Pure Oil Company

Feb 23, 2009 | Posted in Essays, Pennsylvania Oil Companies

By Neil McElwee, 2009

The Oil Region’s independent producers and refiners met in January 1895 in Butler to discuss consolidation of their interests. As a result of those Butler meetings, the Pure Oil Co. was formed in the autumn of 1895 as a marketing company to serve the business interests of the independent refiners, producers and pipeline operators of the Pennsylvania Oil Region.

The independent refiners and producers completed a gathering pipeline in early 1893 from Coraopolis north through Allegheny County and Butler County to the refineries in the Oil Creek Valley from Oil City to Titusville. This pipeline was called the Producers’ & Refiners’ Oil Co. Pipe Line. In 1893, the Oil Creek refiners received 2,500 to 3,000 barrels a day of crude from this line. The Producers’ & Refiners’ Oil Co. Pipe Line was connected to independent producers in the McDonald Field and in Butler County. This line was built so that the independent refiners could pay a lower gathering pipeline fee, 15 cents, rather than the prevailing 20 cents per barrel charged by Standard Oil’s National Transit Co. The Producers’ and Refiners’ Pipe Line pumped crude from the McDonald Field that was piped to the firm’s Coraopolis terminal by a second independent pipeline, the Producers’ Oil Co. Pipe Line.

To connect the independent Bradford and Warren refineries with the Producers’ & Refiners’ system, a third independent pipeline was built by Bradford and other Oil Region investors in 1892 southwest from Bradford through Warren and Titusville terminating in Oil City. This line was called the United States Pipe Line. Bradford’s Lewis Emery was the leader of the effort. Emery announced his intention of extending the United States Pipe Line east to the seaboard, thus giving the Oil Region independent oil interests a trunk line that would be cost competitive with Standard Oil’s trunk pipelines out of the Region. The United States Pipe Line actually consisted of two parallel lines, a four inch crude line and a separate five inch refined product line.

Pure Oil was formed to market a consortium of independent refiners’ oil to East Coast markets and to Europe. The firm’s first President was David Kirk, elected in 1895. He was replaced in 1896 by James W. Lee. The firm was incorporated as a New Jersey corporation. To fulfill the requirements of New Jersey corporate law, Pure Oil met once a year in Taylor’s Hotel in Jersey City for the corporation’s required annual meeting. The actual executive headquarters were established in Pittsburgh with operational headquarters in Oil City.

Beginning in March 1896, Pure Oil marketed illuminating oil by tank wagon on the streets of Philadelphia and New York in direct competition with Standard Oil. The firm also competed vigorously with Standard’s South Penn Oil for available crude in the Appalachian Field. The organizers of the firm were politically savvy and connected. They used a committee of the Congress, the Industrial Commission, to advance their competitive position. The firm built in April 1896 bulk terminals in Amsterdam and Hamburg and established extensive marketing networks in the Netherlands and Germany. In the Netherlands and Germany, Pure Oil competed with Standard Oil, the Nobels, the Rothchilds and the Deutchbanke for market share.

Pure Oil by way of a 1900 consolidation became the holding company for the three independent pipelines: the Producers’ & Refiners’ Co. Pipe Line, the Producers’ Oil Co. Pipe Line and the United States Pipe Line. In addition to originally marketing the unbranded refined output of fifteen or so existing independent refineries in the Oil Region, Pure Oil operated a refinery, the former Foggan Refinery, under the Pure Oil name in Titusville. These Oil Region refineries by 1900 had a combined capacity of 12,000 barrels a day. Pure Oil completed a refinery at Marcus Hook on the Delaware River in 1904. The United States Pipe Line delivered its first crude, 600 barrels a day, to the site in 1904. By 1906, the pipeline was delivering 1,800 barrels a day. Pure Oil operated their own tanker, the Pennoil, between Marcus Hook and Europe and expanded its marketing along the Rhine and in Holland.

To ensure a supply of crude, Pure Oil incorporated the Pure Oil Producing Co. in 1902. The firm drilled a good number of wells in Southeastern Ohio and in West Virginia. Pure’s producing company added 1,900 barrels a day to the total of 6,000 collected at the time by Pure Oil’s gathering system.

Pure Oil enjoyed notable success in the United States and Europe for over two decades. The firm withdrew completely from Europe by 1917. New York investors perceived the Pure Oil owners might be in a mind to sell. These New York investors asked a Columbus, Ohio firm, Ohio Cities Gas, to evaluate the Pure Oil property. The New York investors backed out of pursuing Pure Oil. Beman Dawes of Marietta, Ohio and his brothers, who owned Ohio Cities Gas, instead made an offer of $24.50 a share for Pure Oil. Beman Dawes believed Pure Oil’s existing gathering pipelines and producing properties complimented his own growing oil production and marketing very well. Additionally, Dawes was building a refinery in Oklahoma that could use the crude production of Pure Oil property in that state. The Pure Oil investors accepted, realized a net gain of $22,000,000, and the Pennsylvania Pure Oil firm in 1917 passed into history.

Aware of a pressing need to establish a brand and corporate identity more competitive in the marketplace, Dawes renamed Ohio Cities Gas in 1920. The Ohio firm adopted the old Pennsylvania name, Pure Oil.