Petrolite Corporation

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Petrolite Corporation

369 Marshall Avenue
St. Louis, Missouri 63119
U.S.A.
(314) 961-3500
Fax: (314) 241-1833

Public Company
Incorporated: 1930 as Petrolite Corporation, Ltd.
Employees: 1,800
Sales: $364.8 million (1995)
Stock Exchanges: NASDAQ
SICs: 2899 Chemical Preparations, Not Elsewhere Classified; 3569 General Industrial Machinery, Not Elsewhere Classified

A leader and a pioneer in the oil field chemical industry, Petrolite Corporation manufactures specialty chemicals, equipment, polymers, and waxes that enable its customers to realize maximum performance for their products and processes. From its founding in the 1930s on into the mid-1990s, Petrolite has culled a tradition of innovation, developing proprietary products, processes, and equipment to serve a variety of industries. However, throughout its existence the company has relied on sales to the petroleum industry for the bulk of its revenues. During the mid-1990s, Petrolite derived the majority of its annual sales from the production of specialty chemicals formulated to assist oil drillers and refiners in eliminating or separating the sundry contaminants impinging upon optimum production.

Founded in 1930, Petrolite entered the business world at a running start, having already established itself as an integral supplier to the petroleum industry before its inaugural year of business was concluded. For this early momentum, the company was indebted to the work of two scientists, William S. Barnickel and Frederick G. Cottrell, whose pioneering efforts during the early 20th century ceded Petrolite the technological expertise that would enable it to distinguish itself early on as a highly respected and innovative competitor within its industry. When they began their experimentations, Barnickel and Cottrell were separated by nearly 2,000 miles, their respective scientific work conducted independently of one another, but the formation of Petrolite united the groundbreaking discoveries of each man, creating a flourishing concern that would function as an important supplier to the petroleum industry and other industries for the remainder of the century.

William S. Barnickel was a 29-year-old St. Louis chemist working in Sapulpa, Oklahoma, as a consultant in 1907 when he began investigating a problem that was confounding oil drillers in the area. At night, while looking across the oil fields surrounding Sapulpa, Barnickel watched bright plumes of fire spewing from the ground, their intensity fueled by earthen pits of oil. During the day, the apocalyptic nighttime display gave way to billowing clouds of black smoke belching from the pits. Though spectacular, the fire and the smoke were representative of the futile effort to dispose of crude oil mixed with water, a worthless substance known by oil workers as “roily oil.” For years, oil drilling companies had endeavored in vain to find a way to dispose of the wet crude. Channels were dug in the ground to guide the oil into earthen pits, where it was hoped the water would settle out, but the results were only negligibly successful. Heating the oil with steam coils had also been tried, but the process had proved to be prohibitively expensive, leaving oil drillers saddled with mounting levels of roily oil.

Prodded by the sight of flames and smoke to find a solution to the problem, Barnickel took to the oil fields in 1907, hoping to discover a chemical process that would separate water from oil. After four years of putting his training as a chemist to practical use in the fields, Barnickel developed a chemical process in 1911 that economically and efficiently recovered crude oil from emulsified oil, a discovery that yielded Barnickel the first of several U.S. patents in 1914. Once he had discovered the chemical process that would rid oil fields of environmentally harmful roily oil, Barnickel contended with his next formidable task: gaining the ability to prepare large quantities of his treating chemical in the field. In 1916, he achieved his objective by modifying a small factory in St. Louis to suit his needs; then, in the fall, Barnickel sold the first two drums of his product, which was marketed under the name “Tret-O-Lite.”

Tret-O-Lite, manufactured by the Tretolite Company, was an instant success. Within a few short years, oil companies in Oklahoma, Texas, and Louisiana were using the Tret-O-Lite process to recover hundreds of thousands of barrels of wet crude, gaining marketable oil from what previously had been a worthless substance.

