Muskegon Discovery Puts Michigan Solidly on the Oil Map

Following the 1925 discovery of oil in commercial quantities at the Saginaw Field, oil explorers in Ohio, Kentucky and Indiana, as well as local prospectors, became convinced that Michigan was the place to be for oil exploration. The Saginaw Field wells were commercial, but not spectacular, averaging 20-40 barrels per day. They were not particularly long-lived, as rapidly ­declining production rates would show over the last half of the 1920s. Nonetheless, out of state individuals and companies began to take oil leases in the state beyond the Saginaw area and local development companies were developed across the length and breadth of the state.

A host of test wells were drilled from 1925 to 1927, with minimal results. Michigan's days as an oil producing state might well have been numbered if not for the Muskegon Field. Oil and gas shows had been reported sporadically in Western Michigan wells drilled for salt and other purposes since the turn of the twentieth century. Muskegon County was considered prime petroleum prospecting territory. Intrigued by the oil and gas industry, brothers-in-law Charles Myler, an accountant, and Stanley Daniloff, a tailor, formed an oil company, Muskegon Oil Corporation (today Muskegon Development Company), raised capital, and drilled their first well. That well, drilled in July of 1926 reported light oil shows and was encouraging enough for investors to OK a second try.

A Standard Oil of ­ Indiana subsidiary, Dixie Oil Company, was also active in the Muskegon area adjacent to Muskegon Oil Company lease holdings. Dixie Oil Company geologist Hugh D. Crider was anxious for a proven well in the area to justify the leases his company had taken out. Crider advised Myler-Daniloff and their investors to drill at a location four miles north of Muskegon (the Reeths 1 well, NW NW Section 9-T10N-R16W, Muskegon Township, Muskegon County) near the town of North Muskegon in an area already subdivided for industrial and residential use.

On December 8, 1927, the Reeths 1 encountered natural gas in the Traverse at 1,640 feet. Drilling further, at 1,700 feet oil was encountered and started to flow. The flow reached a rate of 330 per barrels per day, and then settled in at about 50 barrels of oil per day in later weeks.

The Muskegon discovery, blessed with a prime location near a center with a shipping infrastructure by land and water, brought big companies and independents from across the state and nation. The "boom" intensified when Dixie successfully drilled a second well on 200 acres it had acquired in its arrangement with Muskegon Oil and Muskegon Oil started another well. Expanding its holdings to more than 50,000 acres as fast as leases could be written, Muskegon Oil Corporation organized Muskegon Development Company with three subsidiaries (Citizens Petroleum, Lakeshore Petroleum and Juliet-Morris Development Company).

By mid-February, 1928, Muskegon Development had two test wells drilling. Ten other companies, Dixie, J. S. Reed, Johnson Oil and Refining Company, Bower and O'Keefe, Bull Dog Oil and Gas, Citizens Petroleum, Mario-Caswell, Lakeshore Petroleum, Carter Hill and A.S. Cochran were either drilling test wells or moving in to drill.

Four months after the Muskegon Oil discovery, seven oil wells and two wells rated as natural gas wells were producing more than 1,000 barrels of oil per day, making the field the biggest in the state. Dixie Oil became the largest gatherer and purchaser of crude oil in the field, sending the oil across the state to the company's new refinery at Zilwaukee, near Saginaw. Muskegon Traction and Lighting, which was marketing manufactured gas to greater Muskegon, promptly tapped into the two ­natural gas wells making available more than one million ­cubic feet of natural gas a day.

Oil made Muskegon a boom town. The local newspaper, the Muskegon Chronicle, reported in November, 1928, an estimated 1,000 people were involved with some phase of the area's new oil industry. That publication reported that about 70 drilling rigs were active in the area, most operating 24 hours a day. It cost from $12,000 to $15,000 to drill a successful well, with dry holes averaging around $10,000 each. Days were long with most shifts lasting 12 hours, but workers' wages were good. Drillers received about $2,600 a year and tool dressers about $2,340 a year in a world where a new car cost $525, a house $7,333 and a loaf of bread 10 cents. The newspaper estimated that oil had led to an investment of about $2 million in the area, with another $1 million in the current drilling operations.

Drilling successes and increased competition, also led to a quick jump in the price of leases. A dollar an acre lease rental had been about par before the boom, but after the discovery of oil lease prices soon climbed to $5 an acre. In some cases leases cost $10 to $50 per acre, and one account of $2,500 per acre was rumored.

The Muskegon Field accounted for 347 well completions in 1929 resulting in 264 oil wells, 23 gas wells and 60 dry holes in the field's peak activity, shielding many a Muskegonite from the effects of the Great Depression that began with the October, 1929 stock market collapse. Oil production in the field peaked in 1929 with 3.1 million barrels of oil. Natural gas output peaked in March of 1929 at 428.8 million cubic feet.

Assistant Michigan Supervisor of Wells Robert B. Newcombe's 1932 report stated there had been 629 wells started or completed in the Muskegon Field with 439 completed resulting in 304 Dundee oil wells, 57 Upper Traverse oil wells, 14 Lower Traverse oil wells, 14 Lower Traverse natural gas wells, two Monroe natural gas wells and 64 dry holes. The development had covered about 3,170 acres, which on an estimated 629 dry and productive well completion basis would represent a well density of one well per 5.039 acres, closer in some places.

The final years of the 1920s saw western Michigan oil and gas discoveries and development in places other than the Muskegon Field. Muskegon Development and its three affiliates (Citizens, Lake Shore and Joliet) worked out a deal with Dixie Oil Company to core test 60,000 acres in Ottawa County and later the group core tested and deep drilled in Shelby, Hart, Weare, Pentwater and Benonia Townships of Oceana County.