First oil-producing well on Osage land is completed

On October 28, 1897, the first oil-producing well on Osage land is completed, setting the stage for one of the greatest oil booms in American history. The discovery brings extraordinary wealth to members of the Osage Nation, making them the richest people in the world per capita. But their newfound fortunes also make them targets of a murderous conspiracy.  

The Osage people originally lived on fertile land spanning parts of present-day Missouri, Kansas and Nebraska in permanent villages. As the United States expanded westward, the Osage were driven from their land through a series of broken treaties and land cessions with the U.S. government. In the early 1870s, the Osage purchased 1.5 million acres of Cherokee land in Indian Territory (modern-day Oklahoma) and established the sovereign Osage Nation. The arid grasslands weren’t suitable for agriculture, so the Osage initially supported themselves by leasing grazing rights to cattlemen. 

The first oil lease was purchased in 1896 by a banker from Kansas named Henry Foster. The terms were generous: Foster received a “blanket lease” giving him the right to drill anywhere in Osage territory. In exchange, the Osage got 10 percent of all oil revenue, plus a $50 annual fee per well.  

When Foster died suddenly, his brother Edwin took over the lease, forming the Phoenix Oil Company in 1896. The company’s first two exploratory wells were a bust, but the third well, completed on October 28, 1897, tapped a reservoir of high-grade oil 1,600 feet below the surface.

The first oil-producing well yielded 20 barrels a day, but Phoenix Oil didn't sell its first barrel until 1900, when a railroad reached nearby Bartlesville, Oklahoma. The company became the Indian Territory Illuminating Oil Company in 1901 and steadily expanded production, operating 300 wells by 1905.

In 1906, the Osage Allotment Act divided the reservation into 2,229 parcels of land. Each tribal member received a parcel of 657 acres along with a single “headright,” or share of the tribe's oil royalties. By law, Osage headrights couldn't be sold. They could be inherited, including by non-Osage heirs.

In 1916, the blanket lease held by the Indian Territory Illuminating Oil Company expired and the Osage Nation auctioned individual oil leases to the highest bidders. Oil magnates like J. Paul Getty, Harry Sinclair and Frank Phillips gathered at outdoor auctions under the “Million Dollar Elm” and paid vast sums to buy Osage oil rights.  

In the 1920s, Osage oil fields were some of the most productive in the world, producing millions of barrels a year. In 1923 alone, the Osage Nation earned more than $30 million in royalties—the equivalent of over $500 million today. Each individual headright was worth millions of dollars and the roughly 2,000 members of the Osage Nation became among the richest people on the planet per capita. The revenue from the Osage oil fields was greater than all American gold rushes combined.  

The Osage Nation’s newfound wealth attracted outsiders eager to claim a share. Discriminatory laws and policies subjected many Osage citizens to financial guardianships, giving court-appointed guardians control over their money. Corrupt guardians exploited the system, stealing millions of dollars from Osage accounts.

Then the murders began. It’s estimated that more than 100 Osage men and women were killed for their headrights during a harrowing period known as the “Reign of Terror.” Some perpetrators married Osage women to inherit their wealth, then murdered them through poisoning or other means. The killings were chronicled in David Grann's acclaimed 2017 book Killers of the Flower Moon: The Osage Murders and the Birth of the FBI, which director Martin Scorsese adapted into a 2023 film.