Cheyenne's 100-Octane Plant
By Mike Mackey
The Japanese attack on Pearl Harbor brought the United States into World War II on December 7, 1941. Within days, the United States was at war with Germany and the Axis countries as well. War mobilization, already begun in anticipation of the inevitable American involvement, went into high gear. The government let huge contracts for construction of airplanes, ships, and every other form of war material. One of the most central needs was for a dependable, ample supply of petroleum. It would require industry-government coordination as well as anti-trust exemptions so that companies could coordinate operations and pool supplies.
Getting the maximum performance out of military aircraft required high-octane gasoline, a commodity that had only a limited market before the war because of the cost of manufacture. The fuel, developed by Shell Oil Company researchers in the middle-1930s, increased aircraft performance far beyond the level of 75 or 87-octane fuels customarily used. Such use also provided fuel savings and made possible longer-range aircraft. The fuel had proven its worth in the air war over Britain in 1940 when 100-octane fueled British Spitfires outperformed the German planes powered by 87-octane gasoline. Because petroleum was so central to a successful war effort, the federal government organized production and consumption systems. The principal agency in charge was the Office of the Petroleum Coordinator but early in the war, some 40 agencies had a say, one way or the other, in the petroleum industry. The goal was to maximize the supply while curtailing all non-essential use.
The 100-octane fuel was crucial in the equation, but the oil industry and government officials knew that production of such fuel was vastly more difficult and expensive than for lesser quality gasoline products. Such plants could not be constructed quickly. The steel and other construction items needed for plant building were demanded in all other sectors of the war economy. Any new 100-octane plant would require gaining the necessary priorities for such goods from the Office of War Production and other war agencies.
Defense specialists believed plants to make the 100-octane fuel should be constructed in the nation's interior, close to oil fields but away from possible enemy air or sea attack. Within a month of the onset of the war, Cheyenne businessman M. H. Robineau began to study the feasibility of opening a 100-octane fuel plant in Cheyenne. He proposed a 40-acre site adjacent to the already existing Frontier Refinery in the south part of Cheyenne near the Union Pacific rail lines. Construction and operation of such a facility would require significant government assistance. Not only would the plant need government approval to divert oil supplies for its needs, it would have to gain government priorities for building materials which were in demand in all sectors for the war effort. Robineau, the president of Frontier Refining Company, enlisted the help of Wyoming senior U. S. Senator Joseph C. O'Mahoney. An influential member of the majority party who had been in the Senate since January 1, 1934, O'Mahoney wielded significant influence with federal agencies involved in making war allocation decisions. As the construction of the 100-octane plant in Cheyenne demonstrates, O'Mahoney was more than an ardent advocate for increased appropriations for military installations in Wyoming. "He labored indefatigably in behalf of Wyoming's small business, agriculture, livestock, and mineral industries."
Robineau told O'Mahoney that he already had located dependable sources of oil from which the aviation fuel would be made. He discussed the prospects with Duff Gray, owner of Gray Refinery, Inc., of Newcastle, who agreed to furnish the necessary raw product. Other refineries in Wyoming--C&H in Lusk, Z&W in Torrington and Albany Refining in Laramie--would be likely sources, too, Robineau believed. In the deal with Gray, Robineau agreed to buy 500 barrels of oil daily from Gray's refinery to be shipped to Frontier Refining in Cheyenne. In return, Robineau would ship 70-octane unleaded gasoline back to Newcastle for sale to Gray's customers. Robineau planned similar deals with the other small refiners.
Wyoming's other U. S. Senator, H. H. Schwartz reported in April, 1942, that Wyoming refiners were working together on plans to solve the 100-octane fuel shortage. He told the Wyoming Labor Journal that all Wyoming refiners would benefit from aviation fuel production. The Journal noted that a plant was proposed for Glenrock.
Robineau concluded that the oil produced from the Lance Creek field in Niobrara County was of sufficiently high quality that it would be ideal for making 100-octane fuel. It could be shipped easily to the Frontier facility in Cheyenne. But A. W. Peake, Vice President of Standard Oil of Indiana, reported to the Petroleum Coordinator that Wyoming did not have sufficient crude oil to supply a 6,000-barrel aviation fuel plant. Peake's motive, in Robineau's view, was to keep the Lance Creek oil flowing to a Standard refinery near Sugar Creek, Missouri, where it was being processed in the company's own refinery. Robineau wrote to O'Mahoney, pointing out that the federal government would save money if the Lance Creek oil were processed into aviation fuelat Cheyenne instead of down the pipeline in Missouri. He told O'Mahoney that Ohio Oil and Continental Oil were willing to cooperate in the 100-octane venture and he hoped the senator could influence Standard to be similarly pliant.
