This Week in Petroleum History, August 28 – September 3
August 30, 1919 – Natural Gas Boom (and Bust) at Snake Hollow
About 300 petroleum companies sprang up near Pittsburgh within months of a major natural gas discovery – the “Snake Hollow Gusher” of McKeesport, Pennsylvania.
Drilled near the Monongahela River, the discovery well produced more than 60 million cubic feet of natural gas a day. It prompted an exploration frenzy that witnessed $35 million invested in a nine-square-mile area.
“Many residents signed leases for drilling on their land,” the local newspaper later reported. “They bought and sold gas company stock on street corners and in barbershops transformed into brokerage houses.”
But excitement in the McKeesport natural gas field ended in just seven months. At the beginning of 1921, natural gas production had declined in 180 wells; more than 440 exploratory wells were dry holes. Of the millions invested during the boom, only about $3 million came out. The field was soon described as “the scene of the Pittsburgh district’s biggest boom and loudest crash.” Learn more in Natural Gas is King in Pittsburgh and the McKeesport Gas Company.
August 30, 2002 – Birth of ConocoPhillips
Almost 100 years after Frank and L.E. Phillips completed their first oil well and 128 years after Continental Oil delivered its first can of kerosene in a horse-drawn wagon, Phillips Petroleum Company and Conoco Inc. combined to form an energy industry giant. The two historic companies created ConocoPhillips.
The early business ventures that played important roles leading to today’s ConocoPhillips (and two oil museums) included successful companies like Transcontinental Oil & Transportation, 101 Ranch Oil, Marland Oil, and Continental Oil and Refining, to name a few. After ConocoPhillips decided to separate its refining and marketing business, Phillips 66 debuted in May 2012 as an independent downstream energy company.
August 31, 1850 – San Francisco Utility incorporates to manufacture Gas
The San Francisco Gas Company incorporated in 1850 to produce and distribute “manufactured gas” extracted from coal. Irish immigrants Peter and James Donahue and engineer Joseph Eastland erected a coal gasification plant at San Francisco Bay to distill coal for manufacturing a gas for lighting. Their company illuminated its first “town gas” street lamps in 1852.
Over the next half-century, the company merged with competitors, ultimately concluding in the 1905 formation of Pacific Gas & Electric (PG&E). By 1915 there were almost 8,500 San Francisco street lamps – each hand lit and shut off every day. The last coal-gas lamp was extinguished in 1930.
Learn more about early gas-light utility companies in Con Ed – America’s Largest Utility.
August 31, 1859 – America’s First Dry Hole
Just four days after the first American oil well in Titusville, Pennsylvania, a series of far less known “firsts” were achieved by local entrepreneur John Grandin in August 1859.
Although Edwin L. Drake used a steam-powered cable-tool rig to drill his well, Grandin used the simpler, time-honored spring-pole “kick down” method for his well at nearby Gordon Run Creek. The well reached a depth of 134 feet – about 65 feet deeper than Drake’s – but produced no oil despite desperate attempts.
Not to be remembered as America’s second oil discovery, Grandin’s dry hole on the last day of August 1859 achieved other petroleum industry milestones. His attempt would be credited with the first stuck tool, the first “shooting” of a well with black powder – and first well ruined by a failed shooting attempt. Learn more in First Dry Hole.
September 1, 1862 – Union taxes Manufactured Gas
In order to help fund the Civil War, a new federal tax took effect – up to 15 cents tax per thousand cubic feet of manufactured gas (coal gasified by heating). Editors at the Brooklyn Daily Eagle soon accused the local gas company of passing on the tax, which “shifts from its shoulders its share of the burdens the war imposes and places it directly on their customers.”
“Not so,” replied the Brooklyn Gas Light Company. “We do not contemplate anything of the kind.” Still in need of revenue to fund the war, U.S. Treasury Secretary Salmon P. Chase imposed a $1 per barrel oil tax in 1864.
September 2, 1910 – Cities Service Company incorporates
Henry Doherty formed the Cities Service Company as a public utility holding company in Bartlesville, Oklahoma. Doherty bought producing properties in Kansas and Oklahoma as he acquired distributing companies and linked them to the natural gas supplies. His company derived income from the subsidiary corporations’ stock dividends.
In 1915, a Cities Service Company subsidiary, Wichita Natural Gas Company, discovered the 34-square-mile El Dorado oilfield. In 1928, another subsidiary, Empire Oil & Refining, discovered the Oklahoma City oilfield. Federal court mandates in 1940 resulted in Cities Service’s divestiture of its public utilities, and in 1959 the remaining companies were reformed as Cities Service Oil Company. Cities Service changed its marketing brand by introducing the name CITGO in 1964.
Occidental Petroleum acquired the company in 1982. Four years later Petróleos de Venezuela, purchased 50 percent of CITGO. The remainder of the company, today based in Houston, was acquired by the Venezuela state-owned oil company in 1990.
September 2, 2009 – Gulf of Mexico Depth Record
BP announced a major oil discovery 250 miles southeast of Houston in the Gulf of Mexico. The well would set a world depth record by drilling 30,923 feet into seabed from a platform floating more than 4,130 feet above. (Learn about an onshore depth record in Anadarko Basin in Depth.) The Tiber Prospect field – estimated to hold more than three billion barrels of oil in 2009 – was drilled by the ill-fated Deepwater Horizon, which later was moved to a new site and destroyed in deadly explosion and oil spill in April 2010.
Recommended Reading: McKeesport – Images of America: Pennsylvania ( 2007); Street Lights of the World (2015); Conoco: 125 Years of Energy (2000); Phillips, The First 66 Years (1983); Vertical Reefs: Life on Oil and Gas Platforms in the Gulf of Mexico (2015); A Hole at the Bottom of the Sea: The Race to Kill the BP Oil Gusher (2012).
Listen online to Remember When Wednesdays on the weekday morning radio show Exploring Energy from 9:05 a.m to 10 a.m. (Eastern Time). Executive Director Bruce Wells calls in on the last Wednesday of each month. AOGHS welcomes sponsors to maintain this website and preserve U.S. petroleum heritage. Please support our energy education mission with a tax-deductible donation today. Contact firstname.lastname@example.org for information on levels and types of sponsorships. © 2017 Bruce A. Wells.