The Marland Oil Refinery in Ponca City, Oklahoma

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A photo of part of Marland Refinery in Ponca City, Oklahoma taken in 1919. An article from Petroleum Age in 1922 said that Marland Refinery in Ponca City had a production of 10,000-barrel per day and Marland Refinery included nearly two million barrels of steel storage for crude and finished products. An article from Petroleum Age in 1928 said "Marland refinery at Ponca City is one of the largest complete plants in the Mid-Continent field with a crude capacity of 35,000 barrles per day of which approximately half can be run down to wax. The plant is equipped with four large Dubbs units, two Cross units, and 18 Fleming stills." Derivative Photo: Hugh Pickens
A photo of Marland Refinery in Ponca City in 1921. By 1921 EW Marland had consolidated all of his oil operations under the auspices of the Marland Oil Company. Headquartered in Ponca City the firm continued its phenomenal growth pattern by absorbing numerous small oil companies including the Comar Oil Company, Tom Jones Oil Company, Kenney-Cleary Oil Company, Francoma Oil Company, John S. Alcorn Oil Company, and many others whose highly competent executives Marland's company usually retained. Photo: Oklahoma Historical Society
Willie Cries was the first successful oil well drilled by EW Marland in 1911. Photo: Wikipedia

by Hugh Pickens, Ponca City Oklahoma

On May 1, 2012 ConocoPhillips split into two separate publicly-traded companies: an upstream company that will retain the name ConocoPhillips and concentrate on exploration and production, and a downstream company, to be named Phillips 66, that will include refining and marketing (R&M), chemicals, and midstream business segments. The refinery in Ponca City, with over 700 employees the single largest employer in Ponca City, is part of the R&M segment and will go into Phillips 66. Phillips 66 will be a publicly traded company (PSX) and a number of independent financial analysts will be following the company.

The purpose of this web site is to document the history of the Marland Refinery in Ponca City, Oklahoma with a special emphasis on evaluating the impact of Phillips 66 business decisions on the refinery and the community of Ponca City.

Contents

Ponca City and the Oil Industry

Marland founded the 101 Ranch Oil Company, located on the Miller Brothers 101 Ranch, and drilled his first successful oil well at Willie Cries on land which he leased in 1911 from the Ponca Tribe Photo: Wikipedia
Conoco headquarters at Ponca City circa 1950. Ponca City was a thriving community after it became the headquarters for Continental Oil Company (Conoco). Conoco was by far Ponca City's biggest employer with over 800 employees at the refinery and about 3,800 employees working in support services including financial, research, engineering, and service organizations. Photo: Unknown
The Conoco Oil Refinery in Ponca City, Oklahoma circa 1955 before the two research buildings were built. Derivative Photo: Hugh Pickens
The Conoco Oil Refinery in Ponca City, Oklahoma circa 1965. The refinery in Ponca City, Oklahoma is part of the Refining and Marketing business segment. The three business segments of Phillips 66 have very different ROCE's. In 2011 the ROCE of the Refining and Marketing segment was 12%, the ROCE of the Midstream segment was 30%, and the ROCE of the Chemical segment was 28%. Because the ROCE of the Chemical segments and the Midstream segments is so much higher than the ROCE in the R&M segment, Phillips 66 plans to aggressively grow the Chemicals and Midstream segments of the new company and de-emphasize the Refining and Marketing segment of the company. The Refinery and Marketing segment of the company is the lowest profit margin segment of the company and Phillips 66 plans on selling and shutting down unprofitable assets in this segment. On the plus side, the Ponca City refinery is part of the Mid-Continent segment with about 21% of Phillips 66 capacity and margins have been very strong in this area. In 2011 about 84% of Phillips 66 capital was allocated to Refinery and Marketing with 11% allocated to Chemicals and 5% to Midstream. Phillips 66 plans a major change in this allocation. "Long-term we have a vision that about 50% of our capital employed will be directed towards the R&M segment. And the other 50% will be directed towards Midstream and Chemicals." Derivative Photo: Hugh Pickens

Before we evaluate the general strategies that Phillips 66 plans to employ in its Refining and Marketing Business Segment, we will take a close look at one of its most important refineries - the Marland Refinery in Ponca City, Oklahoma.

Marland finds Oil in 1911

Over the past 100 years, Ponca City's history has been shaped for the most part by the ebb and flow of the petroleum industry. EW Marland decided to come to Ponca City after a relative introduced him to the Miller brothers whose famous 101 Ranch lay near Ponca City, Oklahoma. In 1908 E. W. journeyed to Ponca City and immediately decided that the surface geology indicated oil. Marland raised capital from financiers back in Pennsylvania and began drilling. After drilling seven dry holes, Marland made his first discovery drilling his first successful well, Willie Cries, in 1911. Marland originally founded the 101 Ranch Oil Company, located on the Miller Brothers 101 Ranch, and drilled his first successful oil well on land which he leased in 1911 from the Ponca Tribe.[1][2]

Marland Oil Founded in 1917

Marland Oil Company was founded in 1917, when Marland assembled his various holdings including the 101 Ranch Oil Company into one unit, forming Marland Oil Company. Later, on January 3, 1921 Marland incorporated the Marland Oil Company in Delaware to acquire through an exchange of stock control of the Marland Refining Corp. and Kay County Gas Co. By 1920 it is estimated that Marland and his partners controlled 10% of the worlds oil production (the equivalent of Saudi Arabia in 2006) and that Marland was worth $85 million.[3]

