Oil & Washington County
(Italicized links in the text are to photographic images.)
Oil brought wealth to Washington County. The first commercial oil well in Oklahoma, the
Additional oil deposits in the neighboring Osage Reservation (now Osage County) were tapped soon thereafter, helping attract wildcatters and oil speculators from across the country. Figures who at one time or another operated in the area included industry legends Frank, L.E. and Waite Phillips, T.N. Barnsdall, H.V. Foster, Harry Sinclair, and J. Paul Getty. (Getty's involvement began with his job as a newspaperboy in Bartlesville during the early boom days.) The immense wealth of the Osage oil fields is illustrated by the $300 million the Osage Indians divided up from the approximately 250 pools developed on their lands between 1901 and 1950, including the large Avant field and the Burbank field which opened in 1920.
One of the most successful newcomers was H.V. Foster, who helped established the Indian Territory Illuminating Oil Company (ITIO) in 1901, forming it from the former Phoenix Oil Company and other Osage oil companies. Foster unwillingly left a large drainage engineering project in Wisconsin when the death of several relatives led to his being named company president in 1903. The company was floundering, but it controlled the immense Osage oil lease (the company name reflected the high kerosene content in the Osage oil). Knowing he could never develop the field in the three years remaining on the lease, Foster split it into hundreds of small subleases which were developed by dozens of small companies. Foster thus became the richest man west of the Mississippi by making many others rich as well. The old ITIO building stands at the corner of modern-day Frank Phillips Boulevard and Johnstone. For himself Foster built the La Quinta mansion. Foster would have major strikes in the Osage, around Seminole, Oklahoma, and finally in Oklahoma City. The Oklahoma City strike was typical Foster: he thought there would be oil there because of the reddish sandy soil covered with scrub oaks and out-croppings of red sandstone. Studies of the area did not support there being oil, and there had been a 4500 foot deep dry hole there years before. But Foster spent $250,000 on preliminary investigations and then leased the area and put in a wildcat well for another $150,000. He drilled all the way to 6402 feet and hit black gold. That well would produce more than a million barrels of oil, and the Oklahoma City wells eventually produced more than $224,000 per day for ITIO.
In 1935, Foster would sell ITIO Empire to the Cities Service Oil Company of Bartlesville for $64 million. That company led back to Henry Doherty, a banking and utilities multimillionaire from New York who came to Bartlesville in 1912. He bought several gas operations and created Empire Gas and Fuel Company, which grew under the leadership of Herbert R. Straight. It built the historic ITIO/Empire/Cities Service/REDA/RSU building in Bartlesville in 1918, which had 170,000 square feet across nine floors with a Masonic Lodge with blue windows on top. Cities Service became the tenth largest oil company in America and was a leader in petroleum research, with work in using underground reservoirs to store natural gas, thermal cracking high-efficiency furnace design, oil and gas metering methods, reservoir conditions, dust separation in gas lines, and "Unit Operations" for oil recovery. The company's research brought about oil and gas conservation laws which stabilized the industry and increased the percentage of oil recovery from 23 percent in 1923 to more than 50 percent in the 1970s. Cities Service had its operational headquarters in Bartlesville until 1971, when it relocated to Tulsa. (Mergers and spin-offs in the 1980s split up the company among OXY USA, Citgo, and Williams Natural Gas Co.)
The rich oil fields around Bartlesville itself were not fully exploited until 1905, when the Department of the Interior allowed oil leasing to begin. On September 6 of that year, Frank Phillips and his brothers Lee Eldas (L.E.) and Waite had their first producer in the Osage field, the Anna Anderson #1. It was drilled on Delaware Indian Anna Anderson's allotment three miles north of Bartlesville between the Caney and Little Caney Rivers about three miles east of the Osage Reservation, in what was then the Cherokee Nation. The Phillips brothers had arrived in Bartlesville in 1903 and operated a variety of oil companies and banks. The Anna Anderson strike was made by their Lewcinda Oil Company, but Waite left shortly thereafter to organize his own oil company which became a major independent producer.
