Is oil valuable? Depends on who you ask! Some argue it only became valuable when we learned how to use it. Join your host Tavis Kilian as he explores the birth of the modern oil and gas industry!
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Hello everyone and welcome back to another episode of Hydrocarbon History from RARE PETRO! I’m Tavis Kilian, and I will be walking you through the modern birth of oil. If you are listening to this rather than watching it on YouTube, I feel sorry for ya as you are missing out on a more entertaining experience. There is still time to pause the podcast and search “RARE PETRO” on YouTube to find this episode. Enough of that though, it is time to jump right in!
I got the idea for this episode while reading, “The Moral Case for Fossil Fuels” by Alex Epstein. It’s a great book that breaks down the most common arguments we hear from climate experts and media outlets. I highly recommend you pick up a copy, or do what I do, and listen to it on Audible as you commute, cook, or work out. To open one of the chapters in his book, he mentions a question he loves to ask people when he lectures or debates. Is oil valuable? Go ahead and answer it for yourself. When I first heard this question, my answer was, “Well, duh! There’s a global market for the stuff and I make use of it everyday!” Alex, however, suggests that oil is only valuable because of the way we learned how to use it. Before we found a use case, it was just another natural resource that we would rarely see. So this episode will explore how oil became valuable in the modern context, and how the industry was born.
Let’s jog it back a few million years to the time of prehistoric creatures. As time progressed, sea levels rose and fell quite dramatically. You can often see this in rock outcrops in very distinct layers. Whenever the sea rises or falls, it changes the depositional environment of a lot of these sedimentary systems, and you get these strange patterns that are indicative of different time periods. As this happens, plants and animals will often die and accumulate within specific areas. The biomass is buried, and with enough tectonic activity or other forms of geologic change, they are pushed further and further into the ground. From there, eons of pressure and heat refine this biomass into its very basic forms: hydrocarbons. An unfortunate school of fish may have been transformed into some crude oil. A large swampy area of trees and algae may have been converted into natural gas. This is how the stuff got there, and if you think about it, is technically a biofuel and natural resource, like sunlight, or wind. So we know how it got there, but where do humans come in to establish value?
One of the earliest uses of oil recorded was actually from 1539 when Venezuela exported a significant amount of oil to the Holy Roman Emperor Charles V to treat his gout. I imagine that wasn’t entirely successful. After that, the word “petroleum” which is latin for “rock oil” was cited by German mineralogist George Bauer in 1556. This mid 1500 time period was about the time people were taking notice of this gooey black gunk. It wasn’t until 1755 that Lewis Evans made his “Map of the Middle British Colonies in America,” which noted the presence of petroleum in what we now know as Pennsylvania. Pennsylvania is home to the Marcellus gas field today, but back in the 1700s, there were no fields, jacks, or refineries. The land was natural and abound with oil seeps. An oil seep is a type of surface expression that you can see. What I mean by that, is there are natural migration paths that bring oil from deep in the ground alllll the way to the surface. You can find these on the coast of California and even sometimes, the ocean floor. According to the National Ocean Service, natural oil seeps are responsible for nearly half of the oil released into the ocean every year. Native Americans established themselves on the super fertile farming lands of Western Pennsylvania that were abound with oil seeps leaking crude into their water systems. The Seneca were very familiar with these seeps, but eventually lost their foothold to the Iriquois, one of the most cultured and technologically advanced in the area. The Iriquois used oil for salves, tonics, and mosquito repellent. The Medicine Men of these tribes were probably the first oil drillers in America as they believed these oil seeps were a gift from the heavens to be used for wellness. They may have been harvesting oil from waterways as early as 1410 using a primitive skimming technique. This continued until white settlers began to push them from their lands in the 1700s as they were in search of the rich farmlands, but not the oil.
