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Texas History:

Oil's Big Day

duhler@express-news.net / San Antonio Express-News 6jan01

Imagine Texas without oil.

No black gold. No Texaco and no Gulf. No "Giant" on the silver screen.

Oil roared 150 feet into the air when Spindletop exploded 100 years ago. (Texas Energy Museum)

No pump jack on "the back 40" of Grandpa's ranch, silently nodding up and down, 24/7 no matter what the weather, sucking thick, gooey, sulfurous stuff out of the hardscrabble earth.

No refineries, no petrochemical plants, no gas burnoff stacks lighting up the night with blue-and-white fire like the flames from giant matches.

No "awl bidness" pumping billions of dollars annually into the Texas economy.

This was Texas 100 years ago.

Then came Spindletop.

When the oil well near Beaumont blew in on Jan. 10, 1901, the "gusher" the term was coined because of Spindletop did more than make a bunch of people filthy rich. It divided history, not only in Texas, but the rest of the world, into two parts: everything that came before Spindletop, and everything after it.

At a time when "successful" wells produced 100 barrels of oil a day, Spindletop spewed at a rate nearly 1,000 times that fast. It dumped 800,000 barrels onto the fields surrounding the shattered derrick until its owners capped the hole nine days later.

"The oil business in Texas provided the final push needed to convert the United States from a second-tier country at the turn of the century into the biggest superpower of the 20th century," says Joe Pratt, a history professor at the University of Houston.

The world, thirsting for a cheap alternative to coal and a fuel fit for the newfangled automobile and the soon-to-be invented airplane, had been sitting at the brink of a precipice.

Spindletop pushed it over the edge.

Four decades after the landmark event, the Beaumont city fathers placed a pink granite monument at the historic site. An inscription on the 58-foot tall obelisk reads: "On this spot on the tenth day of the twentieth century a new era in civilization began."

 

Michel T. Halbouty, a 91-year-old Beaumont native and lifelong oil wildcatter, says "the day that Spindletop came in is the day our country became a world power."

"Spindletop was the catalyst. It moved everything forward."

The discovery of the vast pool of petroleum at the dawn of the 20th century came at a critical juncture in the global timeline. The world needed energy. The steel mills of Andrew Carnegie, the electric light bulbs of Thomas Edison and the boilers of steamships and locomotives demanded it. So did the furnaces and generators in millions of homes and factories.

The world's power plants burned coal. It was plentiful and relatively inexpensive. Coal could also be refined to produce lubricating oil, kerosene and natural gas. Petroleum, also available as a lubricant and source of kerosene, was more expensive and harder to find.

Until the 1850s, oil was something found accidentally while drilling wells for water or salt brine. No one went looking for it until a process for conversion of petroleum into kerosene was invented.

On Aug. 27, 1859, Edwin L. Drake discovered oil in Titusville, Pa. The well brought in 10 to 25 barrels of oil a day.

"It was nothing," Halbouty says. "The oil could be used, certainly, but not for industrial purposes."

The world's biggest oil fields were in Russia. America's tiny petroleum industry, fueled by its thirst for kerosene, continued to grow. Drillers hunted new sources in Pennsylvania, Ohio, Indiana, Kansas and California. Every time a well came in, the price of petroleum plummeted. When the well dried up, the cost skyrocketed. None of the wells produced long enough to keep the market stable.

The chaos helped entrepreneurs such as John D. Rockefeller. He built his Standard Oil Trust with 30 refining, transportation and marketing companies to control the crude oil industry. After forcing rivals to sell or fold, he would then cut the prices he paid to petroleum producers.

Rockefeller's tactics made him and other major oil companies targets for anti-trust legislation. After oil was discovered in Corsicana in 1894, then-Gov. James Hogg and the Legislature passed a series of laws designed to prevent monopolies from getting a foothold in Texas.

"It is fair to say that no man not Morgan, Gould, Hill, nor any other of the late 19th century's great American robber barons was more hated and feared than John D. Rockefeller," wrote the authors of "Brine to Bonanza: The Story of the American Oil Industry." "No man could pay more for crude, refine it into kerosene and sell the kerosene for less than Standard."

By 1897, a field of several hundred wells in boomtown Corsicana yielded 60,000 barrels of oil, about 90 percent of the state's annual output. The big oil companies were largely locked out of the action.

At the turn of the century, Texas was at a crossroads. Cotton, cattle and hides dominated its economy. The railroads came in the 1870s and 1880s; the Southern Pacific cut through South Texas on its route from Florida to California.

