From tobacco to petroleum: the beginning of Royal Dutch Shell
Zijlker a tobacco planter discovered petroleum near his tobacco farm in Leban, Langkat. This is the beginning of the Royal Dutch Shell extracting petroleum from Sumatra.
Aeilko Jans Zijlker, born in 1840 on a farming family in Groningen. Zijlker’s father was a member of the Dutch parliament around 1850 and one of the founders of the liberal party.
Zijlker went to Eastern Java at the age of 20 to seek fortune in a tobacco plantation. He tried his luck in Deli when the tobacco industry was in its early boom in 1870.
With investors from Batavia and Surabaya, Zijlker established Sumatra Tabakvereeniging, a small company. Large companies already taken all good areas in Deli with fertile volcanic soils. Zijlker could only obtain a concession in Lepan, a low-lying area in Langkat. Zijlker became an administrator of the plantation called Boeroeng Merak with a large concession area of 2000 bouws (around 14 km²) in 1870.
The soil in this area was not of good quality, derived from old sediments, and not affected by the recent volcanic activities. It is also frequently flooded. In 1879, it produced 6 tons of tobacco and a tenfold increase the next year (60 tons), but the quality would not be good.
The story goes that in one afternoon in 1879, Zijlker was inspecting the tobacco field and was caught by a large storm. He and the mandor (local overseer) took a shelter on a shed and had to spend the night there. The mandor lit a torch, and Zijlker was surprised with the unusually bright flame. He asked the mandor how he got the fuel, and the mandor told him about the minjak tanah, the oil of the soil, commonly found in the area.
The local Malays found these liquids on the banks of the Lepan, Babalan, Besitan, and other small rivers. They can be found in pools, telaga, in which the oil floated. The locals skimmed it and used as fuel, relief for joint stiffness, wounds heading, boats caulking, and many others.
The next morning, Zijlker went to see the telaga and straightaway he could smell kerosene. Zijlker took some samples and sent them to Batavia for analysis. The analysis returned a 59.2% flammability.
Zijlker negotiated with the Langkat pangeran (prince) to lease the land with the telaga. The area is called Sie Minjak. Unfortunately the land had been leased to a couple of Englishmen. Zijlker convinced the owner to let him had the land, since the tobacco production in that area was not that great. And in exchange, he asked the Sultan for another piece of land elsewhere.
In 1893, the prince of Langkat entered into an agreement with Zijlker to exploit petroleum resources. Zijlker was given the exclusive right to land on Lepan for 75 years, covering about 1,500 bouws (about 10 km²). He had to pay the monarch a fee based on the amount of oil extracted.
However, the initial exploration was not easy. The rough terrain became a massive problem for drilling. Paths had to be built, and the cart road from Tandjung Poetoes to Telaga Said had to be built twice because of floods. The coolies did not want to stay and often ran away.
The Netherland Indies government department of mines offered some help in surveying. At Telaga Said, a skin of oil on the water can be found at a depth of 42 meters. When drilling resumed a month later, and drill pipes were let in up to 50 meters, and gases rose from the borehole, exploded, and set the surroundings on fire. Adding to this disaster, the workers were agitated by a rumour of Acehnese attack. Zijlker also could not convince investors to put in enough capital.
Between 1883 and 1889, seven drillings were carried out, three of which only reached a depth of 40 to 50 meters and only a small amount of oil was obtained. Three other drillings to 95, 121 and 165 meters also yielded insignificant amounts. Near the southern boundary of the land allotment, Telaga Toenggal initially in 1885 little oil was found and left out. However, in 1887, another drill found an unexpected large flow of oil.
Zijlker now convinced that the east coast of Sumatra had a great expanse of petroleum-bearing formation. To transport the oil, the bank on the river Babalan, 10 kilometers from Telaga Said, could serve as a port. The oils were then transported to Pangkalan Brandan where ships could collect them for export. Large capitals were needed for road construction, land acquisition, factories buildings, and more workers.
Zijlker’s initial success convinced investors in the Netherlands. A public limited company supported by the king and thus called Koninklijke Nederlandsche Maatschappij (Royal Dutch Company) was formed. The company established in The Hague commenced on June 16, 1890. The registered capital was 1,300,000 guilders, divided into 1,300 shares of a thousand guilders.
However Zijlker did not live to enjoy his hard work; he died in Singapore on December 27, 1890.
The wells’ exploitation was delayed until 1891 when the leadership was taken by Jean Baptiste August Kessler.
The job is still not easy, Kessler wrote:
“a hostile jungle and ineradicable lalang, local crews difficult to manage, equipment that did not fit, tropical diseases, operational set-backs such as fires, and absence of adequate geological know-how”
It took another two years to get the production going and from 1895 to 1897 a fivefold production increase was achieved.
In 1892, a refinery was setup in Pangkalan Brandan. In 1897, another port was completed in Pangkalan Soesoe, where tankers could come and collect the kerosene.
Kessler’s hard work caused his death in 1898.
In February 1907, the Royal Dutch merged with Shell, a British company into a new company called the Royal Dutch Shell.
Neither, Zijlker nor his family received any money from the Royal Dutch company. (Information from D.A.Buiskool)
The directors of Royal Dutch in 1890 wrote:
That the government put down the money, so that its engineers might analyse and record more precisely what Zijlker had discovered, has its merit. But what is this in comparison with the sacrifices they made in earlier days for setting up of tea and indigo plantations in Java, for the breeding of silk worm and cochineal, and not long ago, for cultivation-with what pregnant results-of cinchona bark, not to mention what was done for the tin exploitation in Billiton.
The exploitation of oil resources from Telaga Said continued until it dried up in 1934. Millions of barrels of oils were sucked up by the world’s richest company.
References
Broersma, R., 1919. Oostkust van Sumatra. Javasche Boekhandel.
Gerretson, F.C., 1958. History of the Royal Dutch. (Vol. 1). Brill Archive.