January 10, 2019

January 10, 2019

The 1901 Texas Spindletop Discovery: The Symbol of an Economic & Energy Exploration Revolution

The 1901 Texas Spindletop Discovery: The Symbol of an Economic & Energy Exploration Revolution

On January 10, 1901, The Gladys Oil, Gas, and Manufacturing Company discovered the Spindletop oilfield on a salt dome formation south of Beaumont, TX in Eastern Jefferson County. Thus began the birth of oil exploration as we know it today in the USA. Indeed, Spindletop is a historical beacon to the energy extraction industry and has developed into the Permian Basin in Texas and New Mexico – the world’s third largest oil region, ahead of entire OPEC countries like Iran and Iraq. While it stands as a groundbreaking event in archived documents, the history leading up to Spindletop is not vividly reflected. There were many earlier attempts to extract the “black gold” from the ground, but all attempts failed on the back of inadequate technology, haphazard methodology, and limited financial resources. This created a scenario where there was a lot of activity in and around Spindletop, but no significant oil extraction. That was until Gladys hit pay dirt. How things have changed: in 1900 Texas oil fields contributed but a paltry 1.3% of national production. Today Texas contributes nearly 50%. The key players in the Spindletop event were Anthony Lucas – a leading expert on salt dome formations, who was supported by the Mellon interest in the persons of John H. Galey and James M. Guffey of Pittsburgh. Lucas, despite being watered down equity-wise, was driven by a passion to prove the abundant energy resources in the Texas ground formations he understood so well. The other two steadfastly supported him by harnessing the prowess of Al and Curt Hamill, a proven crack drilling team from Corsicana. New technology such as a heavier and more efficient rotary type bit propelled them to success. On January 10th mud bubbled from the drilling hole, followed by tons of steel drilling pipe that literally exploded upwards into the air. Like the calm before the storm, the mud hole bubbled quietly until a few minutes passed when oil suddenly spurted in a unique spectacle never seen before. They named it the Lucas Geyser. From a depth of 1,139 feet, a blue-black stream gushed over 100 feet high. This was an extraordinary happening even for seasoned drillers and they were only able to cap the spout 9 days later. The extraction alone was credited with producing a flow of 100,000 barrels per day (versus less than 1 million Texas barrels per year). Life in Beaumont County was turned on its head. When the dust settled and the oil spill on the drilling site was finally cleaned up, the region was inundated with droves of oilmen, speculators, and spectators – all drawn to the vision of new immense wealth. Land prices careened up of course, appreciating sometimes by 50,000 times, and the county’s population swelled by over five times in the space of months. It has been compared to the Silicon Valley digital-age rush as we witnessed it at the end of the 20th century, where the Californian city escalated to arguably the most expensive real estate in the USA. Over $235 million of energy-related deals occurred in the same year, where astounding fortunes were lost and made. By 1952 over 153 million barrels of oil had been extracted from Spindletop, which in itself indelibly printed its name and anniversary on American history and much of the prosperity we as citizens enjoy now and probably into the future. It is a matter of record that as of today billions of dollars are invested into myriad wells all over the Permian shale fields, as well as pipelines to strategic Texan city ports, storage facilities, and refining units for international export. Thanks to Spindletop and the resolute attitudes of the oil pioneers behind it, we live in an ever-prosperous era that doesn’t look to be ending anytime soon.

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