Wednesday, July 25, 2012

Part 3: Historic Oil Wells of the Little Spokane River Valley




(all rights to this material retained by author) 

A Review of the Historic Oil Wells
of the Little Spokane River Valley
&
Regions Around
(part three)

by

Wally Lee Parker


… topsy turvy land ...

            At least three geologic factors fueled the oil speculations sporadically flaring up and down Washington State’s far eastern counties.  One was the verifiable existence of both shallow and deep — though not necessarily extensive — deposits of natural gas.  Another was the existence of workable seams of coal where a bed of ancient rocks surfaced along the eastern slopes of the Cascade Mountain range.  And another was the simple fact that a vast swath of the state’s older geologic history was hidden beneath much younger outpours of lava — outpours of basalt.  Except in those instances where erosion had scoured through these overbearing flows, no one was certain what lay beneath this basalt — though the normal scientific expectation would be strata of even more ancient rock such as the coal bearing sandstones abutting the Cascades.  Uncertainty as to the exact nature of the lands buried beneath the geologically recent Columbia Plateau flood lavas left open the possibility that the deep geology of these hidden lands would be of a type likely to contain oil — a possibility that appeared enhanced by the proven existence of coal and a form of natural gas.
            As for the early history of verifiable petroleum discoveries in the state, Information Circular No. 29 from the Washington State Division of Mines and Geology, published in 1958 under the title “Oil and Gas Exploration in Washington, 1900-1957,” explained, “Oil was first reported in Washington about 1883 along the Pacific Ocean beach on the west side of the Olympic Peninsula, where there are outcrops of sandy shales with a kerosene odor.  At certain times of the year and at certain places, small amounts of … paraffin base oil (would) seep from the outcrops.”
            Regarding natural gas specifically, the report continues, “One of the earliest indications that gas occurred in the state was found by chance in Whatcom County in 1893.  A man named Clark is reported to have struck a match to light his pipe while digging a water well.  Gas that had seeped into the well was ignited by his match, causing an explosion.  The occurrence of gas stimulated drilling near the Clark water well, but results were apparently disappointing because the test well was abandoned.”
            The numerous waves of exploration, justified in part by these discoveries, are summarized as follows; “Prior to 1940 very few wells were drilled as the result of sound geologic investigation.  Many wells, especially on the west side of the Olympic Peninsula, were drilled on the strength of nearby oil or gas seeps.  The great majority of the early wells, however, were drilled at sites selected by unscientific methods of exploration, and some of the wells were part of out-and-out stock swindles.”
            In 1913 the Conservative Land Investment Company of Spokane was drilling for water “on the northeast limb of the Rattlesnake Hills anticline” in western Benton County — Benton County is in the southern part of Washington State where the Columbia River makes its last great turn to the west, and in doing so becomes the border between Washington and the State of Oregon from that point to the Pacific Ocean.  According to the Division of Mines and Geology publication, the company’s well was located “18 miles northeast of Grandview and 16 miles west of the Columbia River.”
            A description of the Conservative Land Investment Company appeared in the November 1, 1908, issue of the Spokesman Review.  The newspaper said the company owned “great tracts of irrigated land and timber interests,” and reportedly had title to “22,600 acres of land on the east slope of the Rattlesnake Hills, close to the North Coast Railroad route.  The new town of Benton, on this ground, is to be at the junction of the main line of the North Coast and Walla Walla branch.”
            Five years later the railroad’s town had been platted, and the land development company was sinking a well deep into its Rattlesnake Hills property.
            The company reportedly struck gas at 705 feet.  The pressure upwelling at the time of discovery was between 5½ and 7 pounds per square inch.  By the time extensive commercial use of the gas from this first and the many following wells drilled over the next decade and a half was actually begun, the pressure had dropped to about 2 pounds per square inch — the majority of the ongoing outflow having been allowed to waste away into the atmosphere.
            This was not unusual.  In Bulletin 102 (part 7), United States National Museum (Smithsonian Institution), 1918, in a section titled Natural Gas: Its Production, Service, and Conservation, the author’s following comment was noted.  “In my own State of West Virginia only eight years ago not less than 500,000,000 cubic feet of this precious gas was daily escaping into the air from two counties alone, practically all of which was easily preventable by a moderate expenditure for additional casing.  In reference to natural gas, the great and pressing necessity is to stop its appalling waste …”
