A Brief History of Oil
By Keith Kohl | Friday, March 12, 2021
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Colonel Drake is credited with drilling the first-ever oil well in Titusville, Pennsylvania in 1859.
But nothing could be further from the truth.
You see, this may come as a surprise to you, but cavemen were the first oil wildcatters.
That’s right: They extracted and used oil.
How can that be, you wonder?
Well, archeologists have uncovered tools used by Neanderthals dating back some 40,000 years ago. Neanderthals used oil from naturally occurring oil seeps to adhere stones to sticks.
As human society developed, so did the use of oil and natural gas. Around 3000 B.C., man was using oil for the construction of buildings and waterproofing canoes, baskets, baths, and drains.
In ancient Mesopotamia, natural asphalt was used in the construction of the walls and towers of Babylon.
Around 1272, while traveling through the city of Baku (Azerbaijan), Marco Polo witnessed oil seeps being worked in hand-dug wells.
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Natural gas was being used, too.
Around 1000 B.C., a goat herdsman in Greece came across what looked like a burning stream at the top of Mount Parnassus. It was a flame rising from a crack in the rock. Most likely, a lightning strike ignited the natural gas.
The ancient Greeks, believing the flame to be of divine origin, built a temple around it. This temple housed a priestess known as the Oracle of Delphi, who gave out prophecies she claimed were inspired by the flickering flame.
But it wasn’t until around 500 B.C. that natural gas was actually used as a valuable commodity.
The Chinese searched for where natural gas was naturally seeping out of the surface of the Earth and, once they found a good seep spot, built the first-known gas pipelines out of bamboo shoots. These were used to transport the gas to a giant fire under massive pots where they would boil sea water, separating the salt and making it potable water for drinking.
Fast-forward 2,000 years to 1821, when the first natural gas well was drilled in the United States.
William Hart drilled a 27-foot well in Fredonia, New York. How did he know where to drill? He asked the Native Americans who worshipped the naturally occurring gas flowing out of “burning creek.”
Hart’s success lead to the Fredonia Gas Light Company, the first-ever utility company in America. And ever since, oil and gas companies have used the observation of naturally occurring seeps to find massive oilfields.
That’s because typically, where you see a seep, you find a highly pressurized reservoir below. The high-quality oil is literally being pushed out of the ground.
Think about it.
How did Colonel Drake know where to drill in Titusville? Well, it was actually quite easy for him. Since Drake didn’t have the technological advantages of satellite images or 3D seismic studies, he took the easiest path for discovering oil: He looked down at the ground.
You see Titusville is a small town that sits near a creek. The name of the creek: Oil Creek.
For centuries, the Seneca tribe used the oil that seeped into the creek for many things, including cures for sickness.
For the next 40 years after Drake struck oil, Pennsylvania would supply the world one-third of its oil.
Then came Spindletop in 1901.
For years before the legendary Spindletop field was drilled in 1901, Texas residents had witnessed thousands of “tar balls” and miles-long oil slicks right off shore in the Gulf of Mexico.
Spindletop quickly became the largest oilfield in America, larger than all of the previous oil fields in the U.S. combined.
And it occurs all around the world. The second-largest oilfield in the world — Kuwait’s Burgan — was discovered by British geologists who observed hundreds of oil seeps at the surface in 1912.
To this day, oil seeps are spewing crude in deserts, mountains, rivers, and oceans. In fact, it’s estimated that at least 100,000 barrels of oil a year naturally seep out of the ground.
Of course, 100,000 barrels is peanuts compared to what producers are actually pumping out of the ground every single day — right here in the United States.
How much, exactly?
At the start of 2019, U.S. domestic production had hit a new all-time high of 12 million barrels per day!
Now, perhaps the worst kept secret right now in the U.S. oil industry is that our tight oil resources have accounted for ALL of production growth since 2008.
You see, once U.S. drillers started utilizing horizontal drilling along with hydraulic fracturing techniques, they effectively unlocked untapped wealth in oil and gas resources.
Of course, most of this production growth took place in just three tight oil plays: the Permian Basin, Eagle Ford, and the Bakken/Three Forks.
Take a look just how critical those three plays were for the United States’ oil supply:
ei-gauntlet-us-production
According to the EIA, just three formations in the Permian Basin accounted for 41% of U.S. tight oil production in 2018.
In fact, tight oil production in the United States overall is expected to grow from 6.5 million barrels per day in 2018, to more than 10 million barrels per day in 2024.
Think about that for a second…
If this prediction becomes reality that means that tight oil production will be higher than the previous production peak in the U.S. set back in the 1970s.
The EIA now expects U.S. oil output to top 14 million barrels per day within the next four years, and remain that high for the next two decades.
As you can expect, this will usher in a new era of wealth for oil and gas investors. Not only will we use this new crude supply to satisfy high demand here in the U.S., we will use it to become one of the largest oil exporters in the world.
By 2024, the United States is projected to overtake Saudi Arabia in gross exports.
And you better believe we’re making a fortune from this domestic oil bounty.
From producers to pipelines and everything in between — if you’ve been on the sidelines of the American oil and gas boom, now’s the time to get in and get a piece of the action for yourself.
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Good investing,
Keith Kohl Signature
Keith Kohl
Managing Editor, Energy and Capital