The city of Galveston and its port were the gateways to the state. In September 1900, however, Galveston was hit by a hurricane that killed an estimated 6,000 people and left the city in ruins. As it struggled to recover from the disaster, the city suffered another blow.

Its name was Spindletop.

The well was the brainchild of Pattillo Higgins, a one-armed, self-educated real estate man and Sunday school teacher in Beaumont. Higgins, who didn't have any formal training in geology or engineering, thought a salt dome formation about four miles south of town might contain oil.

Spindletop Hill, a 15-foot rise about one mile in diameter, oozed pools of foul-smelling water and sulfurous gases. More than a few experts, citing the hill's lack of petroleum seeps and other clues, told Higgins the hill would never yield oil.

It took several years and a couple of dry holes, but Spindletop proved them wrong at 10:30 a.m. on Jan. 10, 1901.

The ground shook. Mud spurted out of the 1,020-foot well, followed by an explosion of gas that shot the drill bit and hundreds of feet of pipe out of the hole and up through the derrick, knocking off its crown block.

"The 20-foot sections of four-inch pipe, now four tons of scrap metal, broke off in mid-air and fell in odd, tumbling patterns to the ground, driving into the muddied clay like arrows from some Greek god's bow," writes Paul N. Spellman in his recently published book, "Spindletop Boom Days." "Rocks the size of five-gallon buckets showered down like meteorites, imbedding themselves back into the earth."

The debris was followed by a steady stream of oil, six inches in diameter and 150 feet tall.

The drillers congratulated themselves and waited for the column of thick, black and green crude to subside. It didn't. The well continued to flow, almost 100,000 barrels a day, forcing the men to come up with some creative solutions. They erected earthen dikes to form vast ponds for the oil, putting up new barriers further away each time the advancing crude overran its banks.

After nine days, they finally managed to put a lid on Spindletop. First they hauled a heavy sled of timber and railroad rails over the gusher. Then they installed the petroleum industry's first "Christmas tree," a short series of pipes with progressively smaller valves they closed to choke the well's flow.

By the time it was capped, Spindletop had spewed more oil than the entire Corsicana field had produced during its four-year boom. No one had ever seen this much oil come out of the earth so quickly.

"At one time, they were predicting, 'Man, this might produce 500 barrels a day,'" says Ryan Smith, director of the Texas Energy Museum in Beaumont. "Some of the biggest and best wells in Pennsylvania were producing 100 barrels day. And here you had this blowout doing 100,000 barrels a day."

The price of crude, nearly $1 for a 42-gallon barrel, transformed Beaumont overnight. Thousands of sightseers came to see the gusher. Many stayed. They were joined by an army of land speculators, oil company executives and rig workers, along with a proportionate number of swindlers, gamblers and prostitutes. Beaumont's population jumped from 9,000 to 50,000 in three months. By the end of 1901, the oil field had 138 producing wells; eight months later, it had 300 more.

"Pig wallows sold for $35,000 and cow pastures for $100,000," wrote Walter Rundell Jr. in his book, "Early Texas Oil: A Photographic History 1866-1936. "Land 150 miles from Beaumont sold for $1,000 per acre and land within the proven Beaumont field sold for $900,000 an acre."

One farmer got $20,000 from an investor who sold the property a few minutes later for $50,000.

A Houston Post reporter dispatched to cover the big oil strike parlayed his assignment into a Texas institution. Marcellus Elliot Foster bought an option for $30, which he sold days later for $5,000. Foster used his earnings and $20,000 from investors to found the Houston Chronicle, which also celebrates its 100th birthday this year.

The boom attracted investors such as Joseph Cullinan, a former Standard Oil Trust executive who had drilled in Corsicana. Cullinan formed the Texas Fuel Oil Co., the forerunner of Texaco. J.M. Guffey, one of the partners in the original Spindletop well, launched Gulf Oil, which was swallowed by Chevron in 1984.

Their independent companies and dozens of others spawned by Spindletop helped break Standard Oil's monopoly in the petroleum industry.

The price plummeted to 2 cents a barrel, the lowest price in the history of U.S. oil. Drinking water, which had to be carted out to Spindletop for workers in the oil field, was more expensive.

All of a sudden, the world had more oil than it knew what to do with.

The oil producers needed to create new markets. The world demand for kerosene wasn't big enough to sop up the crude flowing out of Spindletop.

Tanker ships hauling Texas petroleum to East Coast markets were among the first to make the switch from coal to crude.

Railroads, especially in Texas and the rest of the Southwest, soon followed suit, ending their reliance on coal from faraway sources that included Appalachia and Alabama. Next came the nation's factories and power plants.

