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Jacob Vandergrift…Transportation Pioneer

Feb 23, 2007 | Posted in Essays, People

Neil McElwee

Steamboats, Mouth of Oil Creek, 1863

Steamboats, Mouth of Oil Creek, 1863

The first railroad to reach the early Oil Region, the Oil Creek Rail Road, arrived in Titusville in November 1862, more than three years after Drake Well struck oil. This early railroad from Corry, a single track only, was limited for several years to carrying an average of 30,000 barrels of oil a month from Titusville and Miller Farm at a time when the Oil Region was producing 200,000 barrels a month and more. What, then, happened to the other 170,000 barrels produced monthly in the Region? Some crude was stored; some, locally refined; some was simply wasted. The Derrick’s Handbook of Petroleum, Volume I, indicates 100,000 barrels of oil were shipped from Oil City to Pittsburgh by river during one week of November 1862. This shipment was extraordinary, but it testifies to the volume of oil that could be transported on the river. The Atlantic & Great Western completed a right of way and rail line to Franklin in July 1863, but, due to a shortage of rail cars and the distance from Oil Creek, substantially less oil was shipped from Franklin than Titusville and Miller Farm. Though early transport records are sketchy, it is clear much of the Region’s oil production in the 1860’s, perhaps the majority that made it to a market, was shipped by water to Pittsburgh for storage, refining, or further shipment by rail to Philadelphia. Beginning with the flush production of the big flowing wells on Oil Creek in the summer of 1861, Pittsburgh would by way of the Allegheny River often receive 50,000 to 100,000 barrels of oil a month from Oil City. This level of activity continued until 1867 when sufficient rail capacity was built to begin to carry the previous Oil Creek and Allegheny River trade.

Captain Jacob Vandergrift

Captain Jacob Vandergrift

Captain Jacob Vandergrift was a Pittsburgh riverboat captain and pilot on the Ohio River when Drake’s Well on Oil Creek produced its first oil in August 1859. Vandergrift was well known on the Ohio River for running very large, long tows of coal from Pittsburgh to Cincinnati. He was employed by Daniel Bushnell, a wealthy Pittsburgh coal mine owner and merchant who owned the powerful steamboat - the Black Diamond, a fleet of coal barges, and storage and coal marketing facilities in Cincinnati. Bushnell and Vandergrift were Ohio River celebrities; they pioneered the practice of pushing a tow of barges ahead of the steamboat.

Vandergrift was unknown on the upper Allegheny River when in October 1861 he brought his own steamboat, the Red Fox, to Oil City with a tow of two barges filled with empty barrels. He pulled up near the mouth of Oil Creek along the northern bank of the Allegheny. Oil City wasn’t anything like Pittsburgh, Cincinnati, Saint Louis – just a place of muddy riverbanks and green-black oil. Vandergrift bought 5,000 barrels of crude for delivery to him on Oil Creek in the spring of the next year. Vandergrift, by then a business partner in oil shipping with Daniel Bushnell, likely agreed to pay the low price prevailing at the time, less than $1.00 a barrel.

Vandergrifts Ferry

Vandergrift's Ferry

The Allegheny River was iced over during the winter of 1861-1862. Vandergrift and Bushnell used this period to have twelve bulk barges constructed in Pittsburgh, each capable of carrying 400 barrels of bulk crude. Vandergrift returned to Oil City after the thaw on the river in 1862 and took delivery of his 5,000 barrels of crude and towed it down to Pittsburgh. This began a lucrative river shipping business for the firm. The men would buy oil on the Creek when the price was low, store it, and then sell it during the late fall refining season in Pittsburgh and Philadelphia for a much higher price. Big money could be made and was, but you must remember, the financial risks were great. The price of oil was volatile and subject to chance events. Fires, floods and ice destroyed the oil fleet and warehouses at Oil City several times. This was not a business for the meek of heart!

Bushnell and Vandergrift built two boat landings and associated warehouses on the north bank of the Allegheny at Moran’s Eddy, about a half mile downriver from Oil Creek. Their landings were just two of more than twenty landings and warehouses built by rivermen at Oil City in the 1860’s. These Oil City shippers were the principal market makers, the bankers, the commodity traders for crude oil in the Region for most of the 1860’s. These men would provide a ready cash market for oil produced at the well, store it, transport it, and find refinery markets for it elsewhere. The argument can be made, without these early Oil City river shippers; the oil industry would not have made it through the 1860’s.

Morgans Eddy, below Oil Creek

Morgan's Eddy, below Oil Creek

Vandergrift moved to Oil City with his large family in 1863 where they lived on Colbert Avenue until 1881. In that period, Mr. Vandergrift and his business associates built outright or by consolidation the great gathering pipeline and storage system known as the United Pipe Line Co., a firm he was President of for seventeen years. The United Pipe Line Co. and Mr. Vandergrift’s large Imperial Refinery in nearby Siverly became part of the Standard Oil Company in 1873-74. Jacob Vandergrift was the largest individual Standard Oil stockholder living in the Oil Region. Vandergrift, Charles Lockhart of Pittsburgh, William Warden of Philadelphia and Charles Pratt of New York were elected to the Standard Oil Board of Directors on March 10, 1875. These four additions increased the number on the board to thirteen. By 1877, these few Standard Oil men would own or control over eighty per cent of the oil industry’s transportation and storage, refining and marketing capacity.

By the Spring of 1881, Vandergrift’s United Pipe Lines controlled 12,000 miles of 2 in. and 4 in. gathering line, 30 million gallons of iron tank storage and 600 miles of larger diameter interstate trunk lines. These assets were valued at $25,000,000 when the United Pipe Lines became part of the $30,000,000 National Transit Co. creation in April and May of 1881.

Unlike his Standard Oil business counterparts, Vandergrift early on was heavily invested in production. He organized the Forest Oil Co., one of the largest oil production companies of its time in the Appalachian Field. Forest Oil’s Appalachian properties were bought by Standard’s South Penn Oil. In 1895, the Forest Oil Co., then a part of Standard Oil, leased 700,000 acres of promising oil lands in Kansas and the Indian Territories, the nucleus of the great Mid Continent Field of the early twentieth century. Forest Oil’s Mid Continent properties became known as Prairie Oil, destined to become in the twentieth century the largest pipeline company in the country. Jacob Vandergrift passed away in Pittsburgh in 1899.

REFERENCES:

The Derrick’s Hand-Book of Petroleum, Vol. I, P. C. Boyle, Oil City, 1898
Sketches in Crude Oil, John J. McLaurin, Harrisburg, 1898
John D. Rockefeller, Vol. I, Allan Nevins, New York, 1940
Study in Power, John D. Rockefeller, Vol. I, Allan Nevins, New York, 1953
Oil Creek, the Beginning, Neil McElwee, Oil City, 2001
United Pipe Lines Deeds, Leases and Contracts Journal, custody of Drake Well Museum
United Pipe Lines Stock Journal, custody of Drake Well