In 1883, tales of a fabled “tar spring” may have inspired a wildcatter – Pennsylvanian Mike Murphy – to drill Wyoming’s first oil well.

In 1837, Washington Irving published The Adventures of Captain Bonneville: or, Scenes beyond the Rocky Mountains of the Far West. Eastern readers were spellbound by Capt. Benjamin Bonneville’s four-year expedition, encounters with Indians, and detailed accounts of life on the fur-trapping trail.

In the unforgiving lands that would one day become the Wyoming Territory, Bonneville traveled down the Popo Agie River and in 1832 made note of a natural resource that would one day bring a new industry to the state of Wyoming:

“In this neighborhood, the captain made search for ‘the great Tar Spring,’ one of the wonders of the mountains, the medicinal properties of which he had heard extravagantly lauded by the trappers. After a toilsome search, he found it at the foot of a sand-bluff, a little east of the Wind River Mountains, where it exuded in a small stream of the color and consistency of tar.

“The men immediately hastened to collect a quantity of it, to use as an ointment for the galled backs of their horses, and as a balsam for their own pains and aches. From the description given of it, it is evidently the bituminous oil, called petroleum or naphtha, which forms a principal ingredient in the potent medicine called British Oil. It is found in various parts of Europe and Asia…and in some places of the United States. In New York, it is called Seneca Oil, from being found near the Seneca lake.”

Exploring Tar Springs and Salt Creek

Fifty years later, tales of the “Great Tar Spring” would lead to Wyoming’s first oil well. In the intervening years, intrepid pioneers first crossed central Wyoming via the rugged “South Pass” route. These early paths now are national historic trails: the Mormon Pioneer, Oregon, California, and Pony Express – many punctuated with makeshift gravesites of ill-fated travelers.

America nonetheless continued to grow westward, encouraged by periodic, if transitory, gold rushes. By 1867, the Union Pacific Railroad reached the easternmost boundary of the Wyoming Territory, spawning new towns all along its route.

Because the right of way included substantial land grants on each side of the tracks, railroads were very much in the real estate business and promoted settlement in order to develop their property.

Still, by 1870 the pioneer population of Wyoming was just over 9,000 in a territory of 97,809 square miles. The government held almost half of the territory and encouraged development of mineral resources in these public lands through the federal Placer Act.

Ten years later the Territorial census still enumerated only 21,000. In the East, diminishing production from Pennsylvania oilfields in the 1880s prompted the industry to look westward to Ohio, Indiana, Illinois, and beyond.

Pennsylvanians Find Oil

Mike Murphy was a Pennsylvania-born Irishman who had come west to the Nebraska Territory in 1854 as a land surveyor. He served in the territorial legislature until being lured to Colorado in search of gold in 1859. Again in 1865 he went to Montana for gold and in 1876, he was off to the Black Hills, still prospecting.

When he returned to Wyoming in 1883, Murphy and his brother, Frank, bought an oil lease from Dr. George B. Graff on the very site of Capt. Bonneville’s “great tar spring” southeast of Lander.

The Murphy brothers found oil at 300 feet in what would become known as the Chugwater formation. The news spread quickly and inspired others to stake their own “placer” mineral claims on promising sites. One of these sites was the Salt Creek valley area north of old Ft. Caspar, which would one day yield millions of barrels of oil.

Placer claims on government lands could be filed in 20-acre blocks by an individual or 160 acres by an “association” of eight individuals. For the claimant to be granted a legitimate patent on the land, the law further required drilling (or digging) a well, $500 in improvements, “oil in commercial quantity” (a much argued specification) and a $2.50 per acre fee.

Complicating the process was the government’s intermittent inclination to withdraw lands from the public domain. Competing legitimacy disputes, claim jumping, litigation, and even gunplay were the natural byproducts of placer claims. The Wyoming Territorial Geologist himself, Dr. Samuel Aughey, filed placer claims near Salt Creek in 1884.

More Discoveries

In 1887, perhaps lured by tales of Mike Murphy’s oil discovery, a tenacious but unsuccessful gold prospector by the name of Cy Iba returned from California with his four sons, two daughters, and their families. He began staking his own and “association” placer claims in Salt Creek. Iba and his family dug and timbered and staked and re-staked, eventually accumulating 30 claims in anticipation of one day selling valuable oil leases.

Meanwhile, Wyoming continued to grow with the railroads. The Fremont, Elkhorn & Missouri Valley Railroad pushed westward and delivered its first passengers to what would become Casper, Wyoming on June 15, 1888. Two years later, Cy Iba collided with “The Central Association of Wyoming,” a group of New York investors headed by H.D. Schoonmaker.

