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Gas Country Makes Louisiana History

November 24, 2005

By Lyle, Don

Northern Louisiana’s rich reserves created a booming natural gas market.

At one time, 278 offshore wells dotted Caddo Lake. This photograph was taken around 1920.

At one time, 278 offshore wells dotted Caddo Lake. This photograph was taken around 1920.

Oil City’s quiet streets and wellgroomed park along the railroad B m track mask the past of a wide-open boomtown with all the rags- to-riches-to-rags history of boomtowns from Slitter’s Mill, Calif., to Rhyolite, Nev., to Central City, Colo., to Nome, Alaska.

Gold created the booms in those towns, just as oil made a boomtown of Beaumont, Texas, aiter the Spindletop discovery in 1901. In a way, Spindletop also gave birth to the oil play that created oil City north of Mooringsport in northwestern Louisiana and started Louisiana’s prolific natural gas industry 100 years ago.

First gas

Natural gas made a name for itself in northern Louisiana even before the newcomers “found” it. Local Kadohadaccho Indian stones talked about fire on the water around Lake Caddo in Caddo Parish.

Oil and gas operations provided steady work for the crews that built rigs and pipelines in northern Louisiana.

The first commercial use of gas in Louisiana apparently occurred in Shreveport when a night watchman in an ice plant on North Market Street accidentally located a seep in a water well in 1870. The company later used the gas to light the plant.

Local farmers considered the hydrocarbons a nuisance when they invaded and contaminated wells the farmers drilled to find fresh water.

Then along came Spindletop with more production from a single field than the rest of the nation’s wells combined, and enterprising investors began to see potential rather than nuisance.

A year later, Ellison M. Adger of Belcher, on the southeastern corner of what later became Caddo-Pine Island field, tried to drill wells to water his livestock and kept finding salt water at 400ft (122m). He sent soil samples from the wells to the U.S. Geological Survey (USGS), and experts told him he could expect to find oil or gas at 1,000ft (305m). Other farmers faced the same situation.

It was up to Judge S.C. Fullilove, D.C. Richardson and Ira G. Hedrick of Shreveport to get the ball rolling. They leased land near the Surry and Ananias rail stops north of Caddo Lake, an area that later became Oil City.

The No. 1 Offenhauser produced in 1905, but the first big well didn’t come on stream until May, said Coe Haygood, curator of the Louisiana State Oil & Gas Museum in Oil City, referring to Early Louisiana & Arkansas Oil: 1901-1946 by Kenny Frank and Paul Lambert Jennings.

Blowouts

That well, the Producers No. 2, hit a shallower Nacatoch formation gas pocket that created a mud volcano big enough to sink the derrick and everything else lying nearby.

Rig construction crews were the busiest people in the state when Caddo-Pine Island was at its peak.

That’s the reason the oil industry almost didn’t get started in Caddo Parish, she said. The oil wells produced gas at huge volumes and pressures. Blowouts were frequent, and operators had to solve the gas problem before they could produce the oil.

The Producers Oil Co. (later Texaco) Harrell No. 7 probably is the best known of the Caddo field blowouts. That well burned for several years, long enough to lower the pressure of many other wells in the Oil City District. The railroad brought passengers from Shreveport to the site near Oil City to view the blowout. Even when the fire was out, the pond of muddy water in section 7-21n-16w continued to surge and churn with the strong gas flow.

The company finally stopped it by drilling a parallel well to relieve the pressure and smothering the flow with mud.

Early fire fighting efforts also took shape at the Star Oil Co. No. 3 blowout on the Loucks lease. Crews extinguished the fire by driving a truck into the flames, forcing the end of a pipe over the connection at the top of the casing and flowing the oil off to a bermed storage pit.

Geology

That first-humble, then-spectacular beginning led to exploration that resulted in a gas field some people called the largest in the world at one time. Forces working at right angles caused a series of anticlines and synclines that acted as efficient traps, according to the USGS Bulletin 619, The Caddo Oil and Gas Field, Louisiana and Texas, written by George Charlton Matson in 1916.

The field included the Mooringsport, Oil City, Jeems Bayou, Monterrey, Hart’s Ferry, Vivian, Black Bayou and Pine Island districts in nearly all of Caddo Parish, and in eastern Marion County and northeastern Harrison County in Texas, although the Texas branch of the field was never a great production area.

The primary producing formation, the Nacotoch, ranged from less than 100ft (30m) thick in the southern Mooringsport District to more than 200ft (61m) thick in some places toward the northern end. Nacotoch sand is found in every commercial well in the area.

