P: This is Julian Pleasants and we are in Gainesville, Florida. It is June 15, 2005.
I'm talking with Jon Thompson. Tell me when and where you were born.
T: I was born in Jacksonville, Florida, May 5, 1939.
P: What about your parents? What did they do?
T: My mother was a primary school teacher. She taught mostly first and second
grade. My father worked for Swift and Company, which is a meat packing
company. [He] was a salesman and then an assistant manager with Swift and
P: They were out of Chicago at that time?
T: Yes. They were out of Chicago. My dad's father also worked for them, which, I
guess, is how he got started in the general Georgia area.
P: Where did you go to school in Jacksonville?
T: In Jacksonville? I went to Hendricks Avenue Elementary School. We didn't have
middle schools in those days. That went up through the seventh grade, as I
remember. Then Alfred I. duPont High School, which is no longer a high school.
It's a middle school now, if it's even that.
P: Was there anybody in your early career in education that had a strong influence
on your life or later career?
T: There were a number of them. The first recollection that I have is a fifth grade
teacher. At that time, really fourth and fifth grades were the first time you ever
got exposed to anything scientific, as well as [when] you got into enough
literature that you would be reading things which had meat to them. I remember
the fifth grade teacher. I really got interested in general science at that time for
the first time I can remember. She was very encouraging. Then it gets a little
vague in high school, because I was pretty deeply into sports. There were some
coaches that were important to me in terms of character. I remember a
chemistry teacher that was particularly important to me.
P: What sports did you play?
T: I played every sport that anybody could play. I played football, basketball,
baseball, ran track, anything else that had a ball or anything associated with it, I
played it. That was a big transition because that didn't happen until I was about
in the seventh or eighth grade. Up to that, I was a music person and took piano
lessons for seven or eight years starting when I was five or six, as I remember.
In addition to the piano, I played the saxophone and almost any other instrument
that we needed to. I remember even in high school I played the bassoon when
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we went to the state tournament. There was the conflict between music and
sports, which is not an unusual one. About the seventh or eighth grade, sports
won. It helped that I grew a little bit, because I was just a little skinny runt with
bright red hair and freckles all over my face. Up until that point [I played music],
then I started growing.
P: I had that very same problem with conflict between football practice and piano
lessons. Occasionally, I'd come home from football practice with my pants all
torn. They could figure that I wasn't at piano practice.
T: Fortunately, somewhere along the way of the piano, I discovered that I could play
things by ear. So, I could go off and play most anything that I could get the tune
for, and that sort of hurt the classical piano as well. I learned to go out and play
all these contemporary songs and things like that, instead of playing these
classics. I was already transitioning away from classical piano and recitals.
P: What did you want to do when you left high school? Did you have any career
plans in mind at that juncture?
T: No, I did not. I was in the National Honors Society and I did well on the SAT
[Scholastic Assessment Test, formerly Scholastic Aptitude Test], but I was a
semi-finalist for the Merit Scholarship. I didn't make the Merit Scholarship. I had
a rather broad background. I took a lot of elective courses and was just
interested at that time in a good education there in Davidson. [Davidson College
in Davidson, North Carolina]
P: Why did you pick Davidson over other schools?
T: What sticks in my mind is I had convinced myself that it was the Princeton of the
South. You've probably heard that as well. I really didn't have the means to go
to an Ivy League school, even if I could have gotten in. The idea that Davidson
was called the Princeton of the South, and had such a high reputation, and they
accepted me, [was pretty great]. I didn't have a whole lot of choices. I didn't
apply to a lot of schools.
P: You stayed there one year?
T: One year, that's right.
P: Then you decided to leave to pursue science?
T: Thinking back to that fifth grade [course work] and then in some of the science
courses during high school, I remember taking physics and chemistry the first
year at Davidson, and I responded to those much better than I did history and
religion. I don't say that disparagingly, but I seemed to like that and I decided
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firmly that I didn't want to go into pre-med and I didn't want to be a lawyer. I had
no interest in being a lawyer. I couldn't see where I would end up [as far as]
what subject in graduate school. I said, well, I'd better go somewhere that I can
get more exposure to the sciences. Besides that, hitchhiking back from
Davidson to Jacksonville was a long trip. It was a lot quicker to go to Gainesville.
I could get to Gainesville by hook or by crook.
P: So you started at the University of Florida in 1958?
T: I think it was 1958.
P: When you got there, had you, at that point, decided that your major interest was
going to be geology?
T: No, no, no. Back then, the first two years you had to take all the C-courses,
which was fine with me. I took the C-courses, and one of the electives that I took
was the basic Introduction to Geology course. It just clicked. I didn't have any
prior definite interest in that. It just clicked. It was just one of those things where
here I can combine all of the basic sciences into something which was interesting
P: Did you have a particular aspect of geology that interested you more than any
other part of it?
T: Not then, because I couldn't even hardly spell geology when I took that course. I
didn't know anything, I had never read any books or had any particular interest in
geology. I was really interested in learning the fundamentals, [and] in [learning]
how the other sciences related to the geo-science world, which of course, they all
do. It's really not a pure science. It's a conglomeration of sciences, which I
found very interesting. I was just learning the basics of geology.
P: Who would have had a strong influence on you in your geology courses?
T: It was a small department with a small number of students. The professor that
kind of took me under his wing, and that I worked with a lot was Kelly Brooks. I
remember the head of the department was the Admiral Caspar Rappenecker.
He was an old Navy Admiral. He was kind of the disciplinarian to keep us all
straight. Kelly Brooks was a field geologist and was always out in the field and
was hands on. We took a lot of field trips. We went a lot of places with him and
learned kind of first hand what we had seen in the classroom. He probably had
the greatest influence, and when I got the master's [he] was the key professor.
P: You worked with him for your MA?
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T: It was a MS [Master's of Science]. I got my undergraduate degree in three and a
half years, and then got my master's in a year and a half. So I was in and out
with a total of school for five years, which was great with me. I wanted out. I
worked summers and winters.
P: That's what I was going to ask you; when you were in school, what kind of work
did you go?
T: I worked all the time. I worked all summers when I was starting, and then I was
going to school full-time. I worked at the library for a good long time, probably for
two years here at the [University of Florida] library, which was very interesting. I
got to read some books and see some things that I wouldn't have otherwise
seen, just because I ran into them. People would check books out and they'd
check them in and I'd be taking them back and putting them in stacks, and there
would be something that I'd say, oh, this looks interesting. I'd look at that. I
found that very interesting. Then I worked as an assistant in the department as a
graduate assistant. I taught some courses and things like that during graduate
P: Obviously, you not only had an interest for geology but you had an affinity for
geology as well.
T: As it turns out, that's right. I minored [as an] undergraduate in chemistry. Then
in graduate school I really minored in biology. So the chemistry-biology
fundamentals were particularly interesting to me. The historical evolution of the
earth was kind of in at the time; trying to get a handle on millions of years instead
of ten years was really very interesting to me.
P: So you start looking for hydrocarbon deposits, you have a little understanding of
how they got there.
T: Right. Well, the understanding of the whole way that the earth has evolved in the
solar system and all that was very interesting.
P: I'm sure chemistry comes in there.
T: Chemistry is very important as a building block.
P: Were you ever interested in any engineering courses at all?
T: When I came here, I thought I was going to be in engineering, I was taking
elective engineering courses. I decided early on that to me, that was too stifling.
It was too rigid. Engineering is a very structured, applied sort of thing. I
evidently was more creative than that, and didn't want to be constrained like that.
That's one of the reasons that geology interested me, because there's a lot of
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creativeness and putting puzzles together and multiple outcomes that weren't
there in engineering. It was even more than that. I was going to be an electrical
engineer. I said no, I don't think I want to spend my life that structured.
P: About half the students come in here and change their minds three or four times,
and the other half immediately know exactly what they want to do. I guess it's
fortunate that you came across something that you really like and that you're
good at and you didn't have to search for half of your life looking for the
profession you really wanted to be in.
T: I think that's right. Profession is a good word, because I knew that I wanted to be
[in] a profession. It had to be a science-related profession, and it had to have a
high level of expertise. That was very important to me.
P: How important is a liberal arts education, the C-courses for people who are going
to be science majors?
T: It's extremely important. I really don't think you can ever reach your potential in a
science environment without having that liberal arts grounding, and I've said that
to many people throughout my career. I would rather have somebody who had
an outstanding liberal arts degree and then came to work for me, and I taught
them all the science. I can teach them the science, but I can't teach them the
other things. One of the courses that I loved when I was here was a course in
the English Department. It was a History of Language course, [dealing with] the
origin of words. I was here when I got the distinguished alumni award and some
English professors were there. I told this story about this course I took and this
little book and all of them clapped and said, nobody ever comes back and says
that they really like this. But I found that fascinating. There have been a lot of
times in my career that I have used words and their roots and their definitions in
dealing with my people or with outsiders, that went back to roots of things for
clarity. I've used that a lot. So I think it's very important. I wouldn't have had it
any other way. I would have hated to have gone into a school which says, this is
an engineering school, this is a geology school and you start off and you just get
expert, expert, expert.
