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South Penn Oil and Pennzoil

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

By Neil McElwee, 2009

Standard Oil showed little interest in entering the production function of the oil business until the latter 1880’s. In response to what Standard perceived as a serious threat from the Producers Protective Association to its supply of crude in the Appalachian Field and to the viability of its refineries and extensive Appalachian pipeline network, Standard Oil organized the South Penn Oil Co. in 1889. South Penn was organized as Standard’s sole producing company in the Appalachian region including Pennsylvania, West Virginia, New York and Southeastern Ohio. The firm’s original headquarters were located in Oil City and Noah Clark of Oil City was named the first President.

South Penn early on developed some remote, deep wells in West Virginia and Noah Clark’s oil lands in Elk and McKean County. By the end of 1891, the firm had purchased Anchor Oil - owned by Jacob Vandergrift, Jacob Cadwallader and John D. Archbold; Union Oil - owned by H. L. Taylor, John McKinney and James McKinney; Midland Oil - owned by the McKinney brothers; a substantial portion of Thomas Phillips’ extensive Butler County oil leases and Vandergrift’s and W. J. Young’s Forest Oil property in New York and Northern Pennsylvania.

In the administrative reorganization of the Standard Oil Trust’s properties in 1892, John D. Archbold was named President of South Penn Oil and Noah Clark designated the Vice President. By 1898, South Penn Oil was the largest producing firm in the country. The company that year produced 38% of all Appalachian crude. That number represented 36% of all the crude brought to the surface that year in the country. W. J. Young, formerly of Oil City, was named Vice President of South Penn Oil in 1902. South Penn kept its corporate headquarters in Oil City until 1917. Young, however, established a second South Penn corporate office in the Vandergrift Building in Pittsburgh.

South Penn was spun off as a distinct stand-alone entity with the 1911 dissolution of Standard Oil. Joseph Seep was named President of South Penn Oil in 1911. Seep was named Chairman in 1918 and served in that capacity through 1928. L. W. Young, Jr. succeeded Seep as President in 1918 and served as President through 1932. In 1917, South Penn moved its corporate offices from Oil City to Pittsburgh. The firm was located in the Chamber of Commerce Building, on Seventh Ave. just across from the Gulf Building, until 1946.

Water flooding of old oil wells was legalized in Pennsylvania in 1921. This method of secondary recovery proved particularly effective in the Bradford Field. South Penn was the leader in its use. As the Bradford Field made a remarkable recovery, South Penn looked for a refining partner to compliment its resurgent Appalachian production. South Penn acquired 51 % of Pennzoil in 1925.

The PENNZOIL trademark was registered August 1, 1916, and the familiar Liberty Bell icon was introduced immediately after. The Pennzoil brand of motor oil was marketed in California by the Panama Lubricating Oil Co., a firm started by Charles Suhr, Daniel J. Cavanaugh, R. A. Browne, and Luther H. Johnson in 1913. Luther Johnson was the manager in California. In the East, the Pennzoil brand of motor oil was distributed by the Oil City Oil & Grease Co., a lube oil marketing firm established by Charles Suhr and Daniel J. Cavanaugh in 1908. R. A. Browne joined the small Oil City Oil & Grease firm in 1909. Browne had gained considerable sales experience in the field while employed by Atlantic Refining.

Suhr and Cavanaugh introduced the “Pennsoil” brand, spelled with an “s”. In 1915, the “s” was replaced with a “z” at the suggestion of the California marketing group.

The Oil City Oil & Grease Co. and the Panama Lubricating Oil Co. obtained their motor oil from the Germania Refining Co. of Rouseville. Germania Refining consolidated in 1914 with the Penn Refining Co. Both firms had plants located along Oil Creek in Cornplanter Township and Rouseville. Both firms’ original refineries were built in 1886. The Penn Refinery on the old Clapp Farm was limited to kerosene and gasoline production until 1904 when the lubricating oil capacity was added. The Germania Refinery property in Rouseville was originally a limited kerosene plant operated by the Valley Oil Co. until local investors purchased it at sheriff’s sale in 1889 and renamed the enterprise the Germania Refining Co. The former Valley Oil plant was improved in 1889 by Germania Refining to manufacture lubricating oil. Penn Refining and Germania Refining were owned by common investors including Henry Suhr, Samuel Justus, C. H. Duncan, Conrad Simmons, and Louis Walz. Though distinct business properties, Louis Walz served as the manager of both plants. Daniel J. Cavanaugh, originally the bookkeeper for Valley Oil, retained that position with Germania Refining.