From the outset Marland realized that to sustain long-range corporate growth he must form an integrated company encompassing drilling and production, storage and transportation, and refining, and retailing, similar to the very successful model used by the Standard Oil Company. The first step in this process was to dissolve the 101 Ranch Oil Company and replace it with the Marland Refining Company. Over the next several years Marland expanded his empire to include production in neighboring states, and by 1919 he had even started large-scale drilling operations in Mexico. The next step in bringing the feverish rate of growth under a more centralized and integrated operation came in early 1921 when Marland consolidated all of his oil operations under the auspices of the Marland Oil Company. Headquartered in Ponca City, where its major refining facility was located, the firm continued its phenomenal growth pattern by absorbing numerous small oil companies such as Comar Oil Company, Tom Jones Oil Company, Kenney-Cleary Oil Company, Francoma Oil Company, John S. Alcorn Oil Company, and many others whose highly competent executives Marland's company usually retained. Additionally, the company opened its first retail gasoline "filling station" in Pawhuska, Oklahoma, in 1920, and that aspect of the business began to experience rapid growth. Marland took a strong, paternal interest in his company and in his employees and provided numerous benefits not normally offered in that era. He furnished company housing at a nominal fee, provided free insurance to all employees, paid wages above the norm for the time, and is generally acknowledged to have provided the best employee benefits and working conditions in the state. Additionally, his donations to local charities and civic projects were enormous, and he sponsored legendary entertainment spectacles for both employees and the general public.[4]

According to an article appearing in Petroleum Age in 1922, the refinery in Ponca City was already one of the largest refineries in the world by 1920:

Located in the heart of the Mid-Continent oil field, the greatest known light oil field in the world, by 1920 the company controlled, with its subsidiaries, over 200,000 acres of proven and valuable oil land within a radius of 100 miles from Ponca City, the headquarters of the company. A study of the map of Marland properties in Northern Oklahoma proves easily the strong strategic position the company holds through its oil resources and large reserves in some of the best pools of this district. Marland oil opened in 1920 the famous Hickman, or now better known as Burbank pool, in the Western Osage; in 1921 the Tonkawa pool in Noble County, within fifteen miles of Ponca City, which promises to produce large quantities of high-gravity crude. It controls almost entirely the Ponca field, one of the oldest and best producing fields in the Mid-Continent, with five producing sands; holds large parcels of oil and gas lands in the Eastern and Western Osage fields, in the Garber, Noble, Newkirk, Deer-Creek and in the Pawnee Payne district. Marland draws its crude from eighteen producing fields with 244 wells and produces, with its affiliated companies, the Comar and Alcorn Oil Companies, over 12.000 barrels per day, sufficient crude for its own refinery demand. Pipe lines extending 271 miles, with thirteen modern equipped pumping stations, radiate in three directions from Ponca City and connect Marland's two refineries with oil fields which have ample unmined production to supply sufficient crude oil for many years to come. The company operates in Ponca City a 10,000-barrel complete refinery, and at Covington a 1,000-barrel skimming plant producing a well-known brand of high grade gasoline and lubricating oils. Nearly two million barrels of steel storage for crude and finished products give the company a strong position in the market, and enabled Marland to begin the storage of gasoline when the refinery price was as low as 12-1/2 cents. The recent raise, totaling so far 3 cents per gallon has greatly increased the value of the 250,000 to 300,000 barrels gasoline the company keeps i» storage against the coming summer demand.[5]

By 1922 nearly 600 Marland stations were found in 11 mid-continent states, from North Dakota to Oklahoma and as far east as Indiana. Growth required capital, however, and Marland was continually strapped. Turning to investment banker J.P. Morgan and Company, Marland was able to secure financial backing for continued expansion, but with expansion came a hefty price. By 1928 Marland had been forced out by Morgan interests who placed former Texaco executive Dan Moran in charge. With orders from Morgan and Company to put Marland Oil back in the black, Moran set out to acquire key assets that would round out the Marland operation, allowing for increased financial stability. With this in mind, Marland management began to look around for a partner, a company with complementary assets, an operation that would perhaps consider a merger.[6]

Marland's exploitation of oil reserves generated growth and wealth that were previously unimaginable on the Oklahoma prairie, and his company virtually built the city from the ground up. Mansions—including the Marland Mansion and Grand Home—were built by Marland and his associates. The "Roaring 20s" came to an end for Ponca City shortly before the Great Depression. After the takeover bid by J.P. Morgan Jr., son of financier J.P. Morgan, Marland Oil Co. merged with Continental Oil Co. (Conoco) in the late 1920s.[1] It was known as Conoco for more than 70 years. The company maintained its headquarters in Ponca City until the 1950s and continued to grow into a global corporation.[7] Marland was later elected the governor of Oklahoma and as a U.S. congressman.

Conoco Oil Company Acquires Marland in 1929

Conoco Inc. was an American oil company founded in 1875 as the Continental Oil and Transportation Company. Based in Ogden, Utah, the company was a coal, oil, kerosene, grease and candles distributor in the West. Marland Oil Company (founded by exploration pioneer E. W. Marland) later acquired the assets (subject to liabilities) of Continental Oil Company, for a consideration of 2,317,266 shares of stock. On June 26, 1929, Marland Oil changed its name to Continental Oil Company and moved its headquarters to Ponca City, Oklahoma. The acquisition gave Conoco the red bar-and-triangle logo previously used by Marland. Conoco used the logo between 1930 and 1970, when the current red capsule logo was adopted. Ponca City remained the world headquarters of Conoco until the 1950s when the headquarters moved to Houston.

