It looks like an oil fitting at the front cam Cover. Did it have some military application since this is a 59L military block?
How about this for a surprise. I decided to pull maintenance on the distributor and install and clock it to the number one cylinder. Much easier to find number one with the heads off. This is a MSD. Has worked well for the past 6 yrs. Boy was I surprised when I took the cap off. The rotor burned up the cap terminals. I’ve seen this before and had to change it out after 5 yrs prior to this one. Check your MSD’s fellas. I’m surprise this thing was even firing. Yea.... I know stock distributors work perfectly but it’s what I have available in the garage.