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Early Company History

Today it is hard to imagine a time when gasoline was not a necessity, but until the beginning of the twentieth century gasoline was seen as a largely waste product of refining. Nineteenth century oil refineries focused on making kerosene, which was the preferred fuel by consumers for illumination. After refining one, forty-two gallon barrel of crude oil manufacturers had to sell about 1.26 gallons of kerosene and about 16.8 gallons of gasoline. Gasoline was marketed as “stove naphtha” and sold for cooking and occasionally illumination, but because it was more likely to cause and explosion than kerosene it was not much used.
The automobile fundamentally restructured the refining business, taking the unpopular and largely unsellable stove naphtha and making it a commonly sold petroleum product. By 1933 more than 170,000 gasoline stations were selling fuel to power automobiles. The market was vast and profitable. The discovery of oil in Michigan soon led businessmen in this state to enter it. In 1928 mid-Michigan’s Mt. Pleasant oil field was opened and began to produce substantial quantities of crude oil. Two subsequent oil discoveries in the area, in Midland County’s Porter Township in 1933 and the Crystal Field in Montcalm County in 1935, made it clear that large amounts of crude oil lay underneath mid-Michigan’s ground. Several refineries were constructed to process the crude oil.
J. Walter Leonard was a young man whose father was a Pennsylvania oil man who was active in oil exploration and development across the nation. The sudden death of one of his father’s partners in a Michigan project jeopardized the family interests, and J. Walter was asked to come to the state to ensure the success of the endangered investment. When he arrived, Leonard sensed an opportunity. He bought the drilling rigs his father had sent to Michigan and drilled the wells himself. In 1935 one well, drilled by J. Walter Leonard, The Durban #1 in Montcalm County, opened the very successful Crystal Field. At a time when production in the state amounted to about 37,000 barrels of oil a day, Leonard’s Durban #1 discovery well daily produced an astounding daily figure of 3,594 barrels of oil. J. Walter Leonard suddenly had more oil than he could market.  He needed a refinery to process it.
In 1936, J. Walter Leonard formed a publicly held company which purchased a refinery that was being constructed in Alma, Michigan. The refinery Leonard purchased was small and had very limited technical capability. It could process only 2,500 barrels of crude oil a day, and produce gasoline rated from 40 to 50 octane, which as dispairingly called “Michigan gas.”  Competitors could refine gas rated at 75 to 80 octane. In 1937 the Leonard refinery began a series of improvements designed to both increase capacity and create higher quality products.
Leonard Refineries became known for technical innovation.  In 1938 the firm developed a “midget” polymerization unit. Polymerization was first used by large refineries. As Philips explained it to the public when it introduced “Poly-Gas,”  
”You tip-toe the button, and there is no missing … sputtering … or backfiring. What a kick! When your motor rolls over with no gnashing of teeth, purr-r-r-s into instant action, warms up fast. Besides, you save miles usually wasted by excessive use of the choke with ordinary low-test fuels.”   
Advertising hyperbole aside, polymerization allowed refineries to capture “waste gases” to make a high octane gasoline. The first polymerization units cost $125,000, far more money than small, independent refineries like Leonard could afford. Leonard’s “midget” unit cost $9,000, and gave smaller, independent refineries the ability to successfully compete with national oil companies. Similarly, in 1947, Leonard introduced a “midget” catalytic cracking unit. Similar units at large refineries had cost millions of dollars, while the Leonard midget was created on a $500,000 budget. Similar in impact to the midget polymerization unit, it allowed independent refineries like Leonard to successfully sell 100 octane plus aviation fuel in competition with national firms.
In 1955 Leonard expanded dramatically when it obtained control of two other nearby refineries – Alma’s Mid-West Refinery and Mt. Pleasant’s Roosevelt Refinery. Because each of the three refineries specialized in different products, the merger was quite successful. However, finding sufficient crude to meet the company’s expanded refining capacity proved challenging. In 1956 Leonard, which had originally relied on crude oil found in Michigan an increasingly on supplies brought in by pipeline from the south, began to purchase Canadian crude oil.  Canadian crude had become available because of a newly completed Canadian oil pipeline that had been built to link Canada’s western oil reserves to the country’s eastern markets. To lower construction costs, the pipeline traveled through Michigan rather than around it and ended Sarnia, Ontario, where existing pipe could carry the crude further east into Canada.