Dupont Acquires Conoco in 1981

In 1981, in what was called the largest acquisition in US history at that time, Conoco was purchased by DuPont Company, headquartered in Wilmington Deleware, over the July 4 weekend for $9.7 billion. At the time of the acquisition, DuPont announced that $2 billion in Conoco assets would be sold to reduce Conoco's debt. Dupont began by selling a west coast refinery for $100 million and a group of domestic properties were sold to Petro-Lewis for $750 million. At the time of the acquisition, Conoco was by far Ponca City's biggest employer with 828 employees at the refinery and an additional 3,805 employees working in support services including financial, research,engineering, and service organizations.[8] Thirty years later only the refinery employees remain.

Environmental Settlement with Conoco in 1990

The NY Times reported in 1990 that Conoco had reached one of the largest settlements ever recorded at that time in a lawsuit over environmental contamination offering 400 families that are neighbors to the Conoco refinery a package of measures worth from $23 million to $27 million, according to various estimates that will allow them to move away "from the acrid odors that have come to signify sickness and death in many households." Conoco executives said the settlement would permit them to create an uninhabited buffer zone around the plant. "We didn't do this for the money, and people are not going to have a good time spending it," said Anna Sue Rafferty, a leader of Ponca City Toxic Concerned Citizens, a community group that helped organize the suit against Conoco. "This has been my home for 34 years. I raised four children here. I love this house, but all I want to do now is get out of it." In response to years of complaints, Federal and state officials along with Conoco executives repeatedly told the plant's neighbors that no toxic substances were evident and that they faced no health risk. But recent tests performed by Conoco on samples of water found underground showed traces of benzene, a known carcinogen, according to Dennis Parker, the refinery manager. Adrienne Anderson, Western regional director of the National Toxics Campaign, which provided technical assistance to people in the area, said privately commissioned tests on water that had seeped into basements regularly showed dangerous levels of benzene, arsenic and about 20 other potentially harmful chemicals. Conoco, a fully owned subsidiary of E. I. du Pont de Nemours & Company, did not acknowledge any wrongdoing in the settlement. In a statement Monday, Mr. Parker noted that the agreement says, "No party admits any fault, liability or responsibility for any claims, injuries or damages claimed by any adverse party." Grace Klinger, who learned the chemistry of hydrocarbons to find out what was happening in her neighborhood, said: "When I was growing up, everyone just figured the stink was just refinery stink and if the company said it was O.K. then it was O.K. Now we know better, and it doesn't matter what Conoco says because the truth is out."[9][10]

Major Downsizing of Conoco in 1993

Ponca City was hit by major downsizing at Conoco in 1993 when approximately 1,400 jobs were cut, resulting in an annual payroll reduction of $40 million. This precipitated an economic slowdown in the city and county in 1993 and 1994. The unemployment rate, which had always been well below the national average of six percent, jumped to 12 percent and unemployment compensation claims more than doubled from the previous year. While Conoco once accounted for 50 percent of the jobs in Ponca City, after the downsizing Conoco accounted for just seven percent, or 1,400 jobs. According to a study by the International Economic Development Council, "the town’s psychology and identity was rocked by the downsizing of its one major employer."[11]

DuPont Sells Off Stake making Conoco Independent in 1998

The NY Times reported in 1998 that in a move that many investors believe was long overdue, DuPont announced that it would divest itself of 20 percent of its $22 billion Conoco oil subsidiary in a tax-free stock offering that could bring in as much as $5 billion. Charles O. Holliday Jr., DuPont's chief executive, said he would dispose of the rest of Conoco "as soon as practical." DuPont bought Conoco in 1981 as insurance against the pricing and supply tactics of the Organization of Petroleum Exporting Countries. But oil prices have been far less volatile than it had feared, and DuPont continues to de-emphasize the petrochemical side of its business, so having Conoco as a captive source of raw material is of less strategic importance.[12] A successful road show kicked into gear to sell Conoco to the investment community, culminating in the largest IPO in history, nearly $4.4 billion. Many financial analysts were skeptical the deal would be pulled off, given tremendous upheaval in both the oil and stock markets and a dried-up appetite for public offerings. But company personnel, from top executives to support people, worked countless hours to make the IPO a success. On October 22, 1998, their efforts paid off: Conoco stock began trading again, using a new symbol, "COC," honoring the name it had held for so many years - Continental Oil Company.[13]

A Merger of Equals Between Conoco and Phillips in 2001

Conoco Inc. and Phillips Petroleum Co. announced on November 18, 2001 that their boards of directors have unanimously approved a merger of equals. The companies said they have signed a definitive merger agreement. The merged company became the third-largest integrated U.S. energy company based on market capitalization and oil and gas reserves and production. Worldwide, it became the sixth-largest energy company based on hydrocarbon reserves and the fifth-largest global refiner. Upon completion of the merger, Archie W. Dunham, Conoco chairman and chief executive officer, would serve as chairman of ConocoPhillips and delay his scheduled retirement to 2004. James J. Mulva, Phillips chairman and chief executive officer, would become president and chief executive officer of the combined company, and also become chairman upon Dunham's retirement.[14][15]