The boom wasn’t immediate. By 1907, only 23 wells had been drilled in Caddo field, eight were successful oil wells and 11 were successful gas wells. Production jumped to 50,000 bbl of oil in 1907 from 3,358 bbl the previous year.

The following year, Caddo field was flowing enough gas that operators built Louisiana’s first natural gas pipeline to move the gas to the nearest population center at Shreveport.

Also in 1907, exploration took a more scientific approach as J. B. McCann, an employee of Guffy Oil Co. (later Gulf Oil Co.) tried to map the extent of potential pay in the area by tracing escaping gas across Lake Caddo by boat. Even today it’s possible to see gas bubbling up through the lake’s water.

That was an important first step to a landmark event.

Offshore wells

By 1911, most of the countryside around Caddo Lake had been drilled or leased for drilling. Gulf Refining took the next step by drilling the world’s first offshore well – the Ferry No. 1 – in Caddo Lake. It drilled seven more offshore wells that year.

Operators in California had been drilling offshore wells from piers extended from the mainland for about 15 years by that time, but the Caddo Lake wells had no visible connection to the shore.

H.A. Melat, drilling superintendent for Gulf, invented a rig set on pilings that could be floated to well sites by tugs and supported by barges. The offshore industry was born.

Gulf began building platforms with a goal of installing a permanent platform every 600ft (183m) on 10-acre spacing throughout the lake. Most of the original wooden platforms are gone, but many production platforms still flow gas, and small pumpjacks on offshore platforms still move oil to shore around the lake. A tender dock where Jeems Bayou flows into the lake still takes care of maintenance work on the offshore wells.

Eventually, 278 wells dotted the lake, and they produced more than 13 million bbl of oil and associated gas during a 40-year period. Producers dammed up the lake to keep the water level high enough to continue drilling.

Boomtown

In the early days of the Caddo Lake play, workers lived in Shreveport and commuted daily by train to the stop at Ananias, which later became oil City. By 1910, oil City had grown to a bustling boomtown of 25,000 people. It was the first boomtown in the Arkansas/ Lousiana/Texas area, and it was a good one.

Land prices had climbed from $0.50 to $500 an acre in a year, according to the Caddo-Pine Island Historical Society.

It even had its own red light district called Reno Hill, just east of the railroad track.

Reno Hill lasted until the 1920s when a group of men showed up in cars – two men to a car. They parked at the depot, walked across the tracks and started handing out pamphlets throughout Reno Hill, then they left.

The next day, most of the population of Reno Hill stood on the platform at the train station waiting for the southbound train to take them away.

The group of men was from the Ku Klux Klan, Haygood said, and they closed down Reno Hill.

Trees City

The Ku Klux Klan wasn’t the only group that didn’t approve of the killings, injuries and wide-open living in oil City. oilfield veterans Mike Benedum and Joe Trees had followed the growth of the oil industry through the eastern states and had moved in on the Caddo Lake-Pine Island boom in 1908. They had seen boomtowns before, and they didn’t like what they saw.

They established Trees City (later shortened to Trees) a few miles from oil City near the Texas border. The city grew from tents to wooden homes and businesses. It had at least one bar, but the two veterans banned prostitution. Most of Trees City is gone, but it still claims a few residents, and the bank has been moved to Oil City where it is part of the Louisiana State Oil & Gas Museum.

As part of their legacy to the area, the seasoned oilmen advanced local technology. They saw people killed by blowouts, and they started the practice of cementing wells to minimize gas leaks.

Benedum and Trees made a good living by finding and developing production and then selling it to subsidiaries of the old Standard Oil monopoly. Caddo Lake was no exception.

Before any pipelines were built from the Caddo Lake fields, operators had to ship their oil by rail or they couldn’t sell it, and Standard Oil owned the railroad.

Shortly after the two men announced they planned to build their own refinery, a man came to oil City on the tr\ain. Haygood said her mother told her the man traveled to Trees City, visited the bank and left a deposit of $1 million as a down payment on the Benedum-Trees properties.

The two men reportedly sold the oil from their properties for $10 million, Haygood said, but they kept the natural gas for their Arkansas Fuel Oil Co.

That didn’t seem like such a great deal at the time, since gas glutted the market. The price didn’t go over $0.25/Mcf until the 1970s, said Murray E. Moore, a veteran geologist in Oil City with his own company, Memco Exploration & Production LLC.

Bumpy road

The boom in and around Caddo Lake touched off more exploration in northern Louisiana, but Green B. Hayes Sr., who bought acreage near Cheniere in Ouachita Parish for his sawmill, had more foresight that even the Caddo Lake pioneers, according to an article by Louis Casper in The Monroyan newspaper called “The Romance of Gas.”