P: What was the campus like from 1958 to 1962 when you were here?
T: It was much smaller. The geology department was in Floyd Hall. Poor, old,
rickety Floyd Hall. I remember it not being much different than this because the
basic architecture was the same, but it was a very short walk to the engineering
school and you didn't have to walk as far. The campus, the bas[ic] look of the
campus is very similar as I remember it then.
P: Were you involved in any extracurricular activities at Florida?
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T: Not really. Once I left Davidson where I was, then I was pretty concentrated. I
wanted to get through this and get out in the world, where I could apply whatever
I was going to do.
P: Where did you live during the time you were in school here?
T: That was back when you could still live at the frat houses. I remember I lived at
the SAE [Sigma Alpha Epsilon fraternity] house a little while. Then I lived in an
P: You didn't live in dorms?
T: No, I never lived in the dorms here.
P: At some point, and I'm not clear about this, at some point were you in the United
T: Yes. I was an ROTC [Reserve Officer's Training Corps] guy. Part of the way I
financed-you said jobs that I had and I said library-the other job that I had was
ROTC here. The last two years I took ROTC, then [I] went in to the Army.
P: What was your branch and where did you serve?
T: Artillery, and I was really into missiles. I ended up at White Sands and Fort Bliss
in El Paso.
P: Where did you go to artillery school?
T: I went to artillery school at Fort Sill, Oklahoma.
P: Fort Sill, Oklahoma, that's right.
T: Then my assignment was at Bliss and White Sands. I was in air defense
missiles. We trained foreign units from all over the world in air defense missiles.
P: What two years were these?
T: This would have been 62 to 64. I graduated in May, 62 with a
masters. Bless their hearts, Humble Oil and Refining Company, which is now
part of Exxon, offered me a job, understanding that I had to go in [the Service] for
two years. I actually went to work in New Orleans for six weeks. They flew me
back for graduation once I'd finished my thesis. Then, as I remember, I went into
the Army in July. I knew there was a job then waiting for me to come back to,
and that was really important.
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P: So you got out really before Vietnam heated up.
T: Yeah. The closest that I came was the Cuban Missile Crisis, and we were
loaded for bear going to Florida to sink Cuba, which I think we could have done
with all the firepower we had. That was as close as I came.
P: Were you in any unit that was in any way directly involved, because the U. S.
went to Defcon 2 during that process?
T: Not that I remember. It was pretty concentrated; this training business that we
did with units, they came in every six weeks and they just came one after
P: What impact did your military experience have on your life?
T: Well, that taught me leadership. I must have had some [leadership] traits
because I was captain of the school boy patrol and president of the senior class
in high school and things like that. So I had leadership positions, but I didn't pay
a whole lot of attention to what that meant. There must have been some natural
something in there. When I went into the service, where I had all these grizzled
old sergeants and people [who] had been in for a long time and knew what they
were doing and I didn't, that's where you learn leadership. You learn how to deal
with people, how to handle people, including going across Sunday morning to
Juarez, Mexico, and getting them out of jail. [laughter] That's where you learn
P: It's tough for a young lieutenant to tell this grizzled Korean War veteran what to
do. They've been there and it's a delicate line that you have to walk.
T: You bet. You learn that you better have done your homework. You don't walk in
there and try to talk to those sorts of people, without being able to defend and
understand and have a discussion with them. That's what I learned. To deal
with them, you'd better have done your homework.
P: When you get out of the Army, you go back to New Orleans?
T: I go back to New Orleans.
P: What was your first job?
T: I was hired as a paleontologist, which is one of the branches of geology.
Probably because of the biological importance of that. I did my thesis on an area
where you primarily had to describe all of the fossils, and determine the age of
this and the environment and deposition. That's kind of as much of an expertise
area as I had. As it turned out, Humble Oil & Refining Company was, and when
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they came to recruit in 1962, they happened to be looking for that. I remember
this old grizzled geophysical guy who was a field person. He asked me, son, let
me ask you, would you be willing to spend your whole career with Humble as a
paleontologist? I said, oh yes sir, yes sir. I just wanted a job, of course. So that's
what I went to work as, working in New Orleans on the Gulf of Mexico. It just
happened to be [during] the very early days of the explosion of that part of the
science. That's when we first could connect up the fossils that we found in the
well bores to their ages and environment of depositions. You could tell when you
were drilling a well whether the rocks you were going through were formed at the
beach, or whether they were formed in one thousand feet of water. That was the
early stages of that part of the science. Before that, they were just used for age
P: You were on off-shore rigs?
T: Yeah, I spent a lot of time on off-shore rigs. A lot of the development of this
micropaleontology is using foraminifera [microscopic shells produced by
secretions of unicellular animals] in determining a lot of things. That was also a
period of time in the geological sciences that arguments went on between the
geologists, who would correlate physical and would run electric logs and they
would have little wiggly things on them. They would correlate these and that's
how they determined the relationship of things. The geophysicists, who would
shoot off a charge at the surface and measure the waves that came back, they
would also end up with wiggly lines and they would correlate those. As it turned
out, they gave you two completely different answers. So the geologists and
geophysicists were fighting each other and were at each other's throats. They
killed each other because they had these violent disagreements. As it turned
out, the micropaleontology solved the problem and sided with the geophysical
side and helped solve that problem. Very interesting times in the industry for the
P: I understand those oil rigs can be a bit dicey in heavy weather?
T: Oh, man. You go out there in these crew boats, and then there would be this
crane up on top of the rig. It'd be one hundred and fifty feet up above you. This
crane would come down with what they called the basket on it. It was just ropes
with this little rubber floor. This thing would be swinging in the wind, and it would
come down in the vicinity of this boat, you had to get on that basket and then the
crane operator would have to lift you up. The crane operator [could only] see so
far, he wasn't sure whether you were on this thing or not. So sometimes he
pulled up and you weren't on it. You had to let go and get back in the boat.
When you got on there you were just swinging out in the breeze, just hoping that
all these ropes and wires held. You'd get up on the rig and then he'd try to set
you down and again you'd be bouncing up and down. Oh, there were some
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crazy times. When you go out on the rigs, of course, you work twenty-four
P: How long would you usually stay?
T: It would depend on what you were trying to do, but it was very normal to stay for
three days and three nights or something like that. Two nights, three days,
something like that. Then you had to go back in with all the information that you
P: Let me get something clear. Because at this point, Standard Oil bought Humble.
T: They owned a part of Humble all the time. Then they bought the rest of it.
P: At this time were you working for Humble?
T: I was working for Humble Oil and Refining Company. Basically, Standard Oil of
New Jersey was an international company.
P: That was once the biggest oil company, Standard Oil, broke up in 1911.
T: Yeah. They were doing things all around the world. Humble really became the
U.S. company for Standard Oil New Jersey. It kind of handled the U.S. business.
P: When did they change the name to Esso?
T: Esso has always been around and Esso is just a marketing brand name used all
around the world from the earliest days of Standard Oil New Jersey. In the U.S.,
because of patent problems, they could not use Esso. So they used Humble and
Enco, and they had all kinds of names in the U.S.
P: As a matter of fact, it seems like I remember, to get that name it cost them like
four hundred thousand dollars.
T: Right, to get Exxon. It had to be a name that had never been used. That was a
big event. Once that happened, there was no more Humble and no more of all
the other affiliates.
P: Did you have any, just as a point of interest, any dealings with Freeport
MacMoRan in New Orleans?
T: No, not other than in the early days of the offshore, because when I went to work,
we were just [tiptoeing] into the offshore. The only production was in very
shallow water. I remember a couple years after I went to work, we discovered a
field in one hundred and fifty feet of water, which we weren't sure we could ever
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develop. We were basically dealing with the shallow water. In the earliest days
they did gravity and magnetics, and found salt domes which were sticking up
through the rock. It just so happened that at the top of the salt domes you had
sulfur formed, and Freeport MacMoRan was a big sulfur company. They usually
owned a crest of these things, where the sulfur was. Then the oil companies
owned the flanks and that's where the oil and gas was although there was oil
also on the crest but only to that degree.
P: If it's sulfur, it's sour, if the oil has less sulfur it's called sweet?
T: No, that's in the crude itself. I'm talking about actual deposits of elemental
surface sulfur. Good old yellow sulfur, which is formed at the top of the salt
P: During this period of time, gas would have been relatively inexpensive. Was
there enough incentive to promote a lot of exploration?
T: Not for gas. Oh no, we didn't like gas. That was just a nuisance. Although it
was used in the refining industry and the petrochemical industry as well, so that
was a very limited market. It was not a lot of residential use of gas, but certainly
in the petrochemical business. So we wanted gas, but we liked to have it right
next to the refinery and right next to the chemical plant. We didn't want to have
to transport it for a long distance.