1907 Bartlesville was forest of derricks. That same year the Hogshooter natural gas field was opened. It was the first significant discovery of "dry" gas in Oklahoma. Dry gas is that which is not produced in association with crude oil, while "wet" gas generally is found with oil.
Frank and L.E. Phillips would eventually form Phillips Petroleum Company, which grew to become one of the largest in the world with international operations. This Fortune 500 company's world headquarters was in Bartlesville until it merged to become ConocoPhillips in 2002. Major Phillips Petroleum accomplishments included George Bunn and F.E. Rice's pioneering work in natural gas, unravelling the mystery of natural gas liquid. They developed "natural gasoline", which became the mainstay of the nation's natural gas industry and led to Phillips controlling one-fourth of the nation's natural gasoline production.
Phillips would also become a world leader in plastics, after the serendipitous discovery of polypropylene by Phillips chemists J. Paul Hogan and Robert L. Banks. On June 5, 1951 they were experimenting with catalysts to make higher-octane gasoline from propylene and ethylene. To their surprise, the lab equipment became clogged with a whitish, tacky-looking substance. They had discovered a new plastic - crystalline polypropylene. Shortly thereafter they made the similar crystalline polyethylene. The new plastics were tough, heat-resistant, and relatively inexpensive to produce. Phillips would soon invest $50 million to build a large-scale polyethylene plant near Houston, marketing its plastics as "Marlex". The new plastic had a shaky start with its pellets coming in off-specs in color and size, but the hula-hoop craze of the late 1950s saved the day by consuming all of the off-spec plastic and the plant's entire output for six months. By then the production problems had been solved and today polypropylene and polyethylene are used to produce the vast majority of the thousands of plastic products throughout the world.
Other successes for Phillips, including the major Ekofisk project in the North Sea, would lead to the company employing over 9,000 people in Bartlesville in 1981. The mid-1980s were dark years for the company with hostile takeover attempts by T. Boone Pickens and then Carl Icahn. Fending them off put the company billions of dollars in debt, and led to massive layoffs and major restructuring. A decade after the takeover attempts, Phillips only employed 3,300 people in Bartlesville. In 2000, Phillips purchased ARCO's extensive petroleum interests in Alaska for $7 billion, but by 2001 it only employed 2,400 Bartians. The next year it merged with Conoco and the new ConocoPhillips company was headquartered in Houston. The refining, wholesale marketing, and exploration and production divisions left Bartlesville for Houston, but employment levels remained fairly stable and then grew to about 3,000 as Bartlesville became a global support center for the company, handling accounting, information technology, human resources, and finance operations. The company's research and development center remained in Bartlesville, which is also home to Chevron Phillips Chemical Co. research and development operations. In 2011 it was announced that ConocoPhillips would split into two separate companies, one for upstream exploration and production and the other for downstream refining and marketing.
At one time another key player in Washington County was the Prairie Oil and Gas Company. It incorporated in 1900 as a purchasing and pipeline subsidiary of Rockefeller's Standard Oil Company of New Jersey. Its offices were in Neodesha, Kansas and this company erected the first storage tank at the Bartlesville depot for oil shipments to its Neodesha refinery. The company extended a pipeline into Indian Territory in 1904, and a year later began constructing two huge tank farms in Washington County. One north of Ramona was billed as the "world's largest" and another sizable one was north of Copan. The company also had a compressor plant in Oglesby. The company explored establishing its corporate office just north of the county in Caney, Kansas in 1915 at the present location of Wark Memorial Park. Caney lost that building, however, to Independence, Kansas. Today the large building, with an updated exterior, is a centerpiece of that community, housing many offices and small companies. The Prairie Oil and Gas Company was taken over by the Prairie Pipeline Company, which in turn was bought out by Sinclair.