The need for northern Louisiana natural gas in surrounding cities and states created work for pipeline gangs like this one working for The Texas Co.

He started drilling in Section 11-17n-2e. The hole caved in at 400ft (122m). He brought in a rotary rig and found a small gas pocket at 900ft (275m). The crew lost a fish in the hole at 1,300ft (397m) and had to abandon the well.

Nine years later, A.A. Forsythe, mayor of Monroe, drilled a well at Forsythe Park. He found enough gas to light about 50 light posts in the park and heat water for showers in the bathhouse, and two nearby residents later tapped into the supply.

The gas came from a salt-water formation at 2,350ft (717m), and the company used the water for the nations first natatorium, complete with an electric sign that announced, “The water is free.”

Monroe field

The successful well stirred the imagination of Louis Lock, a Russian immigrant who had opened a plumbing and heating business on South Grand Street in Monroe in 1910. Lock’s company was hired to build a pipeline to pipe fresh water into Corpus Christi, Texas, in 1915. He became interested in a drilling company there that was successfully drilling for gas. He hired J.H. Hampton to lease 13,500 acres of land in Morehouse Parish early in 1916.

Lock, in need of money, sold half of his interest in the 13,500 acres and a half-interest in any future land acquisitions to Casper for $500.

After some starts and stops, they hired Lucky Bob Allison, a veteran of Red River oilfield, drilling near Caddo Lake.

Allison said he would build a rig with a 112-ft (34-m) derrick and drill the well for $14,000, but he wanted to pick the spot at the chosen location. He flipped a half-dollar, watched it fall on what he called a gas bump and started building.

Lock and Casper hastily formed Progressive Oil Co. with several residents to meet the first payment of $5,000. The remainder of the $14,000 was due when the well hit 3,000ft (915m) or when oil or commercial gas was found.

The company hosted a barbecue at the well site to try to raise the money. It rained that day, and they didn’t sell one share of stock.

Allison continued drilling, and Sept. 3, 1916, at 2,275ft (694m), the SpykerNo. 1 in Section 9-20n-5e hit a gas kick so strong it nearly blew the drillstring out of the hole, Casper wrote. They sold out all their stock at twice the pre-blowout price.

Berney Oakland, in “Development of the Gas Industry,” also written for The Monroyan, estimated the open flow at 2.5 MMcf/d.

“It was but a short time before the woods were full of derricks,” Casper wrote.

The industry drilled 13 more wells in 1917, and two companies produced gas for use in the city July 14 of that year.

Oachita Parish had much more gas than it could use locally. The industry was able to attract the carbon black industry to the city, and that industry supplied much of the money for the further development of Monroe field.

“Land values soared; royalties on land put ready cash into the landowners’ pockets; hundreds of men were given steady employment; and the parish and city tax collections mounted in proportion, thus enabling the parishes to construct good roads and affording the city the luxury of paved streets, better schools, etc.,” Oakland wrote.

A movement against the use of natural gas to produce carbon led the state to reduce carbon production to 35% of premovement levels. Much of the produced gas had no place to go. Higher taxes on the remaining carbon black plants further lowered gas demand.

By 1925, however, the Louisiana Power and Light Co. built a huge electricity generation plant at Sterlington, and Monroe gas fed the generators that provided electricity for parts of Louisiana, Arkansas and Mississippi. With all four generators on line, the plant used 30 MMcf/d of gas to supply electricity to 610,000 people in 442 cities and towns.

At the same time gas pipeline systems through the South and Midwest took gas to St. Louis, Memphis, Atlanta, Birmingham, Dallas and Houston and New Orleans.

The field spread into Union and Morehouse parishes. In 1927, the field had an open-flow capacity of 3.48 Bcf/d, wrote William F. Chisholm, director of the Division of Minerals. In February 1928, it had 514 wells capable of producing and 426 actually producing. The field had produced 132.9 Bcf of gas in 1927 for a cumulative total of 728.2 Bcf. Moving to more modern times, Louisiana’s largest gas field has produced more than 7.3 Tcf of gas.

Rise and fall

The Eighth Biennial Report of the Louisiana Department of Conservation for 1926 to 1928 offers some perspective on the peak years of the oil and gas boom in northern Louisiana.

Chisholm wrote that Mexican oil imports were declining, but imports from Venezuela were climbing. Meanwhile new discoveries from Seminole field in Oklahoma and Yates field in West Texas were flooding the market. New fields in Baku, Azerbaijan, also were helping to push prices downward.