This group had acquired Dr. Aughey’s placer claim as well as others, and then paid the required $2.50 per acre to patent the land. Iba sued and after several years of litigation, he settled for an 80-acre tract of the disputed “Jackass Claim.” Years later, the “Iba 80″ would become one of the Salt Creek oilfield’s best producers.

Noted Wyoming historian and author Mike Mackey – Black Gold, Patterns in the Development of Wyoming’s Oil Industry – has said that Philip Martin Shannon was Wyoming’s first “legitimate” oilman since, “he plans on coming to Wyoming, drilling wells, refining the product, and finding a market for it.”

Wyoming’s First True Oilman

Philip “Mark” Shannon was a Civil War veteran and successful Pennsylvania oil businessman who first visited the area in 1884. He chose to drill for oil on the northeast side of the Salt Creek activity, and with a small group of investors, began shipping equipment from Pennsylvania to the new Casper railroad station, still a 50 mile wagon haul from the proposed site.

In August 1890, just one month after Wyoming became the 44th state, Shannon brought in his first well. Even unrefined, the new state’s oil proved to be an excellent lubricant. The Wyoming Derrick, Casper’s newspaper, enthusiastically announced, “Wyoming will become the greatest and wealthiest mineral producing state in the Union.”

Within 20 months, Shannon and his associates had two producing wells, one dry hole, and a fourth well underway. Their only market for this unrefined lubricating oil was the railroads. Shannon negotiated agreements with the Fremont, Elkhorn & Missouri Valley Railroad as well as the Cheyenne & Northern.

Still, his oil had to be laboriously hauled in barrels by wagon to the railhead in Casper. The first delivery of 45 barrels took five days using a string team of 14 horses and three tandem wagons. In the distant East, a pessimistic Harper’s Magazine reported, “…it is noticeable now that this oil excites little human interest, and interests still less capital.”

To expand their markets, Shannon and his Pennsylvania investors began building a refinery in Casper in 1894. Wyoming’s population had grown to over 62,000.

Within a year, the new refinery was able to produce 100 barrels a day of 15 different grades of lubricant, from “light cylinder oil” to heavy grease. Soon thereafter, Shannon and his associates incorporated as the Pennsylvania Oil and Gas Company with 6,000 shares of stock. The company’s assets included the Casper refinery and placer claims on over 3,000 acres of the north perimeter of Salt Creek. Only 160 acres were patented, but this included four producing wells.

For the next nine years, the Pennsylvania Oil and Gas Company continued drilling, producing, refining, and marketing. By 1904, the company owned 14 small wells, each producing ten to 40 barrels per day – more than the Casper refinery or the market could accommodate. Despite a growing population (1900 census counted 92,531) and improved railroad access, transportation costs meant that Wyoming oil could not successfully compete for the distant eastern markets.

The Pennsylvania Oil and Gas Company struggled; it paid out only $37,000 in dividends over 11 years of operations. When a buyer appeared, the company quickly agreed to sell. By October 1904, a $350,000 deal was closed. Joseph H. Lobell and his French and Belgian backers, however, fared no better and the Casper refinery was soon abandoned amidst Lobell’s convoluted finances.

Wyoming’s first real oil boom would have to wait until 1908, when Salt Creek’s “Big Dutch” well came in as a gusher, bringing a new flood of entrepreneurs and investors.

Phillip Shannon’s venture illustrates the challenges faced by early oilmen in the development of Wyoming’s oil industry. The legitimacy problems of placer claims remained problematical for many years to come. By 1912, every individual or company in the Salt Creek oilfield was either suing or being sued.

Isolation from the petroleum-hungry eastern markets also endangered every oil venture. Even with the advent of railroad tank cars, Wyoming oil could not compete in eastern markets because of transportation costs. These early problems eventually yielded to the tenacity of the stubborn oilmen who confronted them. In 1920, the “Oil and Gas Leasing Act” finally provided some relief from the morass of legal wrangling over placer claims.

In the 1920s, about one-fifth of all oil produced in the United States came from one field: Salt Creek.

Salt Creek Museum

The Salt Creek Museum in Midwest, Wyoming, displays artifacts and more than 4,000 photographs of the Salt Creek and Teapot Dome Naval Reserve No. 3 oilfields, illustrating the area’s history from 1889 to today, according to Curator Pauline Schultz. The museum holds a full set of Midwest Refining Company Books from 1920-1930.

The Salt Creek Oil Field, about 40 miles north of Casper, was once among the largest light crude oil fields in the world. The field was extensively developed – and became famous for its gushers. A pipeline to the Casper refinery was built in 1911. Salt Creek was surpassed in the 1920s by the nearby Teapot Dome field, the source of financial scandal during the Warren G. Harding administration.

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