Early Wells of Oil Creek
The discovery of oil along a small creek in Titusville, Pennsylvania, in August 1859 launched the American petroleum industry. Drilled just 69.5 feet deep by former railroad conductor Edwin Drake, the well produced oil that could be refined into an inexpensive lamp fuel, kerosene.
Drake, who pioneered drilling technology, borrowed a local kitchen water pump to fill the first oil barrels. Early oil production from his and other northwestern Pennsylvania wells brought new refineries to Oil City and Pittsburgh on the Allegheny River. Demand for kerosene quickly outpaced the inexpensive but volatile lamp fuel camphene. Kerosene also replaced expensive whale oil. A typical four-year whaling voyage returned with 40,000 gallons; New oilfields produced 10 million gallons of kerosene in 1860 alone.
Drake’s well, drilled for the first U.S. oil company established by George Bissell, brought the country’s first drilling boom as entrepreneurs rushed in. Farmers who leased their land were among the first to benefit. “Oil Creek was soon taken up and within a relatively short time, the entire valley as far back as into the hillsides, had been leased or purchased,” noted author Paul Gibbons noted.
With the science of petroleum geology yet to debut, early oil explorers searched near oil seeps and the “rich territory was limited to flats along the streams,” Gibbons added. Natural gas discoveries would later arrive to the benefit of Pittsburgh industries.
The 200-acre farm of J.T. Foster on a Pioneer Run hillside off Oil Creek was in “the dry diggings” where few were willing to gamble. Nonetheless, some newly minted oilmen gathered a few investors to try their luck. Capital was hard to come by. On the Foster farm, one struggling “poor-boy” outfit had to trade a one-sixteenth interest for $80 and an old shotgun to continue drilling on its Sherman Well.
Four acres close to the Sherman well sold for $220,000 as venture oil capitalists, entrepreneurs, and speculators tried their luck in the newly created petroleum industry.
Drilling along Oil Creek continued undiminished, but in September 1861 on the Funk farm, the Empire well began flowing a river of oil under its own pressure. They called it a “fountain well.” Some said it initially produced 2,000 barrels of oil a day. Other successful wells followed.
Back on the Foster farm lease, the Sherman well, formerly saved by an old shotgun, in March 1862 was completed as the “best single strike of the year,” despite being “above all the other flowing wells” according to the Hornellsville Tribune. Leases on the farm became highly prized. Historian and author Terence Daintith observed that “subleasing was also a money machine.” The Venango Citizen reported, “Territory along the river above and below Franklin has been changing hands at high figures, and preparations are being made for active work.”
Just four acres close to the Sherman well sold for $220,000 as venture capitalists, entrepreneurs, and speculators tried their luck in the newly created petroleum industry. The Foster Farm Oil Company and the oddly named Shoe & Leather Petroleum Company were among the many corporations formed to exploit exploration opportunities.
Foster Farm Oil Company
Foster Farm Oil Company incorporated in February 1865. Based in Philadelphia and capitalized at $1.5 million, the company offered 150,000 shares to the public. “The Foster Farm is owned by a company of ten gentlemen, and is known as the Foster Farm Oil Company,” reported the The Titusville Morning Herald. E.C. Bishop (Elisa Chapman ) was principal owner as well as one time general agent, treasurer, and superintendent.
The new company secured acreage on the Foster farm that already had 12 wells pumping 100 barrels of oil a day. Foster leased acreage in small tracts to several new companies vying for closest proximity to known producers. Oil prices had always fluctuated wildly, but a standard 42-gallon barrel of crude oil sold in 1865 for about $6.50, including a Civil War excise tax of $1 per barrel.
Foster Farm Oil Company continued drilling and subleasing small tracts. In April 1866, it drilled a well producing 300 barrels of oil a day from 612 feet deep. Then a second well produced at 310 barrels, a third at 100, and another at 350 barrels of oil a day. In 1867, Foster Farm Oil Company sold 1,000 barrels of oil at $2.10 each.
All over the Pioneer Run hillside, wooden derricks with steam engines pumped away even as overproduction drained the oilfield. Margins disappeared and companies began to fail. Vanango County historians confirm, “Not one of the other fifty or sixty wells on the Foster farm, some of them Sherman’s, was particularly noteworthy.”
Foster Farm Oil Company’s fortunes faded as did the value of its stock. In 1869, total U.S.oil production topped 4 million barrels and oversupply drove many out of business. After 10 years in the oil patch, Elisha C. Foster departed to enter the banking business in Connecticut.
By 1871, shares of Foster Farm Oil were being auctioned off along with other “Stocks, Loans, etc.” The following year, 5,000 shares of Foster Farm Oil Company were offered at 11 cents a share. Litigation began to overtake the failing company in 1873; it would continue long after the drilling boom had moved on, finally being settled by the Connecticut Superior Court in 1886.
Shoe & Leather Petroleum Company
Shoe & Leather Petroleum Company incorporated in New York City in March 1865 to join the Pennsylvania oil rush. The company initially capitalized at $400,000, later reduced to $160,000. “Until the spring of 1865, the Foster Farm, Pioneer Run and vicinity were considered dry territory. Through the exertions of Mr. David Harris of this city, the Shoe & Leather Petroleum was formed,” reported the Titusville Morning Herald.
The company leased six acres on the Foster farm, then subleased them into 11 smaller tracts – the kind sought by smaller, speculative operations. “Substantial leaseholders could milk their leases by subleasing small lots for large premiums and high royalties,” historian Daintith later noted. “Far more money could be made this way than by actual production.”
By 1867, Shoe & Leather Petroleum had five producing wells, on five different tracts, with five different operators, yielding about 350 barrels of oil a day. But frantic production at Pioneer Run and Oil Creek, compelled land owners above oil reserves to drill, “regardless of price or market demand, in order to prevent his neighbor from draining his reserves.” This traditional “law of capture” rendered an oily landscape thick with derricks.
Overproduction and waste depleted reservoir pressures. Wells were pumped dry. Triumph Hill, Pithole and others reinforced the precedent of oil discovery, drilling boom, and inevitable bust.By 1902, United States Investor reported Shoe Leather & Petroleum Company had “disappeared” and concluded, “The supposition is that the company has gone out of existence.” Two years later, Smythe’s Directory of Obsolete American Securities and Corporations confirmed the company, “Extinct. Stock worthless.”
The stories of exploration and production companies joining petroleum booms (and avoiding busts) can be found updated in Is my Old Oil Stock worth Anything? The American Oil & Gas Historical Society preserves U.S. petroleum history. Please support this AOGHS.ORG energy education website. For membership information, contact firstname.lastname@example.org. © 2018 Bruce A. Wells.