The Associated Press reported that analysts described the combination as a deal done to survive. If Phillips and Conoco hadn't decided to join forces, analysts said they risked losing market share to competitors in an unhealthy business climate for all but the largest petroleum companies reported Alan Clenndenning. "This is absolutely a matter of survival - survival nor necessarily to thrive, but to guarantee they will survive, said Fadel Gheit, an analyst at Fahnestock & Co. In a conference callwith analysts, top Phillips and Conoco officials said the merger would allow them to save at least $750 million annually in part through the elimination of an unspecified number of jobs from the company's combined roster of 58,000 employees. "You cannot say you are cutting cots if you cut less than 5 percent, said Gheit. "And if you want to be aggressive with a sharp knife you can cut 15 to 20 percent, which I see as unlikely." Officials took pains to describe the deal as a merger of equals, tough under its terms, Phillips shareholders wil end up with a 56.6 percent stake in the new company.[16]

Businessweek reported in 2005 chief executive officer Mulva had conceived the bold $16 billion deal that created ConocoPhillips in 2002 that vaulted it into the league of energy giants so large they're called supermajors and was an aggressive risk-taker willing to place multibillion-dollar bets in the most volatile places on earth. All of the industry's big players are swimming in cash, reported Businessweek but Mulva is plowing some 70% of the company's expected cash flow back into the business, compared with 60% at Chevron Corp. and 35% at Exxon Mobil Corp.. "We're aggressive about where we want to be five years from now," said Mulva. "Even with the benefit of hindsight, Mulva has done a lot right," wrote Mark Morrison. "His aptly timed Conoco acquisition put the company in a position to benefit from a new global dynamic of rising energy demand that could last into the next decade. And his bold plans may ultimately prove that he adjusted more wisely and quickly to the changing world of energy than the other majors. Right or wrong, no one will accuse Mulva of being shy."[17]

According to Jim Mulva's presentation to financial analysts on July 14, 2011, ConocoPhillips' view was that the company needed to go up in size. That is one of the reasons for the merger -- to compete around the world. "We also felt, looking back 10 years ago, that there is going to be consolidation in the industry. And that made a lot of sense that we were pretty bullish about oil prices and we feltthe supply and demand situation of oil would get tighter with time."[18][19][20]

Impact of Merger of Conoco and Phillips on Oklahoma Communities

See KOCO. "Phillips-Conoco Merger Stuns Bartlesville" November 19, 2001.[21]

ConocoPhillips Closes Demonstration Plant in Ponca City in 2005

On October 21, 2004 ConocoPhillips announced that it would shut down its demonstration plant eliminating up to 120 jobs. The plant was built to test technology designed to convert natural gas into liquid fuels. "It isnever easy tomake this kind of announcement," said George Paczkowski, ConocoPhillips vice-president of downstream technology in Ponca City, "but we've known this demonstration plant was temporary since we built it. The plant was scheduled to close in July, 2005 eliminating 80 full-time positions and 40 contract jobs. Paczkowski said many of the full-time workers would be reassigned to other positions at the company.[22]

ConocoPhillips Relocates 700 Jobs from Ponca City in 2009

On November 7, 2008 ConocoPhillips announced that the company was planning to downsize their operation in Ponca City and that all 700 office worker positions in Ponca City were being for relocated to Bartlesville or Houson. On November 8, 2008 ConocoPhillips first announced that all 700 office worker positions in Ponca City are being considered for consolidation or relocation. "Consolidation and relocation are options we're looking at," said company spokesman Tracy Harlow. "Any and all options are still on the board right now." Most of ConocoPhillips' nonrefinery jobs in Ponca City werefocused in the credit card, information technology, facilities and other support operations, she noted. A steering committee, including ConocoPhillips managers, was looking at options. The review started November 2008 and had not narrowed into specifics so far, Harlow said. The 750 people employed in refinery operations would not be affected by the review.[23]

The Tulsa World reported on February 17, 2009 that ConocoPhillips had decided to relocate all of its 750 non-refinery positions out of Ponca City within two years and that first 250 jobs will be moved in 2009 with 180 jobs going to Houston and 70 jobs to Bartlesville. The positions moving first include jobs in technical services, research and development, engineering and support, human resources and Internet technology, among others. Management met with hundreds of Ponca City employees to tell them the news. "It’s a difficult time in general for all ConocoPhillips employees," said ConocPhillips spokesman Tracy Harlow. ConocoPhillips originally planned the Ponca City relocation study as a standalone effort in 2008 but falling energy and credit markets forced ConocoPhillips to consider layoffs and include Ponca City into its overall business efficiency study. "We made the strategic decision to consolidate locations for the most effective corporate operations,” Harlow said. “Obviously we are conserving cash right now, so cash will limit relocations in 2009.”[24]

Business Week reported that Ponca City took a hit from ConocoPhillips in February 2009, when the company said it planned to move 750 non-refinery jobs out of the city of about 26,000 to Bartlesville and Houston. But the refinery has remained a key part of ConocoPhillips' operations, said ConocoPhillips spokesman John Roper. Rich Cantillon, president and CEO of the Ponca City Chamber of Commerce, said ConocoPhillips upgraded the refinery last year and is performing another upgrade this year. No new oil refineries have been built in the U.S. since 1976, which is another positive sign for the Ponca City facility's future. "It's not going anywhere," Cantillon said. "We are good to go. Ponca City is a happy, good community. ... It's fascinating to see how (the split) will all play out, but we'll always have the refinery. There won't be any more job loss for Ponca City when it comes to (ConocoPhillips). There could be job growth."[25]

