Oil boom: Pittsburgh was nation's first petroleum capital

Samuel M. Kier watched as the lamp burned, and hoped the fuel he was testing would give off a brilliant light with no smoke.

The Pittsburgh businessman already had sold petroleum sopped from around his father's salt wells as medicine. With sales declining, he was looking for a new use for the greasy, greenish liquid.

Kier tested hundreds of lamps made to burn coal, whale and other oils before fashioning a burner for his fuel. He built a refinery along Downtown's Seventh Avenue that was the first in the Western Hemisphere, and his achievements in the late 1840s and early 1850s helped to develop the worldwide petroleum industry.

Edwin Drake's well would focus national attention on the Titusville area a few years later. But Kier and other Pittsburghers provided the technology, business know-how and financing to make their city America's first oil capital, a center for petroleum refining, trading and tool-making until the late 19th century.

"Pittsburgh always has had an entrepreneurial spirit. This is one example of it," said Alfred N. Mann, a retired chemical engineer who has studied the region's oil history.

But "total luck" also ushered in the city's oil boom, in the form of a cheap transportation route, he added. Oil Creek, in the heart of the first petroleum fields, flowed into the Allegheny River about 100 miles north of Pittsburgh, and the river took flatboats filled with crude to a city that had the labor and resources to refine and market it.

Just a waste product

Petroleum was a nuisance to early settlers in Western Pennsylvania.

Native Americans of the Seneca nation had taught them to use it as a salve, and to swallow it to relieve a range of ailments. Small quantities were on the ground's surface. But when the settlers dug wells to bring up brine they could boil down into salt, petroleum often came up, too.

Some managed to sell it. Nathaniel Carey, who lived along Oil Creek, collected oil from a spring, loaded it onto his horse in two 5-gallon barrels and traveled to Pittsburgh to sell it to get supplies. By the early 1800s, rafts from the oil region were carrying small quantities to the city, along with the far more important lumber shipments.

Lewis Peterson Jr. of Allegheny City, now the North Side, owned an interest in a salt well in Tarentum and, at one point, offered a reward for anyone who could use the excess oil.

Later, he solved the problem himself. Peterson had owned a cotton-spinning business that was destroyed in Pittsburgh's great fire of 1845. Later that year, he took petroleum to the Hope Cotton Factory off Lacock Street, near where Allegheny Center is now, and the managers there found it worked better for lubricating cotton spindles than the commonly used whale oil.

The company ordered two barrels per week from Peterson, but petroleum's use as a lubricant wouldn't be widely known until years later.

Kier ran several businesses during his lifetime. In the mid-1840s, he and his father, Thomas, were busy with two salt wells they owned near Tarentum, and they often dumped the useless petroleum by-product into the nearby Pennsylvania Canal.

A mishap one night signaled its possibilities. A group of boys, according to one account, threw a hot branding iron into the canal near the Kiers' property, igniting a brilliant fire that they had to let burn itself out.

Gradually, Kier became more intrigued with petroleum.

His wife was taking medicinal oil similar to what his wells produced. So, Kier began selling half-pints of what he called "rock oil" for 50 cents through sales agents who traveled in gilded wagons that featured pictures of the Bible's Good Samaritan.

"He was the first one to give any value to petroleum products," said Neil McElwee, a historian who studies Pennsylvania's oil regions. "Prior to that, it was just waste. Farmers would use it on their animals and burn lard oil for light."

'The magic elixir'

Kier, working from an office on Liberty Street, now Liberty Avenue, sold his petroleum as a remedy for health problems ranging from blotchy skin to diarrhea, but he soon turned to experiments with lighting.

By purifying the oil, Kier figured, he could make a cheaper, easier-to-get illuminant than the whale oil in common use then.

He built a simple one-barrel still at Seventh and Grant streets, where the U.S. Steel Tower is now. By 1850, he was distilling petroleum and selling it for $1.50 per gallon.

Four years later, Kier enlarged the operation to a five-barrel still that is considered to be the first refinery. The oil he used came from the Tarentum salt wells, transported via a Pennsylvania Canal extension that went into Downtown, from what now is 11th Street to a point near Kier's business.

