From Breakthrough to Dominance: Tret-O-Lite's Crude Oil Treatment (P3)
William S. Barnickel relied on perseverance, chemical knowledge, and patents to build and defend their business to become a global leader in oilfield chemistry.
I describe William S. Barnickel’s early life as a chemical emulsion breaker inventor in the first two parts of a four-part series. I describe how he learned about the oil patch’s problem in dealing with oil emulsion. Then I tell about the years of his hard work and experiments to develop the first chemical treatment to break crude oil emulsion, separating water from crude oil—the oilfield’s first chemical emulsion breaker.
Barnickel’s first patent for the chemical emulsion breaker, U.S. Pat. No. 1,093,098 was issued on April 14, 1914, with an application date of March 13, 1912. I describe in the earlier post how the patent examiners demanded Barnickel defer from using the word “emulsion”; instead, they wanted him to use the description “slimy substance” because of their lack of knowledge and experience dealing with crude oil emulsions. Barnickel felt getting a patent, regardless of the vagueness of the word slimy, relieved him that he had some degree of protection for his invention. He followed with a second application on November 19, 1914, with U.S. Pat. No. 1,223,659 Treatment of Crude Oil was issued on April 24, 1917. By this time, the patent examiners had gained knowledge, allowing him to use a better description and the word “emulsion” in his application.
In the patent world, the first independent claim gives the inventor the most substantial protection for the invention described in a patent. In his first patent, the examiner forced him to amend the original language and claim, “whereby the slimy substances are caused to collect in the intermediate layer between the water and the petroleum.” It was OK, given that the science around crude oil emulsions was not yet generally understood. He needed to file a second patent with better clarity to improve his invention's protection. He did this in his second patent, where he states: “A process for treating natural emulsions of petroleum containing petroleum, brine, and other organic matter….” With the first and now the second patent issued, he established the beginning of an intellectual property foundation for his company to expand and continue to develop the chemical process of breaking crude oil emulsions. But would having a patent be enough to fend off copycats?
Barnickel came to rely on his longtime friend and attorney, John S. Lehmann of St. Louis, for filing his first and future patent applications. John S. Lehmann was the son of Frederick W. Lehmann, former Solicitor General of the United States, representing the fourth highest-ranking person in the Department of Justice. He would reward Lehmann for his work with a ten percent share of any profits he might derive from any patent Lehmann prepared for Barnickel to file on his chemical breaker science.
In 1915 Barnickel began selling the Tret-O-Lite chemical emulsion breaker to many oil producers. The Tret-O-Lite chemistry was economical and worked. It quickly dropped out the bulk of the produced water from the emulsion, allowing oil producers to recover crude oil rather than wasting it.
In 1915 it was reported in the Muskogee Daily Phoenix and Times-Democrat on July 8, 1915, that Barnickel installed a plant for treating roily oil, cut oil, and waste oil or b.s. on the Mabel Dale allotment on the west side of Cimarron and about two miles west of Oil Creek. He would no longer be called “BS Barnickel.” He was now recognized for his emulsion-breaker chemistry, just eight years after his first visit to the Glenn Pool field.
No other company had yet invented a commercial chemical treatment to break crude oil emulsion. Until Tret-O-Lite, oil companies relied on time and heat to break emulsions. The heat didn’t always work, and it took much longer to separate the water. The time and expenses of using steam coils meant oil companies would need to install large oil storage tanks and boilers to steam the oil. This was a significant cost to oil companies. The development of the chemical Tret-O-Lite changed all of this—no more burning oil pits or wasting emulsified crude oil down the ditch.
The company's commercial success helped Barnickel and his employees use motorized transportation to travel the oil patch. It allowed them to expand their coverage and the sale of Tret-O-Lite.
As with most inventors of new chemical applications, they keep on inventing. This is precisely what Barnickel did. He continued to experiment with unique chemistries for treating crude oil. On January 4, 1919, he filed his third patent, U.S. Pat. No. 1,467,831 Process for Treating Petroleum Emulsions, issued on September 11, 1923, over four and a half years after filing it. This is a relatively long period for a patent to be examined. The delay may have resulted from the patent office re-staffing following World War I or the impact of the Spanish Flu pandemic. According to a USPTO publication, it issued 945 patents to Missouri inventors in 1923. This is a relatively small number given how St. Louis, Missouri, was an industrial epicenter for many companies.
This third chemistry patent puts the emulsion-breaking science on track to use organic chemistry versus the earlier inorganic metal sulfates used for the first Tret-O-Lite product. Barnickel describes how sulfurized and sulfonated fatty acids improved emulsion-breaking performance in this patent. He used Turkey Red Oil, which combines sulfuric acid with castor oil.
