that are going to have a big effect...'
Hadley says that one of the surprises he had when he came to Saudi Arabia to work for Aramco was 'to see how intimately Aramco's growth and the country's growth had been tied together,' a quote that, in its way, sums up the Aramco story: a kingdom and a company growing up together for 50 years.
This, perhaps, is the unusual feature that has marked the history of Aramco: the slow, peaceful evolution of Aramco from wildcat venture to world prominence, from Americans in tents to Saudi Arabs in the executive suite. I can think of no other examples of such radical, yet peaceful change.
This isn't to say it has been without friction.
But to quote Ali Naimi, Aramco does have a 'long tradition of a successful multinational workforce, working together without the strains or dislocations experienced ... in other countries.'
Sure, I know that sounds like a PR handout. And so does his reference to Aramco's 'good citizenship,' which has earned the company a 'unique position,' in the kingdom. But it's also true. To quote Wallace Stegner one last time, there was always a 'mythic' quality to Aramco - and today, with other hands on the helm, and other bridges to cross, there still is. I'm proud to have been part of it.'