GULF OIL CORPORATION
GULF OIL CORPORATION. The Gulf Oil Corporation was an expansion of the J. M. Guffey Petroleum Company, which was organized in May 1901, and which acquired the interests of Anthony F. Lucas and John A. Galey in the Spindletop Oilfield. In this company, organized to exploit the new oil discovery, Guffey had a seven-fifteenths interest, while A. W. and R. B. Mellon and some of their associates including James H. Reed, William Flinn, J. D. Callery, T. H. Given, and Joshua Rhodes owned the balance. Later in the same year the same men organized the Gulf Refining Company of Texas for the purpose of refining and marketing the crude oil produced by the Guffey company, and a refinery was built at Port Arthur. By the fall of 1902 approximately $6 million had been invested in the two companies, and the dwindling production at Spindletop made necessary a reorganization. W. L. Mellon was placed in active charge of the Guffey and Gulf operations, although J. M. Guffey remained the nominal head for five years more. Only the most efficient management kept the two companies from going bankrupt during the period 1902 to 1907, when Texas crude production continued to decline. In January 1907 the Gulf Oil Corporation was formed with A. W. Mellon as president, and Guffey’s interest was purchased for about $3 million. The Gulf Oil Corporation then built a 400-mile pipe line from Port Arthur to the Glenn Pool field in Oklahoma, which had been discovered in 1906, and began refining Oklahoma crude in September 1907. A subsidiary, the Gypsy Oil Company, was organized under Frank A. Leovy to handle production operations in Oklahoma. Altogether the reorganization and expansion program required an additional investment of $7 million, but by the end of 1908 Gulf’s position had become relatively strong. In less than two years following the opening of the Glenn Pool pipeline Gulf’s production had more than doubled and had exceeded the refinery throughput of 11,000 barrels daily. During the next twenty years Gulf’s growth was steady, the company expanding its production operations into nearly all of the major oilfields in the United States and into Mexico and Venezuela. In West Texas Gulf became the leading producer. A network of pipelines connected Gulf’s production with refineries at Port Arthur, Fort Worth (built in 1911), Bayonne, New Jersey (1925), Philadelphia, Pennsylvania (1926), and Sweetwater, Texas (1928). By 1928 the company’s assets had grown to an estimated $232 million, while crude production rose to 78 million barrels annually.
Gulf’s organization was characterized by integration from production of crude to retailing of refinery products. In 1929 it was decided to expand the retail business, which had been concentrated in the south and east, into Ohio, Illinois, and Michigan. At the beginning of the Great Depression a $90 million expansion program was undertaken, which included the building of refineries in Cincinnati, Toledo, and Pittsburgh, the construction of an 800-mile pipeline from Oklahoma to Ohio, and the acquisition of more than 400 marketing facilities. Partially because of the expansion program the depression severely affected Gulf; for the first time in its history the company operated at a loss in 1931. The depression period brought about retrenchment and some internal reorganization of the company. In general the policy of maintaining and operating service stations was abandoned in favor of leasing them to independent operators, and each of the four major departments (production, transportation, refining, and marketing) was placed on a separate accounting basis. By the mid-1930s the company began to prosper again, and the dramatic increase in demand for oil during World War II further fueled the company’s expansion. In 1950, with a capital investment of $1,075,000,000 and owned by more than 32,000 persons, the Gulf Oil Corporation had 43,000 employees, carried on extensive production in the United States, Venezuela, Kuwait, and Canada, operated 10,000 miles of pipelines and a large fleet of tankers, and sold the products of its refineries through more than 36,000 service stations in the United States and nearly as many others in foreign countries. In 1951 Gulf Oil Corporation completed one of the world’s largest (at the time) catalytic cracking units in Port Arthur, Texas, and in the same year began construction of plants in Port Arthur for the manufacture of ethylene and isooctyl alcohol, a major move in developing its petrochemicals capacity. While the Fort Worth, Sweetwater, and Pittsburgh (Pennsylvania) refineries were dismantled in the 1950s after the facilities had become obsolete, the Port Arthur and Philadelphia refineries continued to expand and the Toledo and Cincinnati refineries were modernized. New refineries were built or acquired in the United States, with additions at Purvis, Mississippi, Santa Fe Springs, California, and Venice, Louisiana.