P: Obviously, any exploration is always a chancy business, very expensive and
basically only large corporations can do it. When you started out, did you
perceive that you would be involved in exploration?
T: Well no, we've got to connect the story again. The story of going to work and
saying that I would be a paleontologist, I would be happy to be that for my entire
career, not having a clue what I was talking about. I never had seen an oil rig, I
never had been west to the Mississippi River. This was all new to me, but I
agreed to that. It was fortuitous that after I had worked as a micropaleontologist
for two years, someone in the company, this is Humble now, had the great idea
that it would be really helpful now go back to this discussion about the
geologists and the geophysicists -really interesting, and worthwhile to have some
cross training. I came in one day and they said, you've been selected to get
cross trained as a geologist, probably because the [geophysicists] were mad at
me. That's when I really started going out to the rigs. It was a training program
that lasted a year, but I really liked that. So they said, when it was time to go
back to be a micro-paleontologist, son, it's time for you to go back. I said, I don't
think so. I like this. Well, that caused some hard feelings. That was the base
decision that I made in my working career, was to be a geologist rather than a
paleontologist, and really rather than a geophysicist, which is too much like
engineering for me.
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Having done that in New Orleans, I moved to California in 1968, right after
the Great Santa Barbara Channel lease sale, and the big oil spill that they had
out there, that the union had. We were so sure that we were just going to shoot
ducks in the water and develop big fields that we formed a whole division out
there at the time of the lease sale. There were two geologists that went out
there. One was the chief production geologist and then I was his swamper. We
went out to California in 1968, and lo and behold, we didn't make all the
discoveries right away. It was much more complicated than that. Two things
happened that were very fortuitous in my career at that point. One is that in the
Santa Barbara Channel, we had a type of rock called the Monterey chert, which
we always had to drill through on the way to the supposed primary objectives. It
was a heavy calcareous type, more a source rock, rather than a reservoir rock.
Everybody hated to drill through it. I was the only production geologist out there
who's going out on rigs and everything. One time we logged the well and we had
a big gas kick at the top of the Monterey chert. I remember going back in and
telling everybody that we had to test this. I was not convinced that this wasn't
something that was producible. Lo and behold, that now is the major producing
zone in the Santa Barbara Channel. Of course, all the exploration people were
mad at me then because it wasn't their idea, but so be it.
The second thing that happened is that in 1968 was the discovery of oil in
Prudhoe Bay in Alaska. We decided to handle that out of the Los Angeles office.
So I started making trips to Alaska in 1968 right after the initial discovery well.
But at the time we were drilling the confirmation well to the Prudhoe Bay field. I
was involved in that, which of course grew into a very important province. So I
just happened to be there at that time, involved in those two things, which
became very important to the company in later years.
P: Explain to me a little bit about drilling for oil on land and in the ocean. What
you're doing, you're looking for, I think they're called reservoirs?
P: What would be the difference between land and water?
T: It's a lot cheaper on land, of course, because you just go out there and set it on
the ground. When you're finished you can usually break that down and move it
to another location, so you can use it for multiple things. In the offshore, you
have to set a platform from which you drill multiple wells. That's the only way the
economics would work. So once you discover the oil, then you have to decide
where to set this platform. Once you set it, it's there forever until you take a
welding torch and break it down. Then you drill out from that in all different
directions. These are the directional wells, so you have to be right. That's more
expensive because you've got to build this thing. It's made out of steel. You set
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it down and then you drill all these wells and they have to go up. You have to
control that, so it's much more difficult. The onshore wells, normally, you just drill
the well straight down and that was it. Today, that's not right. When you drill
deep wells onshore it's not right and gets very expensive, but that was the basic
difference. It was a cost differential.
P: If you were to drill either offshore or onshore, would some of these be primary
fields and there would be enough pressure that the oil would come up?
P: Whether it would be on or offshore?
T: In general, offshore in order to make the economics work they have to be
able to produce on their own pressure. Onshore, you would prefer that, and
usually at the beginning, initial parts of developing a reservoir, that's the case.
But when you lose pressure, it's very often the case that you have to
mechanically put pumps in and bring it up.
P: Would you use gas or water to pump the oil up?
T: Normally, the simplest thing is just a pump that creates a suction and helps the
pressure. What you're looking at is the pressure differential between the
reservoir and earth's hydrostatic pressure. It's much like an artesian well of
water. An artesian well just means there's more pressure where it starts then at
the surface. So you do that, but you can use then any kind of gas. A water
problem is a miscibility [ability to be mixed in all proportions] problem because
you can't pump water down and displace oil very much. It just gets really messy.
P: A hard decision, I guess, would be at what point would it be economically feasible
to keep bringing oil up.
T: Yes. Now you're into the engineering world. The tremendous engineering world
of the oil and gas business, where they study this a lot and they know a lot about
this. The fundamentals of what a reservoir produces and how it produces and
the nature of it is geological. So without the geological description of what it is
that you're dealing with, you could do all the engineering work you wanted to and
you would be surprised one hundred percent of the time.
P: How accurate would you be in predicting the size of a field and the amount of oil
you might be able to retrieve?
T: Today, fairly accurate. The seismic tool, the geophysics, has really been what
has been refined in the last thirty years, from a two-dimensional where you
weren't really sure if what you saw at the surface, where it was really located in
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the subsurface. Today, we do 3-D [three-dimensional] seismic and you can
accurately pinpoint the exact location of where you're getting this energy back
from. So in the last thirty years, I'd say mainly the last twenty years, it's been the
revolution in the geophysical tools, which have helped this accuracy that you
need to have.
P: Nowadays, you really don't have to take too many risks in just drilling and hoping
you hit something? You're pretty sure that you're in the right place?
T: Not initially, but once you've made a discovery, in delineating the size, and how
to develop it and how big it's going to be and all of that, that has become a lot
P: In the beginning, it's still hit and miss?
T: In the beginning, you try everything you want, but Mother Nature has a way. All
the tools that we use to try to minimize the risk have increased and surely
allowed the success rate to go from, as I remember, ten percent success rate on
exploration wells, up to a fifty or sixty percent. There still is that one in three,
we'll say, that you won't find an economic pool. You may find either oil or gas.
Of course, today we love to find gas, too. It's the economics of it. Particularly
now that we've moved into deep water. We're drilling into water depths of eight
thousand to ten thousand feet now. To make that economicall, it has to be
really good and really big. You have to be right more of the time.
P: When was the Santa Barbara oil spill? Was that 1967?
T: [It was] 1968. We just had the lease sale, as I remember, and we're just about to
get to work, and then one day [had] this blowout on a Union [Oil Company]
platform, that had already been there. It wasn't part of the Santa Barbara lease
sale. It was close to shore, and the well blew out. They were drilling a well and it
blew out. That just kind of soured the whole Santa Barbarians against the oil
P: That was really one of the big oil spills that got a lot of attention.
T: Yeah. The funny thing is the natural seeps in the Santa Barbara Channel, where
the oil was coming out of the rock continually. They also have an onshore oil
pond out there where they've recovered all these old mastodons and things like
that. There's a lot of oil in those rocks. With the earthquakes and things like
that, they're still moving. Those rocks are still moving, and so there's a lot of oil
coming in naturally out of the rocks in the Santa Barbara Channel. There's
probably more oil coming out of the seeps in there than was spilled in this
FBL-32, Thompson, Page 14
P: Did that affect your drilling and how you went about your business?
T: Oh yeah. It affected the permitting. In a sense, it was federal land, so the state
people couldn't keep you from drilling. Now they can, because they have the
Coastal Zone Management. They have lots of regulations on the shore part that
can really change. In those days, the feds, which owned the leases, had their
own rules. You still could drill. The question is, if you wanted to produce it, what
you did with it. Could you pipeline it to shore and have a point there? They said,
no, we don't want any of this.
P: That would change the safety equipment, right?
T: Yeah. It affects the economics. You have to learn to produce the oil and
transport it by tanker from the offshore facility directly to the refinery, for example.
That really spawned that part of the industry which says you don't have to take
this to shore. You can produce it and fill up the tankers right there. That's a
whole important part of the industry today.
P: It saves a lot, not having to do the pipeline.
T: It's very expensive. It's always cheaper to build that pipeline.
P: Oh, it is?
T: Oh, yeah. Because once it's there, you just keep flowing through it.
P: You don't have to do it again.
T: You have to inspect it and make sure it's all right, but that's a little different than
all these tremendous big things coming out of the water, in these tankers that
have to come in every few days.
P: You were the project leader of the North Rocky Mountain Region?
T: That's after Los Angeles.
P: How did you get that job?
T: Once we had made the discoveries in the Santa Barbara Channel, and that really
became an engineering production thing; and we had the north slope of Alaska
pretty well understood; we knew what we were doing, [and] then we didn't need
to operate all that out of Los Angeles. [It] was a pretty expensive place to live, as
you might imagine even back in the 60s. We reorganized, and we set up
divisions in other parts of the U.S. We moved a lot of people from Los Angeles
to Denver and set up what we called the Rocky Mountain Division. I was
FBL-32, Thompson, Page 15
transferred there. Really, that was the first management job I had. I was
supervisor before, but [that was] the first management job. We handled all of the
northern Rocky Mountain area; Wyoming, Colorado, Montana, [and] the Dakotas.
