EAST TEXAS OILFIELD
EAST TEXAS OILFIELD. The East Texas oilfield, located in central Gregg, western Rusk, southern Upshur, southeastern Smith, and northeastern Cherokee counties in the east central part of the state, is the largest and most prolific oil reservoir in the contiguous United States. Since its discovery on October 5, 1930, some 30,340 wells have been drilled within its 140,000 acres to yield nearly 5.2 billion barrels of oil from a stratigraphic trap in the Eagle Ford-Woodbine group of the Cretaceous. The source of its primary recovery was a strong water drive. Because the field is so large geographically the first wells, located several miles apart, were originally regarded as discovery wells in separate fields. After the spaces between the first wells were drilled, it was revealed that all sectors drew oil from the same Woodbine sands. The giant field was named for its geographic region. The first discovery in the East Texas field came in Rusk County. It was there in the summer of 1927 that Columbus Marion (Dad) Joinerqv, a sixty-seven-year-old promoter from Ardmore, Oklahoma, took mineral leases on several thousand acres of land with the intention of selling certificates of interest in a syndicate. Joiner presented a kind and gentle appearance, which belied his shrewd ability to use the labor, property, and money of others in his ventures. Joiner transferred 500 acres of mineral leases into the syndicate and offered a one-acre interest in the lease block and a pro-rata share in a drilling test for twenty-five dollars. He mailed copies of a misleading report, prepared by a nonprofessional geologist, to hundreds of names on his sucker list. The duplicitous report promised the existence of oil-productive geological structures in Rusk County and incorrectly claimed that major oil companies were actively leasing there. Joiner's real motivation, as evidenced by a later lawsuit, was the sale of his syndicate shares. Because he needed a drilling test to serve as a prop for impressing potential investors, Joiner commenced a lackadaisical poor-boy drilling operation with rusty, mismatched, and worn-out equipment. But, Joiner's unstable rig and his oil-rich promises appealed to the generosity and dreams of the hard-scrabble farmers and townspeople who donated their labor and traded supplies for syndicate certificates.
Joiner and driller Tom M. Jones spudded the Bradford No. 1 on an eighty-acre tract belonging to Daisy Bradford in the Juan Ximines Survey of Rusk County. After drilling for six months without finding a show of oil, the hole was lost to a stuck pipe. Joiner abandoned the well at a depth of 1,098 feet. By April 14, 1928, he formed a second syndicate from another lease block of 500 acres and sold certificates of interest through another mail promotion. A second well, the Bradford No. 2, was spudded by Joiner and driller Bill Osborne at a site 100 feet northwest of the original well. Joiner's certificates again were bartered for supplies and labor for the well, becoming an accepted medium of exchange in the poor economy of Rusk County. After eleven months of intermittent drilling, the Bradford No. 2 reached a depth of 2,518 feet, where the drill pipe twisted off and blocked the hole. Before abandoning the site, Osborne returned to test a shallower horizon at 1,437–1,460 feet where gas had been reported. When no evidence of production was found, the well was abandoned. After abandoning the Bradford No. 2, Joiner formed a third syndicate and managed to oversell the shares of interest in a third test as he had in the first two. On May 8, 1929, driller Ed Laster skidded the rig to a new location, 375 feet from the second site, and spudded the Bradford No. 3. After two days of drilling, the well reached a depth of 1,200 feet, using the same rachitic rig, weary equipment, and farmers as rig hands. The boilers were fed green wood from the beginning and old automobile tires at the end. In late August Laster and farmer-rig hand, Jim Lambert, were seriously burned when the boiler exploded. The well was shut down until the driller recovered. By January 1930 the well reached a depth of 1,530 feet, and drilling was suspended until the spring. Laster resumed work by late March, when Joiner sent word that he was bringing potential investors to the site and wanted Laster to take a core for their benefit. Drilling proceeded through the summer and into the fall. On September 5, 1930, after the well reached a depth of 3,592 feet in the Woodbine sand, it flowed live oil and gas on a drill stem test. Its initial production was 300 barrels of oil per day, and no one appeared more surprised that Joiner, who had oversold his shares. The well was completed on October 5, 1930.