As it turned out, other companies were considering building such plants. U. S. Rep. John J. McIntyre told a reporter on May 1 that Texaco, Continental and Standard had sent a proposal to the Petroleum Coordinator to build a 100-octane plant at Casper. He pointed out that financing for such a project could come from the Reconstruction Finance Corporation.
The Cheyenne Chamber of Commerce learned of the competing proposals and believed Schwartz and McIntrye were not doing enough to help Robineau and Frontier to set up the aviation fuel plant. Schwartz, a Casper resident, responded that he was not opposed to the project. In fact he also supported high octane, synthetic rubber and butane plants at Parco (Sinclair), Codyand Casper. He was opposed to any plan that would cut existing oil production levels at other major refineries simply to facilitate Frontier's plan. McIntyre said he would support an aviation fuel plant for any firm coming up with a "feasible proposal," but he understood that the existing facilities at Frontier could not be modified to produce 100-octane fuel. It would require an addition to the present refinery, he said.
Despite the concerns of Schwartz and McIntyre, the Office of the Petroleum Coordinator approved the Frontier plan along with a similar proposal for a plant at Parco (Sinclair). Frontier would supply its own raw oil, but the Parco plant would receive diversions from the Texaco and Standard Oil refineries in Casper. In reality, the raw oil for Frontier was to come from four small independent refineries: Z&W, Gray, and Albany Oil, all of which Robineau had already contacted, and Silver Tip Refinery of Yoder. Robineau was confident that others would sign on as suppliers at a later date.
Meanwhile, O'Mahoney urged the Office of the Petroleum Coordinator to negotiate in Robineau's behalf with Standard Oil. On June 13, 1942, Howard Marshall, OPC chief counsel, told O'Mahoney that after extensive discussions with Peake, Standard agreed to sell 1,500-2,000 barrels of Salt Creek oil to Frontier for the 100-octane project. Standard would supply the oil for $1.12 per barrel plus a 2 1/2 cents per barrel marketing charge. Peake emphasized that the company was already having trouble filling existing contracts and urged that Frontier seek oil from other firms in the area.
Robineau and other Wyoming oil producers were concerned about oil pricing. Pipelines, operated by the major companies, moved the oil cheaply and avoided the otherwise high costs of shipping Wyoming oil. The average price refiners had to pay for mid-continent oil was 70 cents per barrel. Companies with pipelines could pay the average Wyoming price of just 42 cents a barrel, send it by pipeline to their mid-continent refineries and make a substantial profit.
According to oil producers in Wyoming, the royalties assessed for production on government land made Wyoming oil non-competitive, too. Under the old system, producers paid a royalty ranging from 12 1\2 to 32 percent on oil taken from public lands. The more oil that was produced, the higher the percentage. At the request of independents, O'Mahoney introduced a bill to put a ceiling on government royalties at 12 1/2 percent. The measure passed on Dec. 24, 1942.
In June, 1942, the Frontier project hit another snag. Robineau was informed that the War Production Board would not give the project the highest priority rating. The board rated all projects as to their importance to the war effort and concluded that while the Frontier project was important, it was not the highest priority. Without the priority rating, Frontier would be unable to secure the services of an engineering firm to design the plant before September. Since construction would take an estimated 10-12 months, the project would not be completed until the fall of 1943. Any project not completed by June 1, 1943, however, risked cancellation.
Perhaps at the urging of Senator O'Mahoney, the War Production Board did give Frontier the go-ahead on the project in June. The $4 million plant was to be built on 40 acres next to the existing Frontier Refinery and be completed no later than May 1, 1943.
Senator O'Mahoney participated in the ground-breaking ceremonies for the new plant in late August, 1942. The plant would contribute to the war effort, but also to the local economy. It was estimated that construction would require 325 men and payroll from the completed plant would add an estimated $900 per day to the Cheyenne area economy. The aviation fuel would be sold exclusively to the armed forces for the duration of the war but, according to the newspaper, 100-octane fuel would still have a market after the war because auto makers were designing car engines that would use such fuel.
With the plant under construction, Robineau still worried about a dependable source of raw oil. He wrote O'Mahoney that if Wyoming's independent refiners like Frontier were to stay in business, contracts allowing for shipment of Wyoming oil out of state would have to be broken or new reserves would have to be discovered by independent drillers who would sell to independent refiners. He pointed, once again, to the Lance Creek and Salt Creek oil shipments to out-of-state refiners which deprived local refineries from running at full capacity. Robineau told O'Mahoney that even though Standard had agreed to sell oil to Frontier, they were refusing to do so. He said he believed Standard had several million barrels of oil stored at its Clayton tank farmand again asked the senator to intervene.
A month later, Robineau reported that Peake had agreed that Standard would sell Frontier enough oil to maintain its operations at a minimum capacity. He thanked O'Mahoney for his help, adding that his company had signed a contract with Continental to begin supplying oil to Frontier in December.
