Champion Chemical - New Mexico to the Permian
Champion Chemical, founded by an Ivy League entrepreneur selling salt from New Mexico into the Permian Basin, grew into a leading global oilfield chemical company.
Champion Chemical
In the oil industry, service companies play a crucial role by providing necessary products and services to assist in drilling and producing oil and gas wells. Service companies are valuable partners to oil companies in the oil patch. Today there are several sub-categories for “service” companies. Some companies supply drill pipe, tools, drilling mud, chemicals, and rig. Many readers of this article may not know that the oil company drilling the oil well owns very little (if any) equipment to drill the well. In almost all cases, the equipment to drill and complete the well is provided by service companies who rent to the operator. Once an oil well is completed at the site, the production equipment (wellhead, separators, oil tanks) is supplied by service companies. There are dozens of sub-categories under the heading “service company.”
The oil-treating chemical companies represent an essential sub-category. They earned the label “oil-treating” from the early days when treating crude oil was the primary purpose. Today, the label “oil-treating” has broadened to include a wide range of specially formulated chemical compounds developed to deal with all sorts of fluid and gas-related problems encountered. Champion Chemicals was founded in the Permian Basin to supply oil drillers and producers with chemicals for oil-treating purposes, becoming a significant player in the industry. So let’s look at how Champion began and grew to become one of the largest service companies in the oil-treating chemical world.
As the oil industry expanded after World War II, hard-working and entrepreneurial men worked to create service companies in the oil patch. Champion Chemical was founded in 1953 as the industry was experiencing a tremendous expansion. Since that time period, Champion became a trusted partner and service company to many oilfield and pipeline operators.
Champion Chemicals began as a soda ash, potash, and salt supplier in the Permian Basin of West Texas. Champion supplied chemicals used by drillers to make up drilling mud, and completion fluids. These salt products were sourced from a producer out of Eunice, New Mexico.
Potash is an alkaline (basic – high pH) potassium compound, including potassium carbonate and potassium chloride. Soda ash is used in drilling mud as an alkalizing agent to maintain a higher pH. The potassium compounds help to stop many types of swelling clay downhole. Swelling clay, called “gumbo clay,” can make a bad day for a driller by causing the drill pipe to get stuck during the drilling process. A stuck pipe event can result in the loss of the wellbore, including the valuable drill pipe, forcing the driller to pull up, set a cement plug, and sidetrack, creating a new wellbore. It’s a time-consuming operation and expensive.
The founder of Champion Chemicals, Courtenay M. Thompson, was a Harvard University graduate of 1930. During the challenging times of the Great Depression, even well-educated individuals like Thompson struggled to find employment. Hence, he responded to a job advertisement for a sales position at Solvay Process Company, a pioneer in producing and supplying soda ash. Thompson quickly discovered that chemical sales suited him well and gained valuable industry knowledge from his work at Solvay. This experience set him on a lifelong path of working with chemicals. While working at Solvay, he expanded his understanding of chemistry. His expertise later proved helpful during World War II, leading to his appointments as a chemical warfare procurement officer in New York, a company commander of the 4.2 mortar battalion, and an intelligence officer serving under General Stillwell in Burma and India.
In 1945, following his military service, he came back to the alkali industry. He took on the role of southwestern sales manager for Southern Alkali Corporation, based in Dallas, Texas. This corporation was a joint venture between Pittsburgh Plate Glass Company (PPG) and American Cyanamid Company, and they had started building an alkali plant near Corpus Christi, Texas, in 1931. By 1934, the plant was producing soda ash and caustic soda.
In April 1948, with some oil patch sales experience under his belt, Thompson joined the startup Frontier Chemical Company as the sale manager out of Frontier's general office in the Midland Tower in Midland, Texas. Frontier Chemical was founded by experienced oilfield business people deeply rooted in the oil patch through their business experience. Frontier co-founder “Eddie" Chiles, Jr., who served as the President of The Western Company at Seagraves, Texas, and Robert L. Wood from Midland, Texas, who established Frontier. The Western Company’s tagline, "If you don't have an oil well, get one – you'll love doing business with Western!" This was just one example of the marketing approach of the flamboyant Eddie Chiles, Jr. Thompson undoubtedly gained invaluable marketing insights during his tenure at Frontier.
