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TEXASGULF

TEXASGULF. Texasgulf, Incorporated, began as the Gulf Sulphur Company in 1909 in Matagorda County, with its initial mine at the massive Boling Dome in neighboring Wharton County. This mine is still considered the largest inland sulfur deposit in the world; by 1993 its total production had surpassed all other dome mines. With the Spindletop oilfield discovery in 1901, Texas drillers exploring along the Gulf Coast punctured numerous salt domes. At Big Hill, five miles from Matagorda, they found little oil, but a definite presence of sulfur. In 1908 two St. Louis businessmen, A. C. Einstein and J. W. Harrison, bought the mineral rights at Big Hill, drilled for sulfur, and found a good show. On December 23, 1909, they formed the Gulf Sulphur Company, with headquarters in Matagorda. The sulfur industry was in its infancy. In October 1891 Dr. Herman Frasch obtained a patent to use superheated water to melt sulfur crystals and pump the liquid to the surface and into vats, where it solidified into elemental sulfur. His method succeeded at a salt dome in Calcasieu Parish, Louisiana; however, fuel costs, primarily coal, hindered production until the oil discoveries. The Frasch process enabled large sulfur reserves to be mined, reduced domestic prices by 40 percent, and greatly reduced imports from abroad (mainly from Italy). In 1908 Frasch's basic patent expired, and Texas investors adapted his method to sulfur mining along the coast. On November 12, 1912, the first mine using the Frasch process was opened at Bryanmound, near Freeport.

In 1914, the war in Europe expanded the demand for sulfur. Eastern bankers Bernard Baruch, J. P. Morgan, and W. B. Thompson purchased Gulf Sulphur, and on June 27, 1918, formed the Texas Gulf Sulphur Company. TGS built a plant at Big Hill with fourteen 702-horsepower boilers, and on March 19, 1919, the company's Well No. 25 produced the first sulfur. In October a modern company town was completed and named Gulf. TGS began shipping sulfur by rail and by barge. As sulfur demand dropped at the war's end, TGS sought new markets for its product, particularly in the fertilizer industry and among suppliers of sulfuric acid. It also sought foreign markets. After the Webb-Pomerene Act of 1923 permitted domestic manufacturers to unite to seek sales, Texas Gulf, Freeport, and Union Sulphur formed Sulexco for this purpose. In 1922 TGS acquired mineral rights to 5,000 acres in the Boling Dome, estimated to contain forty-five million tons of sulfur. As the leases required exploration by 1927, TGS joined Gulf (Oil) Productions in the development. Gulf traded its sulfur rights on the Texas and Louisiana Gulf Coast for $3 million and half of the net profits of the Boling Dome production. The two companies rushed in twenty-eight rigs, drilled about 200 wells, and began plant construction. TGS brought in its first well on March 20, 1929. The Union Sulphur Company had begun operating a well on Boling on November 14, 1928, but TGS bought all the mineral rights in the Boling Dome. TGS built a second town, named Newgulf, of more than 350 homes and moved its employees at Gulf to the new site. The town served as central headquarters for the corporation's diversified interests and enabled the company to manage its operating costs effectively. The town exceeded 2,000 residents at its peak. Within a year the company had poured more than 600,000 long tons of sulfur into its vats at Boling Dome. It also opened wells at Long Point Dome, twelve miles northeast of Newgulf.

During the Great Depression, TGS shortened its work week to four days, but kept its employees on the payroll. Its pay scale equaled or surpassed those of industries with unions, and TGS workers never unionized. In September 1932 TGS slashed production and closed its plant at Gulf. In September 1934 TGS stockholders voted a 1,300,000-share increase in stock, and the company bought out its contract with Gulf Production (Gulf Oil Corporationqv). In 1936–39 TGS acquired the rights to 75 percent of the Spindletop Dome reserves. The company drilled for sulfur in Africa, the Middle East, Europe, Australia, South America, and the Gulf of Mexico, and opened mines of pyrite, zinc, rock phosphate, potash, soda ash, and other minerals. In August 1949, TGS became the first United States company to acquire rights and a contract to mine sulfur in Mexico. TGS also extracted sulfur from sour gas (natural gas containing hydrogen sulfide). Toxic and commercially unusable, sour gas was burned by production companies. In 1941 TGS and other companies, at the government's request, developed an experimental method to convert the hydrogen sulphide into free sulfur. The TGS gas-purification (desulfurization) plant in Newgulf pioneered the first large-scale sulfur production from this source. TGS extended its sulfur-recovery processing to Canada. In 1948 it built a recovery plant (largest in the world) at a cost of $4 million for the Pure Oil Company (Union Oil of California) in Worland, Wyoming. From 1939 to 1947, Newgulf had supplied most of the TGS sulfur; its Worland and Moss Dome operation (in Liberty, Texas) added to the production.