Meanwhile, with the oil supply problems solved for the existing Frontier facility, Robineau was faced with a critical housing shortage for the workers building the new 100-octane plant. The Cheyenne population had shot up from 23,000 in 1940 to an estimated 34,000 in October, 1942. Many of the new residents were affiliated with Fort Warren which was evolving into a major quartermaster training center. The housing shortage had become so acute that many workers connected to a United Airlines project underway in the capital city had to be bused from Greeley or Fort Collins each day.
Robineau discovered 29 houses for sale at the Lance Creek oil field, 150 miles north of Cheyenne. Dawson-Corbett Trucking Company offered to move them to Cheyenne and set them on foundations for $14,000. Water and sewer hookups, building the foundations, re-decorating and modest landscaping would add another $65,000 to the price. At $2,240 each, the houses would be a bargain compared to the cost of building new ones. The 55 homes already under construction in Cheyenne, and 165 proposed, ranged in price from $3,500 to $5,200 each. Nonetheless, Robineau needed loans from the Defense Plant Corporation because he could afford but $10,000 for the project.
Confident that funding would be provided, Robineau obtained a 60-day option on three city blocks near the Frontier Refinery. A city sewer and a Cheyenne Light, Fuel and Power line ran down the alleys and a city water line came down the street in front of the properties. Robineau asked the Defense Plant Corporation to move rapidly on his loan request because the owner of the land, F. E. Warren Mercantile Company, would likely raise the asking price of $3,250 after the 60-day option had expired. (At first, the firm had offered Frontier the property for $1,000 per block).
Robineau faced yet another problem. The 100-octane plant would require significant additional water which he requested from the City of Cheyenne. The City Council referred the request to the mayor's Advisory Water Board in the fall of 1942 and in November, the board gave its approval but with several limitations. The city agreed to furnish the 1,000,000 gallons per day, but the board urged Frontier to seek out and develop sources under its own control. City water, the board said, should be regarded only as complimentary to Frontier's own supply. Further, the board stipulated that Frontier pay the cost of the water line which, upon completion, would become the property of the city. It emphasized that the offer was not a guarantee to supply water because it could not predict snow fall or spring run-off, essential to the city's water needs. Further, once minimum domestic requirements of the city were met, Fort Warren and the Union Pacific Railroad were next in priority for the water.
Meanwhile, plant construction continued ahead of schedule even though delays could occur if steel and piping were not delivered on time. The Office of the Petroleum Coordinator was responsible for seeing that those items were delivered. Robineau feared that the War Production Board would give priority in scarce building materials to two 100-octane plants under construction in California because the completion dates for both had been targeted for three months prior to Frontier's. The California plants had enjoyed the three-month head start in construction, Robineau pointed out, but Frontier had caught up by November, 1942, because of "superior construction skills." With O'Mahoney's help, Robineau got the War Production Board to give all three plants the same priority. At this point, Robineau had worked out an agreement with Socony-Vacuum Oil Company to process their oil from the Horse Creek field, 25 miles north of Cheyenne. Robineau hoped the field would be a substantial enough one that Frontier could build a pipeline from it to the refinery, making Cheyenne the center of oil activity in the Rockies.
Throughout the spring, construction continued on schedule but by July, 1943, the Wyoming Eagle reported that construction costs had risen to $5 million. The record is silent on the reasons, but the plant was not completed until April 1944, almost seven months after Robineau's September target date. Meanwhile, the construction costs had risen to $8 million, double the original estimate. The plant was finally dedicated on April 14, 1944, and began processing aviation fuel that same day. The local press called it one of "Cheyenne's greatest industries," but for the remainder of the war, the government did not release information about it. It was designated "a secret project."
The plant continued processing aviation fuel after the war. In December 1945, its workers negotiated a new contract with Frontier. While peacetime demands continued for the fuel, the plant had made its contribution to the war effort. None of this would not have been possible, however, without the help of O'Mahoney. As Robineau often acknowledged, the intervention of Wyoming's senator at critical times caused the plant to be built. With the added factor of Robineau's persistence, the independent refiner both profited from the war effort and contributed to the critical fuel supply necessary to win the war. Cheyenne and the rest of Wyoming gained as well. The plant added a substantial payroll to Cheyenne's economy which added to the city's growth and development during the war years and beyond.
Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power. (New York: Simon and Schuster, 1991), p. 383.
The author holds the M. A. degree in history from the University of Wyoming. He is author of several books on Wyoming history, including Black Gold: Patterns in the Development of Wyoming's Oil Industry. (Powell: Western Publications, 1997), and several articles in Annals of Wyoming. This article first appeared in the first edition of Readings in Wyoming History.