In the month between the drill stem test and completion of the Bradford No. 3, both major company representatives and independent oil men rushed into Rusk County to take leases. But, it was the independents who drilled the first wells and led the early development of the field. The first of those independents to find oil was Deep Rock Oil Company when it completed the second well in the field, located one mile to the west of the Bradford No. 3 on the seventy-five-acre Ashby farm. It came in on December 4, 1930, flowing 3,000 barrels of oil per day. On December 16, 1930, another independent, H. L. Hunt, brought in a small producer, yielding 100 barrels of oil per day. It was a puny well for East Texas, but it did not represent all of Hunt's interest in the field. On November 26, with Joiner's interest in Rusk County in receivership, Hunt bought his 5,000 acres of leases and the eighty-acre tract containing the Bradford No. 3 for $1,335,000, most of it to be paid in production payments. In late December 1930 Hunt formed a gathering system, Panola Pipeline Company, by linking his small well, the Bradford No. 3, and the Deep Rock well to a four-inch pipeline. Production from the three wells was pumped three miles to the Sinclair Oil and Refining Company loading rack at the Missouri-Pacific Railroad. The first oil leaving the field went in thirteen tank cars of 10,000 gallons each to the Sinclair refinery in Houston. Later, in December 1930 Ed Bateman, a Fort Worth promoter who ran a poor-boy operation called Bateman Oil Company, completed a well ten miles to the northwest of the Bradford No. 3 in the E. G. Sevier Survey, Rusk County. It was the Lou Della Crim No. 1, and it flowed 22,000 barrels of oil per day from 3,653 feet. With four producing wells at the end of 1930, East Texas field reported a yearly production of 27,000 barrels of oil and no gas. On January 9, 1931, Humble Oil and Refining Company bought the Lou Della Crim No. 1 with 1,500 acres of leases for $1.5 million cash and a $600,000 production payment. And a week later, Humble announced plans to connect the field to its pipeline which ran from Van field in Van Zandt County to Louisiana. A fourth important well came in on January 26, 1931, when John Farrell and his associates, W. A. Moncrief and Eddie Showers, completed their Lathrop No. 1, located twenty-five miles north of the Bradford No. 3. Its flow was choked through a half-inch valve and three-inch casing, but it flowed 320 barrels of oil per hour from a depth of 3,587 feet. Two weeks later, Farrell and his associates sold their interest in the Lathrop No. 1 and the surrounding acreage for $3,270,000 to Yount-Lee Oil Company of Beaumont.
By early spring of 1931 the widely-spaced discoveries revealed the vastness of the field as hundreds of small operators began its unconventional development. Unlike earlier fields, such as Big Lakeqv or Yates, which were controlled by one or a few operators who developed them by an orderly plan, East Texas field had no plan and no governor. Many landowners carved their holdings into small mineral leases that could be measured in feet, offering them to the highest bidder and realizing from $1,800 to $3,000 per acre. As the leasing frenzy seized the five counties of the field, Kilgore became the center of the boom. In that small town, wells were drilled in the yards of homes and derrick legs touched those of the next drilling unit. One city block in Kilgore contained forty-four wells. Whether in town or on farms, independent operators were compelled to drill wells as quickly as possible to prevent neighboring producers from sucking up their oil. This principle, known as the rule of capture, guided the development of oilfields since the 1889 Pennsylvania Supreme Court decision gave ownership of oil to the one who captured it, even if part of that oil migrated from an adjoining lease. However, rapid development of a field signaled its early decline, because it decreased field pressure and damaged its gas or water drive mechanism. As a result, wells in such fields stopped flowing and were placed on pump. Adequate depletion of a field after its drive and pressure were damaged was nearly impossible, but as the East Texas field faced this peril in the spring of 1931, its operators gave little attention to that fact.
Another ignored fact in East Texas field was the economic law of supply and demand. Crude sold for ninety-nine cents per barrel when the Bradford No. 3 began production, but the price was cut to forty-six cents in 1931. Oilmen responded to the lower price by increasing production, which sent prices even lower. No help came from the weak state regulatory agency, the Railroad Commission, because it had no authority to restrict production to the market demand. Rather, it was charged with the task of prohibiting physical waste and conserving oil and gas, making no connection in the early field between overproduction and field destruction. Although the commission established Rule Number 37, which dealt with well spacing, neither operators nor the commission worried about enforcement of that regulation. On April 4, 1931, the commission issued its first proration order for the field, restricting production to 50,000 barrels of oil per day from its current yield of over 200,000 barrels. Although the commission revised the allowable upward on April 22, and again on April 29, in consideration of newly-completed wells, it went into effect on May 1, 1931, to control the physical effects of overproduction. In spite of the proration order, many operators disregarded well allowables and continued to produce their leases as they chose. By mid-summer of 1931 operators were producing approximately 900,000 barrels of oil per day from about 1,200 wells. Most of the 1931 production left the field through the seventeen pipelines or by the five railroads that served it. However, part of the crude was processed in the field, where six refineries worked. Although ninety-five refineries were eventually built, only seventy-six endured. They were profitable investments, costing only $10,000 to $25,000 to build and bringing in a profit of nearly $6,000 per month. Most of them were teapot refineries, where the owners skimmed gasoline from the high-quality crude, producing a low-octane fuel called Eastex, which was welcomed by the nation's depressed economy at eleven cents per gallon.