World War II brought an increased demand for sulfur. Newgulf employees won the Army-Navy "E" Award flag-the industrial equivalent of a distinguished service medal-five times. TGS war production surpassed prewar totals by 50 percent. After the war, the expansion continued. In 1952 TGS entered the oil business, and by October 1953 the company was operating caprock wells on the Boling and Spindletop domes. In 1959 in Ohio it opened the sulfur industry's first distribution terminal for liquid sulfur; the same year it introduced the first volume shipping of liquid sulfur on the Mississippi River. TGS built a deepwater turning basin with a canal connecting a terminal at Beaumont with the Neches River and the Gulf of Mexico. The company also commissioned the first liquid sulfur tanker in the world, the Marine Sulphur Queen. When the government lifted price controls in 1953, sulfur prices advanced worldwide. In 1954–56 TGS had the most profitable years in its history. The company published a corporate magazine, the Golden Triangle (January 1962 to December 1981) in Stamford, Connecticut, to report TGS news from around the world. By 1964 the company had diversified even more. On 30,000 acres in North Carolina it held mineral rights to ten billion tons of high-quality phosphate rock, the largest deposit in the nation. TGS invested $80 million in the Lee Creek Plant (phosphate) and other facilities to make sulfuric acid, a super-phosphoric acid, and solid fertilizer. This was TGS's largest single project investment to date. In 1963 TGS found an ore body of trona in Wyoming. When converted to soda ash, trona is a basic raw material in making glass, aluminum, soap, and various chemicals. In 1968 TGS acquired the Armstrong Forest Company, which held timber and mineral lands in Pennsylvania and in Canada. TGS signed an agreement with a French company, Companie Française des Petroles, to explore for oil in Africa under the name Total-Texas Gulf S A R L. However, also in the 1960s, twelve company executives were charged by the Securities Exchange Commission with insider trading. The SEC argued that TGS issued a misleading press release concerning the Kidd Creek Mine in Ontario, Canada. The press release in question stated that the quality and quantity of the newly discovered mine had been exaggerated by the press. After the notice, TGS shares traded down, and a few days after that, TGS issued another statement declaring Kidd Creek a "major discovery." In the interim, executives of the corporation made personal TGS stock purchases. All but two of the executives were acquitted, but the case set legal precedent concerning insider trading interpretations by the courts.

TGS became known as Texasgulf, Incorporated, in April 1972. By the mid-1970s, two-thirds of Texasgulf's operating income was derived from its Canadian mines, and half of its employees were Canadian. However, the corporation had only one Canadian on its board of directors. In this context the Canadian Development Corporation, a company chartered by the Canadian government to oversee and protect Canada's natural resources, attempted a hostile take-over bid in 1973. CDC offered to buy ten million shares of Texasgulf at $29 a share. The $290 million offer would have given CDC controlling interest. Texasgulf went to federal court to prevent the take-over. Delays and confusion followed. In the end CDC purchased more than eight million shares (roughly 30 percent of Texasgulf stock). Management, led by Charles Fogarty, capitulated and put four CDC members on the Texasgulf board. Texasgulf then prospered. In 1980 it realized a net income of $325.6 million. Its directors included R. Allan Shivers, George H. W. Bush, George Brown, and Pierre Cote. The number of its employees rose to 6,480 and its common shareowners to 53,795. In 1980 Texasgulf produced 1,528,100 tons of sulfur in the United States and Canada, and its Mexican affiliate produced 551,300 tons. (Texas sulfur reserves are estimated at 15.1 million long tons; Mexican reserves at 19.3 million.) The company owned 2,100 railroad cars for transporting superphosphoric acid and liquid sulfur.

Texasgulf subsidiaries also profited. Texasgulf Metals mined copper and silver at the Kidd Creek mine in Canada, and gold at mines in Iron Dyke, Oregon, Cripple Creek, Colorado, and Owl Creek, Ontario. In 1980 Texasgulf Oil and Gas Company acquired federal leases in nine properties in the Gulf of Mexico. Oil and gas exploration increased in 1980 to $75 million, and discoveries were made in Oklahoma, Montana, and Texas, and in Canada.

In January 1981, CEO Charles Fogarty died in a plane crash along with five other top executives of the company. Five months later, Elf Aquitaine, a French development corporation, acquired ownership of Texasgulf in a $5 billion deal. In order to finance the purchase, Elf Aquitaine sold the Canadian mining operations (50 percent of Texasgulf's assets) to the Canadian Development Corporation. Elf Aquitaine later sold interest in Texasgulf to Williams Companies of Tulsa, Oklahoma. Texasgulf was left to focus on sulfur production and the company's oil and gas interests. In 1984 the company completed a seventy-megawatt cogenerating plant at Newgulf to supply power to generate steam for the Frasch mining at the Boling Dome and other operations. By the early 1990s the fertilizer industry used 75 percent of sulfur produced. Sulfur recovery from sour gas and oil at refineries and gas-processing plants amounted to 60 percent of all sulfur production. In 1992 the Texasgulf plant at Newgulf, the former headquarters, produced approximately 300 long tons of sulfur a day. Although Texas remains in the title, company properties and activities are worldwide. In 1995 Potash Corporation of Saskatchewan purchased Texasgulf for more than $800 million.

BIBLIOGRAPHY: 

Golden Sulphur (New York: Texas Gulf Sulphur Company, 1964). Michel Thomas Halbouty, Salt Domes, Gulf Region, United States and Mexico (Houston: Gulf, 1967; 2d ed., 1979). William Haynes, The Stone That Burns: The Story of the American Sulphur Industry (New York: Van Nostrand, 1942). Houston Post, February 13, 1989. Matagorda County Historical Commission, Historic Matagorda County (3 vols., 1986–88). New York Times, September 22, 1973. Kenneth G. Patrick, Perpetual Jeopardy: The Texas Gulf Sulphur Affair (New York: Macmillan, 1972). Morton Shulman, Billion Dollar Windfall (New York: Morrow, 1969).

Merle R. Hudgins

Citation

The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this article.

Merle R. Hudgins, "TEXASGULF," Handbook of Texas Online (http://www.tshaonline.org/handbook/online/articles/dktgq), accessed April 16, 2014. Uploaded on June 15, 2010. Published by the Texas State Historical Association.