The product, which Kier called carbon oil, was a success.

"He made an illuminant from petroleum, which was important," said William Brice, a professor at the University of Pittsburgh at Johnstown who studies oil history.

That's because petroleum was easier to obtain and transport than shale or coal oil. "It was the magic elixir, in that regard. You didn't have to dig a big hole to get it -- you just had to drill a hole in the ground and pump it out," Brice said.

Petroleum use as a lighting fuel and lubricant, flourished during the 1850s.

William McKeown of Nevins McKeown & Co., a Liberty Street drug store, built a second refinery, in Allegheny City. And Kier, under pressure from Pittsburgh leaders who feared an explosion in densely populated Downtown, eventually moved his refinery to Lawrenceville, around where 43rd Street now is.

Ironically, Kier's earlier venture would play a part in the industry's next big development.

Moving underground

New York businessman George Bissell, in 1856, noticed a flier for Kier's medicinal oil in a drug store window on Broadway. The petroleum came from a well, 400 feet deep, the ad said, and Bissell thought of drilling for illuminating oil.

Bissell was involved in a company that owned a farm near oil-rich Titusville, Crawford County. He hired Drake and William A. "Uncle Billy" Smith, who had worked for Kier as a salt-well driller.

On Aug. 27, 1859, they struck petroleum after drilling 69.5 feet down and casing their well with pipe -- proving that abundant supplies of oil could be pulled from underground. Within a month, financiers were snapping up farms and oil leases, and thousands of prospectors began to pour into the Oil Creek Valley.

Flatboats filled with oil were floated down the Allegheny River, then returned to the oil regions pulled by towboats or horses. Refineries were built along the Allegheny River, lifting Pittsburgh out of the doldrums of an industrial depression that was rooted in the over expansion of railroads a few years earlier, and uncertainty in the early years of the Civil War.

A handful of existing refineries in the city, built to make kerosene from coal or shale, switched to processing petroleum. By the late 1860s, the Pittsburgh area had 58 refineries.

Drake sold petroleum to Kier, McKeown and other Pittsburgh businessmen. And Charles Lockhart, after earlier oil ventures, built the first commercial-scale refinery in 1861, at the bottom of Negley Run in Highland Park, near where Washington Boulevard meets Butler Street.

Lockhart eventually operated the largest oil-refining business in Pittsburgh, with seven locations, and with partners including William Frew and William Warden, built the Atlantic Refinery in Philadelphia in 1872.

While forging relationships with other producers, Lockhart also was active in the oil fields. He and Frew, William Phillips and other partners drilled the Albion well near the mouth of Oil Creek that was a champion producer, turning out 4,000 barrels of crude per day.

Phillips, a Westmoreland County native, had a keelboat operation that was the first to run large quantities of petroleum from the oil region to Pittsburgh.

Other key figures emerged. Andrew Carnegie was one of the largest stockholders in the Columbia Oil Co., with interests around Oil City, and his dividends helped him raise capital for his steel mills.

Lockhart spurred overseas trade, traveling to Liverpool in 1860 with samples of crude and refined oil.

"This was the first that crossed the Atlantic," he wrote in an autobiography. "By the latter part of the same year, we were shipping crude in large quantities" to Scottish and English coal oil refineries.

The industry flourished through the Civil War years, influencing the war's outcome.

"Oil's importance in the war was strategic," McElwee said. "The European market during the mid-1860s and beyond was absorbing 70 percent of the refined crude from the United States. That gave us much-needed currency and allowed the Union to remain solvent to fight the war," and balance the capital that Southern states raised by selling cotton overseas.

Millions were made during this time. Lockhart, who built a stately mansion in Highland Park, where the Pittsburgh Theological Seminary now stands, recalled buying out three partners in an oil-producing business in 1863. Phillips was one, and while he handled the money, he never kept books.

"His bank of deposit was an old boot," Lockhart wrote. "He brought it down with him just as he had stuck it in," and when the cash on hand was counted, there was enough to pay each of the exiting partners the tens of thousands of dollars they were owed.

Pittsburgh also was home to the world's first oil exchange, where producers, refiners and shippers met.