City officials were disappointed in ConocoPhillips' announcement that 750 jobs will be relocated from Ponca City, but expect the community to bounce back. "We would have liked to have seen them expand here. We have plenty of office room for them and had hoped they would grow their operation here," said City Manager Craig Stephenson. "We also understand it's a corporate decision." Mayor Homer Nicholson said Conoco has been a good corporate citizen and he is glad ConocoPhillips has decided to leave Oklahoma's largest refinery in Ponca City. "We are thankful," he said. "We were hoping the business optimization study would give them a reason to expand their business in Ponca City. Unfortunately, that did not happen," Nicholson said. "We have weathered larger reductions in force than this one," the mayor said.[26]

Effect of the 2009 Downsizing on Ponca City

The Tulsa World reports that Conoco employed more than 5,000 people in Ponca City before the oil bust of 1985, the year Dave Myers, executive director of the Ponca City Development Authority, pinpoints as "the beginning of the end for us being a company town." The end itself came in 2002, when Conoco merged into ConocoPhillips and began transferring departments en masse to the Phillips campus in Bartlesville. In November 2009, the company announced it would probably transfer the final 700 office jobs out of Ponca, leaving only 750 jobs in the refinery.

Until a few months ago, Fred Holmes worked in research and development with more than 100 other technicians. Then he and his wife had to choose between early retirement or transferring to Bartlesville, an hour and 20 minutes east of Ponca. "It was a 12-hour day any way you look at it," Holmes says. "She couldn't put up with it then, and I didn't want to do it now." After a few weeks, his wife quit the company and invested in a downtown bridal shop, Affairs to Remember. Now Holmes works there, too — recently moving the shop to a larger storefront and adding a catering service. But Homes still resents the company for, as he puts it, "abandoning Ponca City." While he had a small business to fall back on, Holmes has watched friends and co-workers move away to look for jobs elsewhere. "You used to be able to wake up in the morning and know you had a job and know that your family would be provided for," he says. "Now, nobody knows what's going to happen next."

Mike Dove took early retirement when the company moved his entire department to Bartlesville. When he grew up during the '60s, a job with the company seemed like "the ultimate prize," Dove says. Like many of his classmates, Dove went off to college not to escape Ponca City, but so he could come back and stay. "You could pretty much count on a job for life, and it gave you a sense of security and stability. "By the '90s, that wasn't the case at all." For his own two children, both now adults, staying in Ponca City was never an option. "Finding a job," Dove says, "pretty much means going somewhere else."[27]

KOCO reported on November 7, 2008 that City development executive director David Myers said the diversity of the economy would lessen the effect of possible job losses. "The impact of this economically is not nearly as severe as the impact emotionally," said Myers adding that city leaders didn't want to depend on a single employer that could make or break the community and that other employers also make up a big portion of the economy. "Sensor testing is a $6 billion worldwide industry, and we're the only place in the world where you come and have your sensor tested by a neutral third party," Myers said. "Our real concern is with the individual families that might be impacted by this, and we want to make sure that there are some viable alternatives for them to stay here in Ponca City because most of them do want to stay here," Myers said. Barber Barney Barnwell said he has been in this situation before and so has the community. "We can survive," he said. "Ponca can survive."[28]

Possible Sale of Ponca City Refinery in 2010

In May 2010, there was a lot of discussion in Ponca City about the possibility that ConocoPhillips was interested in selling its Ponca refinery to another oil company and getting out of Ponca City especially after ConocoPhillips Chairman and CEO Jim Mulva met with corporate analysts in October 2009 for the ConocoPhillips Q3 2009 Earnings Call and announced that the company's capital budget would decrease by about 12 percent in 2010 and that ConocoPhillips planned to divest $10 billion in refining, exploration, and production assets in a bid to improve its financial position.[29]

At the earnings call on October 29, 2009 Mulva was asked specifically about the possibility that ConocoPhillips might divest itself of some of its refineries and Mulva said that the company was "going through a more strategic assessment [of its refineries] because there are some that are less sophisticated. We will think long-term when the market gets a little bit better about selling some refineries. We think that is going to be subsequent to the next two years for 2012, 2013 and we have in mind a number of facilities that we think might have some value to someone else."[30]

The Tulsa World and the Bartlesville Examiner-Enterprise report that Mulva appeared before a packed house at the Bartlesville Community Center on May 21, 2010 to present the annual company update, talk about ConocoPhillips' plans for the future, and clarify the company's plans for Bartlesville and for the Ponca City refinery.[31]

Mulva told his audience that employees in Bartlesville and Ponca City have little to fear. Although ConocoPhillips announced last year that it was tranferring or eliminating all 700 non-refinery jobs in Ponca City, ConocoPhillips plans to keep the Ponca City refinery with it's 750 employees. "We will retain only the largest and most sophisticated refineries," Mulva said. "Ponca City is a large and sophisticated refinery that is important to our refinery portfolio."[32]

Mulva added that he didn't forsee any change in the 3,100 ConocoPhillips employees in Bartlesville, and that there was actually room to accommodate an additional 800 to 1,000 more employees in Bartlesville. "There's no change in our long-term plans for Bartlesville," Mulva said. "It's a very important global support center for ConocoPhillips."[33]

"Ponca City Still a Competitive Refinery"

The announcement reinforced a statement made in February 2009 at the time that the announcement was made that ConocoPhillips non-refinery employees in Ponca City would be relocated over the next three years. "The refinery in Ponca City continues to be a competitive refinery," said John A Carrig, President and Chief Operating Officer of ConocoPhillips, when he talked to students as part of the Distinguished Speaker Series at the Michael F. Price College of Business at Oklahoma University. "Like all of our facilities, we are continuing to make investments to enable it to thrive. I don't see any particular change in the outlook for it."[34]

