The San Diego and Gulf Railway Company was chartered on March 23, 1929, to connect Palangana with the Texas Mexican Railway Company at Byram, in Duval County. The capital stock was $25,000, and the principal place of business was Houston. Members of the first board of directors were J. W. Cain, A. H. Smith, D. C. B. Cogswell, C. F. Bowman, William W. Chapman, J. B. Huff, Jr., and D. E. McCravy, all of Houston. The San Diego and Gulf was organized by the Duval Texas Sulphur Company, a subsidiary of the United Gas Company, to handle the output of the sulfur mines at Palangana. The 2.85-mile railroad was completed in September 1929 at a cost of about $45,000, and operated by Duval Texas Sulphur for the balance of 1929. In early 1930 the Texas Mexican began operating the spur, and the San Diego and Gulf was dissolved in 1935. The line was abandoned in 1939 following the depletion of the sulfur reserves.