The wharf near Duquesne Way was the terminal for oil traffic, and while refiners set up offices nearby, their business often was conducted right along the curb. The dealings often took in this area between Seventh and Ninth streets, often tying up traffic at the curbs before meetings at the Dalzell Building began in the mid-1860s. A few other oil exchanges followed, mainly in the same area of Downtown.

The city's glow as the center of oil trade lasted only a few years.

Boom starts to bust

Petroleum shipments eventually vanished from the river. The Allegheny Valley Railroad between Pittsburgh and Oil City was completed in 1868, providing a cheaper transportation mode.

Pipelines were built to carry oil from wells to the rail cars, and by the late 1870s, bigger lines to carry petroleum longer distances to remote markets were under construction.

Too many refineries had been built, and they outpaced consumption of lighting fuel. Many refineries began to move west to the Cleveland area. "We talk about excess capacity in the auto industry today, but by 1872, these refineries were killing each other off," McElwee said.

Lockhart recalled a meeting with J.D. Rockefeller and other oil producers in the summer of 1874 in Saratoga, N.Y. "We agreed to form a company to be named the Standard Oil Co." that would combine several of their refineries, barrel factories and other resources, he wrote.

He became the first president of Standard Oil, which controlled 90 percent of the refining capacity nationwide by 1878. The company became one of the first multinational corporations, and made Rockefeller a billionaire, but was broken up by the U.S. Supreme Court in 1911 for violations of antitrust laws.

Widespread drilling for petroleum didn't reach the Pittsburgh region until later, in 1890, when a well drilled on William Whitesell's farm in the Wildwood section of what now is Hampton went into production.

Pine and McCandless were other production areas. The McDonald Field that stretched from Neville Island to Midway, Washington County, pumped 80,000 barrels per day in 1892, and Allegheny, at that time, led all other Pennsylvania counties for production.

Pittsburgh oil wildcatter James M. Guffey and partner John Galey, who opened oil fields in Armstrong and Butler counties in the 1870s, led the bonanza in McDonald and later headed for the Gulf Coast in Texas.

Guffey bought out his partners in an oil business in 1901, by selling shares to Andrew and Richard Mellon and other investors in a deal that led to the creation of Gulf Oil Corp. in 1907, a time when consumers were buying the first automobiles.

Pittsburgh-based Gulf, by 1970, was one of the world's-biggest producers, refiners and sellers of oil, but in 1984, the company was absorbed by Chevron Corp. in a $13 billion deal that was the largest corporate merger to date. Gulf's offices in the city disappeared, marking the end of an era, although the brand endures.

Mann, who worked for Gulf and for the U.S. Department of Energy during his career, convinced the American Chemical Society this summer to honor Pittsburgh's earliest oil pioneer.

Officials with the professional group dedicated a plaque to Kier on Aug. 26 that later will be installed at the U.S. Steel Tower, near another historical marker for Kier's business. Another ceremony took place the next day in Titusville, marking 150 years after Drake's discovery.

Still, Pittsburgh's petroleum history remains little-known today.

"All of it predates living memory now," Brice said, "and it was overshadowed by steel, when (Henry Clay) Frick and Carnegie were in their heyday. The refinery business was large, but there were 58 different ones while Carnegie Steel was an enormous, single company."

The names of many of the entrepreneurs involved in Pittsburgh's history as the nation's petroleum capital remain familiar today. Here are a few:

• Michael Benedum and J.C. Trees -- Well-known wildcatters, or experimental drillers starting in the 1890s, formed the Benedum-Trees Oil Co. in 1900 and tapped oil reserves in Mexico and elsewhere abroad.

• Charles McCune -- Oil producer in the early 20th century who eventually became Texaco's largest single shareholder, later was president of Union National Bank of Pittsburgh.

• John Pitcairn -- Heavily involved in production, refining and pipeline transportation, later founded Pittsburgh Plate Glass Co., now PPG Industries Inc. .

• Jacob Vandergrift -- Pittsburgh riverboat captain who became a major shipper and refiner of oil, and later a large shareholder of Standard Oil Co.