Frontier began making chemicals in 1947, including calcium chloride brine and hydrochloric acid. These are used in oil drilling, and Frontier quickly became a significant supplier in the Permian region.
Thompson became the Sales Manager of Frontier Chemical in January 1950, three years after the company started production. By then, the company had already built a reputation for providing dependable products in the Permian Basin. During the same year, Frontier Chemical was sold to Clint W. Murchison, a Texas-based oil tycoon, and his associates in Dallas, by the previous owner Eddie Chiles, for a remarkable amount of money at the time of over $1,000,000. Today's value would be worth more than $12 million in 2022.
Thompson gained valuable insights into oil patch opportunities while working with such oilfield-experienced people at Frontier. He also gained a good understanding of the oil market from the wellbore up to production through his work selling Frontier's salt and chemical products to oil operators.
With five years of oilfield experience and the quest to express his entrepreneurship, Courtenay M. Thompson formed his own company, Champion Chemical Company, in 1953.
The business office was established in the small town of Terminal, Texas, in Midland County. (In 1965, Midland annexed the community. The municipal airport was renamed Midland International Airport.) At first, Champion's main goal was to provide oil drillers in the Permian with salt and potash. He decided to source the supply from Eunice, New Mexico, located a reasonable distance from the Permian market. This supply point proved key in expanding his business by selling salt products to drilling operators throughout the Permian.
State of Texas records reports the original company's founders included Thompson, his wife Madeleine (50%), and co-founder Boyd Laughlin (50%). Laughlin, a friend and seasoned attorney, formerly the Midland County Bar Association president, was known in the banking community. It is believed he helped Thompson gain banking and business connections to help achieve a firm commercial footing to launch the business. Later, Thompson would buy out Laughlin's investment as the company grew more prosperous.
Champion's history began in Eunice, New Mexico, known for its rich mineral deposits, including soda ash and potash. The area's evaporite bed is highly sought-after, and calcium salt is produced as a byproduct. Eunice was conveniently located near drilling operations in the Permian Basin, which had a high demand for alkali and salt in their drilling mud and completion fluids.
Anyone driving in West Texas learns that travel to and from locations isn't measured in miles but in time. For those living and working in the region, it is nothing to take two or three hours for a typical commute. Eunice, New Mexico, is about two hours from Midland, Texas. I can only guess how often he and his delivery trucks traveled to and from Eunice from Midland to rig locations throughout the Permian.
Back in 1953, the Permian Basin had approximately 500 rigs in operation. These rigs required the salt that Thompson was selling. Thompson cleverly packaged his salt in cotton or paper bags to make his product more appealing. He opted for white cotton bags instead of paper, which served as a smart marketing tactic. Not only did the cotton bags provide a container for the salt, but they also doubled as washcloths. While it's unclear if this strategy was successful, drillers seemed to prefer the cotton bags for the fabric they could reuse at home after emptying the salt. The rig count remained high for several years, benefiting Thompson's business.
As Thompson's Champion Chemicals business venture progressed, he identified a lucrative opportunity to offer high-margin, specialty production-treating chemicals. Given the corrosive properties of salt, it was logical to introduce a corrosion inhibitor. This was followed by a scale inhibitor to prevent mineral buildup and a biocide. As customers presented Thompson with additional needs, he developed new chemical solutions to add to the growing list of specialty products. Consequently, Champion Chemicals transformed into an oilfield-treating chemical company.
In 1958, as a strategic move to expand his company, Thompson brought on board Sam White, a bright chemical engineer who had recently graduated from the University of Texas. White boasted excellent academic credentials and was highly regarded for his sharp intellect. He had graduated as the Valedictorian of his high school and was among the top ten percent of his University of Texas engineering class with a degree in Chemical Engineering.