P: Did you find much oil?
T: Yeah, but it's in much smaller quantities, because it was onshore. It didn't have
to be the same volumes we were talking about before. That was more field
geology; you go out and see the rocks in the field, and you could relate them to
the number of wells that had already been drilled there over the years. So you
had a lot of data.
P: Did you like that better?
T: It was different. The different part, it made me stop and think about things which
you don't think about when you're looking for elephants. It's just as valuable and
you make just as much money, but it's a different kind of geology. So I wouldn't
say I liked it better, but it was sure different.
[End of Tape A, Side 1.]
P: You did some work in Alaska.
T: That was really tied in to the Los Angeles years, 68 to 72, when I spent a
lot of time in Alaska. I'd spend a good part of some summers up there doing field
work, and I remember flying around in helicopters through the mountains of the
Brooks Range. It's just beautiful country and you'd feel like you were the only
human that ever set foot in some of these places. You'd get chased by bears
every once in a while. You're lucky to get out of them. It was just a beautiful
setting to be a geologist. Once I left there in 72-until I got management
positions where that was part of my responsibility-I really was out of the Alaska
part for some period of time. But I've never lost touch with it and have been able
to follow it over the years.
P: While we're on that, let me get you to comment on Exxon Valdez [Oil spill in
Prince William Sound, Alaska, 1989].
T: Well, number one, it was a very unfortunate accident. It was an accident.
P: The skipper had been drinking.
T: But I've never, in my mind, reconciled who was wrong in doing what. It was at
night. If you've ever been to the southern coast of Alaska, it is rocky and it is
treacherous. The shipping lanes were very narrow. So I can understand that
given the number of trips that tankers went in and out of that place that it is
FBL-32, Thompson, Page 16
possible; it's always possible to stray enough out of that shipping lane, and you
don't have to go very far and you're in big trouble. It was as much an accident, I
think, of that nature to me. There certainly is a responsibility for anybody who is
a skipper of a tanker like that. [He] is responsible and should have been there
and has to take the responsibility. Like being a lieutenant in the Army is the
same thing. You don't get up there and say, well, I'm sorry. It was somebody
else's fault. They say, yes, it was on your watch. So it's very unfortunate. I think
Exxon went way out of their way to try to do everything they could to mitigate the
results of that.
P: I understand, I don't know the figures too well, it was something like two billion
dollars for cleanup?
T: Yes. In those kinds of situations where you're spending big money and you have
to hire a lot of people and all, there's a lot of people who took advantage of that.
P: As I remember, some fishermen sued Exxon and were originally awarded
something like four hundred million and another court finally threw that out.
T: Yes. Any time you have big money floating around, there are sharks in the water
looking for that money, and I'm sure we paid a lot of money out that if we'd had
enough time and thought through it, we probably wouldn't have spent, but we
were trying to mitigate this as quickly as we can and as much as we could.
P: What's the best way to mitigate it an oil spill? Use nets?
T: No. Again, the currents up there, once you push oil onto the beach, and it's not a
beach up there, but once you get it to where the rocks are, then it coats
everything. That's where if there happen to be birds around, that's where the
birds get oil on them. With that cold water up there and the viscosity of that oil, it
just is a very difficult thing. You can't pick up every single rock on every beach
and take it in and wash it off, and put it back and say no further oil is going to get
on it. It's a very difficult problem to do [something about]. We, at Exxon, felt at
least as bad about this as anybody in the public realm, and were trying to do
everything we knew to try to mitigate this. It's an unfortunate accident, and of
course, those kinds of things in the realm of history don't ever leave you.
P: Plus, you have all these tankers all the time all over the world. It could happen
T: The record is phenomenal. At that place, at that time, it's just one of those
P: I think the right year is 76, you go to Europe and you were in London for a
FBL-32, Thompson, Page 17
T: Yeah, in 72 I went to Denver, and then in 74 I went to Houston. I was
only there for a short time.
P: Is that where the headquarters were?
T: Headquarters of Humble [were] there. Actually, headquarters of the U.S. part of
it-of Standard Oil of New Jersey-was in Houston at that point in time. I forget
what job I had then, but I wasn't there very long before they offered me to move
to Esso Europe, which was then handling all of Europe and Africa. The history
there is we discovered gas in the North Sea in the late 60s. The first real oil
in the North Sea was found in the 60s. They were just trying to figure out
what everything was. When I went over there in 76, we were in the midst of
developing these fields and trying to figure out the limits of the fields, and how
many platforms and where to put them and drilling the wells from those, in
addition to still exploring. All through that time, once I left that job in Los Angeles,
I have been in exploration ever since. That's really exploring, but part of
exploring is deciding where the limits of the field are and how to set the platforms
up. I was there again, at a very fortuitous point in time in the development of the
oil fields in the North Sea.
P: The North Sea, of course, is very rough and it must be even more difficult there
than it would be probably anywhere else.
T: Oh, yes. Some of the waves and storms in the North Sea are as fearsome as
any place on the Earth.
P: It's very cold as well.
T: Yeah, so it's a pretty dangerous place.
P: Would you purchase the right to drill? Would you purchase from Great Britain?
Who would own that?
T: Of course, they just divide the North Sea down a line, and part of it belongs to
Norway at the north, and part of it belongs to Great Britain. Then when you get
south of there, part of it belongs to the Netherlands, and part to France and part
to Spain. So the line ran right through there. You were dealing with all these
countries who had different processes for leasing the areas. They would divide
them into blocks of different size, and then you would compete for the rights to
explore and develop.
P: When you lease, what sort of term would you have?
FBL-32, Thompson, Page 18
T: Well, it changes, depending on the water depth and how frontier it is. If it's a
known area, then the times are shorter on that. Normally, you have three to five
years to do your initial work, so you have to get after it. You don't just put these
things in the bank. They don't give you an unlimited time period. Once you get
the access right, you've got to get after it and explore and do your work.
P: Did you do a lot of that in the North Sea while you were there?
T: Yeah, I did a lot of that in the North Sea.
T: Yes, we were very successful. Norway was a little behind the U.K. in the
development of their oil fields, so we moved from the U.K. into Norway.
P: While you were Esso Europe, did you explore anywhere else in western Europe?
T: Yes. We had all of Europe, so from the Russian border, basically the old Soviet
Union, all the way west of there.
P: Romania used to have a lot of oil.
T: Yeah, but that was part of the Soviet Union, too.
P: So you couldn't get there.
T: Romania was out, Poland was out, East Germany was out. [We had] everything
else, down to the Mediterranean.
P: Did you find oil? Western Spain has some oil, I guess.
T: Yes. It was onshore, so again, it's kind of like the northern Rocky Mountains. It's
a different kind of exploration. It's onshore, generally smaller fields, but cheaper
to develop. We did that at the same time [that] we were doing all that.
P: At some point, I think about 1979 or 80, you come back to the States and you
go to Midland, Texas? What was your position there?
T: When I went to Europe, I was the Exploration Operations Manager for Esso
Europe. Before I left there, I became the Operations Manager for the U.K. One
of the managers left, so I went there. I was concentrated on the U.K. for the last
year I was there. Then, I went from there to Midland to be the assistant division
manager for the southwestern division. Remember, we had a division in Denver
and we had one in Midland, Texas, that handled Oklahoma and all of west Texas
and New Mexico; the southwestern part of the U.S. I went from London, where it
FBL-32, Thompson, Page 19
rains and is foggy all the time, and I dried out in Midland, Texas, which is like an
alligator drying out in the sun. You had dust storms and desert and all of that.
You can drive a long way in Texas and all of a sudden you see eight or ten
buildings on the horizon and that's Midland, Texas. It's there only because of the
oil fields. It's a very friendly town, and it's mostly oil people.
P: Speaking of that, did you ever have any dealings with George W. Bush or the
T: No. Not that I recall. I wouldn't have related to him particularly then. His
company, probably yes, but not with him, particularly. That was another new
experience. That was hard-rock geology. That's a very low permeability, long
life. You just get the oil out very slowly. So that was a different kind of thing. I
was there for a short time; just a year and a half as I remember.
P: Let me ask you how the OPEC [Organization of Petroleum Exporting Countries,
international organization of eleven oil-producing nations] Oil Embargos of 73
and 79 affected your company and your exploration? Did that give you more
incentive to search?
T: Well, yes, but you've got to remember, I can tell you the Angola story, but this
business that we're in of exploring and developing for oil and gas is measured in
decades. A lot of fields are forty, fifty years long. The time-frame is very, very
long. So you can't respond to short-term fluctuations like that. You have to see
though that, which, of course, we try to have a long-term view from a planning
standpoint. These short-term things that are aberrations caused, which will go
away, and things will come back down to be normal. You can't respond to those
very much. Now, onshore, instead of drilling ten wells in a field and getting the
oil out in twenty years, you could drill twenty wells and get it out in half the time.
