After meeting with “America’s oil king,” Serebrovsky spent several months visiting the oil-producing regions of the US. In Pennsylvania, he examined several refineries and studied in detail the organization of the supply of materials and equipment. Next, he visited all the main fields of the so-called “oil valley” and examined the famous sites of the “oil fever:” Oil City, Rouseville, Petroleum Center, and Titusville, and then he went on to New Jersey, Philadelphia, Chicago, Detroit, and finally to Texas and California.
At the Long Beach fields in California, Serebrovsky spent some time working at drilling, performing the difficult tasks required of the average worker, trying to learn how to drill like the best American specialists. He attentively studied the activity of oilfield equipment operators, getting into the particulars of the field service of machines and mechanisms.
Aleksandr Serebrovsky had reached Oklahoma when he received a telegram from Amtorg saying that he had to return to New York. There, after careful examination of drawings, templates, and instructions offered to him by American suppliers, he ordered the necessary oilfield equipment. It was at this point that, after studying the documentation, the Azneft director began to write a book about the oil industry, which later became a standard reference work that was used for many years by Soviet oil workers.
Afterward, Serebrovsky traveled to Tulsa, Oklahoma, where the International Petroleum Congress and national oil exhibition opened in early October 1924. There he gave a detailed talk about the status and outlook for development of the Russian oil industry. His talk enjoyed widespread media coverage, receiving commentary by the influential New York Times and other leading American newspapers, after which it was published in a series of English and French oil publications.
Over the course of his long return sea voyage from the US to Europe, Serebrovsky was able to finish his book The Oil and Gas Industry in America [Neftyanaya i gazovaya promyshlennost v Amerike], which summarized his stay in the US. During his brief stay in London, he had the book published in Russian.
After returning to Moscow, on January 15, 1925 Serebrovsky gave a public lecture at the Business Club, where he was already giving copies of his book out to oil industry workers as accompanying information.
On the whole, engineer Serebrovsky’s trip to the US had a long-term positive influence on the development of the Azneft trust, and, consequently, on the entire Soviet oil industry.
For example, in the area of production administration, he proposed, on the basis of his analysis of American administrative practice, that work at Azneft be organized according to the model of leading US companies, which had moved to a divisional organizational structure. Such a structure involved giving company subsidiaries practically full authority to make operational administrative decisions, while the company’s central office decided strategic administrative questions and controlled the activity of the company as a whole.
In trying to determine the most acceptable organization model for Russian conditions, Serebrovsky carefully analyzed, above all, the experience of the Standard Oil Company. He explained: “I will not speak about the nationwide unification of this company. This is too large a machine for us; let us take individual Standards, for example its California organization. What do we see there? First, the Standard Oil Company of California is a completely independent enterprise (and not just for the purpose of anti-trust law); it is connected with the center by the most tenuous of financial ties, which are imperceptible, but very strong. And in California itself, you will find fields that are completely independent and a completely independent refinery company. There is an independent pumping company, and there appears to be a completely separate supply company (National Oil Supply), but all these taken together make up California Standard. Their operations run much better than ours, because the very lowest-level companies do all the work, and the center only administers.”36
Aleksandr Serebrovsky strived to realize this approach in the administration of Azneft by working to relieve the administrative center from getting involved in the minutiae of the trust’s daily operations and transferring part of the administration and part of the responsibility to separate regions and enterprises. He felt that providing greater independence to the regions and enterprises and putting them on full cost accounting allowed them greater freedom to develop and the ability to further technical and organizational improvements at their respective locations. As later events showed, the divisional structure that Serebrovsky proposed based on his analysis of American oil companies was perfectly suited to Azneft, since it took into account the large size of the trust, the geographic dispersion of its offices and enterprises, its orientation toward a wide assortment of petroleum products intended for completely diverse groups of customers, etc. However, implementation of his proposal turned out to be incomplete in many respects, as it did not take into account his recommendations regarding the introduction of market principles into the organization of petroleum products trade and the development of the oil economy as a whole.
Serebrovsky also made substantial contributions in the realm of oil production. The samples of oil production equipment that he purchased greatly helped promote the use of electric downhole pumps and put rotary drilling technology into practice. Russian oil workers called these methods of drilling and production “American.” As director of the trust, Serebrovsky started to put these methods into practice at Azneft as early as 1923, although it was not until 1925 that they started to have a perceptible economic effect. Serebrovsky’s contributions to production were critical to the development of the Russian oil industry: without electric downhole pumps rotary drilling was impossible.
Serebrovsky later wrote: “The first thousand downhole pumps received were from America and were the beginning of the transition to the systematic replacement of sand-line reels and bailers with modern economical machines. A great many obstacles stood in the way of this replacement: inertia, the habit of using the old methods, the shortage of qualified workers, the difficulties of operation at sandy sites, etc., but all this was overcome.” By October 1928, 2,554 (78.8%) of the 3,238 wells were already using downhole pumps, while the number of wells that employed bailing, an old production method that had been most common earlier, had sharply decreased from 86.5% in 1923 to 13.5%.
Overall, from 1924 to 1928, changes in drilling technology increased hole-making speed by more than tenfold, and the use of downhole pumps reduced the cost of oil production by approximately 50%. Over four years, the total savings from using the American methods for drilling, production, and electrification amounted to more than 200 million rubles (a significant figure compared to total oil industry capital investments during this period of 743.4 million rubles).
During his trip abroad, Serebrovsky placed special emphasis on refining. The technological backwardness of the Russian refining sector as compared to the rest of the world became acutely apparent in the 1920s, when significant innovations began to appear in the industry, for example, in the cracking process. There is no doubt that American companies were leaders in this field, and that these companies, which had more than 2,500 patents in this area by the beginning of the 1920s, had been leading the development of refining processes since 1860. Their experience convincingly demonstrated the promise of the cracking process, which made it possible to increase the output of light fractions and improve the quality of gasoline.