At roughly the same time Barnickel was surveying the burning and smoking pools of roily oil in Sapulpa and about to launch his scientific investigation, another scientist, nearly 2,000 miles to the west, was completing a scientific discovery of his own. Dr. Frederick G. Cottrell, while working at the University of California, had developed a method of separating solid particles from flue gases by using electricity. When he learned of the vast amounts of California crude oil being discarded because of its water content, Cottrell’s mind turned to the same problem riddling Barnickel in Sapulpa.

Cottrell and Barnickel were pursuing the same objective, but their approaches were different. Barnickel found his answer through chemistry; Cottrell, on the other hand, hoped to apply his newly discovered method of precipitating solid particles from flue gases to the roily oil tainting California’s oil fields. By 1908, Cottrell had done just that when he used electricity to separate water from oil four years before Barnickel would achieve the same result with his chemical process. In 1909, the first commercial application of Cottrell’s technology was performed successfully; then two years later, the same year Bar-nickel developed his Tret-O-Lite process, Cottrell’s pioneering work in reclaiming crude oil from roily oil through electricity gave birth to a new company, the Petroleum Rectifying Company of California.

Such were the origins of Petrolite, formed in 1930 when the Tretolite Company merged with the Petroleum Rectifying Company of California and linked the technologies first developed by Barnickel and Cottrell. From these two demulsification techniques, the company’s expertise grew to embrace a wide range of demulsification processes for a number of different industries, each of which benefited from Petrolite’s ability to isolate and remove unwanted contaminants.

Though the contributions of Barnickel and Cottrell predicated Petrolite’s formation and reputation during its formative years, providing the foundation upon which the company was built, nearly all of the company’s success after 1930 was attributable to the pioneering tradition established by wave after wave of Petrolite inventors, scientists, and engineers. The consistent development of sophisticated technologies and their applicability to other industries enabled Petrolite to move past the historic discoveries of Barnickel and Cottrell and establish a presence in other markets that would support its existence for decades to come.

One such diversifying move came shortly after Petrolite’s formation in 1930, when company employees developed a process for recovering microcrystalline waxes from crude oil tank bottoms. Once recovered, the refined microwaxes were sold by Petrolite to polish manufacturers and other companies engaged in a variety of businesses, ranging from food packaging to cosmetics. Other innovative discoveries followed, each one resolving a difficulty that plagued a particular industry. Petrolite scientists and engineers pioneered technologies that prevented the corrosive effects of sour gases deep inside oil wells, developed electrostatic desalting technology to remove salt and other contaminants from crude oil streams inside refineries, and created the first turbine fuel treatment system, which was used by the power generation industry to purify low-grade fuels used in gas turbine engines.

By the beginning of the 1960s, after the company’s legacy of innovation had driven its growth for three decades, Petrolite was generating roughly $30 million a year in sales, half of which came from sales to the petroleum industry. Although diversification had engendered a more well-rounded company, leading Petrolite into several key markets, the company was dependent to a large degree on the sale of its processing equipment, chemical formulations, and services to the petroleum industry to sustain its operation. During the late 1960s, after profits stagnated for several years, management restructured Petrolite’s global marketing operations and its prolific research activities, transferring full control over both domestic and international operations to the company’s headquarters. After this change, Petrolite entered the 1970s and ushered in the decade by eclipsing the $50 million mark in annual sales, recording its 40th consecutive year of dividend payments.

The company’s operations by this point were organized into three divisions, each representing a pillar that would support Petrolite’s existence in the decades to come. With manufacturing plants in St. Louis, Missouri; Brea, California; and Kirby, England, the company’s Tretolite division ranked as the market leader in the oil field chemical industry, supported by its traditional product line of oil heating and water treating specialty chemicals. The production of oil field and refining equipment, industrial gas turbines, and a turbine fuel treating system used by the utility industry was assigned to Petrolite’s Petreco division and its manufacturing facility in Houston. In Barnsdall, Oklahoma, and Kilgore, Texas, Petrolite operated its commercial wax production business through its Bareco division, which ranked as the world’s leading producer of microcrystalline waxes, accounting for nearly 30 percent of worldwide production. Supported by these three divisions, along with foreign subsidiaries in Canada, England, France, and Germany, Petrolite stood well-positioned for the growth it would record in the coming years, growth that would greatly outpace what had been achieved during the previous 40 years.

