The Montana Plan

At his ornately carved dark wood desk in Lima's graceful Presidential Palace, President Jose Luis Bustamante pored over a plan. It had been drawn up, at his request, by crack U.S. petroleum engineer Arthur Curtice. The plan was to throw Peru's important oil reserves open to foreign exploitation.

In the musty chambers of Lima's venerable Gran Hotel Bolivar, over bourbon-and-sodas, representatives of the world's major oil companies also studied the supposedly secret Curtice plan. They grumbled at proposed royalties that would resemble the prevailing Venezuelan scale of 16 2/3%. Such percentages, they said, were fair enough in proven fields like Venezuela, but high for Peru, where exploration costs are probably the highest in the world and where the trans-Andean pipeline to bring oil out to the west coast might cost $30,000,000.

Peruvians believed they had gone more than halfway by cutting combined royalties and export tax from their present high of 37%. And three factors might well influence oilmen to agree:

1) world politics threatens Middle East sources;

2) Californian oil may be running out;

3) Peru's Amazonian fields may be even richer than million-barrel-a-day Venezuela.

First to Flow. Without doubt, black gold abounded in the Montana--as Peruvians call their Amazonian foothills east of the Andes. A jungle-whacking, California-financed wildcatter--the Ganso Azul (Blue Goose) Petroleum Co.--had long since proved that. Last week, Ganso Azul was hard at work, as it had been for seven years, not exploring but producing, cracking petroleum and selling gasoline, kerosene and diesel oil.

Ganso Azul had become a legend since the day in 1929 that a U.S. geologist, studying the trackless Montana for a possible railroad, spotted from the air what has since been described as the nearest thing to a perfect geological oil dome. A 2,800-mile supply line up the Amazon, oil diplomacy, and proliferating jungle postponed the payoff till 1939. Then Ganso Azul drilled a well that was a honey: 750 barrels a day. Thenceforth, the problem was not producing but selling oil.

For the Lamps of Peru. Churning up the Amazon from Iquitos in his double-decked river boat Lucrecia last week was Ganso Azul manager Edgar Clayton. As usual, he was looking for new business. He tied the Lucre da up to mudbanks by thatch-roofed Campa Indian villages, talked with mestizo river merchants about setting up new distribution centers.

With the river valley his only market, Clayton first floated oil drums downstream to Iquitos as rafts tied together with vines and buoyed by balsa logs. Later he got barges, now has river tankers. During the war he sold gasoline, kerosene and fuel oil as far down the river as Manaus.

Already Ganso Azul has brought new life into the Peruvian Montana. Indians who never saw a lamp come with bottles and even hollow canes for kerosene. With wicks stuffed into tin cans, they now have lights in their huts. A balanced diet of vegetables, fruit, beef, pork and chicken for the company's 250 employes has by example encouraged better living habits among other Indians.

High-Hanging Goose. Oilmen last week were talking Montana oil from Lima's Hotel Bolivar to Manhattan's Rockefeller Plaza. As the major oil companies scampered for position, Peruvians dreamed of a boom of Venezuelan proportions. But if boom it were, more than Peru would be involved, for Ganso Azul's gushers tapped the same kind of oil-bearing formation that crops up in the Venezuelan and Colombian llanos and, farther south, in Bolivia and the Argentine. And some 50 miles east of Ganso Azul lay Brazil. Black gold might give the needed impetus to Brazil's old dream of "Marcha para o Oeste."

The new Peruvian oil code could remake the interior of a continent.

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