This Week in Petroleum History, August 27 to September 2
August 27, 1859 – U.S. Petroleum Industry begins in Pennsylvania
America’s petroleum industry began with a well drilled 69.5 feet deep in Titusville, Pennsylvania. Hired by the Seneca Oil Company of New Haven, Connecticut, former railroad conductor Edwin L. Drake drilled America’s first commercial oil well. The Venango County well produced 25 barrels of oil a day.
Although earlier “spring pole” and cable-tool drillers of brine wells had found small amounts of oil – an unwanted byproduct – Drake specifically drilled for it. His investors wanted to refine the oil into a highly demanded new product, kerosene. Drake pioneered several new drilling technologies, including a method of driving an iron pipe down to protect the bore’s integrity from nearby Oil Creek.
But after five months of financial setbacks and drilling problems, the locals called the well “Drake’s Folly.” To improve his reputation, Connecticut investors addressed their letters to “Colonel” Edwin Drake.
Late in the afternoon on August 27, 1859, Edwin Drake’s driller, blacksmith “Uncle Billy” Smith, noticed oil floating at the top of the pipe. The bit had reached what would become known as the First Venango Sand. To begin pumping the oil, Drake borrowed a kitchen water pump.
August 27, 1959 – Stamp celebrates Oil Centennial
“No official act could give me greater pleasure than to dedicate this stamp commemorating the 100th anniversary of the petroleum industry,” declared U.S. Postmaster General Arthur Summerfield, who addressed a large crowd gathered for the “Oil Centennial Day” in Titusville, Pennsylvania.
Gen. Summerfield added that a commemorative stamp would serve “as a reminder of what can be achieved by the combination of free enterprise and the vision and courage and effort of dedicated men.”
During his introduction of the new four-cent commemorative postage stamp, the Postmaster General described the role of U.S. petroleum in war and peace. “The American people have great reason to be indebted to this industry,” Gen. Summerfield proclaimed. “It has supplied most of the power that has made the American standard of living possible.”
Fifty years later, the U.S. Postal Service Stamp Advisory Committee in 2009 rejected requests for a stamp recognizing the 150th anniversary of the U.S. petroleum industry. The committee, which meets four times a year to review suggestions for new postage stamps, earlier had granted commemorative stamps for Kermit the Frog and each of his nine fellow Muppets. Learn more in the Centennial Oil Stamp Issue.
August 30, 1919 – Natural Gas Boom (and Bust) at Snake Hollow
About 300 petroleum companies converged on a natural gas field near Pittsburgh within months of 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 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 – Conoco and Phillips Petroleum become 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 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. 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 gaslight in Illuminating Gaslight and early gas 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.
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).
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