Miri Well No.1 : The Start Of Malaysia's Petroleum Industry

It was exactly a century ago, on August 10, 1910, that a group of curious local inhabitants of Miri in Sarawak gathered on top of the hill overlooking the small fishing village. Back then, Miri consisted of 20 scattered houses and a few shops.



The villagers were watching a small party of Shell employees and thirty local labourers undertake the slow and laborious task of drilling by the old cable tool method, first used in AD 421 by the Chinese to extract salt. While the occasion was cause for great interest, none of the onlookers could have realised what tremendous consequences the event would have for Sarawak. Four months later oil was struck at a depth of 136 metres and brought into production. The wooden derrick, erected at 79m above sea level, began to produce an initial 83 barrels a day.
The well was Miri Well No. 1 – which came to be called the “Grand Old Lady” - on top of Canada Hill. The company was the Anglo-Saxon Petroleum Company, forerunner of Sarawak Shell Berhad and part of the Shell Group of Companies formed in 1907. As the birthplace of the nation’s petroleum industry, Miri would be transformed by the landmark event into one of Sarawak’s most developed towns post-independence.
In the course of the last 100 years of upstream business, Shell has recorded remarkable achievements in the development of oil and gas resources in Malaysia. Contributing capital, advanced technology and skilled human resource to the country, these achievements are milestones that the company continues to be proud of today.
Today, Shell operates as upstream contractors to Petronas after the national oil company was established to look after the nation's hydrocarbon resources in 1974. Since the signing of the first production sharing contracts in 1976, Shell has continued to achieve firsts in Sarawak, among them the development of E11, the country’s first gas field in 1982. The company also started Shell MDS, the world’s first commercial gas-to-liquids plant of its kind in Bintulu in 1993.
The 100-year journey would not have been possible without the support of the community it operates in. In giving back to society, Shell has implemented a diverse range of events, projects and programmes - commencing with the construction of the Miri-Lutong road and the Miri hospital in the early part of the 20th century - which evolved into today’s corporate social responsibility initiatives in human capital development, educational excellence, sustainable development and road safety awareness.
Flagship programmes include the Shell Scholarship Awards, Project Link (a coded welder training programme), the Shell Traffic Games, Nature Education Camps and the Shell Kenyalang Press Awards. Through its signature “We Care We Share” programme, the company funds staff volunteerism for community projects in areas of large operations such as Miri and Bintulu
As Shell celebrates the centenary of the “Grand Old Lady” and its first hundred years of upstream operations in Malaysia, it looks forward to the next 100 years of powering progress together with its partners and the community, confident that its second century will be just as memorable, exciting and successful.

The “Grand Old Lady” in retirement

Lutong refinery in 1920

First oil refinery - Brighton Beach, Miri - built in 1914

Note: Ihsan dari Shell Malaysia

Why Gold and Silver Seem Stuck

I have contended that the Obama Administration has printed so much money that it will cause serious price inflation. So why is gold stalled around $1,200 and silver around $17 and we are seeing actual price deflation?

Let me restate some economic principles:

Inflation is first and foremost a monetary phenomenon. Monetary inflation is the real threat caused by creating money out of nothing. Price inflation is not real “inflation” but merely the natural consequence of monetary inflation and tends to follow with a time lag.

Gold and silver are performing their usual predictive function in anticipation of future price inflation. They have risen steadily for several years.

From a price-inflation perspective, we are in a deflationary period. From a monetary inflation point of view, the government is still printing money and monetary inflation will continue. It will not be reflected in price inflation until the money gets into circulation.

The Velocity of Money

The banks where the money has been deposited will have to start lending the money to get it into circulation. The government produced the money and gave it to the banks, and the banks must loan it into circulation.

Because of all the uncertainties created by the Obama Administration about the future of taxes and the economy, banks are afraid to loan money for fear of losing it. Businessmen are logically afraid to borrow because they don’t know what the future looks like, so they won’t invest and expand their businesses, keeping the economy in the doldrums.

Until the banks realize they can’t make much money if they don’t loan the money they are sitting on and just deposit it in interest-bearing accounts yielding under two percent at the Federal Reserve, the money won’t get into circulation and cause price inflation.

Always distinguish monetary inflation from price inflation. Monetary inflation is caused by creating more currency; price inflation is caused by the velocity of money or currency getting into circulation.

Despite the fact that we are in a price-deflationary period, gold and silver are holding up under forces that theoretically should be bearish for the metals, but it isn’t bearish for the metals because the markets are looking ahead to the inevitable future price inflation When price inflation shows up, they will take off.

Also, Socialism always causes inflation. The Soviet Union tried to control price inflation with price controls, which inevitably created horrendous shortages with people standing in line if a rumor spread that a store had something to sell. Even if they didn’t know what it was and didn’t want it, they knew they could barter it or sell it for rubles which they could spend to support their families.

We will see the same thing. When price inflation breaks out, government will eventually try to control price increases, which will create inevitable shortages. I don’t know when it will happen, as the timing is beyond my pay grade. It is inevitable. We simply need to wait it out and use the current pause in the markets to load up on gold and silver to protect our assets from the coming price inflation.

Two Functions

The metals serve two basic functions. One is insurance. When you own coins and bullion, you are insuring against the potential loss of the purchasing power of the dollar. Money is supposed to be a medium of exchange and a store of value. The dollar is still an important medium of exchange, but many years ago ceased to be a store of value.

You need to own some actual bullion or bullion-type coins for insurance. Not for profit, but for insurance. It will be profitable, but that’s not your primary objective. If you want to make big money with gold and silver, the best way is gold and silver in the ground.

That’s why I recommend mining stocks after you have insurance. The fundamentals that apply to any corporation apply to mining stocks. I have listed many of them in my Maverick Ala Carte Investment Menu.

The mining stocks are the place to make money. It will not be the place ultimately for insurance protection.

The day will probably come when liquidity in the stock market is a real problem. When I see that coming, I will recommend you liquidate your mining stocks and transfer your assets into gold and silver coins and bullion.


By Howard Ruff
The Ruff Times

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Howard J. Ruff, the legendary author and financial advisor, has re-edited and re-issued his 1978 mega best seller, How to Prosper During the Coming Bad Years, still the biggest-selling financial book in history, with 2.6 million copies in print. He is founder and editor of The Ruff Times financial newsletter. The newsletter is much more comprehensive and deals with a broad spectrum