For twenty-five years, the two refining companies were operated as separate businesses with separate books. They merged in 1914 under the Germania Refining Co. name. Charles Suhr was named President and General Manager of Germania Refining in 1916. During World War I, Germania found it wise to change its name in 1917 to the more patriotic Penn American Refining Co.

The Pennzoil brand sold so well that the Panama Lubricants Co. reorganized in 1921 as The Pennzoil Co., a new California corporation. Concurrently, the Oil City Oil & Grease Co. reorganized to form The Pennzoil Co., a new Pennsylvania corporation. Both firms continued to obtain their motor and lubricating oils from the Penn American Refining Co. of Rouseville. In the East, Pennzoil of Pennsylvania also marketed gasoline under the Pennzoil brand name. A third Pennzoil marketing company was established in New York in 1922 when the bulk plants and service stations between Buffalo and Albany of the Warren Oil Co. were acquired. In 1924, the three Pennzoil marketing companies introduced the first Pennzoil national advertising campaign with the slogan, “Sound you Z”. The three Pennzoil marketing companies in Pennsylvania, New York and California were merged with the Penn American Refining Co. in 1925 under the name of the Pennzoil Co. chartered in Pennsylvania. Charles Suhr remained the President.

To ensure adequate crude supply, Pennzoil that same year, 1925, sold 51% of the firm to South Penn Oil. The South Penn-Pennzoil merger prospered handsomely. The Pennzoil Company of Florida was established in 1927. The Victor Gasoline and Oil Company of Butler and the Union Oil Supply Company of Union City were purchased at that time and continued operations under their own individual names. The Oil Creek refineries were improved in 1928 to a combined refining capacity of 10,000 barrels a day. That same year, Pennzoil acquired the majority interest in the Columbia Refining Co. of Cleveland with its eighty service stations in Cleveland. In 1928, Pennzoil moved its headquarters from Rouseville to the new Drake Building in Oil City.

In March 1929, a twenty-five car train of Pennzoil tank cars left Oil City with 200,000 gallons of lube oil stock. Five days later, the train arrived in Los Angeles. This was the largest shipment of lube oil to that time and was given national media attention. Newsreels of the event were shown in movie theaters nationwide.

South Penn Oil brought in 400 new wells in the Bradford Field in 1927 and 300 the following year. With widespread use of water flooding, the Bradford Field production grew to 31,000 barrels a day in 1929 and 50,000 in 1930. South Penn Oil in 1929 in a joint venture with Tidewater Oil Co. of New York organized the Bradford Transit Co. The Bradford Transit was formed to operate as one system the extensive gathering pipeline systems both firms owned in the resurgent Bradford Field. George J. Hanks was named President of the Bradford Transit. Hanks would become President of South Penn Oil in 1944. South Penn Oil moved its corporate headquarters from Pittsburgh to Bradford in 1946.

In 1953, South Penn Oil increased its ownership of Pennzoil to 84.33 . In 1955, South Penn acquired the remaining stock of Pennzoil and owned 100 of the company as of June 30, 1955. The surviving corporate name became South Penn Oil. Pennzoil was designated a division of South Penn Oil. Charles Suhr was named Chairman of South Penn Oil and George Hanks was named President. South Penn moved its corporate offices to Oil City in 1956 and located in the remodeled Drake Building where Pennzoil had been for nearly three decades.

In 1952, Pennzoil purchased 50% of the Elk Refining Co. of Charleston, West Virginia, a firm that operated a chain of service stations in West Virginia under the Keystone brand. Pennzoil acquired the balance of Elk Refining Co. as well as Wolf’s Head Oil and Refining Co. of Oil City in 1963.

A major shareholder of South Penn Oil was the Tidewater Oil Co. owned by J. Paul Getty. Getty knew J. Hugh Liedtke of Texas who was involved in joint exploration activity with South Penn Oil. With Getty’s and Tidewater’s backing, Hugh Liedtke became a member of South Penn’s board of directors in May 1962. He was elected President in August of that year. Hugh Liedtke’s Zapata Petroleum and William Liedtke’s Stetco Petroleum, both Midland Texas production firms, merged with South Penn Oil in July 1963, and the new national corporation was renamed simply Pennzoil. Hugh Liedtke was named Chairman.

Pennzoil acquired the National Transit Co. and the Eureka Pipeline in 1964. Headquarters for Pennzoil’s refining operations and gasoline marketing remained in Oil City. Lube oil marketing headquarters were transferred to Los Angeles. Pennzoil’s corporate headquarters were moved from Oil City to Houston in 1965. Pennzoil is now owned by Shell.