On July 14, 1931, when overproduction had driven the price of crude to thirteen cents per barrel, had reduced reservoir pressure by 130 pounds per square inch, and had made water encroachment a serious problem in the field, Governor Ross S. Sterling called a special session of the legislature. A bill was introduced there to limit East Texas production to market demand, a measure to preserve the reservoir and to stabilize the price of crude. However, on July 28 a three-judge federal court ruled that the proration order of April 4, 1931, was invalid because it was an attempt to solve production glut and to fix prices. In compliance with the court decision, the legislature passed a law that prohibited the Railroad Commission from regulating production to meet the demand of the market. A group of hundreds in East Texas who wanted proration in the field appealed to the governor to declare martial law. On August 17, 1931, the governor ordered the Texas National Guard and Texas Rangersqv into the ten-month-old field to shut in all of its 1,644 wells and to maintain order. The field resumed production on September 5, 1931, under a new proration order that limited its production to 400,000 barrels of oil per day, permitting each well 225 barrels and giving no consideration to its potential or to the characteristics of the lease. New wells came on line, and by October allowables were reduced for each one to 165 barrels per day. Disgruntled operators filed lawsuits in protest. Others protested by shipping hot oil, or crude produced above the legal limit, out of the field. Because the military still maintained watch, hot-oil smuggling demanded creative maneuvers involving truckers as well as bribed railroad and pipeline employees. As 1931 ended, East Texas field reported its yearly legal production as 121,670,485 barrels of oil and 627,000,000 cubic feet of gas.
On February 2, 1932, a federal court ended martial law in the East Texas field by ruling it illegal. Federal courts continued to dictate policy in the field throughout 1932, as they struck down each of the nineteen proration orders issued by the commission. However, the price of crude rebounded to nearly $1 per barrel in spite of continued hot-oil shipments. On November 12, 1932, Governor Sterling called a special session of the legislature, which passed a bill allowing for market-demand proration. At the end of December, as the state legislature made the producing of hot oil a felony, the field reported yearly production of 148,325,961 barrels of oil and 5,268,000,000 cubic feet of gas. On April 6, 1933, the Railroad Commission again shut in East Texas. Before it reopened on April 24, the field allowable was set at 750,000 barrels of oil per day based on botton-hole pressure in individual wells. This excessively high allowable combined with illegally shipped oil, which was estimated to be hundred of thousands of barrels per year, forced crude prices down from seventy-five cents to ten cents and lower per barrel. With the East Texas field and the national oil industry facing economic collapse, on July 14, 1933, President Franklin D. Roosevelt signed an executive order to enforce the regulation of crude production. Secretary of Interior Harold L. Ickes, the enforcer of the order, sent investigators of the Federal Tender Board into the East Texas field to study refinery records, test oil gauges, inspect tanks, and even dig up pipelines to control the movement of crude from the field. With federal inspectors attempting to enforce proration at the end of 1933, the East Texas field reported its greatest production year, when 11,867 wells brought up 216,291,397 barrels of oil and 7,805,000,000 cubic feet of gas.
Throughout the early months of 1934 hot-oil production increased with state and federal authorities unable to eradicate it, but by November the Federal Tender Board had cracked down on producers and had reduced hot-oil shipments to about 10,000 barrels daily. However, in January 1935 the Supreme Court overturned the subsection of the National Industrial Recovery Act that outlawed hot oil. To maintain control of the interstate movement of crude, the United States Congress passed the Connally Hot Oil Actqv on February 22, 1935. The Texas legislature more narrowly defined the state's stand on May 11, by enacting the Texas Hot Oil Statute, which declared hot oil as contraband and allowed its confiscation and sale by the state. With the hot-oil problem under legal control, the Railroad Commission turned its attention to reservoir conservation in East Texas. In June 1936 the commission reduced the allowable per well to 2.32 percent of potential but not less than twenty barrels daily. On November 15, 1937, the commission closed the field for four consecutive Sundays to study bottom hole conditions. This was the first regularly scheduled shutdown day order in Texas. Eventually there were fourteen shut-down days per month in the field.