The U.S. Bureau of Mines founded the Petroleum Experiment Station in Bartlesville in 1918. Petroleum research was conducted at this facility for decades under a variety of names. One highlight is from 1929, when H.C. Miller published the influential book The Function of Gas in the Production of Oil, which explained the vital role of natural gas in obtaining the maximum production of oil. The facility became the Bartlesville Petroleum Research Center in the mid-1960s, the Bartlesville Energy Research Center in 1975, the Bartlesville Energy Technology Center in 1977, and the NIPER, or National Institute for Petroleum & Energy Research, in 1983. It was operated from 1983-1993 by IIT Research Institute, and then by BDM-Oklahoma which agreed to privatize it in 1995. The facility closed in 1996, with some of the BDM-Oklahoma employees relocating to Phillips Petroleum's local Research Center. By 1998 BDM had been bought out by TRW (an acronym for Thompson, Ramo, and Woolridge) and the Bartlesville operations were discontinued or folded into other companies. The former Bureau of Mines facility was used for awhile as the headquarters of the Delaware Tribe, but later sold after that group was denied its sovereignty.
Hal Price was a graduate of the Colorado School of Mines in 1913 who started as a chemist at the Bartlesville Zinc Company. He became the personnel manager, but lost his job when the smelter shut down in 1921. He borrowed $2,500 and opened the Electra Welding Company. His company began with tank welding in oil fields, and then went into pipeline welding. His development of a shield arc or coated electrode was first used in a 1930 pipeline for Cities Service, and the technology was adopted by the petroleum industry. He formed the H.C. Price Company, which continued to develop pipeline welding techniques until World War II. The workers then went to work in shipyards, building Liberty ships and tankers, including the S.S. Bartlesville Victory. After the war, Price expanded into pipeline general contracting in addition to pipeline coatings. His company grew to become one of the largest such companies in the world, and he commissioned Frank Lloyd Wright to build the historic Price Tower as the company's Bartlesville headquarters in the 1950s. The Price company was bought out around 1980 and relocated.
In 1916 Armais Arutunoff, who lived in Russia, developed an electrical submergible motor and pump. He emigrated to America in 1923 and in 1928 moved to Bartlesville and formed, with the backing of Phillips Petroleum company, the Bart Manufacturing Company. His pump was crucial to the successful production of thousands of oil wells. In 1930 the company became REDA Pump (pronounced red-ah or some say reed-ah), an acronym for Russian Electrical Dynamo of Arutunoff. It occupied the city's industrial park just northwest of downtown and the plant eventually grew to nine acres, or 30 times its original size, through 42 additions over the years. REDA merged with TRW (another acronym for Thompson, Ramo, and Woolridge) in 1969 and acquired the large Cities Service building after that company moved to Tulsa in 1974. REDA was divested by TRW in 1988 and became a division of Camco Inc. In the late 1990s the company became Schlumberger-REDA Production Systems. In 2001 the city, motivated by the need to retain the 500 jobs at REDA, announced an ambitious plan to rebuild the company's aging plant. The 16 different lease agreements for the land the plant occupied would be consolidated into one lease, and the plant would be rebuilt in phases resulting in a new city-owned and air-conditioned facility of over 300,000 square feet. But that plan was scrapped in early 2003 when Schlumberger announced it would not rebuild the facility, but instead only refurbish the existing structure. In late 2004 the sold the nine-story downtown headquarters building to Rogers State University.
By 2004 Oklahoma's cumulative production had reached 14.7 billion barrels of oil and it remained the fifth-largest oil producer in the country, even though it only represented about three percent of the national output. Annual production, which peaked in 1924 at 278 million barrels, had fallen to 64 million barrels with proven reserves in 2000 of 610 million barrels. The average Oklahoma oil well now produces about two barrels per day, and the state's consumption of petroleum products is about 50 percent greater than its production of crude oil.
Cumulative natural gas production had reached 94.0 trillion cubic feet by 2004, with production of 4.5 billion cubic feet per day compared to a peak of 6.2 billion cubic feet per day in 1990. Oklahoma represented about eight percent of total U.S. production, ranked third in the nation. In 2000 the proven gas reserves were 13.7 trillion cubic feet. Statewide gas production is about three times consumption.