Refining || Retail and Modern Refining || Refining Post-WWII || Historic Development of Natural Gas in Montana || Conclusion
Montana’s oil and gas deposits are modest in comparison to the larger Great Plains region of the U.S. and Canada. Consequently, development of the resources and infrastructure came somewhat later than neighboring districts and quantities remain comparatively modest even today. Montana has never produced much more than 1 percent of total U.S. annual volume of oil.
Cat Creek oil well, circa 1920s, Coulter Studio, Lewistown
The early history of oil in Montana is tied to discoveries and developments as they came into production. The earliest oil refining followed these developments as well.
Some of the first oil exploration occurred in what is now Glacier National Park and near Red Lodge as early as 1889. Some oil production apparently occurred around 1902 at Swift Current Creek north of St Mary Lake. Elk Basin on the Montana-Wyoming border was the site of Montana’s first major production as development of that field moved northward in about 1915. The state’s first true oil boom was a discovery in what geologists refer to as the Middle Mosby Dome at Cat Creek, a tributary of the Musselshell River east of Lewistown. The Frantz Oil Company out of Denver brought in the first production oil there in early 1920. By 1921, 1.3 million barrels was produced at Cat Creek.
As with the development of coal in Montana, railroad locomotives influenced production as they switched from coal-fired steam to oil. The Great Northern Railroad converted at least some of its locomotives to oil-fired steam around 1910, which created a market for fuel oil and increased exploration for crude in northern Montana.
These early wells were “spud-drilled,” essentially a percussion process of raising and dropping a chisel-shaped drill head under steam power. Hollow-stem drilling equipment and the two-cone rotary Hughes drill arrived as better financed exploration companies joined the oil booms. By 1913, the U.S. Bureau of Mines was testing the properties of injected drilling “mud” in the Oklahoma fields. These technologies arrived to Montana in the 1920s and allowed for deeper penetration to recover oil.
According to legend, Montana's first oil refinery was built in the Cat Creek area when John R. Hill, a local rancher, built a small facility out of parts scavenged from large steam-powered tractors. The more formal Weowna Refinery was built at the Cat Creek strike and was almost immediately removed to Winnett in 1921, at a site very close to the Chicago, Milwaukee & St. Paul railroad spur. That refinery would operate intermittently into the early 1930s.
The Great Northern Refinery, also an independent, shipped its first refined fuels from Winnett in November 1921. Yale Oil Company, a national concern, constructed a third refinery near Winnett in 1936, but it was dismantled about a year later when a bid for government land was lost to Continental Oil.
An astounding number of oil refineries were constructed in Montana during the early decades of oil development and they largely followed development of the state’s oil fields, beginning with Cat Creek and the larger Mosby Dome in the 1920s. These “tea kettle” refineries were installed close in to the oil strikes. Even by the standards of the day they were considered inefficient, as they skimmed gasoline off the light oils that sometimes yielded 50 percent. Remaining kerosene-type fuel oil could be sold to the railroad with some residual tars marketed locally.
The Sunburst and Kevin areas were exploited next in north central Montana, and would lead statewide production from about 1925 through 1935. A bit further west, the Pondera Field near Conrad was producing heavily in 1929. The Bannatyne Field north of Great Falls was discovered in summer, 1927. The Dry Creek Field just south of the Canadian border was developed in 1930 by the Ohio Oil Company. That field's early production was reportedly almost pure gasoline. Dry Creek Wells averaged about 4,500 feet, which was considered very deep at the time. The Cut Bank oil fields were developed in the mid-1930s and were considered high quality during the Depression era of limited demand. Oil extracted from those fields would lead state production well into the 1950s when oil was discovered in the Williston Basin around 1955.
Texaco Refinery at Sunburst, circa 1950
Two refineries were built in Lewistown in 1921 and 1922 to process the light crude from nearby fields of the Mosby Dome. Lewistown Oil and Refining Company would later be purchased by Continental (Conoco) and the refinery there would operate until 1943. Arro refinery in Lewistown processed gasoline as well as fuel oil for the railroads during the oil-fired steam era. It would close in 1942.
The Sunburst-Kevin area saw refineries constructed in the early 1920s. Kevtana, later to become Big West, would operate for about 50 years. International Refining there would become Grizzly and later Texaco, operating until 1960. This era also saw the construction of refineries outside the immediate fields, most notably the Sunburst Oil and Gas refinery built in Great Falls in 1923. Butte had two oil refineries during this time and the Hart Refinery in Missoula was put up in 1924. Kalispell also had a refinery (Unity) that operated off-and-on until about 1960.
