File No. 812.6363/170.

Vice Consul Bevan to the Secretary of State .

No. 1354.]

Sir: I have the honor to acknowledge receipt of the Department’s telegraphic instruction of January 25, 1915, instructing this office to state to the appropriate authority [etc.]

I am transmitting herewith a copy of my letter to Señor J. Cabrera, Chief of the Petroleum Inspectors, protesting against the application of such requirements to American companies; also the official document sent by Señor Cabrera to the representative of the Cortez Oil Corporation, and the company’s reply to the same. Not only does the Government request that this company agree to conform with laws not yet enacted, but they desire strictly confidential geological information which costs thousands of dollars to obtain and which can be had only by actual drilling. The Government of the United States can not too strongly protest against such illegal procedure against American companies, for this would be a most dangerous precedent to establish.

All of the oil companies are awaiting developments. Practically all drilling and construction work of all kinds has been closed down and a large number of oil men have already returned to the United States.

I have [etc.]

Thomas H. Bevan.
[Page 876]
[Inclosure 1.]

Vice Consul Bevan to the Chief of Petroleum Inspectors .

Sir: With reference to your official communication No. 43 dated February 3, 1915, addressed to the Tampico representative of the Cortez Oil Corporation, which has been referred to this Consulate, I have the honor to advise you that I have received instructions from the Honorable Secretary of State of the United States of America to advise you that this company should not be expected to agree to conform with prospective laws and regulations of the provisions of which the company has not been informed; and that the United States Government protests against the application of such requirements to American companies.

I have [etc.]

Thomas H. Bevan.
[Inclosure 2—Translation.]

The Chief of Petroleum Inspectors to the Tampico representative of the Cortez Oil Corporation .

No. 43.]

In reply to your letter of February 1 in which, as representative of the Cortez Oil Corporation, you request permission to continue drilling operations at your well, located in the Juan Casiano Oil Zone, I advise you that permission of a provisional character is granted to you pending approval by the Department of Fomento, without which approval the operations shall again be suspended; and I caution you that this permission binds the company you represent to submit to the laws and regulations which the said Department will soon issue, and to waive the right to allege retroactivity. I further advise you that in order to exercise this permission it is necessary that you send to this office the following data:

General map of the district;

Conditions of lease entered into between the company and the land owner;

The present total depth;

Length and diameter of the casing now in the hole;

Map of the tract showing the location of the well, dams and tanks constructed for storage, auxiliary buildings and ether structures, together with specification of completed construction, construction under way, and projected construction;

A geological chart, in a sealed and stamped envelope, bearing the inscription “Strictly confidential” in order to guarantee the interests of the company.

I am [etc.]

J. Cabrera
[Inclosure 3.]

The Tampico representative of the Cortez Oil Corporation to the Chief of Petroleum Inspectors .

I have received your communication No. 43 of February 3, 1915, answering mine of February 1, wherein I, as representative of the Cortez Oil Corporation, requested through you permission of the Department of Fomento to place 6 in casing in the company’s well in the Juan Casiano district and to deepen it sufficiently to set this casing securely and properly cement it, the reason for this request being that we are unable properly to cement the 8 in casing now in the well and that there is imminent danger that the well in its present condition will get beyond our control, causing great loss and damage to the company, the surrounding oil country and the farms in the vicinity.

[Page 877]

I have carefully noted your answer and especially the part which says:

I advise you that permission of a provisional character is granted to you pending approval by the Department of Fomento, without which approval the operations shall again be suspended; and I caution you that this permission binds the company you represent to submit to the laws and regulations which the said Department will soon issue, and to waive the right to allege retroactivity.

The company at present has no representative in Mexico who has sufficient authority to accept these conditions and the manager here has had special instructions from the New York office to refer all important matters to the head office in New York for approval before acceptance. At the same time the company understands that it is operating in Mexico and must certainly respect and abide by all the laws of the country, and it has no intention of breaking or gainsaying any of the laws of the country.

The local management of the company is very anxious to do the work on the well; we have asked permission to do so because we realize the imminent danger of the well getting away from us at any moment, and we want to do everything in our power to avoid the losses and claims for damage that would undoubtedly come up should the well get beyond control. But we are afraid to start work on a provisional permission, for two reasons:

1.
It is very dangerous to do anything to the well at all unless the work is to be finished, and we are afraid that before the work is finished word might come that the Department had not approved the provisional permission; and
2.
Article 2 of the Decree of January 7 especially says that no legal permission will be recognized even if given by legal authorities unless approved by the Department of Fomento.

With regard to the date required, I am pleased to state the following: General map of the district (attached);

Conditions of lease: Ten pesos per hectare per year rental until production, when rental ceases and 10% of the product is paid;

Actual depth of well, 2,065 feet;

Surface casing, 15½ in., 177 feet; 8 in casing, 2,065 feet;

The general map has the location of the well marked thereon; exact location of buildings we do not have but they are close to well on north side;

We have almost finished earthen storage of 75,000 bbls capacity.

Geological information is in New York but will be sent to you as soon as we receive the same.

As the company is not asking for a permit to continue old work or begin new work but simply a permit to do some extra work on a finished well so as to make it safe and avoid losses to itself and others, again I beg you to please request by wire this permission from the Department of Fomento, assuring you that the company, when once they get the well secured, will keep it closed and await the new laws that are shortly to be enacted.

Mordelo L. Vincent.