Jim Mulva reiterated in his conference call to financial analysts on July 14, 2011 that in answering a question by Ed Westlake of Credit Suisse that "if we have an alternative to sell one of the less sophisticated refineries in a way, we are not going to delay until this is done accomplishing and doing that."[35][36][37]

Phillips 66 and Ponca City

In 1908 E. W. Marland came to Oklahoma after losing his fortune in the Pennsylvania oil fields in the panic of 1907 and by 1920 had reestablished himself and started the Marland Oil Company in Ponca City with a fortune estimated at $85 million (roughly $910 million in modern dollars). Marland was a visionary and not only pioneered the use of geophysical techniques in the oil industry but was years ahead of his time as an employer providing housing, loans, medical care, and other benefits for the thousands of employees who worked at his refineries and pipelines. But misfortune would strike Marland and in 1928 his oil empire was destroyed by J.P. Morgan's banking interests. Marland was forced out of the oil company he had founded when bankers merged it with Continental Oil Company and renamed the company Conoco.

How the Spinoff Affects Ponca City and Bartlesville

Rod Walton writes in the Tulsa World on April 28, 2012 that with the spinoff, Ponca City may not be affected as dramatically by the split as Bartlesville. Going back to the 2002 merger shows that Bartlesville and Ponca City were affected differently leaving the two cities in different situations today.[38]

Conoco employed nearly 1,900 people in Ponca City at the end of 2001, while Phillips had a workforce of 2,500 in Bartlesville. The ConocoPhillips numbers shrunk to only 750 refinery workers in Ponca City but swelled to 3,500 at the shared services center in Bartlesville. Ponca City is now purely a refining town, with Ponca City having lost all 750 non-refinery jobs during the three-year repositioning plan. "Today, we're a refinery town," said David Myers, executive director for the Ponca City Development Authority. "No doubt about it: the merger was not kind to Ponca City." "The dark humorists in that city used to joke that Ponca City got the first name in the merger but little else," writes Walton. "ConocoPhillips opted to shut down a carbon fibers plant early on and eliminated the rest of the 750 non-refinery jobs beginning in 2009."[38]

The Bartlesville Examiner-Enterprise editorialized on April 29, 2012 that Jim Mulva has "proven to be a true friend to the City of Bartlesville."[39] According to Rod Walton, Bartlesville was a big beneficiary of the ConocoPhillips merger and seems to have lived a charmed life economically over the past ten years. Although the home of Frank Phillips doesn't employ 9,000 company workers as it did in the early days, the 1,000 employees added since 2002 have kept downtown buildings such as Plaza and Adams full of mid-level computer, credit and other support personnel. But now Bartlesville operations are in flux and there is much uncertainty about the future. "All employees are being moved to one of the two companies, with co-workers who once sat side to side now literally shifted to separate buildings," writes Walton. ConocoPhillips will employ about 1,700 people in the downtown Plaza and Frank Phillips Tower Center buildings and in the Adams warehouse. Phillips 66's Bartlesville workforce will number 1,900 people, housed in the main Adams and Phillips buildings and the Research and Development Center on the west edge of the city.[38] The Bartlesville Examiner-Enterprise reported on April 29, 2012 that the "split or 'repositioning' as it has been called by company officials, has required many existing local employees to shift jobs and even physically move from one building to another within the extensive downtown Bartlesville office complex" adding that "while no one can predict the future with perfect clarity, Bartlesville appears no worse for the wear during this complex process."[39]

ConocoPhillips CEO Ryan Lance and Phillips 66 CEO Greg Garland reassured its employees in Oklahoma in an op-ed they wrote for the Bartlesville Examiner-Enterprise titled "ConocoPhillips, Phillips 66 have deep roots in Bartlesville" that "ConocoPhillips and Phillips 66 together employ nearly 4,500 people in Oklahoma, an increase in recent years. Going forward, we will both maintain Global Services Centers in Bartlesville providing essential finance, information technology and other vital support to our personnel around the world. Elsewhere, Phillips 66 will continue operating the Ponca City Refinery, by far Oklahoma’s largest, and will remain the leading gasoline marketer. ConocoPhillips will continue producing oil and natural gas from the Anadarko Basin and the Panhandle area." Lance and Garland added that "we continue encouraging both current and incoming employees to maintain our proud tradition of community service. Bartlesville is a special place to work, live and raise a family, and we want to help keep it that way. This is an exciting time for ConocoPhillips and Phillips 66. All of our Oklahoma communities are great homes to our people and businesses, and we both look forward to long and bright futures here."[40]

"The Phillips and Conoco merger has taught everyone, Poncans and Bartians alike, to simply expect the unexpected," writes Walton. "In other words, who knows what ConocoPhillips and Phillips 66 will look like 10 years down the road?" "We do have a strong Conoco retiree group that lives here," says Dave Myers. "There's still talk in the community, still those who'd like to go back to the old days. I think most people have moved on."[38][41]

Visit of Phillips 66 Leaders to Ponca City

On March 27, 2012, the Ponca City News reported that leaders from Phillips 66 visited Ponca City and were met by community leaders.

On the Phillips 66 side were Bob Herman, Future Lead of Health, Safety and Environment; Pete Stynes, Ponca City Refinery Manager; Larry Ziemba, future Lead of Refining, including Projects and Procurement, and President, Global Refining; Chantal Veevaete, future Human Resources; and Tim Taylor, future Commercial, Marketing, Transportation and Business Development.

