The Oil Business in Wyoming

The oil industry has been a part of the Wyoming economy since the beginning days of statehood. As far back as the early 19th century explorers in what is now Wyoming reported evidence of oil. In 1832, when fur trader Capt. B. L. E. Bonneville traveled to the Wind River Valley, he found oil springs southeast of present Lander near Dallas Dome, where the state’s first oil well would be drilled five decades later.

Oil trapped under a layer of impermeable shale. Wyoming Tales and Trails.During the fur trade and Overland trails periods, travelers commented on “oil springs” where oil bubbled to the surface of water pools. For centuries, native people seined off the oil, using the greasy residues for war paint, decoration on hides and teepees, horse and human liniments and other medications. An oil spring near Hilliard in present Uinta County was well known when Fort Bridger was established nearby in 1842.

The first recorded oil sale in Wyoming occurred along the Oregon Trail when, in 1863, enterprising entrepreneurs sold oil as a lubricant to wagon-train travelers. The oil came from Oil Mountain Springs some 20 miles west of present-day Casper.

Nationally, oil had a similar history. Thirteen years after the world’s first oil well was drilled in Baku, Azerbaijan, on the Caspian Sea, America’s first gusher was struck. Made by “Colonel” Edwin Drake, America’s initial discovery was at Titusville, Pa., in 1859. It led to an oil rush to western Pennsylvania. Initially, even the newly “drilled” oil had only nominal use in transportation—as axle grease for wagons and coaches or lubricant for steam engines powered by wood or coal.

Early Wyoming discoveries

In 1866, John C. Fiere, an employee of Fort Bridger Sutler William A. Carter, reported to his boss that he had found oil nearby. He had experience in the Pennsylvania oil fields and offered to develop the oil spring commercially. In the following years, the spring produced 150 barrels of oil. The entire amount was sold to the Union Pacific Railroad.

In the spring of 1867, Judge C. M. White dug a hole next to the oil spring where Carter’s employees had been skimming oil from the surface of the water. White’s crew scooped oil from hand-dug trenches. He shipped modest amounts to Salt Lake City tanners until the transcontinental railroad passed nearby the following year, giving him additional markets for lubrication.

By comparison, Wyoming’s first commercial coal mines also opened in the late 1860s to fuel the Union Pacific Railroad. Coal remained vastly more important than oil to Wyoming’s economy for the rest of the century.

About the time of Drake’s Titusville discovery, meanwhile scientists found that a petroleum by-product, kerosene, could provide superior lighting to candles. The newly developed kerosene lamps gave off even better light than those that burned increasingly costly whale oil. Indeed, whales were becoming scarce and, were it not for kerosene, their extinction could have been a possibility.

In 1870, Cleveland merchant John D. Rockefeller formed a company he called Standard Oil. A purchaser of Rockefeller's kerosene, sold in one- or five-gallon blue cans, could be assured that the product contained no water or explosive gasoline that sometimes was dishonestly passed off as kerosene by other merchants. Gradually, through sound business deals as well as anticompetitive practices, Rockefeller gained near monopoly over oil in the Northeast.

When Thomas Edison invented the first practical incandescent light bulb in 1879, observers believed Rockefeller’s oil business would wither and die. But despite the seeming ruinous competition from electric lighting, Rockefeller persevered. In 1883, he and his partners expanded combined operations across several states into the Standard Oil Trust.

Roughnecks after capping an oil well in the Salt Creek field, 1920s. American Heritage Center, University of Wyoming.

Well drilling begins

That same year, out west, Mike Murphy brought in Wyoming Territory’s first drilled oil well at Dallas Dome, finding oil at 300 feet in the Chugwater formation. (A dome is a geological formation that traps oil underground between impervious layers of rock, with the upper layer bent upward to form a dome.)

Markets for the unrefined petroleum were limited. Apparently, like Carter and White two decades earlier, Murphy sold most of his production to Utah tanners and to the Union Pacific to lubricate railcar axles. Electricity generation proved impractical for tiny towns and ranches, particularly in Wyoming where distances between ranches were great. Kerosene continued its dominance in rural lighting.

Soon after Murphy’s successful well, others entered the business. Cy Iba, a former gold prospector, started drilling for oil around Casper. Several others attracted investment to possible oil strikes in the Big Horn Basin at Bonanza, northeast of present Worland and in southwestern Wyoming around Hilliard and Mountain View. Iba’s first strike, “Discovery Well” north of Casper, began transforming that newly established, wool-shipping railhead into the “oil capital of the Rockies.”

In the 1890s, significant oil strikes were made in northern Natrona County. Investors, comfortable with dependable nearby supplies of crude oil, underwrote construction of Wyoming’s first refinery in 1895. Pennsylvania investors headed by Philip Shannon formed the firm at Casper and named it the Pennsylvania Refinery. They also struck oil at what became known as the Shannon Field north of Casper.

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