By 1929, consolidation and scale came to refining with only 13 operational refineries in the state, mostly serving local and regional markets. In that year, 85 million gallons of gasoline was used in the state, up about 75 percent from 1926. Automobiles and tractors were becoming more obtainable to Montana residents and agricultural business. Gasoline produced by the tea kettle refineries of the 1920s offered octane levels probably in the 55 to 70 range, adequate for most machines of the era. Charles Lindberg reportedly flew the Spirit of St. Louis in 1928 on 73 octane fuel – the highest quality then available.
Retail and Modern Refining
If one was so fortunate as to own an automobile in Montana in 1915, gasoline to fuel it ran about 35 cents per gallon. In today’s adjusted dollars, that would convert to more than $6 per gallon. Tulsa, Oklahoma was the center of pumping and refining then and Montana motorists of the day paid a transportation premium to get the product. The cost was known as “Tulsa-plus,” which meant the price in Oklahoma plus rail freight. In 1915, no production oil discoveries had yet been made in Montana and those in Wyoming were just getting started. Therefore, the rush to build small refineries in the 1920s to serve local markets seems understandable. In Montana, gas prices tended to be lower in areas immediately surrounding a refinery. Nonetheless, Montana gasoline pricing remained significantly higher than major population centers served by large refineries and efficient transportation. In the late 1930s, prices in Billings ran about 55 percent above bench-setting Tulsa prices
The Depression era saw a great deal of change arrive to Montana’s oil business. The discovery of the fabulously rich east Texas oil fields in 1930 resulted in a flood of petroleum products into a declining national market. Crude oil prices plunged in 1931 to 13 cents per barrel and the major oil producing-states of Texas, Oklahoma, and Louisiana limited production to support the market. Canadian markets and refining capacity for northern Montana crude fell off considerably during the Great Depression.
The Home Oil and Refining Company built a refinery in Great Falls in 1931, the predecessor of today’s facility there. The development of the Cut Bank fields later in that decade was accomplished to a large extent by well-financed national exploration companies. The area refineries that followed were also more modern and larger scale. The Northwest Refining Company was built in Cut Bank in 1937. The Montana Power Company inadvertently entered the business when it started to produce significant quantities of oil in its search for natural gas near Cut Bank. It partnered with Texaco and a group of independents to build the Glacier Refinery in Cut Bank in 1939.
Montana Power Company’s labeled retail gasoline brands
Yale Oil started a new refinery in Billings in 1930 and the Laurel Oil and Refining Company built one there in 1930, adding a cracking unit in 1936. These refineries processed oil from fields in northern Wyoming. Conversely, the refineries in the Kevin-Sunburst and Cut Bank regions sold product at times into the Canadian market. By 1941, although the number of refineries in Montana had grown, the Texaco refinery in Sunburst, the Yale in Billings, the Laurel refinery, and the Glacier refinery in Cut Bank produced two-thirds of the state’s refined product.
The World War II years saw further consolidation of refineries in the state as Standard Oil purchased the Northwest Refining Company in Cut Bank in 1942. Farmers Union Central Exchange out of St. Paul (the predecessor of Cenex) purchased the Laurel Independent Refining Company in 1943. Montana Power Company had to exit the oil business by federal law and sold its interests in the Glacier Refinery in Cut Bank to Union Oil of California in 1944. Carter Oil, a national concern, purchased the Yale Refinery in Billings around this time as well. According to the U.S. Bureau of Mines, 28 refineries were operating in Montana at the outset of World War II in 1941; by 1947 there were 11.
Some of these developments were influenced by the Office of the Petroleum Coordinator, which was created in early 1942 as the U.S. Federal Government sought to achieve the greatest possible contribution to the war effort. Among the mandates were that crude prices became subject to ceiling pricing, new drilling had to be authorized by the Coordinator, and each state's oil fields were allocated a target production. New rail rates were also negotiated at the federal level, which gave northern Montana crude a better market in eastern Washington and northern Idaho.
Refining and Pipelines in the Post-WWII Era
After World War II, refineries nationwide modernized and competed to produce high-test motor fuels. Many U.S. refineries were retrofitted during the war to produce 100 octane fuel for use in aircraft engines. By the late 1950s, premium gas was rated at 95 octane and high compression engines of the day demanded that grade of product. According to one source, a car of the 1950s “couldn’t back out of the garage” on the gasoline produced during the 1920s. Smaller refineries closed in great numbers during this era and Montana facilities followed the nationwide trend. Depletion of oil fields around Lewistown prompted Continental to close its plant there in 1943. The company chose to build a modern facility in Billings, which was completed in 1949. Carter Oil also announced that it would build a new plant in Billings to replace its facility there. Philips Petroleum purchased the Home Oil Refinery in Great Falls in 1947. The post-War era also saw more crude imported into the state for processing, largely from Wyoming into the Billings area refineries. (By 1996, about 58 percent of crude processed in the state would come from Wyoming.)