 

The seemingly infinite abundance of oil also put an end to what had been an ongoing debate about the fuel source for one of the newest forms of transportation: the automobile.

"We were playing with electric cars," says Pratt, who has spent much of his academic career examining the petroleum industry. "We were playing with water in Stanley Steamers and oil all at the same time.

"Then comes Spindletop, and all of a sudden, people start to think, 'Maybe it isn't going to be hard to decide what kind of car we're going to have. We have oil.'"

Soon, the race was on to build refineries and lots of them to transform the ocean of Spindletop crude into petroleum products.

"There was so much oil and so little infrastructure," Pratt says. "There are no pipelines and no real tanker industry capable of that kind of capacity to take the oil either to the East Coast or to Europe, where it was needed."

Gulf and Texaco built big refineries in Port Arthur. Magnolia Oil, now part of ExxonMobil, put its plant in Beaumont, which meant Jefferson County had three of the world's largest refineries. Other companies, including Humble Oil, Shell and Amoco, later built plants in Baytown, Deer Park and Texas City. Miles of pipeline, worth between $5 million and $7 million, were built from the oil field to Port Arthur and the Sabine Pass.

Then Spindletop stopped flowing in 1909.

Mineral rights to the oil under the leases worked according to the old English "rule of capture." Under this principle, anybody who had property or a lease anywhere over the pool of crude had the right to suck it out of the ground as fast as he could.

"It's like everybody has a straw down into it," Pratt says. "Whoever sucked it out first got it. You might own the whole middle of the field, but somebody on a corner is going to produce oil as fast as they can, even if it hurt the field."

And it did. With little understanding of the underground pressures of natural gas and water, the producers extracted too much oil too quickly. Water seeped into the reservoir. The flow of oil forced to the surface by pumps slowed to a trickle.

The roughnecks, roustabouts and other graduates of "Spindletop University," however, had learned plenty of important lessons. How to cap out-of-control gushers, for instance, and how to drill in quicksand and fight well fires. They fanned out over Texas, Louisiana, Oklahoma and New Mexico. Wildcatters named after their "wild cat" wells, which explored unproven oil producing territory made several important strikes.

Rather than shipping this crude to East Coast refineries, they built more pipelines to transport it to the Texas Gulf Coast's rapidly expanding petrochemical complex. In 1914, workers completed the ship channel to the Port of Houston. The port quickly became the heart of the biggest industrial region of the south.

Propelled by oil money, the Bayou City's population mushroomed. Galveston, unable to attract the business and industry it needed to recover from the hurricane, withered and declined.

Old Spindletop, however, wasn't done yet.

In 1925, drilling technology and an idea that the flanks of the salt dome might hold oil came together: A 5,000 barrel-a-day strike came in from a well at 2,518 feet. The second boom, almost as productive as the first, yielded 60 million barrels in five years.

As oil continued to flow either pumped out of the ground or shipped in by pipeline men from all over the country continued to move south to work in the refineries. Many came from rural communities, where a way of life was changing with the spread of modern farming techniques, propelled by tractors powered by gasoline engines.

Halbouty went to work on the rigs at Spindletop in the 1920s as a young boy, carrying water jugs for thirsty workers. He launched his own career with a couple of bachelor's and master's degrees in geology and petroleum engineering from Texas A&M University. In 1950, the wildcatter returned to Spindletop to try his luck. He found oil at 4,000 feet.

Halbouty, co-author of "Spindletop: The True Story of the Oil Discovery that Changed the World," still works every day at an office in Halbouty Center, the five-story building he owns across the street from Houston's posh Galleria shopping complex.

"I'm the last living link to Spindletop," he says. "There's no one else left, as far as I know."

During the Depression and the postwar economic boom, the lure of good jobs was especially strong on East Texas farmers and sharecroppers. Pratt's father, like most of his male relatives, left a farm in rural Hemphill near Lufkin to come to work at a chemical plant in Port Neches.

"They came here like everyone else did in the 1930s and 1940s," Pratt says. "You got these jobs down here and you had a steady paycheck and health insurance for the first time."

For 50 years, the industrial complex between Beaumont and Houston was the largest source of refining and petrochemicals in the world. OPEC and automation of the refineries changed things in the 1970s and 1980s. But most of the world's largest petrochemical companies still have a sizable presence in the area, along with service companies offering expertise in exploration, drilling and refining.

"Houston is still clearly the energy capital of the world," Pratt says. "That's the real legacy of Spindletop."

duhler@express-news.net

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