Thompson offered White equity in Champion Chemicals to entice him to join and develop the company. Jim Scott was hired as President, focusing on sales of corrosion inhibitors. Champion's specialty chemicals solved fluid problems and increased productivity for oil operators. Thompson and Clyde Smith established a blend plant facility in Midland.
Thompson may have felt the need to expand beyond the Permian but doing this would require risking a more significant investment. At his age, Thompson probably felt reluctant to overextend his energies. Instead, he would look for a buyer for his business.
In 1959 Permian Mud Service, a company founded by Hugh Munn and Willard M. Johnson, purchased Champion Chemicals from Courtenay Thompson. They wasted no time expanding the company’s geographical reach into other oil-producing areas. The owners of Permian Mud Service had gained a lot of experience as drilling mud distributors and founders of Magnet Cove Barium (Magcobar), which gave them a business roadmap of where to locate sales offices and valuable customer connections.
Following the sale of Champion, Thompson sought a change of scenery and climate, eventually relocating his family to Florida. While in the Sunshine State, he worked across multiple industries until retiring.
Sam White remained with Champion after the sale to Permian Mud Service. He was given a ten percent stake in the new company and continued as Vice-President of the now Permian Mud Service-owned Champion Chemicals company. Not long after the purchase, in 1959, he was promoted to President. Over the next several years, he worked to organize Champion and expanded it into new regions, including Oklahoma, Kansas, Louisiana, and California. In 1965 Champion moved its warehouse operations from Terminal, Texas (now annexed into the city of Midland) to a new location on East Highway 80 closer to Odessa. In August 1968, Champion acquired and consolidated the Petroleum Division of Betz with Champion. This would be one of several acquisitions and mergers that Champion would complete over the next several decades.
Champion Chemicals, Inc. experienced tremendous growth during the 1970s through the 1990s. Several vital employees helped navigate the competitive waters of the oilfield chemical market to position Champion Chemicals as a dominant product and service provider in many areas worldwide. Led by people like Willard Johnson, Hugh Munn (founders of Permian Mud Service), Sam White, one of the first employees for Champion Chemicals and its first President, shortly followed by several including Charlie Haineback, Dr. Jack Claasen, C O “Ollie” Bundrandt, Orville Keller, John Eubanks, Jim Martin, Clint McBay, Howard Endean, Larry Gatlin, C B Trial, Barney Phillips, Virgil Seale, and Mark Vile. These individuals and numerous vital individuals contributed over the years. I hope this historical review brings a bit of pride to them and their families for what they became a part of.
In 2012, fifty-three years after being acquired by Permian Mud Service and acknowledged as one of the oil patch’s most prominent service companies, the Willard M Johnson family agreed to sell their eighty percent interest in Champion for over two billion dollars.
Known today as ChampionX (Nasdaq: CHX), Champion Chemical Company is a global leader in chemical products and services supplied to the oil and gas industry. Recently, it was recognized as ExxonMobil’s “Supplier of the Year,” the first chemical service company to be recognized with this award. The result of decades of developing chemical and process solutions positioned Champion uniquely to achieve this and many other milestone awards. From the early beginning in the Permian, Champion spread out to oil regions worldwide. Over time it merged with several similar chemical providers, including Apergy and EcoLab-Nalco, powerhouse suppliers of specialty chemicals, to become the largest global supplier of oil-treating chemicals.
The success story of Champion is a testament to solving customer problems through hard work and ingenuity in the oil patch. It all began with a Harvard graduate selling salt and brine water in the Permian, eventually passing the reins to a banker who turned into a drilling mud pioneer who worked to expand Champion into becoming one of the largest service companies in oilfield chemicals.
A future story will take a closer look at the remarkable story of Willard Johnson and his industry-altering contributions to drilling mud and oilfield chemicals.
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