As the Williston fields came into production in the late 1950s and 1960s, most of the crude was shipped eastward for refining. Still, in 1961 a small plant would be built in Wolf Point (later Tesoro and Kenco) with hopes of serving the nearby Glasgow air base.
The Butte Pipeline Company and the Service Pipeline Company built lines out of the Williston Basin in the 1950s. Previously, gathering lines would deliver crude which was transported by truck to rail transfer facilities or to local refineries. The Yellowstone Pipeline Company extended its line from Billings to Spokane, a distance of 540 miles. The line was completed in 1954 at a reported cost of $20 million. The 425-mile Oil Basin Pipeline (now Cenex) from Laurel to Minot was also built around this time. The Husky Pipeline Company completed a line from Cody, Wyoming to Billings and the Yellowstone Pipeline Company extended a line from Helena to Great Falls in 1960. The era of export had begun for Montana refined fuels. In 1961, nine refineries were operating at least seasonally in the state. Pipeline miles had increased from 842 miles in 1949 to 1,712 miles by 1958.
The Montana Oil and Gas Conservation Commission was formed in 1954 with broad authority: to track production; reduce waste and boost secondary production; set spacing requirements in certain fields, and oversee well closures and the disposal of salt water and oil field wastes.
Production in Montana rose from 8 million barrels of crude in 1950 to 21 million barrels by 1956. The record year during the era was 1959 when almost 30 million barrels was produced, which still comprised only about a three-day national supply. Depths in the Williston Basin were approaching 12,500 feet by the late 1960s. The state produced a record 48.46 million barrels of crude in 1968, after which production declined greatly.
The former Kenco Refinery near Wolf Point, DEQ photo
A company called Jet Fuel would build a small refinery in Mosby in 1953 to service the needs of the Glasgow and Great Falls bases. The North Star Refinery near Shelby became operational in 1963. Humble Oil dedicated a modern refinery hydrocracker at its refinery in Billings in 1965. The development of Billings as a refining center also saw the rise of refined pipelines to export product out of Montana.
The 1970s and 80s would see further consolidation of refineries. Big West would close in Sunburst in 1977. In 1987 the last refinery in Cut Bank, then owned by Flying J out of Utah, would close after failing to earn a contract extension to process Montana Power Company’s natural gas.
Historic Development of Natural Gas in Montana
The historic discoveries and development of natural gas in Montana closely parallels that of petroleum. Natural gas has long been associated with production of crude oil and the term "associated gas" is that produced alongside crude oil. Even today natural gas at oil production sites may be flared off for many months because of its comparatively low price and separate infrastructure to bring it to markets.
Seamless electric welded steel pipe made long-range transportation of natural gas economical in the 1920s. Natural gas was known in Montana as early as 1913, but actual production drilling did not begin until 1926, as associated gas, and 1929, as a target commodity in fields near Cut Bank.
In 1930, a major oil company drilling in Carbon County near Bridger brought in a gas well that flowed at 11 million cubic feet per day while yielding only a modest amount of oil. This became known as the Dry Creek Field. Natural gas fields were also developed in the 1930s in the Kevin-Sunburst area and Bodoin Dome near Saco. The Big Coulee Field southeast of Harlowton came into production in the mid-1950s.
By early 1931 work began to connect a natural gas pipeline between the Cut Bank Field production area with the industrial centers of Butte and Anaconda. The main line to Wolf Creek was 20-inch with a 16-inch line extending to the Butte-Anaconda junction. Branch lines were laid to Helena and Deer Lodge. The line was completed in summer, 1931 with line pressure running at 330 pounds and a peak load of 20 million cubic feet per day. The line was pressurized from the gas fields until 1949 when a 1,200-horsepower compressor was installed near the absorption plant at the north end of the line. By 1950 a connection was made between Butte and Bozeman, which accessed the Dry Creek Field, and a line was brought into Great Falls for the copper refinery there. Missoula's service began in 1956.
As the Montana Power Company entered into arrangements for Canadian gas, by the late 1950s storage on the system was required and compressed injection systems were utilized in depleted gas fields at Box Elder, Shelby, and Cobb Storage Field in the Cut Bank production area.
The history of oil and gas development in Montana is closely tied to the natural deposits found here. Historically, exploited deposits have proven modest, particularly in comparison to discoveries in North Dakota, Alberta, and Wyoming. After a turbulent history, oil refining remains an important economic component in the state. All four currently-operating refineries have invested in significant upgrades or have upgrades underway. This, too, follows a national trend of expanding capacity at existing refineries rather than constructing new ones. State-wide refining capacity reflects these trends.
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A History of Petroleum County, 1989
Fleming, H., Montana Gasoline Prices and Competition, Montana Record Publishing, Helena, 1958
Kirk, C., History of the Montana Power Company, 2008
Hennip, R.D., History of the Crude Oil Industry in Montana, 1973