Fast forward to the early 1800s, and humans are beginning to realize the potential of oil. The Seneca oil company (a name inspired by a local Native American tribe) had been around for some time now and was peddling oil as a cure-all tonic to new world settlers. Now I’m just trying to cover my own butt by saying this, but do not ingest any type of petroleum product. I don’t care that people used to do it back in the day to heal themselves. People also used to drain large amounts of blood from their arms to cure disease. Don’t consume oil. It wasn’t until 1821 that we saw the first commercial use of natural gas in the United States. A gunsmith named William Hart drilled a 17 foot hole in some shallow shale which produced natural gas that could be transported to local stores and buildings for lighting and cooking. Still, this was a very small case use, and only benefited a handful of people. Less than 30 years later a Canadian geologist named Abraham Gesner developed a new lamp fuel from petroleum named “kerosene.” It was cheaper, cleaner, and much less smelly than whale oil, and is largely credited as the reason whales survived. If you would like to learn more about that, check out episode 3 of Hydrocarbon History that examines the importance of whales as a fuel source from then until now. At this point, there was a cheap source of heating and light, and this, ladies and gentlemen, is what I believe to be the first widespread establishment of value for oil. It is no longer a few hundred people drinking crude and slathering it on their bodies to cure diseas, it is now a product that allows people to bring light into their homes in the evening, a luxury at the time. The search for oil was on, but it was easiest to harvest it from shallow pools and surface expressions. The Seneca Oil Company began harvesting the crude from an oil spring in Titusville, Pennsylvania after it split from the Pennsylvania Rock Oil Company due to disagreements between shareholders and the founders George Bissell and Jonathan Eveleth in 1858.
A man named Edwin Drake saw the vision that both Bissel and Eveleth held for the future of oil and bought stock in the oil company. Mr. Drake happened to be staying in the same hotel as the two men and were able to come to an agreement: Drake would be paid $1,000 a year to investigate the seeps on land owned by Seneca oil since he had free use of the rail thanks to his years working for that industry. The president of Seneca Oil, James Townsend gave Drake the title of “Colonel” in order to impress the locals (despite his lack of military experience) and sent him on his way.
Drake pulled up to his well in Oil Creek and began drilling with a steam engine, but progress was slow as there were about 30 feet of loose gravel to pierce. At 16 feet, the hole collapsed in on itself, and Drake’s crew began to despair, although he was ready to push through, and push through he did. He devised the idea of using a drive pipe, or a pipe that could be pushed into the ground as the bit drilled to protect it from collapsing inward again. The crew bagan to drive 10 foot joints of pipe into the well that would shield the bit from the gravel. Finally, at 32 feet, the crew reached bedrock, but it was difficult getting tools and steam to this depth, which meant that the crew was only able to drill about 3 feet per day. To put that into perspective, some companies find it easy to drill some 600 feet in a day. The well at this point had been nicknamed “Drake’s Folly” as people poked fun at the “colonel” for essentially bashing his head into a stone floor for no reason. Crowds would gather to make fun of the man, but Drake knew that oil had a reason to be valuable as kerosene, so he pushed on. Soon his funds were exhausted, and he had to secure a $500 loan to keep the operation going. On August 27th, 1859, the men hit a crevice at 69 feet and decided to call it for the day. The next morning, Drake’s driller Billy Smith, or as he was more commonly known “Uncle Billy,” discovered oil was accumulating in the bottom of the well, so they used a hand pump to bring it to the surface where it would be stored in a bathtub. Drake’s Folly was producing 25 barrels of oil per day, and by 1872, the entire creek area was producing 15.9 thousand barrels per day.
Drake later went on to lose all of his money as he wasn’t exactly a talented businessman, but the state afforded him an annuity of $1500 as thanks for establishing such a profitable industry.
From there, you probably know the story. Oil was now valuable, and humans began to discover methods for extracting more oil, and ways to refine the oil into useful products. I can drive a gasoline fueled vehicle to work in my synthetic clothes to sit in an office powered by electricity, all thanks to a man who was too determined to accept defeat. Of course today we realize oil has value, but back then, even the President of what would become a profitable oil company cut Drake’s paycheck because they thought he was being a fool. Give thanks to the historical figures that have established the luxuries that we enjoy today, because without it, life would look a whole lot worse.
But that is the end of this episode! As always I will put a link to all of my sources in the description, along with a fantastic documentary from the API made in the mid 50s. If you think I’ve missed something or that I’m presenting a false narrative, please reach out to me directly at “firstname.lastname@example.org.” Otherwise, you can always leave a review, and subscribe to hear more information packed short form content from the RARE PETRO media team. This has been Tavis Kilian with RARE PETRO, and until we see you next time, take care everybody!