            An article in the March 18, 1915 issue of the Spokesman-Review noted the intent of another Spokane company to drill for gas and oil in other parts of Benton County.  At the conclusion of the article former Washington State Governor Marion E. Hay, who appeared to be financially involved with this proposed drilling, is quoted as saying, “While I am not an experienced gas well man, this well (apparently referring to the Conservative Land Investment Company well in the Rattlesnake Hills), because of the fact that it has been flowing over two years at a steady rate, is not a pocket strike.  The recent well struck south of Kennewick and other lesser gas flows through Benton County lead one to believe that there is gas and oil to be struck in this county.”
            As the Washington State Division of Mines report notes, “Gas production (at Rattlesnake Hills) started in 1929.  At one time 16 wells were in production.  The gas was piped to seven lower Yakima Valley cities during the field’s productive period.  Output gradually declined until production ceased in September of 1941.”
            The lack of pressure at the Rattlesnake Hills wells was the most likely reason for the end of commercial production.  As the Division of Mines explains, “By 1933 the pressure had decreased to zero and a central compressor plant was built to maintain a vacuum on the field.”  The literature explained that by 1936 an “approximate 7 pound vacuum” was needed to extract the gas from the wells.
            In the early days of oil and gas development, one of the problems was access to or the creation of infrastructure.  Once a corporation had obtained oil or gas, the raw material had to be moved to the point of use.  The normal means of bulk transport for oil was in railroad tank cars.  These were taken directly to the crude oil customers — be those refineries or end users.  But natural gas was a much more difficult substance.  Piping the fuel in gaseous form directly to the point of use was necessary.  If the point of use was a city, a distribution system within that city needed to be developed.
            As a speculative venture, liquid petroleum required much less initial capital investment to realize a profit than natural gas or coal.  This suggested that if you wanted to get rich without investing your own money or labor too heavily, you needed to strike oil — preferably not too far from a railroad — while convincing others to pay as much of the exploratory and developmental bills as possible.
            Because the profit would be readily at hand if oil was struck, oil was what everyone wanted to find.
            The above noted Spokane-Benton County Natural Gas Company — according to Washington State Biennial Report’s #15 & #16 — filed for corporate status sometime after September 30, 1916, and then, due to the corporation’s failure to pay its annual license fee, on July 1, 1919, it was stricken from the list of corporations authorized to operate within the state.
            According to newspaper accounts, the Spokane-Benton company’s original stated intention was to drill for natural gas at Rattlesnake, and then develop a pipeline to deliver that gas to Spokane.  Whether they could have arranged for distribution within the city through the coal generated gas system the city already had in place is questionable.  The city’s system, in existence as the Spokane Falls Gas & Light Company since at least the early 1890s — probably since 1892 — produced gas by heating coal in an oven to drive off the gaseous volatiles — volatiles which were then collected, compressed, and piped throughout the city for lighting, cooking, and heating.  The coal was obtained from mines located on the eastern slope of the Cascade Mountains, near the little town of Roslyn.
            In his 1922 book, General Economic Geology, William Harvey Emmons dated the coal bearing formations at Roslyn as “Eocene” — the Eocene beginning about fifty-five million years ago and ending roughly fifteen million years before the massive floods of Columbia Plateau lava began, or about thirty-three million years before the human era.  Emmons also noted that Roslyn’s coal, mined from seams interbedded with sandstone, was a “good coking coal of bituminous grade” — coke being the solid remains after coal is heated in an oven and the volatiles baked out.
            In a November 14, 1916 article in the Spokane Daily Chronicle, Herbert C. Harris, a “geologist and mining engineer” later identified as president of the Spokane-Benton Natural Gas Company, said, “It is entirely feasible to pipe gas to Spokane” — approximately 140 miles separate the Rattlesnake Hills and Spokane — “and we could furnish it for $4 a horsepower year.  The value of the gas can be readily estimated when I say that 1000 feet of this natural gas is worth as much for fuel and power as over 1600 feet of the coal manufactured product.”
            Regarding the different heat values derived from the two forms of gas, in an advertisement appearing in the March 23, 1917, Spokane Daily Chronicle the promoters for Spokane-Benton clarified their understanding of the facts.  And in this same advertisement — while playing loosely with the known facts — the company made it clear that it felt the greater potential for return would come from the oil it was sure to find, rather than any exploitation of the already proven deposit of natural gas.
