Shortly after the discovery of a natural gas jet in August 1928, the Murchison Oil Company suddenly ceased operations due to insufficient funding.
Shareholders met to consider voluntary liquidation, but the resolution was defeated. Following the discovery of a gas blow in the Blackwater Valley, considered an indication of petroleum-bearing strata, a delay in any further decisions was agreed until the end of September.
A tentative scheme for reorganising the company was proposed, and several shareholders contributed additional funds to allow the search for oil to continue. Analysis of the gas sample revealed the presence of olefines and a high percentage of ethane.
In March 1929, geologist Dr Leonard Bossard was engaged to carry out further surveys in the Blackwater Valley. At the same time, drilling in the Mangle Valley continued, with the bore struggling to reach the petroliferous horizons.
When the devastating 1929 earthquake struck Murchison, geologists reported a thick pall of vapour hanging over a ridge. As a result of the quake, the vapour spread along the valley for a distance of almost two miles, and for more than an hour there was a strong smell of sulphurated hydrogen.
Spencer was convinced the displacement of the ridge had been caused by a massive underground explosion of petroleum gas. He believed the gas had formed within the Miocene strata and eventually forced its way through a thin shale cap, releasing tremendous pressure and shattering part of the mountain range.
His theory appeared to echo long-standing local accounts. For years, residents had reported hearing violent, bomb-like explosions reverberating through the mountains around Murchison.
The company’s 1930 report was read in November, and its expired leases were renewed for a further five years. In an effort to attract investment, the directors submitted a detailed proposal, including maps and data, to one of England’s leading oil companies.
However, its geologists concluded the area of sedimentary rock was too small to justify involvement. Companies in Australia and Canada were also approached, but with the 1929 Depression still having a major global impact, all parties considered the timing unfavourable for raising capital for a speculative venture.
The directors could only recommend holding on until conditions improved, while continuing efforts to attract outside investment.
By August 1932, the company was again struggling to raise funds. Shareholder contributions had been exhausted, with just £42 remaining.
In 1937, shareholders continued to vote against liquidation, provided Spencer was given the opportunity to secure overseas financial backing. This also proved unsuccessful.
An agreement was then sought to offer the company’s entire undertaking for sale. Its prospecting warrant over 1,000 acres in the Blackwater Valley had lapsed, and the only saleable asset, the plant, was obsolete and unmaintained.
The company was voluntarily wound up in 1940, a decision later recorded in The New Zealand Gazette.
