Edward L. Doheny - Oil Wells and Success

Oil Wells and Success

While in Los Angeles, Doheny found out that there were reserves of pitch (tar-asphalt) beneath the surface. Doheny obtained a lease near downtown with $400 in financing from Canfield, who had made some money from the mining industry. In the fall of 1892 Doheny dug a well with picks and shovels, and a windlass, looking for pitch, from which petroleum could be extracted. When the well (6 feet (1.8 m) x 4 feet (1.2 m) wide) reached a depth of 155 feet (47 m) Doheny devised a drilling system involving a eucalyptus tree trunk. The well, when completed in 1893, reached a total depth of 225 feet (69 m) and produced 40 barrels per day (6.4 m3/d).

The first well dug in Los Angeles was in 1863, on Hoover Street between Seventh Street and Wilshire Boulevard, by a man named Baker. But in his book Petroleum in California: A Concise and Reliable History of the Oil Industry of the State, Lionel V. Redpath states that the oil industry in Los Angeles began with the Doheny and Canfield well at the corner of Patton and West State streets. Although the well was a small producer, it pumped steadily for three years, and during that time period about three hundred more wells were sunk.

Doheny and Canfield soon made a fortune by drilling in the area and selling the oil to nearby factories. Later, they helped spur the California oil boom of the early 1900s (decade) by persuading railroads to switch from coal to oil as power for their locomotives.

Doheny was also a pioneering oil producer in Mexico. His company drilled the Cerro Azul No. 4 well, which in February 1916 became the world's largest producing well, pumping 260,000 barrels per day (BPD). When the well, drilled by Herbert Wylie, came in the sound could be heard 16 miles (26 km) away in Casiano and shot a stream of oil 598 feet (182 m) into the air, sending oil in a two-mile (3-km) radius. Over the next 14-years the well would produce over 57 million barrels.

He formed the Pan American Petroleum and Transport Company, which would later become the Mexican Petroleum Company (PEMEX), to hold his two Mexican companies (Mexican Petroleum and Huasteca) and his Atlantic and Gulf Coasts facilities in the United States, as well as his California holdings. The company owned 600,000 acres (2400 km²) of land worth about $50 million and secured an additional 800,000 acres (3200 km²) in Mexico in October 1919.

He sold a majority (retaining a minority stake) of the family's shares in Pan American Petroleum & Transport to Standard Oil of Indiana, on April 1, 1925, but retained all the California assets, with which he formed his new company, Pan American Western Petroleum Company. Pan American Eastern Petroleum (the Mexico holdings, the Atlantic and Gulf Coasts holdings in the U.S., refineries, pipelines, and 31 tankers), which held the non-California assets, was sold to Standard. Pan American Western returning to its roots as an "upstream" exploration and production company.