By the mid-1970s, Petrolite was manufacturing nearly all of its products at unprecedented levels, with its Petreco division recording particularly vigorous growth abroad, as the international demand for oil field and refining equipment rose substantially. Annual sales halfway through the decade approached $100 million, having nearly doubled in five years. As it had from the outset, the company relied on extensive research and development to fuel its growth, with the internal generation of new proprietary products boosting sales as they entered worldwide industrial markets. This emphasis, combined with the growing wealth and importance of the petroleum industry, propelled Petrolite forward, positioning the company as a vital resource for oil companies in pursuit of maximum production.

By looking inward to Petrolite research specialists to develop products, chemicals, and processes that enabled the petroleum industry to clear previously insurmountable hurdles, the company maintained a technological lead over its competition, consistently developing new products to fuel its growth. One Petrolite employee, Dr. Melvin DeGroote, was named inventor or co-inventor in 963 U.S. patents, the greatest number of chemical-related patents ever issued to one individual, a record that epitomized Petrolite’s commitment to innovation. The intensity of this commitment continued to move Petrolite into new businesses as the company moved past the 1970s, including the entry into a new field that would develop into an integral component of the company’s overall business scope during the mid-1990s. When the supply of raw materials required to sustain Petrolite’s various manufacturing activities began to wane, company scientists developed a family of unique synthetic polymers. The production of these polymers, which proved to be more desirable than the natural materials they replaced, became one of the primary business segments supporting Petrolite and one of the highlights of the company’s business during the 1990s.

During the 1990s, Petrolite increasingly looked to alliance agreements with customers and other manufacturers to enhance the development of new products. In 1992, one such agreement was struck with Houston, Texas-based Energy Biosystems Corp. to develop and bring to market a biodesulfurization process for use in the refining industry. The following year another alliance agreement was reached with Chevron U.K. Ltd., which designated Petrolite as the sole supplier of specialty chemicals and related services to Chevron’s North Sea oil platform.

As Petrolite entered the mid-1990s, it was looking to increase the number of its alliances within the petroleum industry. In late 1994, the company’s polymer division and Penzoil Products Company agreed to form a 50-50 partnership called Bareco Products, which was created to provide a broad line of wax products to domestic and international wax users. As the company prepared for the late 1990s, a weak North American petroleum market was educing Petrolite to increase its involvement in foreign markets. Toward this objective, the company opened a $6 million, 40,000-square-foot laboratory and office facility in Liverpool, England, in the mid-1990s. As the only technical facility of its kind outside North America, Petrolite’s International Technology Center promised to strengthen the company’s position in overseas markets, providing vast new areas of growth for the future.

Principal Subsidiaries

Ecuatoriana de Petroquimicos-Petrolite S.A. (Ecuador); Luz-zatto & Figlio S.A. (France); Petrolite Canada Inc.; Petrolite France, S.A.; Petrolite GmbH (Germany); Petrolite Handels-gesellschaft m.b.H. (Austria); Petrolite Iberica, S.A.; Petrolite International Sales Corporation; Petrolite Italiana S.p.A. (Italy); Petrolite Limited (England); Petrolite de Mexico S.A. de C.V.; Petrolite Nederland B.V.; Petrolite Norge A/S (Norway); Petrolite Pacific Pte. Ltd. (Singapore); Petrolite Saudi Arabia Ltd.; Petrolite Suramericana, S.A. (Venezuela); Petrolite Wax Partner Company; P.T. Petrolite Indonesia Pratama; South America Petrolite Corporation; Petrolite Trinidad, Inc.; A.B. Engineering.