Caddo Parish generated 2,694 permits to drill. The next closest competitor was Claiborne Parish with 2,341 permits, thanks to Haynesville field.

Conservation

Early attempts to conserve gas rather than venting it to produce oil took place in 1921 and 1922 in Monroe field. The state promoted repair of faulty wells and the elimination of fraudulent production records and gas metering in 1923. It fully applied the state law for recording and controlling gas production in 1925 and 1926.

Once the state got Monroe field organized, it turned its attention to the older areas, particularly the Caddo Parish area. State inspectors gauged new wells when they came in and started sealing in orifice plates. The division started getting accurate measurements of gas production for the first time.

Decline

From 1924 through 1926, Louisiana ranked fourth in the nation among gas producing states, ahead of Texas but behind Oklahoma, California and West Virginia. Texas took over the fourth spot in 1926. For comparison, Louisiana produced 159 Bcf of gas in 1926, compared with 285 Bcf for Oklahoma, 205 Bcf for California, 180 Bcf for West Virginia and 175 Bcf for Texas.

Northern Louisiana gas, however, was declining.

“The northwest Louisiana gas fields, in Caddo, De Soto, Red River, Webster and Bossier parishes are showing the effects of heavy withdrawal. The large volume of gas already wasted (by flaring) in the Pine Island Trinity leaves little hope for relief from that source,” Chisholm wrote.

Among other prominent gas fields in the area were Waskom gas field on the border with Texas in Caddo Parish and Harrison County, Texas; De Soto-Red River fields in Red River Parish; and Elm Grove field in Bossier and Caddo parishes.

Cotton Valley field was discovered in 1923 with a central gas area surrounded by an oil ring. The only gas well completed in the 4,600-ft (1,403-m) Trinity by 1928 tested at 54.65 MMcf/d of gas.

Anadarko Petroleum Corp. found a winner in Vernon field as it chased the Bossier pay from Texas into northern Louisiana.

Among other fields were Gleason in Webster Parish; Spring Hill in Bossier and Webster parishes; and Carterville and Sikes fields in Winn Parish.

Richland field’s northern boundary is in Richland Parish about 10 miles (16 km) southeast of the southern edge of Monroe field.

Caddo-Pine Island, Haynesville and most of the earlier fields produced casinghead gas along with oil, particularly in the early years. In more recent years, production leaned more toward dry gas.

According to IHS Energy, Caddo-Pine Island produced 6.55 Bcf of gas in 1965 with 5.55 Bcf of that being casinghead gas. By 2003, gas production had slipped to 950 MMcf with 235 MMcf casinghead gas.

Monroe, however, was a pure gas play. It produced 93.99 Bcf of dry gas in 1965 and still produced 7.91 Bcf of gas in 2003 as it declined.

Moving forward

Northern Louisiana remained a major participant in the gas production roughly into the 1950s. Texaco, Amoco and Gulf still were big players in the Caddo-Pine Island area.

By that time, however, southern Louisiana was going strong, and Kerr-McGee Corp. had drilled the first well out of sight of land offshore Louisiana in the Gulf of Mexico. The majors sold out to larger independents and went looking for bigger fields in other places, said geologist Murray Moore.

Most of the production in the Caddo-Pine Island area comes from mom-and-pop operations run by operators with little geological exploration capability.

New opportunities

Anadarko Petroleum Corp. moved into northern Louisiana natural gas in a big way as it chased its highly successful Bossier play in Texas across the border. Existing Vernon field became a big addition to the company’s portfolio.

“It was an acquisition opportunity, and Anadarko recognized that the area had the potential to be a Bossier-type play,” said Tom Rushing, production manager for East Gulf Coast/Vernon for Anadarko.

Anadarko had drilled more than 700 wells and discovered Dew Mimms and Dowdy Ranch fields in Texas. Peak production reached 300 MMcf/d of gas.

Vernon offered similar potential fo\r the company.

Since Anadarko bought the field in late 1999, it has drilled more than 250 wells. Production has increased from less than 10 MMcf/d to more than 320 MMcf/d producing from more than 2 Tcf of gross gas reserves.

The wells cost about $3.5 million to drill, but the learning curve has helped.

The success rate doesn’t hurt the profit column, either. So far, Anadarko has posted a success rate greater than 95%.

Northern Louisiana may not be the gas powerhouse it once was, but the potential for big gas plays remain and independents like Anadarko have the resources and determination to find and develop those plays.

“Natural gas made a name for itself in northern Louisiana even before the newcomers ‘found’ it.”

By Don Lyle, Executive Editor, E&P

Copyright Hart Energy Publishing, LP Nov 2005




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