There you could get that money back quickly. You can respond to things like the
embargos like that, which we tried to do. Of course, we tried to maximize our
short-term production any way we could. We didn't do anything stupid thinking
that it was going to always be that way.
P: How important for exploration is the cost of both the gasoline and what the
consumer pays at the pump?
T: That's kind of a whole different world, because the upstream, most companies,
particularly the big ones, are divided into the upstream and the downstream.
Upstream, in essence, takes it to the point that the refinery gets it. The refinery,
that's a whole different world with the types of crudes, what products they can
make most efficiently, and all these kinds of things. Whether you use this to help
make plastics or gas, which is next to the refinery. The marketing part, which is a
distribution issue, and in itself, makes very little money. The transfer price from
the upstream that we sell to the refinery, be it ours or somebody else's, is the
FBL-32, Thompson, Page 20
[world] price. Like today, crude is at fifty-five dollars. The upstream is making a
lot of money, because we're selling this crude to whoever wants to buy it at the
highest price. Once the refiners get it, then the margins come way down. The
value that they had, it depends on the products that they can turn it in to, and that
depends on the location of the refinery, [on] whether they're making oil jet fuel,
because there's big airports nearby.
P: What determines the base prices? If it's fifty-five dollars now, and next week it's
sixty dollars, what would be the factor that would lead to an increase?
T: Eventually, it's just pure oil market supply and demand. Eventually. The oil
industry is not unique in that once you get traders involved who are not part of
the industry, these are people behind these screens that are buying and selling,
and doing futures and arbitrage, and this, that, and the other. That's a driver that
is non-market related, and lives on fear and greed and all these kinds of things.
It's like the savings and loan crisis [the Savings and Loan crisis of the 1980s was
a wave of savings and loan failures, caused by mismanagement, rising interest
rates, failed speculation, fluctuation in real estate values, and fraud]. There's a
lot of ways to manipulate markets when you're just basically arbitraging. You're
buying future cargos and you're selling it to somebody else.
P: You hope it goes up.
T: You hope it goes up or you're going to option on this and you're doing all that.
That helps drive the market. Then it becomes psychological to some degree,
because it depends on what the traders think. There's a lot of that going on
these days because of the whole globalization of the whole industry. There are
people who make their living, and they may or may not know anything at all
about the industry. It's a commodity, they're just dealing in commodities.
P: How important is what Wall Street thinks of the Exxon stock? How does that
impact corporate thinking?
T: Not as much as you might think. Again, what we try to do is look at the long-term
fundamentals, including the price and the supply and demand. Where one is
growing and the other is going down, we look at that on a long-term basis of
twenty, thirty, forty years. There isn't much sense in our business in planning for
much less than five or ten years out, so we try to look through all that.
P: How powerful is OPEC?
T: Psychologically, they're very powerful. Number one, because most of the world's
reserves are in OPEC countries.
P: What, about sixty percent?
FBL-32, Thompson, Page 21
T: Who knows what they have. In the first place, they say what they have, but who
knows what they really have. There's a lot of political [aspects involved]. One of
the OPEC countries says, well, my reserves have gone from twenty billion to
thirty billion and their neighbor over here says, oh, well, that's interesting,
because mine just went from thirty-seven [billion] to fifty [billion]. I beat you. What
they really have, that's a separate question. There's a lot of the political part, but
there's no question that the majority of the discovered world's oil and gas lies in
OPEC countries. So that's the fact that you have to deal with. Whether they, in
fact, are acting in concert truly, is another question, because they play games
with each other.
P: Venezuela's done that, Kuwait's done that.
T: Trying to separate reality is something, well, you can imagine that if you're sitting
there behind a screen and you're a trader, how do you sort that out? You don't
know anything about the business, you have no way to judge whether what
they're saying is right or wrong, up or down, whether they're going to do what
they say or not. You're sitting there and your head is swimming, and you're
trying to play this crazy game without understanding anything. It's a lot more
sobering when you understand what's there and what's going on and the
economics of that.
P: In 1981, you go back to New Orleans as the division manager of the Southeast
Division. Is that correct?
T: That's right. We're still [in] divisions. So I go back to where I started, back to
New Orleans. I'm deeply involved, at that point, in the Mobile Bay gas
discoveries and the bidding and the developing of that, which is a significant
event. We handled a goodly part of the offshore out of that office. So now we're
getting into deeper and deeper water, and finding more and more things in the
Gulf of Mexico. It's kind of another exciting time. It happens to coincide with this
new development of the seismic capability, which I said was about twenty or
thirty years. Really in the last twenty years, the development of that part of
science [has] contributed to an opening up of new opportunities. We could see
data that we could never see before, so that was an interesting time. That kind
of completed my cycle. I'd been all around. I'd been overseas, I'd been back, I'd
seen these major developments that had happened in our industry and
happened to be fortunate to be in these places at the right time. I attribute a lot of
my career success to just being in the right place at the right time. There isn't
always an element of that. I'm back in New Orleans for three years.
P: In 1984 you go to USA headquarters? The assistant manager of corporate
T: From a career standpoint, that's a big change. I'd been pretty hands-on and
operating manager up until then. At that point, I get into this ephemeral world of
FBL-32, Thompson, Page 22
corporate planning where we're looking out fifty years. We're trying to figure out
what the supply and demand is going to be, and the price and making sure that
we make wise economic decisions. There, I get involved with the
downstreamers. I learned how to get involved in their business and the refining
thing. I see a corporate view there, but I didn't stay there very long, either.
P: Exxon, I guess, is officially formed in 1986, is that right?
T: No, no. Exxon was formed earlier than that, but 1986 was the big corporate
decision year where we decided to get rid of all these regional offices around the
world. Like Esso Europe was a region. We had an Esso America, we had S.O.
Eastern, which handled the Far East, we had basically Humble, then Esso USA.
We decided to get rid of all that. Prices were going down, long-term supply and
demand looked like it was in trouble. We had to tighten our belt. We had to do
something to save a bunch of money. So we were the first company that really
did that. We concentrated, and we set up, basically, three companies. We had
the Canadian company that handled just Canada. That's partially privately
owned. We had Exxon Company USA, they handled the U.S. Then we set up in
New Jersey, the Exxon Company International. We abandoned all these regions
and brought everybody there. When we set that up, I moved from Houston, cut
short my corporate planning career, which was all right with me, and moved to
New Jersey to help form Exxon Company International. I was the vice president
of exploration. I basically then had [responsibility for] all of the world of
exploration, except for the U.S. and Canada.
P: Where did you find oil?
T: All over the world. I was on an airplane all the time. It liked to kill all of us,
because we had these regions. It's one thing to travel from London to Germany
or Norway, it's another thing to travel from New Jersey to London, and then to
Malaysia and then to South America.
P: Was there much oil in Africa?
T: At that point, there was oil along the northern rim, which is Libya, Morocco and
Egypt, at the southern end of the Mediterranean, which has a lot to do with the
geology of southern Europe. Nigeria is a very prolific [oil] country. If you can
imagine all of the oil that's been found in the Gulf of Mexico. Basically, it owes its
origin to the large rivers like the Mississippi River or the Rio Grande River, which
emptied sediments into this big hole called the Gulf of Mexico. Nigeria has the
same thing. They have these big rivers into it with a large delta and a
tremendous basin. There are a lot of similarities to the Gulf of Mexico.
P: When was the amount of oil discovered really determined?
FBL-32, Thompson, Page 23
T: I said there's a rim of oil in the southern [part of Europe] and then there was
Nigeria, which already had discovered oil and gas. They were in the same
process of going from onshore into offshore that we, in the Gulf of Mexico, did in
the 60s through the 70s. They still had a lot of the offshore that they
hadn't developed. Other than that, there was not a large amount of oil and gas in
Africa, at that point in time. Except for those areas. It happened to coincide,
again, with this kind of significant industry event, our ability to develop the
technology to develop deep water. These would be such things as you didn't
have to be connected to anything. You could put what essentially used to be a
platform in the Gulf of Mexico that stood above water, you can now put it on the
seabed. The water depth doesn't make much difference. You can surface it
from the surface. It's an amazing technology; space age technology. This whole
industry is. We were just beginning to develop that because we were looking into
deeper and deeper water. We were finding discoveries all around the world in
deeper and deeper water, and it needed a new technology.
P: Most of it was offshore as opposed to onshore?
T: Most of the new stuff, a significant volume was offshore. That was really what
we did new once we set up Exxon Company International in 1986.
P: What about China? Of course, you couldn't get to it, but you must have
had some interest.
T: That's one big event, was the development of deep water technology. The
second event was the breakup of the Soviet Union, and the reopening or the
initial opening to international companies all around the world which is still
going on today Mexico being a real good example that's still in the process of
sorting out how much they want to open up. Libya's going through the same
thing today. China went through that in the late 80s. It opened up. They first
allowed us to come in and try to make deals with them.
