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Artesia
Wednesday, February 21, 2024

New Mexico’s oil industry: Before the first discovery

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By HARVEY E. YATES JR.

For the Daily Press

J.J Hagerman and C.B. Eddy were railroad developers. Their railroad through the Pecos Valley needed water for engine boilers. They hired geologists to find it. Water was found, but “at the same time these same geologists became impressed with the fact that the formation indicated the presence of oil.” (Otero County News, April 24, 1919)

Artesian water was discovered near Artesia and developers and farmers rushed to drill water wells. Oil indications were noticed but ignored. “But near Dayton one artesian well brought up so much oil that it had to be noticed. This was the Brown well. Many unsuccessful attempts were made over the years to shut off the water and pump the oil.” (Ibid)

The Otero County News reported in 1919: “In the aggregate a large amount of money has been spent in exploring for oil in New Mexico in the last twenty years, But in spite of this expenditure no thorough test has been made in any location. The tests as far as they have gone, however, have demonstrated the correctness of the opinion of geologists that the oil lies deep… Oil was never so much in demand and the demand is increasing. Six million motor vehicles in the United States alone consume an ocean of gasoline. It is therefore an opportune time to test out the [possibility that there are] New Mexico oil fields.”

The presence of oil fields in New Mexico was finally proven five years later when Flynn, Welch and Yates brought in the Illinois # 3, east of the Pecos River. However, before that event much oil exploration took place in other parts of the state. Much of the exploration was driven by evidence of oil seeps in multiple locations in New Mexico. For instance the Otero County News reported on May 8, 1919 that “There exists just north of Lone Mountain, within 10 miles of Silver City, a seepage of oil which has been known to have been in existence for 30 years.” Earlier the newspaper had reported, “Oil springs and seeps were in evidence in several localities [in the San Juan Basin].” (Otero County News, April 24, 1919). Additionally oil seeps were known to exist in such places as the Tularosa Basin west of the Sacramentos and in the Sangre de Cristo Mountains above Mora.

A state report was published in the Otero County news on April 24, 1919. It listed more than 50 oil companies and their principal offices in New Mexico – this, though commercial oil had not yet been discovered in New Mexico.

Oil exploration wells were drilled in many, many New Mexico counties including Colfax, Eddy, McKinley, Otero, Quay, San Juan and Union counties. It was not at all clear that the first field discovery would occur in Eddy County.

Nonetheless, much of the oil exploration took place in the Pecos Valley west of the Pecos in Eddy County. This exploration was stimulated by the the area’s artesian water wells which often brought some oil with the water. According to Martin Yates, “’The first actual well to be started for oil and gas was [drilled in 1906] by Bill Laurence and associates. It found saturated sand, but when shot [an early 20th century mode of fracking] an ocean of Artesia water resulted.’ This appeared to be the story of virtually all other wildcats situated west of the Pecos River.” (Tulsa Daily World, Nov. 8, 1926). Martin Yates participated in, or led, multiple attempts to find oil west of the Pecos River following Laurence’s attempt.

“Oil fever spread since the discovery of the Burkburnett and Ranger fields in Texas” reported the Otero County News on April 17, 1919. These two fields were the first two fields in what is now known as the Permian Basin. But, they were in Texas.

In 1921 Illinois Producers (owner, Van Welch) ended its exploration work near Dayton in the Pecos Valley. Its drilling rig was to be moved to Burkburnett, Texas. Martin Yates attempted to convince Van Welch not to move the rig out of the area and instead to stay and drill east of the Pecos. Welch agreed but subject to three conditions: 1. A professional geologist must be employed to survey the area and locate a prospective oil field; 2. A lease spread must be obtained which was sufficiently large to justify the investment and, 3. The terms of the lease must be reasonable. (See, The Permian Basin, pp. 294-297.)

V.H McNutt of Tulsa was employed as the geologist. McNutt “located a fault running along the Pecos which apparently had isolated the Artesian [water] belt on the west from the eastern geological province.” (Ibid) He also located a geologic surface structure 16 miles east of Artesia on the east side of the Pecos. Martin Yates and his partner, Dooley ,went to the office of the Commissioner of Public Lands and acquired two oil leases covering 48,085 acres. (These may have been the state’s first oil leases.) The terms of the leases they negotiated were reasonable. Thus, Van Welch’s terms had been met.

The first well on the geologic structure to the east of the Pecos River was started in the winter of 1923. Gas with some oil was discovered and the well was shut in with the idea of using the gas for fuel in the next drilling attempt. There were delays and financial problems. To raise money for continuing operations the company farmed-out or traded much of the acreage it had leased. Also, drillers’ salaries were paid partially by giving them an interest in the well.

The second well discovered a large pocket of gas yielding approximately 4 million cubic ft. a day. The gas flare was 25 ft. in height. The well was capped to use the gas for a third test. The decision as to where to drill the third well was left to Martin Yates. He asked his wife, Mary, to accompany him in finding the third [and likely final] test location. He believed in her intuition. Driving along in their Model T to the east of the second well, she asked him to stop. She walked to a bush and told him to drill there. He and his partners did. Flynn, Welch and Yates’ Illinois # 3 drilled into oil at 1,947 ft. on April 9, 1924. “New Mexico now had its first commercial producer, and the Permian Basin it third oil province.” (Ibid. p. 299)

The Artesia Field was developed as more wells followed the Illinois # 3. Other fields were discovered. New Mexico’s production from the Permian Basin grew through the years and the subsequent booms and busts of the oil industry. Today New Mexico’s part of the Permian Basin funds a significant portion of New Mexico’ s state government and its public education system. The industry productivity has facilitated the growth of New Mexico’s government. With the growth of government has come massive regulatory growth. Ironically, had today’s state regulations which govern oil and gas exploration in New Mexico been in place in 1924, the drilling and effort which led to the discovery of New Mexico’s first field would not have occurred. But, that is a story for another time.

(EDITOR’S NOTE: Harvey E. Yates Jr. is an independent oil-man, managing partner of El Rito Media, LLC, the owner of Artesia Daily Press, and a graduate of Cornell University Law School.)

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