On the Ponca City side were City Manager Craig Stephenson; Lee Evans, Chair of the Ponca City Area Chamber of Commerce; David Myers, Ponca City Development Authority; Rich Cantillon, Chamber of Commerce/Tourism Bureau; Carl Renfro, community leader; and Larry Murphy, Chair of the Ponca City Development Authority.[42]

Phillips 66 CEO Greg Garland, although originally scheduled to visit Ponca City with his management team, was not able to attend. Ponca City Mayor Homer Nicholson, retired from ConocoPhillips after 38 years service, was also unable to attend.

Ponca City Community Advisory Council (CAC)

The Ponca City Community Advisory Council (CAC) was established in 1991 between ConocoPhillips and the citizens of Ponca City. The CAC holds monthly meetings that start with updates on safety and environmental performance followed by information on refinery operations. Many meetings have an educational topic and often focus on environmental topics, such as air quality and groundwater remediation. Other topics of interest include sustainable development and the company’s other operations. The Ponca City CAC’s mission statement is to establish and maintain a dialogue between the community and ConocoPhillips in order to understand community issues and ConocoPhillips issues in an atmosphere of trust and mutual respect, using open, honest communication. With that in mind, members of the CAC conducted a survey in which they asked 10 community members about what issues, questions or suggestions they have for ConocoPhillips. The group used the results in planning the monthly meetings and other events in the community.[43]

Renaming of Refinery in Ponca City

EW Marland pioneered the use of geological techniques in the oil industry and was years ahead of his time as an employer providing housing, loans, medical care, and other benefits for thousands of employees who worked at his refineries and pipelines but Marland lost everything to the powerful JP Morgan banking interests - even losing his name on the oil company that he founded in Ponca City.

On March 12, 2012 a web site was created asking the management of Phillips 66 to consider honoring EW Marland, the oil pioneer who started the refinery and developed the oil industry in North Central Oklahoma.

"The Ponca City News" recently announced that with the split of ConocoPhillips into two companies, the ConocoPhillips operation in Ponca City, Oklahoma will soon be renamed Phillips 66. Frank Phillips, the founder of the Phillips 66 Oil company, was a man who knew how to use his courage and initiative and great administrative ability to create industry and wealth in Oklahoma leaving a legacy in the oil company that bears his name that will always be a monument to his memory. But there is another Oklahoma oil pioneer who was equally important in developing the oil industry and bringing prosperity and advancement to Northern Oklahoma and that man was EW Marland. EW Marland pioneered the use of geological techniques in the oil industry and was years ahead of his time as an employer providing housing, loans, medical care, and other benefits for thousands of employees who worked at his refineries and pipelines but Marland lost everything to the powerful JP Morgan banking interests - even losing his name on the oil company that he founded in Ponca City. It is altogether fitting and proper that Phillips 66 honor the heritage of oil development in Northern Oklahoma by recognizing Frank Phillips and EW Marland. The executives of Phillip 66 have honored the memory of Frank Phillips by choosing to name their new company for Phillips. We think Phillips 66 should honor the legacy of oil pioneer EW Marland by naming their refinery in Ponca City for Marland, the man who started the refinery and brought advancement and development to North Central Oklahoma. It would mean a great deal to the residents of Ponca City for Phillips 66 to acknowledge the history and heritage of the oil industry in Oklahoma by honoring these two great oil pioneers, Frank Phillips and EW Marland. Renaming the refinery in Ponca City the "EW Marland Refinery" will serve as a symbol going forward of the partnership between the oil industry and the citizens of North Central Oklahoma that honors the legacy of these two great oil pioneers.[44]

An advertisement by Phillips 66 announcing its "intent on continually earning the trust of the communities we serve and operating with the highest levels of integrity" appeared in the Ponca City News on May 1, 2012.[45] An advertisement congratulating Phillips 66 on its creation and asking Phillips 66 to "honor the legacy of EW Marland" appeared in the Ponca City News on May 1, 2012.[46]