            “Benton County is a land of fossils, oil sands and seepages.  A land of anticlines and domes that cover vast fields of oil and gas.  The discovery well flows 312,000 feet of gas per day, coming up through about 300 feet of water.  This holds back the flow of gas, and experts have estimated that the well would flow about 1,000,000 feet of gas if the water was cased off.  This flow of natural gas has a heating value above a thousand British Thermal Units.  City gas averages about 600; so this well flows enough to light the city of Spokane at the present rate of gas consumption.  It would supply with gas all the towns between Ellensburg and Walla Walla.  We have one of the greatest markets in the United States for natural gas here in the Inland Empire.  There is an unlimited store of nature’s fuel and light in the Benton County field, say the best petroleum engineers.  But what if we get oil — what then?  Millions, that’s all!
            Washington State’s Division of Mines and Geology Information Circular No. 29 suggested that Rattlesnake Hills’ natural gas was a “peculiar occurrence” in that it came from “porous basalt flows.”  Being an igneous rock, geologist do not normally considered basalt itself a natural container for gas, coal, or oil though seams between lava flows are a different matter.  The gas was found at two levels — 700 feet and 1,200 feet.  In 1958 the Standard Oil Company of California abandoned a Rattlesnake Hills well — one begun in 1957 — after reaching a depth of 8,418 feet.  They reportedly were still drilling through lava rock when they stopped.
            As for the chemical nature of the gas, the Division of Mines concluded that it was “a high-methane type and had none of the heavier fractions that are commonly found associated with a petroleum-derived gas.”
            And regarding the original source of the gas, the Division of Mines offered two hypotheses in their 1958 paper.  One suggested that the gas “originated as the result of decay of vegetable matter in inter-basalt sediments” — meaning in soils and such thickened into interbedding seams during the hundreds of thousands of years that often passed between major volcanic floods.  The other was that beneath the lava floods might lay the same formation of sandstones from which the seams of Roslyn’s coal were being mined — even though those mines were some 90 linear miles northwest of the Rattlesnake Hills.  This seemed to suggest that the gas trapped at Rattlesnake might be much older than the lava flows within which it had collected — that the trapped gas might be as old as Roslyn's coal.
            Whether the scientific ability and sophisticated test equipment need to discriminate between the kinds of natural gas associated with oil, associated with coal, or derived from more immediate vegetal sources was available to the “experts” and the “best petroleum engineers” reportedly working with the Spokane-Benton County Natural Gas Company is not currently known — though the technological ability to perform such test does appear to have existed in 1917.
            What was known since the 19th century is that almost the entirety of southeastern Washington State is covered by hundreds of feet of flood basalts of relatively recent origin — relatively recent in the geological sense.  This made any speculation as to the nature of the older land beneath just that — speculation.  Such didn’t detour the Spokane-Benton County Natural Gas Company.  At the end of March, 1917, they ran this add in Spokane’s Spokesman-Review, under the title “Topsy Truvy Land.”
            “If the Benton County fields were turned upside down, what then?  If the strata was turned over and over again until what was down below was placed on top?  If the Eocene sands were exposed to the surface we believe we would see lakes and rivers of oil — greenish, heavy parafine oil — from which would arise vapors rarefied into natural gas.  Shining ponds of oil would dot the surface here and there.  Banks of wax would dam the streams.  And in favored places the hydrocarbons that make gasoline would collect in limpid pools.  We could then drive up on our modern six and fill a tank of joyful go-so me gas.  And as for oil — common lubricating stuff — we could perhaps scoop it up just like that.  All this, we believe, we could see if the oil and gas fields of Benton County were turned turtle before our eyes.”
            Because the advertisement used the term Eocene — thereby placing “topsy turvy land” in the same geological epoch as the coal seams at Roslyn — it’s possible the company’s promoters were consciously implying some type of association between Rattlesnake’s gas field and Roslyn’s coal beds.
            In other words — by implication — where there was natural gas and coal, there was bound to be oil.
            The Spokane-Benton advertisement of March 29, 1917, spelled it all out.
            “If our eyes are good eyes and have been tested out in looking for opportunities, we can see all the above without turning it (the land) over.  Good eyes take a look at the gas well and then talk it over with themselves like this:  Here is an enormous gas flow.  It is oil gas, coming from the oil of course.  The gas is worth the money anyway; but then we have a big chance to strike the oil.  The company has 2,000 acres of land.  They have no bonds and no debts … A good eye would talk to itself in about that manner.  Then it would say to its friend, the pocketbook, buy some of it before it goes up out of sight.  And good friend pocketbook would invest at once.  Now the question is; have you a good eye?  Some have one good eye and some have two.  But one good eye is good enough to see a good thing.”
            The Spokane-Benton company continued to advertise and presumably sell shares of its stock into 1918.  Other companies, both new and long established, continued to promote efforts to pipe gas from Rattlesnake to Spokane throughout the 1920’s and beyond.  But no pipeline was ever laid to Spokane.  And no oil was ever extracted from Benton County.  

