This Week in Petroleum History, March 27 to April 2
March 27, 1855 – Canadian Chemist trademarks Kerosene
Canadian physician and chemist Abraham Gesner patented a process to distill coal into kerosene. “I have invented and discovered a new and useful manufacture or composition of matter, being a new liquid hydrocarbon, which I denominate Kerosene,” he proclaimed. Because his new illuminating fluid was extracted from coal, consumers called it “coal oil” as often as kerosene.
The U.S. petroleum exploration industry was launched when it was learned that kerosene also could be distilled from crude oil. With new oilfields discovered in Pennsylvania, West Virginia and Ohio, inexpensive kerosene became America’s main source of light until the electric light bulb arrived.
Gesner, today considered the father of Canada’s petroleum industry, established the country’s first Museum of Natural History in 1842. The New Brunswick Museum today houses one of Canada’s oldest geological collections, according to the Petroleum History Society.
March 27, 1975 – First Pipe laid for Trans-Alaskan Pipeline
With the laying of the first section of pipe in Alaska, construction began on the largest private construction project in American history at the time.
The 800-mile Trans-Alaska Pipeline system, including pumping stations, connecting pipelines, and the Valdez Marine Terminal, would cost $8 billion by the time it was completed in 1977.
Recognized as a landmark of engineering, the pipeline system’s 420 miles of above ground segments were built in a zig-zag configuration to allow for pipe expansion and contraction. Learn more in Trans-Alaska Pipeline History.
March 28, 1886 – Discovery launches Indiana Natural Gas Boom
A natural gas drilling boom began in Portland, Indiana, after the Eureka Gas and Oil Company found a gas field just 700 feet deep. For a time, the state became the world’s leading natural gas producer.
The discovery arrived just months after a spectacular natural gas well about 100 miles to the northeast – the “Great Karg Well” of Findlay, Ohio. “Natural gas had previously been found in large quantities in western Pennsylvania and had revolutionized the iron, steel, and glass industries of Pittsburgh, as industrialists adapted their factories to use the natural gas in place of the more expensive coal,” notes historian James Glass of Ball State University.
The prolific Trenton limestone would be found in 17 Indiana counties across 5,120 square miles. The natural gas field became the largest in the world. Within three years, more than 200 companies were drilling, distributing, and selling natural gas. Learn more in Indiana Natural Gas Boom.
March 28, 1905 – Oilfield found in Northern Louisiana
The Offenhauser No. 1 discovery well for the giant Caddo-Pine Island oilfield in Louisiana was completed at a depth of 1,556 feet. Although the well yielded only five barrels a day and is soon plugged and abandoned, more wells follow and the northern Louisiana oilfield is soon prolific. To prevent the loss of natural gas through flaring, Louisiana passes its first conservation law in 1906. By 1918, annual production from the Caddo-Pine Island oilfield reaches 11 million barrels. Learn more in First Louisiana Oil Well and visit the Louisiana State Oil and Gas Museum in Oil City.
March 29, 1819 – Birthday of Father of the Petroleum Industry
Edwin Laurentine Drake (1819-1880) was born in Greenville, New York. Forty years later, in the summer of 1859 near Titusville, Pennsylvania, he used a steam-powered cable-tool rig to drill America’s first commercial oil well.
Drake would overcome many financial and technical obstacles to make “Drake’s Folly” a milestone in energy history. He also pioneered new drilling technologies, including using iron casing to isolate his well bore from nearby Oil Creek. Seeking oil for the Seneca Oil Company for refining into a new product (kerosene) his shallow well created a new industry.
“In order to overcome the hurdles before him, he invented a ‘drive pipe’ or ‘conductor,’ an invention he unfortunately did not patent,” reports a Pennsylvania State University historian. “Mr. Drake conceived the idea of driving a pipe down to the rock through which to start the drill.”
Drake made his historic oil discovery on August 27, 1859, at a depth of 69.5 feet. Learn more in Birth of the U.S. Petroleum Industry.
March 29, 1938 – Magnolia Oilfield Discovery in Arkansas
“Kerlyn Wildcat Strike In Southern Arkansas is Sensation of the Oil Country,” declared an Arkansas newspaper headline as the Barnett No. 1 well opened the 100-million-barrel Magnolia oilfield. Drilling had been suspended by the Kerlyn Oil Company (predecessor to the Kerr-McGee company) because of a recession and lack of backers, but company vice president and geologist Dean McGee persevered. He was rewarded with the giant Arkansas oil discovery at 7,650 feet deep. McGee also would lead efforts in early offshore exploration in the Gulf of Mexico.
April 1, 1911 – First Well of “Pump Jack Capital of Texas”
South of the Red River border with Oklahoma, near Electra, Texas, the Clayco Oil & Pipe Line Company’s Clayco No. 1 well launched an oil boom that would last decades.
“As news of the gusher spread through town, people thought it was an April Fools joke and didn’t take it seriously until they saw for themselves the plume of black oil spewing high into the sky,” reports one Electra historian.
The well on cattleman William Waggoner’s lease settled into production of about 650 barrels per day from 1,628 feet. Hundreds of producing wells followed, leading to the Electra oilfield’s peak production of more than eight million barrels in 1913. North Texas oil fever would again soar when “Roaring Ranger” erupted in 1917 in neighboring Eastland County. A third major discovery arrived with the Burkburnett oil boom in 1918.
Thanks to a campaign by dedicated community activists, in 2001 Texas legislators designated Electra the Pump Jack Capital of Texas. The 2,800 residents today host an annual Pump Jack Festival celebrating their 1911 oil discovery.
April 1, 1986 – Crude Oil Price hits Modern Low
World oil prices fell below $10 a barrel – a modern low for the petroleum industry. Causes included excessive OPEC production, worldwide recession (increasing supplies with declining demand) and a U.S. petroleum industry regulated by production and price controls.
“Saudi Arabia, tiring of cutting output to support prices, flooded the market,” notes Mark Shenk of Bloomberg News. “West Texas Intermediate, the U.S. oil benchmark, tumbled 69 percent from $31.82 a barrel in November 1985 to $9.75 in April 1986.”
Oil prices recovered by 1990 and set a record peak of $145 per barrel in July 2008 – before another price collapse to below $32 by the end of the year. Historic oil prices in the money of the day ranged between $2.50 per barrel and $3 per barrel from 1948 to the end of the 1960s . From the mid-1980s to late 2003, the inflation adjusted price of a barrel of oil was under $25 a barrel.
April 2, 1980 – President Carter signs Crude Oil Windfall Profit Tax
One year after lifting price controls on oil, President Jimmy Carter signed the Crude Oil Windfall Profit Tax (WPT) into law. The controversial WPT imposed an excise tax on oil production.
“From 1980 to 1988, the nation levied a special tax on domestic oil production,” explains historian Joseph Thorndike. Policymakers “imposed an excise levy on domestic oil production, taxing the difference between the market price of oil and a predetermined base price.”
The base price was derived from 1979 oil prices and required annual adjustments for inflation. A remnant of President Richard Nixon’s wage and price controls of 1971, WPT was meant to limit jumps in oil prices. But after eight years of the tax, domestic oil production fell to its lowest level in 20 years. Congress decided to repeal the tax in August 1988. Few in the oil industry mourned its passing.
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