External Links

References

  1. 1.0 1.1 Conoco Inc. Company History at Conoco Phillips company website (retrieved March 2, 2010).
  2. Oklahoma Historical Society. :Marland, Ernest Whitworth"
  3. Wikipedia. "Marland Oil Company"
  4. Oklahoma Historical Society. "Marland Oil Company"
  5. Petroleum Age. "Marland Plans Plant Additions to Cost about $1,600,000" 1922.
  6. Wikipedia. "Marland Oil Company"
  7. Wikipedia. "Ponca City,Oklahoma"
  8. The Durant Daily Democrat. "An Oil Company Town, Ponca City Eyeing Tourism Industry" by Robert V. Peterson. November 14, 2982.
  9. NY Times. "Refinery's Neighbors Count Sorrows, and Riches" by Roberto Suro. April 4, 1990.
  10. NY Times. "Ponca City Journal; Oil Town Is Consumed by Sludge" by Lisa Belkin. May 13, 2988
  11. International Economic Development Council. "Case: Diversifying into Knowledge-based Industries in Ponca City, Oklahoma after the Departure of Conoco Phillips" March, 2010
  12. NY Times. "DuPont to Spin Off 20% of Conoco, the Rest to Be Sold Later" by Claudia H. Deutsch. May 12, 1998.
  13. ConocoPhillips. "Company Independence: 1997-2002 "
  14. Petroleum News. "Conoco and Phillips agree to merger of equals, Mackenzie gasline priority for Conoco Chairman Archie Dunham prior to merger" November 18, 2001.
  15. Wikipedia. "ConocoPhillips" retrieved April 23, 2012.
  16. Pittsburgh Post-Gazette. "Analysts: Conoco-Phillips merger about survival" by Alan Clenndenning. November 20, 2001.
  17. BusinessWeek. "ConocoPhillips: The Making Of An Oil Major" by By Mark Morrison. December 12, 2005.
  18. ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
  19. ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012
  20. Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
  21. KOCO. "Phillips-Conoco Merger Stuns Bartlesville" November 19, 2001.
  22. Victoria Advocate. "ConocoPhillips to close Ponca City demonstration plant" October 21, 2004.
  23. Tulsa World. "ConocoPhillips jobs in jeopardy" by Rod Walton. November 8, 2008.
  24. Tulsa World. "Ponca City losing hundreds of ConocoPhillips jobs" February 27, 2009.
  25. Business Week. "Okla. towns eye split of ConocoPhillips operations" by Murray Evans. July 14, 2011.
  26. The Ponca City News. "City Leaders React To Announcement" by Beverly Bryant. February 17, 2009.
  27. Tulsa World. "Losing 'the company' changes Ponca City" June 28, 2009.
  28. KOCO. "Ponca City Frets Conoco Job Cuts" November 7, 2008.
  29. CEO World. "U.S. oil major ConocoPhillips plans to divest $10bn in assets, cut spending" by Hendrik L Clarke. October 7, 2009.
  30. Seeking Alpha. "ConocoPhillips Q3 2009 Earnings Conference Call" October 28, 2009.
  31. Facebook. "ConocoPhillips Update Forum" May 21, 2010.
  32. Tulsa World. "ConocoPhillips sells assets, slows pace of growth
  33. Bartlesville Examiner-Enterprise. "Update on strategy" May 23, 2010.
  34. Price College of Business. "John Carrig Speaks to Students, Alumni and Faculty as part of the Distinguished Speaker Series" Februaru 27, 2009.
  35. ConocoPhillips. "Slide Presentation for Phillips 66 Investor Update" April 9, 2012
  36. ConocoPhillips. "Phillips 66 Analyst Update Transcript of Phillips 66 Analyst Update" April 9, 2012
  37. Seeking Alpha. "ConocoPhillips' CEO Hosts Phillips 66 Analyst Update Conference Call" April 9, 2012
  38. 38.0 38.1 38.2 38.3 Tulsa World. "ConocoPhillips streamlines with Phillips 66 refining side spinoff" by Rod Walton. April 29, 2012.
  39. 39.0 39.1 Bartlesville Examiner-Enterprise. "ConocoPhillips, Phillips 66 embark on a new future" April 29, 2012.
  40. Bartlesvile Examiner-Enterprise. "ConocoPhillips, Phillips 66 have deep roots in Bartlesville" by Ryan Lance and Greg Garland. May 1,2012.
  41. Tulsa World. "ConocoPhillips split is deja vu for Ponca City, Bartlesville" by Rod Walton. April 29, 2012.
  42. The Ponca City News. "Future Phillips 66 officials visited the Ponca City site last week" March 27, 2012.
  43. ConocoPhillips Web Site. "Ponca City Refinery - Community Advisory Council" Retrieved April 5, 2012
  44. Honor EW Marland web site
  45. Ponca City News. Phillips 66 Advertisement. May 1, 2012.
  46. Ponca City News. "Honor the Legacy of EW Marland" May 1, 2012.

About the Author

Hugh Pickens

Hugh Pickens (Po-Hi '67) is a physicist who has explored for oil in the Amazon jungle, crossed the empty quarter of Saudi Arabia installing microwave communications systems, and built satellite control stations for NASA all over the world. In 2005 Pickens and his wife retired to his hometown of Ponca City, Oklahoma where he cultivates his square foot garden, mows 6 acres of lawn, and photographs local events at the Poncan Theatre and Ponca Playhouse.

Since 2001 Pickens has edited and published “Peace Corps Online,” serving over one million pageviews monthly. His other writing includes contributing over 1,200 stories to “Slashdot: News for Nerds,” and articles for Wikipedia, “Ponca City, We Love You”, and Peace Corps Worldwide.

Other Articles Written about Ponca City

Full Disclosure

I am an independent investor who is a stockholder in Phillips 66 and the purpose of this web site is to follow Phillips 66 to document and understand the company's plans and policies particularly with respect to its Refinery and Marketing Business Segment with a special emphasis on evaluating the impact of Phillips 66 business decisions on the Marland Refinery in Ponca City, Oklahoma. I began building my position in PSX when Phillips 66 went public on May 1, 2012 and am long PSX. I will disclose publicly if I close my position on PSX or go short. Unless stated otherwise, there is a citation for every statement in this article. The only exception is the "Conclusions Section"[1] in this report which includes my own judgements and findings which are not to be taken as a recommendation to buy or to sell stock in Phillips 66 (PSX).

Updates to the Web Site

This web page is frequently updated so check back periodically to see the latest information on "Phillips 66 and Ponca City." If you have any additional information or insights that you would like to see added to this report on Phillips 66 and Ponca City please contact Hugh Pickens by email at hughpickens AT gmail DOT com.

Copyright

The material in this article is licensed under under the Creative Commons under an Attribution-Noncommercial-Share Alike 2.0 Generic license. Except for short, fair use excerpts, the material on this article cannot be used for commercial purposes without permission of Hugh Pickens. Attribution for use of any material from this article must be provided to Hugh Pickens and if used on the web a link must be provided to http://hughpickens.com.


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