... to be continued ...

Thursday, July 5, 2012

Part 2: Historic Oil Wells of the Little Spokane River Valley




(all rights to this material retained by author)

A Review of the Historic Oil Wells
of the Little Spokane River Valley
&
Regions Around
(Part Two)

 by

Wally Lee Parker

  

… known for floating oil and gas stock …

             Scores of petroleum prospecting companies were formed to exploit the major and minor oil excitements that flashed across eastern Washington State in the early decades of the 20th century.  Most of these, within several years of filing for incorporation, were stricken from the State’s biennial records due to their “failure to pay” the “annual license fee.”  As for why these corporations proliferated and dissolved as readily as snowflakes, in the State’s Seventeenth Biennial Report (October 1, 1920 — September 30, 1922), Washington’s then Secretary of State, J. Grant Hinkle, wrote, “There are very few of the States which do not now have Securities Acts, commonly called “Blue Sky” laws.  Thus far the State of Washington has never passed such a measure, although three attempts have been made.  The State of Washington is the easiest State in the Union in which to do corporate business.  It is the only State in which for Forty Dollars a corporation can qualify regardless of its capitalization and proceed with the sale of stock without having to give” the State “any account whatever … as to its activities or methods of conducting business.  For this reason, the State … is well and favorably known for floating oil and gas stock, and … is being exploited each year by these stock jobbers …”
            Without sufficient manpower or legislative recourse, there was little the state’s government was able to do regarding patently fraudulent operations.  Federal charges of using the U. S. Mail to defraud could occasionally be brought.  But even that was rare.
            Early newspapers and magazines often carried solicitations outlining the easy riches to be earned by investing in these speculative corporations.  As Secretary Hinkle explained, there were few rules these advertisements needed to follow.  He noted that “Domestic corporations must name their capitalization and the number of shares into which it is divided which virtually gives a par value to their shares.”  But even this could be turned to the promoter’s advantage.  Corporations are invariably entered with capitalization running into the millions, for the reason that it cost no more under the present laws to file a corporation having fifteen million dollars of capital than if the same corporation has only fifteen hundred dollars of capital.”
            The previously mentioned Clayton Oil Company was incorporated with a Capital Stock of one million dollars.  In its advertisement it listed a par value of ten dollars per share of stock — meaning the company was implying a guarantee that it would not sell any of its stock below that dollar amount (though any company could in theory sell shares for more than the stated par value, and the first public offerings of many corporations were — despite the implied par value guarantee — deeply discounted below the advertised par value).
            To figure out how many shares in all the Clayton Oil Company was offering — how many slices the company was being divided into — a potential investor needed to divide the listed Capital Stock by the stated par value.  This would break down to one-hundred thousand shares, which, in total, would equal 100% ownership of the company.  So, for ten dollars anyone could buy one one-hundred thousandth of the corporation.  If all one-hundred thousand shares of the company were sold at par value, said sale would raise the indicated one million dollars of capital.
            By stating Capital Stock and par value, the Clayton Oil Company was simply complying with the law in a manner that suggested great wealth — although the initial value of the company wasn’t one million dollars.  It was essentially zero.
            Normally the only way an oil company’s stock would become valuable was for the company to find oil.  At that point the investors could make money two ways.  They could draw an income from the dividends produced by the sale of oil, or the investor could sell their stock at whatever the going rate was for the now successful oil company — which assumedly would be more than the ten dollars per share originally paid.  If the company didn’t strike oil, the stock — minus any resalable assets the company may have accumulated — would become valueless.  And likely the company, essentially abandoned, would be allowed to dissolve due to the company’s “failure to pay” its “annual license fee.”
            The Clayton Oil Company wasn’t likely to sell a million dollars’ worth of stock.  And it didn’t have to.  If the company was a legitimate concern — or wanted to appear to be a legitimate concern — it only needed to gather enough money to begin drilling, and then do so.  In 1921 that would have likely been in the low thousands of dollars.  When that money was burned through, an attempt could be made to sell more stock and continue drilling.
            Of the dozens of eastern Washington oil wells drilled, none produced oil.  And some of the oil companies dissolved before even beginning to drill.  That’s not to say these companies — whether drilling or not — failed to make money.  Promotional fees often consumed as much as 15 or 20 percent of every dollar of stock sold.  Within these promotional fees were the commissions paid to “stock jobbers,” — the people attempting to sell the company’s securities locally, nationally, and internationally.  Then of course there were the often healthy monthly stipends paid the company’s officers and board of directors.  And just as now, there were the assumedly justifiable executive expenses — things like travel, hotels, and meals.  All told, the intimates within many of these companies, which collectively consumed hundreds of thousands if not millions of investor dollars, appear to have done quite well — though we can’t be sure since, as Secretary Hinkle noted, within Washington State they operated “without having to give any account whatever … as to … activities or methods of conducting business.”



… to be continued …