As the first decade of the field's existence neared its end, many of the problems unique to the giant field had found solutions. Originally skeptic operators were convinced by 1938 that ultimate recovery of the field's production depended upon the conservation of its water-drive mechanism. They initiated a pressure maintenance program by reinjecting produced salt water into the aquifer, reducing the rate of pressure decline. Field operations throughout 1938 continued to be dominated by independents who controlled more than twice as many leases as the major oil companies. However, the reported yearly production of 151,881,842 barrels of oil was within the allowable, and the year ended with crude selling at $1.10 per barrel. In the early 1940s, as the United States was drawn into World War II, the field became the original point on the largest pipeline ever laid to that time, the Big Inch (see BIG INCH AND LITTLE BIG INCH). The twenty-four-inch carrier was laid over 1,400 miles to transport East Texas crude to refineries in Philadelphia and on to New York and New Jersey, guaranteeing a dependable supply of crude for the nation. From the late 1940s and stretching into the 1960s, the field received national attention from a less impressive source when the slant-hole scandal was revealed. It was learned that operators had drilled slanted holes from barren acreage beyond the limits of the field back into the Woodbine formation, tapping into productive leases owned by major companies. During a series of investigations, inspectors found 380 deviated wells in East Texas field and shut them down. An estimated $100 million worth of oil was stolen over several decades from legal owners. Many of the oil pirates were leading citizens of East Texas communities. They built fortunes on stolen oil, but when they came to trial none was convicted. Although the state brought charges against them in civil suits, they suffered only public embarrassment and fines. Evidently, taking oil from major companies was not regarded as a serious crime in the communities of East Texas field.
In March 1972 the Railroad Commission set allowables at 100 percent, but the East Texas field and the Kelly-Synder were restricted to 86 percent. When reservoir engineers examined the field in 1983, they estimated that it would ultimately produce 5.6 billion barrels of oil or about 85 percent of the volume originally in place when the first discovery was made. This high productivity was credited to the strong water-drive mechanism, which has been preserved by reinjection of produced salt water, by early pressure maintenance regulated by the Railroad Commission through proration, and by successful polymer-augmented waterfloods established on a local basis in later years. At the end of 1990 the East Texas field completed its sixtieth year of operation and reported a yearly production of 35,559,769 barrels of oil. In January 1991, after a series of court hearings, the Railroad Commission calculated the East Texas field at 100 percent production factor. By January 1, 1993, cumulative production from East Texas field was reported as 5,145,562,000 barrels of oil.
Robert O. Anderson, Fundamentals of the Petroleum Industry (Norman: University of Oklahoma Press, 1984). James A. Clark, The Chronological History of the Petroleum and Natural Gas Industries (Houston: Clark, 1963). James Anthony Clark and Michel T. Halbouty, The Last Boom (New York: Random House, 1972). William E. Galloway et al., Atlas of Major Texas Oil Reservoirs (Austin: University of Texas Bureau of Economic Geology, 1983). James S. Hudnall, "Geology and Economic Importance of the East Texas Field," Oil Weekly, July 31, 1931. Roger M. and Diana Davids Olien, Wildcatters: Texas Independent Oilmen (Austin: Texas Monthly Press, 1984). Edgar Wesley Owen, Trek of the Oil Finders: A History of Exploration for Petroleum (Tulsa: American Association for Petroleum Geologists, 1975). James Presley, A Saga of Wealth: The Rise of the Texas Oilmen (New York: Putnam, 1978; 2d ed., Austin: Texas Monthly Press, 1983). David F. Prindle, Petroleum Politics and the Texas Railroad Commission (Austin: University of Texas Press, 1981). Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power (New York: Simon and Schuster, 1991).
Image Use Disclaimer
All copyrighted materials included within the Handbook of Texas Online are in accordance with Title 17 U.S.C. Section 107 related to Copyright and “Fair Use” for Non-Profit educational institutions, which permits the Texas State Historical Association (TSHA), to utilize copyrighted materials to further scholarship, education, and inform the public. The TSHA makes every effort to conform to the principles of fair use and to comply with copyright law.
For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml
If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.
The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this article.Handbook of Texas Online, Julia Cauble Smith, "East Texas Oilfield," accessed September 25, 2016, http://www.tshaonline.org/handbook/online/articles/doe01.
Uploaded on June 12, 2010. Modified on July 22, 2016. Published by the Texas State Historical Association.