GTR Oil Series, Part 17
By CHARLES CANTRELL
Associate Editor
BLACK GOLD: In the early boom days when everyone in the oil industry was an “independent,??? the tall grass prairie around Tulsa became festooned with wooden oil derricks.
Editor’s Note: This article is the 17th in a multi-part series about the past, present and future of the oil industry in greater Tulsa and throughout the region. The series began in Mid-June 2005 and has been published monthly since.
A history of Oklahoma’s oil industry that doesn’t include the role of the independent oilman would be equal to leaving the infantry out of a history of World War II. In the earliest days of Oklahoma oil everyone was an independent oilman. In fact the very definition of early oilmen was one of fierce independence mixed with shrewd entrepreneurship, vision, optimism, dogged persistence and a high tolerance for risk-taking.
It was a pair of persistent, independent oilmen, Robert Galbreath and Frank Chelsey whose decision at the last minute to drill just another 100 feet that brought in Ida E. Glenn No. 1 setting off the Glenn Pool oil rush of 1905. It was a stern countenanced Frank Phillips, a jack-of-all-trades with little to no formal education, who gave up being a barber to enter the oil patch and build one of the first fully integrated major oil companies in the United States. And along the way, according to Michael Wallace’s book, Oil Man, “took little advice and asked for no quarters.”
The early days of Oklahoma oil is resplendent with stories of oil barons who successfully navigated the turbulent waters of an era when according to Wallace “fortunes were made and lost between a sunrise and a sunset.” But less is known of all the foot soldiers or independents as they eventually came to be known, who survived by their wits and ingenuity and waged the myriad of small battles that were instrumental in building the most powerful and wealthiest industry in the world.
As oil production in the United States matured, the industry began to form segments specifically focused on the variety of demands required to get oil out of the ground and to the marketplace. Lease brokers and land men would procure drilling and mineral rights from private landowners, clearing the way for drilling companies, who with the aid of geologists, poked holes in the ground and establish fields of productive wells. From there transporting the oil became the job of pipeline companies who sent the crude oil downstream to the refinery segment of the industry. And finally there evolved a retail segment to interface with other industries and the consumer marketplace to sell petroleum products. Thus the market chain from wellhead to gas pump was established and the links were owned by independent oil companies, at least in the beginning.
In 1916 Harry Sinclair started his career in oil providing timber to drillers for derrick construction. With the profits he began purchasing oil for ten cents a barrel, holding it back and selling when the price reached $1.20. It was this combination of patience, perseverance and vision that guided Sinclair Oil Company through the golden age of American oil. But Sinclair Oil, like other successful oil companies of the times, sought to gain control of their destiny in a volatile supply and demand driven industry by becoming a totally integrated oil company. Total integration meant ownership and management of all the links of the chain from wellhead to gas pump in order to provide some control over cyclic volatility. This was achieved through the aggressive pursuit of acquisitions and mergers of the independent oil companies who managed different segments of the industry. Those who succeeded became the big oil companies known as “the majors.” Texaco, Mobile, Exxon, Conoco, DX, Skelly, Sinclair and Amoco all acquired that status, often by absorbing successful independent oil companies. But surprisingly the emergence of the majors didn’t bring about the end of independents.
Why not? Because that same entrepreneurship, vision, optimism, persistence and risk-taking that served them well through the years remained at play as independent oil companies took on the vital role of living on the edge of exploration, drilling and going where angels, or in this case major oil companies, feared to tread. Living on the edge means pioneering efforts to extract oil from maturing fields, horizontal drilling, coal seam extraction or any other stone left unturned by the more risk adverse majors. By their very nature, independents often pave the way in the oil and gas industry by taking risks, failing, picking themselves up, trying again and succeeding.
In the summer of 1929, a small group of determined independents formed the Independent Petroleum Association of America (IPAA). It was a moment of self-discovery for a powerful segment of the oil industry beginning to realize its value and strength. Since that formation many similar but more specifically focused organizations have formed to help the independent oil and gas industry muster political and economic clout. Together these professional organization leaders have skillfully married business savvy with political skills to help keep the independent oil and natural gas industry alive and thriving. Even with the exodus of majors from Tulsa to Houston, the presence of local and statewide independent oil companies remains a strong economic factor in the city and the state. Today the independent oil segment of the petroleum industry continues to provide a valuable service by dovetailing with major oil companies to help keep an energy dependent nation running.
Special thanks to an independent oil warrior in his own right, Michael Cullinan, of Three Star Energy for consulting on the writing of this article.
Updated 11-29-2006
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