P: So now you can go to a place like Romania?
T: Yeah, places like Romania opened up. So now you've got a bunch of places
opening up and you've got to decide where you want to be, and how much you
want to be there. The Chinese, bless their hearts, as a people you probably
know this they consider themselves the cradle of all world civilization in the
base case. They think the rest of the world is kind of not very important. The
second thing [about] the Chinese mentality is, that having thought that, they can't
stand to be beholden to anybody for anything. Then we get dumped into that.
So they don't always tell the truth. It's not that they don't tell the truth, but they
don't give you the whole facts.
FBL-32, Thompson, Page 24
P: At this point Russia, even today, must be the third biggest producer of oil,
something like that?
T: Russia was opening up, we'd been into Russia twice. We got involved in there,
so I spent a lot of time in Russia. I spent a lot of time, a lot of time in China.
Russia is still, they were open for a while and then they closed when Putin
[Russian President Vladimir Putin] came in and they had this big discussion
about how much they want to retain for national companies.
P: Essentially, they've taken over that private oil company that's apparently part of
T: Well, no, they have a number of companies, but they're all pretty controlled by
P: So that keeps foreign interests out ?
T: Yeah, until they get themselves sorted out, we're not going to go in there and
commit a bunch of money, but we did that in China. What we found out in China
is that for all the reasons of being Chinese, that there was probably very little
physical area of China that they haven't already drilled. These national
companies, they just had their own drilling company and they just kept them
busy. It didn't cost them any more money. It's not like us going out and hiring a
drilling rig to drill a well, and it costs ten million dollars and then we're through.
These national companies-China being one-they built a tremendous number of
rigs and they hired all these Chinese people to do it and they just gave them
jobs. They just drilled all the time. It didn't make a difference whether it was
good, bad, indifferent. They just drilled. They drilled everywhere, but they didn't
reveal that to us when we first went in there. So we had a lot of problems.
P: Of course, politics is always a major issue in any of these.
P: I can remember in 54 with the overthrow of the Iranian government
Mossadeq, where I guess at that time, Standard New Jersey would have gotten a
percentage of the Anglo-Arabian oil company.
P: That was a big boost.
T: That was big. But we were deep into Libya and all these places. When they
nationalized this, as well as Venezuela. We had a tremendous operation in
FBL-32, Thompson, Page 25
P: Once they nationalized it, did they pay you a fair price?
T: In some cases they did, and in some cases it was an unfair price, and in some
cases it was no price at all. That's another significant industry event of the
70s. Now, with this reopening, and the change in technology, now
technology has come a tremendous way. Companies like Exxon-Mobil are using
technologies that these national oil companies haven't even thought about.
They're still dealing in 60s technology.
P: They're still dependent on American technology?
T: No, but they're starting to reopen to us. They begin to reopen whether they
physically give you acreage to explore, or whether they want you to join with their
national company in a joint venture. They see how far behind they are, and we
do all these things and they can't do them. So that's part of the reopening. It's
an anti-nationalization. That's one way to view it. That's what's going on today
and has been going on since 1990. Consequently, there's been a big upsurge in
exploration as a result of that, particularly in the deep water.
P: A question that comes up that reminds me of that, there's always this doomsday
prediction that oil is a finite source and I can remember in the past, people say,
well, by the year 2000 we'll be out. In USA [Today], I read the other day, said
about 2007, and then other people say it won't be until 2050. What's your view?
T: It's a question of economics. We're not running out of oil, it's a question of economics,
pure and simple. If you remember, one of the responses to the initial Arab embargo in
the 70s was that the companies, including Exxon, went into things like oil shale. We
bought tremendous properties in Wyoming and Colorado, some [of] which we still have.
We were going to re-torque oil out of basically the source rocks. We were trying to find
a reservoir and the source rocks are little microscopic-sized things, and you just have to
crush it and re-torque it. But there's oil there. There's a lot of that. There's a lot of gas,
which is very, very tight and very, very expensive to produce, but it's there. So it's a
question of economics.
P: If there's a huge demand that there always is for these gas and oil products, then there
will always be an economic incentive to get them.
T: Therein lies the issue about the current oil price and gas price. Although it may not be
real, and it's not fully supported by supply and demand, the fact that it's going back to
fifteen dollars is also probably not real, because you can't economically develop these
new sources at that price. We're going to have to find where the null point is in between
there, and that will dictate how much of this stuff we can do, as well as technology.
Technology overcomes a whole bunch of economic problems.
P: How important are alternative fuels going to be?
FBL-32, Thompson, Page 26
T: Very important.
P: Is it going to take some of the pressure off of the production of oil?
T: Yeah, but this market is so big. We're dealing in millions and millions of barrels a year,
and like the growth of solar [power], which everybody ought to support, but to the degree
it can economically produce electricity. A lot of people don't connect oil and gas to
electricity. They think electricity is something new. It's like another tree that you plant
out here and it's called electricity. They don't know that you've got to put energy in to
form electricity. In the process you lose a lot of energy. It's not as efficient. They don't
compute that. Solar is the same way. It's efficient once you get it going, but it only
produces a very small amount. You'd have to have windmills everywhere to make any
significant dent in the total supply and demand.
P: It's only a minor factor always.
T: It's growing in the double digits, and that's great, but you'll never see it.
P: What about things like gasohol and some of those hydrogen fuels?
T: Well, the gasohol and things like that, the corn growers love it because they can use
ethanol in the making of gasoline. That's fine, but it costs to plant the corn. You've got
to do that, you've got to transport it. You've got to deal with it, you've got to turn it in to
something. All this costs money. People say, well, why not? But you can't do that at
ten dollar oil. Hydrogen is a problem that we haven't solved technically yet. It may be
coming, whether it's twenty years or fifty years. We have been studying hydrogen for a
long time. It's very dangerous, number one, it's very expensive, number two. The first
time somebody gets into a hydrogen car and the damn thing blows up, it's going to be
like an Exxon Valdez. Next thing you know, it's like nuclear [energy]. Nuclear is
wonderful stuff, until there's a problem. Then you say, oh, how can we solve this
problem, because this stuff lasts for many, many years.
P: What impact do you think the hybrid vehicles are going to have on gas consumption?
T: Great. We're all for hybrids, but these things don't fundamentally change the industry.
That's the whole thing. People don't seem to understand that. They think it should.
What they don't realize is the magnitude of the world consumption and need of energy.
P: One of the problems is countries like China who are growing and industrializing, they
need a lot more energy than they used to.
T: Remember the Chinese don't want to be beholden to anybody. Do you remember that?
FBL-32, Thompson, Page 27
P: That's right.
T: They don't like the Russians.
P: They never have.
T: Number one, and Russia's got oil and gas along their northern border. They don't like
the Russians. They're closer to the Middle East than the U.S. is. All they've got to do is
go over the Himalayan Mountains. They do not like it at all. I remember telling them in
the 80s that they were going to have to start importing oil. They just absolutely
refused to believe that, because their technical people were telling them no, we've got
plenty of this. The politicians didn't know any better, so they had to believe them. They
just didn't think. Lo and behold, in the early 90s, they started importing oil. Now
they're in big trouble. They imported a lot. They're growing fast. What do you do? Do
you hold your hand out? Do you invite the Russians to come and pay them money? Do
you invite the U.S. to come in and do all their stuff? Or do you go make a power move
against the Middle East or someone? I don't know. You're dealing with people whose
mind set doesn't like to be beholden to anybody.
P: Talk about the mergers. In 1999, Exxon merged with Mobil Oil. There's all of these
mergers. Shell, I'm confused as to who owns what now. Why Mobil in particular?
What were the benefits?
T: Very interesting. We put together a time montage that went back to the time of the
Standard Oil Trust. Which, really is not that long ago. We're talking about less than one
hundred years ago. This is a really young industry. We go back to that, 1911, and broke
everything up. Standard Oil New Jersey had this piece of the pie, Standard Oil New
York, which then became Mobil, had this piece of the pie. Standard Oil of California,
Chevron, had this piece of the pie. There has always been as much affinity between
Standard Oil New Jersey and the old Standard Oil New York, since the Jersey
headquarters is in New York.
A lot of the people and the way they thought and the way they did business were
similar. We made this montage that showed the paths that we have taken separately,
once we left and where we were. There were a lot of synergies when you looked at it.
We used Nigeria as an example. Mobil had a very well-established position in the very
shallow water of Nigeria. Shell had a big position onshore. Of course, they're catching
all sorts of flack from the Nigerians because of polluting onshore and things like that.
