Atomic Build-up

Employes of Phillips Petroleum Co. refer to it as "Phillips Pete." Sharp-eyed Founder Frank Phillips, now chairman, is called "Uncle Frank." Heavy-set President K. S. Adams has been titled "Boots" ever since he went wading in a Kansas City flood. Slight, bespectacled President Thomas B. Hudson of The Polymerization Process Corp., Phillips Pete's favorite offspring, answers to "Tubby." This nicknamed outfit last week registered $25,000,000 in debentures with SEC. Wall Street was sure they would have an easy sale--for in polymerization, Phillips Pete is fathering the latest technique in gasoline manufacture.

Gasoline was first made by distilling crude oil, then by the "casing-head process," next by "cracking," finally by hydrogenation. Cracking, of which hydrogenation is a continuation, consists of breaking down the molecular structure of heavy crude oil into a number of lighter, more salable derivatives such as kerosene and gasoline. Polymerization is the reverse; it takes the very lightweight, gaseous fractions of petroleum, which were formerly wasted or used only in restricted ways,* and through pressure, heat and catalytic agents builds them into heavier molecules for high-test (antiknock) gasoline.

Motor knocks are caused by a part of the fuel burning too rapidly, causing pressure and temperature changes characterized by a sharp "ping." Knocking quality is measured in octane, a 100% antiknock laboratory fluid. Most regular-grade automobile gas is about 70 octane. By polymerization Phillips Pete developed 100 octane gas--useless for modern automobiles but invaluable for airplane engines, which must get maximum efficiency and sudden "burst" response on take-off or emergencies. Howard Hughes used 100 octane gas provided by Standard Oil on part of his round-the-world flight, and it is increasingly in demand in military aviation.

Eying this field, Phillips took out a set of polymerization patents, soon ran up against competing patents owned by Texas Corp., Standard Oil (New Jersey), Standard Oil (Indiana). Rather than wage a costly fight, these four companies pooled their patents under The Polymerization Process Corp., which leases the process. Last fall Phillips Pete put up two massive polymerization units at Kansas City and Borger, Texas, baffled the oil world by turning out 100 octane gas in quantity too great for any known U. S. use. All Chairman Frank Phillips will say is that "the total output is being sold abroad to a foreign government." Eventually, Oilman Phillips expects automobile engines to be adapted to use 100 octane fuel.

A bold, slightly deaf man with a love for ranches (he has three), Frank Phillips likes to recall that he was a poor boy who went to work as a farm hand at 14, could not stand it and ran away, finally getting into petroleum with his brother in 1904 at Bartlesville, Okla. Not until 1927 did their company go into refining. Today Phillips Pete's three refineries have a capacity of 44,000 bbl. a day and the company is tenth biggest in the industry, with earnings last year of $24,000,000. Last week, Uncle Frank announced semiannual earnings of $5,585,139, some $7,000,000 less than for the first half of 1937. With its heavy expansion in polymerization and natural gas lines, this meant that Phillips Pete needed money. A proposed stock issue last fall was withdrawn when the cracking process extended to the stockmarket. No New Dealer and a confirmed pessimist about the future, Uncle Frank would not be surprised if the same fate overtook his new debentures.

*The process has vast significance to those who fear U. S. petroleum sources may soon be exhausted. Chemists figure that if polymerization were utilized on all the gaseous hydrocarbons produced in cracking, the extra gasoline output would be about 1,000,000,000 gal. a year.

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