Hoping to attract the necessary funding to continue his work, he published a book in London in 1873 with the intriguing title The Sandor Petroleum Regions of the Center of European Russia [Shandorovskiye neftyanyye rayony tsentra Yevropeyskoy Rossii], in which he pointed out that competition against American oil—at the time American kerosene still dominated the Russian oil market—would benefit the Russian oil industry, but only once a deposit close to the main regions of Russian domestic consumption and convenient water arteries was brought into operation.
On the basis of work already done by Russian geologists, Laszlo Sandor concluded that such a deposit might exist in a completely new oil-bearing province, which he had earlier given the grandiloquent name of “Sandor” and which was located along the Volga only about 62 miles from the Kama River: “I cannot be absolutely, precisely certain of the ultimate success of the matter, but the first results have exceeded my most optimistic expectations,” he wrote in his book.
Laszlo Sandor proposed that this oil-bearing province could be expected to play a much larger role for the Russian Empire than the traditional Absheron Peninsula region. His visit to the Baku oil fields gave him the impression that they were almost as rich in petroleum as the American oil fields in Pennsylvania. However, Sandor noted in his book: “Transportation between Baku and the capital of the Russian Empire is very difficult and unreliable, since the route from Baku to Astrakhan, which passes, in particular, across the mouth of the Volga, frequently dries up almost completely, and transportation from Astrakhan to Saratov involves similar complications.” As such, transportation of oil up the Volga from Baku was a very expensive undertaking: significant amounts of steam and horse power were required, and burlaks38 as well. He felt that the route from Saratov to St. Petersburg was easier.
Laszlo Sandor believed that a serious obstacle to efficient and profitable oil production on the Absheron Peninsula was the lack of sufficient construction timber in the South of the Russian Empire. Wood was required both for drilling derricks and for producing oil barrels, and was readily available in the Saratov, Samara, and Kazan provinces, from which large quantities were exported, especially to England. Sandor also thought that shipping the iron barrel hoops, potash, and sulfuric acid required for oil production down the Volga to Baku was overly expensive. In contrast, the bold American entrepreneur felt that the “Sandor petroleum province” did not suffer any of these shortcomings.
Sandor rented around 350,000 acres of land from various private landowners and serf communes for his oil prospecting work, which began in the valleys of the Sheshma and Sok Rivers. At the village of Shugurovo in the Bugulma District (the former Nadyr Volost), on the right bank of the Sheshma River, two wells were drilled 1,400 feet apart on a line parallel to the course of the river on the slope of the bank (close to the location of a present-day petroleum bitumen plant). The wellheads were located 119 feet above the Sheshma water level—Well 1 was 833 feet deep, and Well 2 went down 140 feet. In Sarabikulovo, Sandor located a well on a shelf, in an area reminiscent of a spacious terrace artificially constructed for this purpose. This well reached a depth of 669 feet. Wells were also drilled in the Sok River Valley (two wells on the right bank of the Volga, opposite Samara). In order to bring his exploration to a definitive result, Laszlo Sandor ordered one of the wells drilled as deep as possible. The well selected for this purpose was Shugurovo Well 1, in which work continued until April 1877. A weak emission of gas began at a depth of 797 feet and the cuttings removed from the well were saturated with oil. However, when the well was deepened to 833 feet, gas emission intensified, accompanied by a loud noise. Concerned that oil might explode in a gusher, Laszlo Sandor stopped further drilling.
At the end of his report to the Mining Department in April 1877 on the results of his oil prospecting, Laszlo Sandor wrote: “All my investigations were crowned with complete success.... Rich, inexhaustible underground basins of liquid petroleum are contained in the valleys of the Sok and Sheshma Rivers, to the northeast of Samara, and also in the Samara and Bugulma Districts. There are huge numbers of fields of oil-saturated earth at the villages of Shugurovo and Sarabikulovo.”
After studying Sandor’s report, Fëdor Raselli, director of the Mining Department, sent mining engineer Yakov Weitzenbreyer and engineer Aleksey Sivkov to the region to study the issue firsthand. In their report of June 4, 1877, they confirmed the signs of oil in the region where Sandor’s work had been carried out: “We feel that the sulfur gases that come out in many places here, as well as the seepage of petroleum onto the ground surface and the large deposits of asphalt encountered everywhere here, serve as reliable signs that these places are an area of rich underground oil basins.”
Unfortunately, Sandor’s work was not continued: a shortage of funding prevented him from drilling to a greater depth and reaching the desired deposits of Devonian petroleum. However, despite the ultimate failure of his undertaking, Laszlo Sandor’s undeniable achievements include the first wide-scale deep exploratory drilling in the Volga-Urals region and his identification of the region as promising for the industrial production of oil. He should also be credited with substantially expanding the production of bituminous rocks close to Shugurovo and even establishing a tar factory that was rather large-scale for its time and whose production was in demand by the local population.
The Fight against the Kerosene Excise Tax
By the mid-1870s, it was clear that the quantity of oil produced exceeded the capability of Russia’s domestic market to absorb it—or in terms of economic theory, supply began to outpace demand. Many economists attributed this to the system of excise taxation of kerosene production, introduced at the same time the tax-farming system was abolished, on January 1, 1873.
The kerosene excise tax was not very effective and suffered from numerous imperfections from the very beginning. It was not just complicated, but artificially overcomplicated, which made it inconvenient for both the tax agencies and the oil industry. Worse, the kerosene excise tax brought little revenue to the Russian imperial treasury. During the five years it remained in effect, it provided the treasury with only 1,246,000 [rubles], while leasing of oil and gas sections on the Absheron Peninsula and the customs duty imposed on American kerosene totaled 20,879,000 [rubles], i.e., almost 17 times more.
The amount of excise tax depended on the capacity of the distilling vat. It initially seemed to government bureaucrats that such a method of calculating the quantity of kerosene would simplify the tax, as vats with capacities of up to 677 gallons were taxed at 4 kopecks per 3.3 gallons [per day], while larger vats were taxed at 10 rubles per vat per day. It was believed that oil distillation in vats with capacities of 9.6–12 barrels should take 30 hours, of which oil filling and distillation would take 17 hours and cooling 13 hours. Oil distillation in vats with capacity over 12 barrels would take several days. The kerosene yield was determined to be 40% of the volume of oil.
It was soon discovered, however, that the excise tax bureaucrats had misjudged the length of a complete oil distillation cycle. The kerosene yield from oil did not exceed 30%, and the production cycle in small vats did not match those of the large vats.
It also turned out that the refiners, in their natural desire to pay less excise tax, tried to distill as much kerosene per day as possible. This practice could not help but affect quality, as it pushed the production process outside its normal sphere of operations. Distilling vats at most refining stills were small, with capacities of 12–24 barrels of crude, while the refineries themselves consisted of three sections: distilling, cooling and purifying. The vat itself was cemented into a base in which a furnace was constructed, and workers added buckets of oil from time to time. The resulting kerosene was drained off into containers and transported to the port. With such technology, the Baku kerosene was not of high quality. It burned poorly and produced a lot of soot, so housewives, especially those in the cities, preferred American kerosene.