The modern-day chemical treating technician can’t appreciate the uniqueness of Barnickel’s discovery for developing sulfurized and later sulfonated chemical breakers. This early invention probably gives them the best choice for a tank bottom treatment to quickly remove water (“knock-out”) from a wet oil tank and get them headed home or catch the next chopper or boat to the beach. So with this 1919 development, the original Tret-O-Lite chemistry was changing. The latest version opened the door for organic breakers to become the standard. Tret-O-Lite would become the dominant crude oil emulsion breaker chemical manufacturer worldwide within a few years. Some might say Tret-O-Lite developed a monopoly on this application in the oilfield for decades.
Unfortunately, Barnickel could not witness his company's commercial success or how his hard work and dedication in developing a chemical treatment for crude oil emulsion changed how oil operators treated crude from that point forward. On May 19, 1923, at age 45, he died at St. John’s Hospital in St. Louis following complications from surgery to repair a perforated ulcer in his stomach. He left behind a daughter, Genevieve, and two sisters, Mrs. Lenora Tucker and Mrs. Della Singer. It was estimated he left his heirs an estate worth over $800,000 at the time, or over $13 million in today's dollars.
We’ll never know if his untimely death was partly caused by the stress from the challenges and work to discover an industry-changing method or the legal battles against competitors who sought to infringe.
Out of friendship loyalty and his vested interest in the profits for Tret-O-Lite emulsion breakers, Barnickel’s attorney, John S. Lehmann, would take action on companies who infringed on the Tret-O-Lite patents. It may be that when a solution to a complex problem is invented, and no other person or company can use the patented method to overcome the monopoly, less scrupulous companies may take to infringing on the unique idea. On August 23, 1923, just three months after his passing, a Wyoming court awarded Barnickel’s company damages of $263,459, one of the largest ever recorded in the U.S. district court at Cheyenne. This is over $4.5 million in today’s dollars.
In 1933 the Tret-O-Lite company filed three suits in Oklahoma against Cities Services, Indian Territory Illuminating, and Empire Oil, alleging infringement of crude processing patents. Rather than bring suit against the competitor selling the infringing product, Tret-O-Lite would file a lawsuit against the oil operator. Later, rather than pursue the matter in court, they would agree to settle the suit by obtaining supply agreements with the oil operators, effectively locking out the competitors for the patent's life. This tactic was repeated several times, adding to Tret-O-lite's dominance in the oilfield chemical market.
In a separate legal matter. Barnickel’s estate defended a legal challenge brought by Paul G. Hinrichs of St. Louis, who claims, as a lab assistant, he helped Barnickel to develop his crude oil emulsion-breaking process. Shortly after Barnickel’s death, Hinrichs filed a lawsuit in the circuit court on April 17, 1924, for $500,000 against Barnickel’s estate. In the case, he claimed that Barnickel, in a written agreement in 1913, promised to give Hinrichs four percent (4%) of the profits from the crude emulsion-breaking process in exchange for his assistance. Hinrichs claimed he helped Barnickel with testing and demonstrations on the process afterward, Barnickel would file a patent solely in his name. Hinrichs stated Barnickel paid him only $2,000 for his work. Hinrichs would not be rewarded as the court eventually dismissed the suit.
As only a chemist might do. Barnickel’s early practice of researching to develop products and then using the patent office to protect his inventions set in place a vital element of the Tretolite business model that would continue to serve them for decades. Tretolite scientists intensely researched and documented emulsion breaker chemistries. Later they would carefully file for patents on unique aspects of every product they invented, regardless of how minor. As a result of this business model, Tretolite created the proverbial picket fence of science and patent protection and became the dominant supplier of emulsion-treating products and many other oilfield chemicals worldwide. The legal talent of John S. Lehmann would use the company’s resources to protect its market position by using the court to discourage infringers.
The dominance of Tret-O-lite over all competitors was tested in the court. In 1935 two competitors, Visco Product Co. of Houston, Texas, and Truman H. Wayne, brought suit under the Sherman Act alleging Petrolite Corporation and Tret-O-Lite used unfair business practices to gain a monopoly in oilfield chemicals. Visco and Truman, who had five patents on an emulsion breaker process, claimed Petrolite enjoyed 90 percent of the oilfield emulsion-breaking chemical market. They asked the court to dissolve Petrolite and Tret-O-Lite. The court sided with Petrolite and Tret-O-Lite, and they went back to inventing and patenting new products.
Tretolite's Vice President of Research and Patents, Melvin DeGroote, along with other scientists, diligently filed and obtained thousands of patents in both domestic and international territories. Their innovative chemical products became a standard in chemical technology in many aspects of oil and gas processes.
I would like to express my gratitude to Chris Oversby and Danny Durham, both highly respected executives in the energy chemicals industry. They generously shared some historical documents pertaining to Barnickel and Petrolite, which have proven to be invaluable in my research. Thanks to their contribution, I was able to create informative posts on this subject and others.