Increasing its capital expenditures in the 1950s, Gulf joined with B. F. Goodrich Company to form a new company, Gulf-Goodrich Chemicals, Incorporated, through which Gulf maintained an important position in the manufacture of synthetic rubber from petroleum-derived feedstocks. It also acquired Warren Petroleum Corporation in 1956 and that same year increased its interest in British American Oil Company by trading Gulf’s Canadian properties for 8,335,648 common shares of British American stock, bringing Gulf’s interest in that company to 58 percent. Gulf also extended its exploration and production operations in the 1950s, including an extensive program for exploration of underwater leases in the Gulf of Mexico off Louisiana, which became one of the company’s leading domestic producing areas. With the conclusion of World War II, Gulf, as a 55-percent participant in Kuwait Oil Company, resumed operations in Kuwait to put into production petroleum discovered there about the time of the war’s outbreak. Production from these vast reserves climbed steadily and yielded for Gulf’s interest an average of more than 1.3 million barrels per day in 1967. Gulf owned or had an interest in twenty-two refineries in addition to those in the United States. Adding to its European refining capacity, refineries at Milford Haven, Wales, and Huelva, Spain, went on stream in 1968 and a permit was obtained for construction of a refinery at Milan, Italy, to further strengthen Gulf’s capacity to supply products for its growing European markets. Discoveries in Bolivia and Nigeria were developed in the 1960s and added significantly to Gulf’s foreign oil production. Production from discoveries in Colombia and Cabinda was expected to begin before the end of 1968, and substantial discoveries were made in Ecuador. Gulf was producing oil and gas from eleven nations as its explorations continued in thirty countries. A milestone in Gulf’s marketing operations was reached in 1966. With the acquisition in 1960 of Wilshire Oil Company of California and in 1966 of mid-continental retail outlets and storage and distribution facilities of Cities Service Oil Company, Gulf for the first time had service station representation in all forty-eight adjoining states of the continental United States. Gulf’s transportation facilities moved more than a million barrels of crude oil daily from oilfields to refineries throughout the world by pipelines and tankers. In 1968 the world’s largest ship, the 312,000-deadweight-ton tanker, Universe Ireland, was placed in service for Gulf. It was the first of six such tankers planned for use by the company to deliver Middle Eastern and West African crudes to deepwater terminals at Bantry Bay, Ireland, and at Okinawa for transshipment to European and Far Eastern refineries by smaller vessels. Refining capacity was increased along with Gulf’s expansion in other petroleum operations. The company owned full or partial interest in thirty United States and foreign refineries. In 1967 the company processed an average of 1,295,000 barrels of crude oil daily. By the 1960s Gulf had become a major producer of petrochemicals, plastics, and agricultural chemicals. In 1967 Gulf entered the field of nuclear energy. In this program it began uranium exploration and acquired the General Atomic Division of General Dynamics Corporation, renaming the subsidiary Gulf General Atomic Incorporated. At the end of 1967, with total assets of $6.5 billion owned by more than 163,000 shareholders, Gulf Oil Corporation had 58,000 employees working in more than fifty nations to provide the world with petroleum and other energy-producing products.
Gulf fell on hard times in the 1970s. Several of its key management figures were implicated in illegal political contributions in the early 1970s, and their successors, in the eyes of many in the oil community, failed to provide clear and aggressive leadership. The company’s long and valuable association with Kuwait ended in 1975, when Gulf’s operations there were nationalized by the Kuwaiti government. In spite of costly attempts to find new sources of oil, the company’s reserve supply was rapidly dwindling by the late 1970s, declining by 40 percent between 1978 and 1982. In 1983 Gulf was still the sixth largest oil company in the United States and managed to turn its oil reserve crisis around, replacing 95 percent of its reserves by the end of the year. Because of what many perceived to be its weak and excessively bureaucratic management structure, Gulf seemed a good candidate for a takeover. In August of 1983 Thomas Boone Pickens’s Mesa Petroleum Corporation, rebounding from an unsuccessful attempt to acquire General American Oil Company, began to buy up shares of Gulf Oil. After Mesa had gained control of 11 percent of Gulf’s stock, Pickens engaged in a proxy fight for control of the company. Gulf executives fought Boone’s takeover and eventually invited takeover offers from other companies and collections of investors. On March 5, 1984, the Gulf board voted to sell the company to Chevron (Standard Oil of California) for $13.2 billion. Gulf operations were merged into Chevron in what was the largest corporate merger to date.
Craig Thompson, Since Spindletop: A Human Story of Gulf’s First Half-Century (Pittsburgh: Gulf Oil, 1951). Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power (New York: Simon and Schuster, 1991).
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Posted on October 16, 2011, in History on Company's, Port Arthur, Texas, Venezuela and tagged Gulf, gulf of mexico, Gulf Oil, Gulf Oil Ccorporation, Gulf Oil Corporation, Kuwait Oil Company, Oklahoma, Port Arthur, Port Arthur Texas, United State, Venezuela, World War II. Bookmark the permalink. Comments Off on GULF OIL CORPORATION.