Skellytown, on State Highway 152 in northeastern Carson County, is named for the Skelly Oil Company, which brought in the surrounding oilfields during the 1920s. In 1926 the company purchased a 320-acre lease from Henry Schafer, a local rancher on whose land the Roxana oil pool was located. Schafer platted a new townsite, which he named Skelly in honor of the company's founder and president, William Grove Skelly, of Tulsa, Oklahoma. Since it was between the neighboring oil camps of Roxana to the north and Noelette to the east Skellytown experienced only limited growth. The first businesses were company-owned supply houses. There were no utilities, and the populace was compelled to buy water hauled in tanks and burn wood for fuel. In 1927 the Panhandle and Santa Fe Railway built a branch line north from White Deer to the oilfields and established its depot at a site just north of Skelly. Subsequently, all three camps moved their businesses to the new site and formed the Skellytown Townsite Company. Within four months Skellytown had two refineries, a carbon black plant, and over 100 oil wells in its trade territory. Soon the new town's Main and Roosevelt streets boomed. In addition to machine shops, warehouses, and lumberyards, Skellytown had seven grocery stores, three drugstores, a hotel, a pool hall, a dance hall, a movie house, several rooming houses, beauty parlors, barbershops, cafes, dry cleaning shops, furniture and hardware stores, filling stations, and garages. A post office was opened in January 1927, and a weekly newspaper, the Roxana-Skellytown News, was launched. Panhandle Power and Light provided utilities, and Dr. F. S. Coolen opened a four-room emergency hospital. The White Deer Ice and Cold Storage Company erected a plant in Skellytown. An elementary school was also begun during this time. It had two grades in each room, two pupils in every seat, and only three teachers.
The population of Skellytown fell from 450 in 1931 to 154 in 1933. By 1943, however, it had risen to 650, due mainly to the growth of war industries. In 1958 the citizens of Skellytown voted to incorporate with a mayor-commission form of government. Subsequently the city built a modern sewer and water system. By 1984 Skellytown had ten businesses, four churches, a town hall, a fire station, a modern school, a library, a ballpark, a small airport, and a population of 899. In 1990 the population was 664. By 2000 the population was 610 with twenty businesses.