It's one thing to be right where the people are, and it's another thing to be in the water,
and Mobil was in the water. They had a tremendous position. Once we formed Exxon
Company International, one of the things that I did in the 90s was to get a big
position in the deep water offshore. Particularly in Africa, and that was Nigeria and
Angola, primarily. I remember meeting with President Dos Santos [Jose Eduardo Dos
Santos] of Angola in New York and Jonas Savimbi [leader of Union for the Total
FBL-32, Thompson, Page 28
Independence of Angola, UNITA] and they were in a civil war. They came to the U.N.
and we met with both of them. We were very impressed with both of them. This is in the
late 80s. We kept developing that and developing that.
We were responsible for setting up in the deep water of Angola, showing them
how to do it and what to do as well as with the Nigerians. We had established a
tremendous acreage position off the west coast of Africa in the deep water. We had the
best position in Nigeria deep water. Mobil had this very strong position in the shallow
water. There were a lot of those kinds of synergies. We had dealt with Mobil people as a
competitor for a lot of times, and we'd gotten along pretty well with them. They thought
kind of the same way we did. So there were a lot of synergies.
When we got back together, we spent a full year where we basically got pulled
out of our jobs and we sat together, the Exxon and the Mobil people and the management
of the different functions, like exploration and production and natural gas, in putting this
thing together and ensuring that it was fair and equitable. We looked at all the people,
wherever they came from, and made sure we picked the best ones for this. In the process
we got to know each other very well. That year that we spent doing that before the
merger happened, so that we were ready on day one. I think [that] is unique in any
merger that I know about, particularly in the oil and gas industry.
P: Is that now the biggest oil company in the world?
T: It's the biggest oil company in the world by far.
P: Who are your major competitors?
T: BP and Shell have come back up towards us. We're still clearly the largest in the world,
but they have-through all the mergers they've done-come close. Now Exxon-Mobil, BP
and Shell are clearly the three leaders.
P: In the long run, in addition to the synergy, you now have more resources and
knowledgeable people. Since you're expanding your exploration anyway, that just adds
to your ability to search out your resources.
T: We were big enough as it was. We were the largest oil company in the world to start
with. Then we add Mobil, which was like number three, and now we're just huge. What
we did, which is part of the story, is that in 1992, I moved from New Jersey, where we
had Exxon Company International, and set up a company called Exxon Exploration
Company. I pulled the Canadian exploration and the U.S. exploration, plus the rest of the
world exploration into a single functional company, which I set up in 92. This was
the model for the merger in 99, because we then went to functional companies.
We're not geographic anymore. I now was the president of Exxon-Mobil Exploration
Company. I had full P & L [profit and loss responsibility], full responsibility for all
FBL-32, Thompson, Page 29
exploration around the whole world, as if I were a separate company. No other company
in the industry has done that. I had the model for that, and in 99 we went to
functional companies. That was our answer to this bigness, and that has stood us in great
stead. That really allows you to concentrate on the piece of business that you have. Now
we have these operating companies.
P: You have production and you have exploration.
T: We have an exploration company, a production company, a development company, and a
natural gas company.
P: You have a research company.
T: We have research that goes across, but then we have a refining company, a marketing
company and a lubrication company. We have all these operating companies. They're
stand-alone functional companies which report to this now, rather small corporation
headquarters in Dallas. It has like three hundred people there.
[End of Tape A, Side 2.]
T: The merger and the functional companies, which is a unique thing now to the largest oil
and gas company in the world. I think it's been very, very successful.
P: May 31, 2004, you retire from Exxon. Is that a required sixty-five year retirement?
T: I have to be careful what I say here. Most of the technical people that are professionals
can work past sixty-five. It is a company policy that the senior management retire at
sixty-five. Many retire before that. That's just a company policy. Certain management
levels, you are expected to resign at sixty-five, which is fine. The only exception that I
know to that is that the Board of Directors has asked Lee Raymond, who is our chairman,
to stay on past sixty-five.
P: He's sixty-six.
T: Yeah, he's sixty-six, he's about sixty-seven now. He's about a year older than I am.
They asked him to stay because in the merger with Mobil, we had to kind of reset our
whole management development process. Just getting through the merger and getting the
business going, and all that took so much energy that we lost a little bit of the normal
management development that you would have done. We needed to stand back a little bit
untill that caught up. That's very unique. That's the only time in the history of Exxon
or Mobil that I know of that a senior manager has stayed past sixty-five.
P: Are you glad you spent your whole career with one company?
FBL-32, Thompson, Page 30
T: Absolutely, and it's because of the company, because of the ethics of the company, the
size, the capability, [and] the financial strength. We could do almost anything that we
wanted to do that made economic sense. That's a pretty unique situation. Not many
companies will ever be able to do that for as long as Exxon was able to do that.
P: Plus, I was looking at your profit sheet and recently Exxon-Mobil profits have been
T: When you produce as much oil and gas as we do and the prices are up, as I say, the most
money is made in the upstream. We get the full benefit of that.
P: It has been, with a few exceptions, a very successful company for its stockholders, as
well as in terms of the products that they have made.
T: I think it's the longest AAA [debt rating measuring a company's general financial health]
company in existence. From [its] inception it has stood the test of time, and has remained
at the top of this list for so long.
P: When you look back at your career, what would you say would be your most important
T: I think this moving to a functional organization, the idea that you don't organize
geographically; that is not the most efficient way, particularly if you're [a] very large
[corporation], but you capture the full strengths of a functional organization. I have all
the geologists, and geophysicists, and the paleontologists, and everything in the world
that work for us, work for me. You've got them all. You can hire them, you can train
them, you can develop them, you can make sure the technology that's being developed is
the right one. You can disseminate the technology quickest that way.
This whole idea that the strength of a functional organization and a highly
technical business like ours is very powerful, and seeing that developed-which I [would]
say started in 86 when we went to New Jersey and we collapsed all the regions
except for the U.S. and Canada- basically, had that function, and so I could begin to
change that function and do that. Then in 92, when the corporation let me set up this
first functional company like that, seeing that grow and nurture and [develop] is probably
the greatest thing. If you'd asked me that question in 1968, I would have felt equally as
strong about the work I had done in Alaska. It changes. I think as one gets experience
and sees, you don't have to work these problems like you had to work in our past. You
don't have to sit down with a bunch of paid [advisors], I already know all that. I know
where it's headed, I know what it's going to do. I can write the book on these companies
and these countries. I could have written the China book, I'd write the Russian book. I'd
write these books. Then you become a shaper. You get much more future-looking, and
you shape. I left this company [and] for the next ten years, I will be able to look at this
company ten years from now and I will know just about where it's going to be.
FBL-32, Thompson, Page 31
P: One thing that's good about your career, you had experiences in all these different levels,
and in different geographical areas.
T: It was the same company. There's a stability here. When I set this up, I don't know that
the corporation would have had enough faith in me to say, why don't you go form a
functional company in Houston, and take the whole thing. I don't know that they [would
have] had enough faith to say, when I say how successful that's been, I could show them
how successful it was. I could use it as a model for the merger. I don't think you do that
if you don't have the continuity of people that you know, and track records which all [of]
you have set. There is a trust and a faith, and that [which] goes along with it, that I don't
think you can do when you bring outsiders in. Exxon [has] always [had] a management
from internal growth. GE kind of had that same mentality.
P: In corporate America it's pretty unusual.
T: Which is unusual. Of course, we went through this time in the 90s where everybody
said, you're going to have multiple jobs through your career. You can't even envision
that you're going to stay with the same company. I'd keep preaching to all the new folks,
I said, the power of what you do is in staying with the same company. Unless the
company changes or you're not comfortable with the company, either ethically or
whatever it happens to be. The power of what you can accomplish is in staying [for] the
long-term, and in being able to develop and change, and mold, and manipulate, and work
with all these people you have to be able to work with. [You] have to have a mutual trust
and respect for them.
P: One of the benefits of your job was you got to do some extraordinary travel. What would
be, say, the most interesting incident that you can recall other than speaking with Jonas
Savimbi, or somebody like that?
T: Well, you always get yourself in pickles, when you travel that much. As far as I can
remember, I never once got sick from the food. My rule was, you don't ever eat anything
that hasn't been cooked thoroughly and is [not] hot when you get it. I've eaten some
strange things in my life. Some of the things I ate in northwest China, out on the Old Silk
Road, I can't possibly tell you what it was. I don't know if it was cat or rat or what, I
don't know. It was cooked thoroughly and it was hot, and I ate it and I didn't get sick. I
would say, generally, the survival of one's health through all that is really a significant
event, because there are lots of ways you can get very ill. I didn't get malaria, for
example, even though I was locked out of my hotel room in Abidjan, Ivory Coast. It was
one of those hotel rooms that had a little deck; I was up on the higher floor. The door
locked behind you, and I didn't know that. I'm out there in my shorts at night and the
door locks behind me.
P: Lots of mosquitoes.
FBL-32, Thompson, Page 32
T: [I thought] I'm sure I'm getting malaria. There are mosquitoes everywhere and I'm
getting malaria. Here I am out here and no way to get back in. I kept yelling. Somebody
was having a party way down on the lower floors, and every once in a while they'd come
out on the deck. I'd be yelling at them, waving my hands. I finally, after some period of
time, got their attention and managed to convince them that I needed the manager to
come up and open the door, and get me back in my room. I'm sure I [should have] had
malaria at least three or four times by then. You run into a lot of those kinds of things.
Some of the conditions in Russia in the early days in the hotels [were] just pitiful.
P: What was the most interesting country you visited?
T: They were all interesting for different reasons. I think China and Russia, and then getting
to know the Africans in Angola, were three that stand out. The Chinese are just different
than anything you'll ever run across. When you deal with Russians one on one, they
remind you very much of U.S. people. They're very creative. They took things which
were behind technically, and they were able to gerrymander them and put them together.
They were very creative and survived very well, thank you. So they have a lot of the
traits that American entrepreneurs have. That was a real revelation to me. I remember
going to the oil minister one time, and he was a nuclear physicist. We were sitting there
talking. This is in the very early days of opening. We're just sitting there talking, and
he's asking us about Exxon and asking [us] what they do. I said, well, we pride ourselves
that we're very creative and entrepreneurial, and we take risks on things. They just
started laughing. As it turns out, he said, well, [those] may be good features in America,
but that sends you to Siberia in Russia.
P: You don't want to get too far ahead of the power elite.
T: This communication that you do, and you have to deal through interpreters, is always a
problem, but the intrinsic way that the Russian people at the top, at least, thought [was]
very similar [to American thinking]. It was a revelation to me. I thought they would be
P: One of the things that I wanted to get your comment on was the College of Liberal Arts
and Science gave you an outstanding alumni award in 2003. What was your response to
T: I was very appreciative. That's where I told this story about the English word course that
I took. I was very appreciative of that. There's a period of time, particularly as I moved
around so much in the early days, that I didn't stay as closely in tune to the University of
Florida as I did later in my career. I just didn't think about it. Once things settled down a
little bit and moved a little bit slower and I wasn't moving every two or three years, in
reflecting back, it became very important to see what had made me ready to take on these
[career accomplishments] and then you're back to the beginning. I didn't do anything in
FBL-32, Thompson, Page 33
an engineering sense. I did everything in a creative, entrepreneurial mind set that utilized
a lot of arts and sciences background, and [creative] thought process. Upon reflection, it
was very important to me. I came back and particularly got involved in the geology
department here, trying to let them know what the real world was about. We started a
thing in my company in Houston, in the Exploration Company, where we would invite
the deans of all the schools that we recruited [from], we'd bring them in [during] the
summer. We would spend some time showing them what we were doing research in,
what we were doing, and we'd hear from them what they were doing.
The idea was to ultimately see where the match and mismatches were between
what their perceptions of what they were trying to get their students ready for, and what
we were really doing and where we were headed from a technical standpoint, to try to get
better aligned. So I did that, and we did things like that. All of that was to try to close
the gap between the rapid change in technology in an industry like ours, which, as I've
said, it's space age. Our closest thing that we deal with is NASA [National Aeronautics
and Space Administration]. In an academic institution, which is not necessarily up that
same curve-because they specialize in a linear sense in expertise-and they may have
missed these jumps in technology that either bypass this, or make it less relevant instead
P: Last weekend I was talking to Manny Fernandez (chairman of the University of Florida
Board of Trustees & former CEO of Gartner, Inc.), that's exactly what he said.
T: Manny's my neighbor on Sanibel Island.
P: The US is behind in this technology evolution. We need to have a better relationship
between what we're producing here and technical training. He was saying that the
Chinese are getting ahead of us here.
T: Oh, yeah.
P: They're producing more engineers and physicists.
T: Yeah, but it's the keeping up with the technology. We still are technically way ahead of
the Chinese in the oil and gas industry, from a technical standpoint. Light years [ahead].
How do we get the University of Florida geology faculty to know that's the case? We
have to have more interchange. That's the way it starts. It's not a question of funding.
It's not a question of should we be funding more. It's a question of trying to get and
decide where our university wants to head, and what they want to be good at, versus
what's going on in the world of those who employ those kinds of people.
P: I also thought it was interesting to note that you have helped the College of Liberal Arts
and Science raise money. You're not just helping with science.
FBL-32, Thompson, Page 34
T: Yes, because I think they're all related. Like I said, geology is not a science unto itself.
It is a conglomeration of the basic sciences, which are in the College of Arts and
Sciences. The synergies of the world and the technologies are getting [to the point]
where the boundaries are blurred. You can't tell where chemistry ends and biology
begins, when you get down to a nano-sized thing. The blur in technology is there and yet,
we're still treating the disciplines as if they were somewhat separate. I know that
everybody's trying to pick up all the synergies, but I'm not convinced that we have the
right structure in place in the academic world, to be on the leading edge of that and see
where things are headed, and try to stay ahead of the curve. So there's a possible
revolution coming which is technology-driven in the structure.
P: What do you want to do in your retirement?
T: Well, I thought I would have a lot of time to do a lot of things, but I really haven't. You
have to neglect so many things when you work like I work, and travel as much as I did.
A lot of things, bless her heart, that my wife had to handle just because I could not handle
them. So I'm now taking back some of those things which I should take back, and want
to take back. It allows you to get your finances in shape and try to think, what are you
going to do in the future, which you just don't have time for when you're working at the
pace that we worked at. That's been job number one, just spending more time with my
wife and our three kids and seven grandkids. That's very gratifying to me. That was
number one. Everybody said, well, what are you going to do? Come work, come be on
this board. I said, leave me alone until the end of the year. I don't even want you to call
me until the end of the year. That was last year. I thought by then I'd have everything
sorted out. I still haven't got it sorted out.
There are some fundamentals that I've always wanted to get more involved with
the University of Florida. That's part of what I'm doing right here today. That's
important to me. That's more important to me than being on boards of companies. I've
learned [from] being [involved] in non-profits the brutal efficiency of an Exxon
company, relative to the rest of the world. It's very hard for me to deal with the normal
world, when we were so efficient. The processes and the people and everything, we got
so much done, and did it so right so much of the time, that when you deal with-
particularly non-profits-you're lucky to get anything done. So that's been a revelation to
me. I'm uncomfortable with that. I'm on some things, and of course, when they get
somebody like me on there, the first thing they do is make you the head of it. Then
you've got to try to reorganize the whole thing and get it to work. That takes an
enormous amount of time if you want to do it right. I can't do too many things, I've
learned that. Some non-profit work, some work with the university, enjoying the time
that I've got with my family that I really missed a lot, are my priorities. So far, that
hasn't left any time for anything else. Whether I do anything else, or not [I don't know].
I may sit down and write a book about this. That may be what I decide is as interesting
to me as anything else. I don't know. Other than at least those three things that I know,
and so far, I have resisted everybody else.
FBL-32, Thompson, Page 35
P: Is there anything that we haven't talked about that you'd like to talk about?
T: The only thing which I think has relevance from a historical standpoint, and from an
industry standpoint, is this time period. Being in geology, you have an appreciation of
geologic time. This debate of global climate change is very interesting; it started off as
global warming, and then it changed to global climate change (including global
warming). What's underneath that is the same thing that it always was. [With] geology,
you've seen the earth evolve, and you know there have been many times in the earth's
history when it has been warmer and colder than it is today.
Much of the earth's history didn't have any glaciers, anyway. This is just another
cycle in the evolution of the earth. It doesn't make any difference whether we have cars,
or whatever. We can have global warming because it's happened many times in
geological history, and it had nothing to do with anything else. It could be exacerbated a
little bit, but it's not the cause and affect. Most people have trouble thinking of time in
terms of a lifetime, much less millions of years. They certainly don't think of our
industry in terms of thirty, forty, fifty years from the time we start projects. I started
working with the Angolans in the late 80s. We finally got to the point where we got
leases in the deep water in the 90s. We drilled our first well at the end of the 90s.
We began to make discoveries. We've now found maybe fifteen billion barrels of oil in
the deep water of Angola, and the first production was a year and a half ago. We're
about twenty years now, and this production will take place over the next twenty years.
It's a forty-year time frame. That causes you to have a different perspective. It is not the
quarter-to-quarter Wall Street perspective. It is not the fifty-five dollar oil, eighteen
dollar oil perspective. It's a range somewhere in between of where it's going to sort
[The issue of] keeping this time frame in front of political people who can't think
past the next election-it's not their fault, it's just the way that system has to operate-but to
try to talk to those people and show them what you're dealing with, and how you have to
look in terms of a long time in dealing with other nations [is difficult]. You have to have a
longer term view of cooperation. It's playing itself out in Iraq today. There are some
people [who] thought that after the Iraq war we'd all go in there and we'd go to work, and
we'd make a big increase in production. Well, of course, it didn't turn out that way.
Sooner or later, at some point in time, how many years in the future, who knows, there
will be opportunities in Iraq. But the time from beginning to end is going to be
tremendous. The appreciation of that is important for somebody to understand this energy
P: That's great. On that note, we'll end the interview.
FBL-32, Thompson, Page 36