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Weekly UpdatesIT WAS EASY TO DESPISE the oil industry last summer, when gas prices were in the stratosphere and it felt like there was a direct pipeline emptying your wallet into the sands of the Middle East. Consider, though, that your neighbor here in Indiana might own a piece of the petroleum business--and depending upon which pump you pull up to for a fill-up, you might actually be powering your car with Indiana fuel.
Sure, Indianapolis-based CountryMark Cooperative is no ExxonMobil or BP; it's just a drop in the barrel in the oil business. But it's our drop in the barrel, and it's pumping oil from the ground right here in the Midwest, instead of the Middle East. Controlled by a group of member-owned agricultural cooperatives spanning the state, CountryMark is busily building up its oil drilling and refining operations, offering one more way to buy local. "We're owned by farmers, and we pay a portion of our profits back to the local co-ops, which pay it back to the farmers," says president and CEO Charlie Smith.
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"We're one of the smaller oil refiners in the U.S.," Smith admits. CountryMark's refinery in Mount Vernon can process about 26,500 barrels of oil a day, about a fifth of the average-size American refinery But those barrels come from oil wells not so far away, across what's known as the Illinois Basin--about 10 percent from Indiana, 10 percent from Kentucky and 80 percent from southern Illinois. "That's kind of where God laid it all down."
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It's a winning formula for a lot of Hoosiers and their counterparts from nearby states. Not only do co-op member-owners share in the profits--Smith says CountryMark has distributed roughly $75 million in the last five years--those landowners hosting wells get a cut of the proceeds as well, through royalties that can run into the tens of thousands of dollars per well every year. Some 40,000 landowners benefit from deals with CountryMark each year.
MARKETING MIDWESTERN FUEL
"We launched a new branding campaign a year and a half ago," Smith says. "We believe what we stand for is American fuel."
And it's not just the locally drilled oil that's on the menu. CountryMark blends about 90 percent of the biodiesel used in Indiana, Smith says. In the early 1990s, CountryMark teamed up with the Indiana Soybean Alliance to field-test biodiesel blends made in part with Indiana-grown soybeans. By 2002, that test was deemed a success and the company added biodiesel-blended fuels to its product offerings.
And CountryMark has been in the business of ethanol blends since the 1970s. The company's gasoline contains the industry standard of 10 percent ethanol, which is produced from corn, boosts octane levels and reduces emissions. It also sells E85, a blend that's 85 percent ethanol, intended for use in flex-fuel vehicles. "We believe the combination of these things is a perfect standard as to what our company stands for," Smith says.
CountryMark's products can be found across the state, at some 90 CountryMark-branded retail gas stations as well as through a dozen and a half local co-ops. Its branding efforts and promotion of its "All-American Fuel" have included revamping its gas stations with new pumps and signage. CountryMark's locations are not as ubiquitous as Shell or BP or Marathon stations, of course, yet while Smith says "they're part of the fabric of rural Indiana," they're not all off-the-beaten-path. The company sells gas in Evansville and Fort Wayne, for example, in Richmond and Columbus, and around the Indianapolis area in Noblesville, Greenfield and Danville.
The company is working hard to spread its name and its story of Indiana fuel. At this year's Indy JazzFest, for example, CountryMark biodiesel powered about 10 Cummins generators providing electricity for the outdoor event. When the FFA held its national convention in Indianapolis in October, Indiana-built Toyota courtesy vehicles were filled with CountryMark fuel. And at the Indiana State Fair, CountryMark biodiesel powered the shuttles circling the fairgrounds, and the company gave away free gallons of its gasoline-ethanol blend to patrons of the "World's Largest Drive-Through Breakfast."
Beyond farmers and retail fuel buyers, CountryMark counts fleets among its biggest customers. That includes public and private vehicles, and lots of school buses. According to Smith, about half of all Indiana schoolchildren are carried to school on buses powered by CountryMark fuels.
A GROWING PLAYER
Last May, CountryMark put the finishing touches on a $20 million expansion of its Mount Vernon refinery.. The project added about 12 percent to the refinery's capacity, and is allowing it to pump an extra 45 million gallons of fuel--most of it diesel--into the local market.
It's a good thing for farmers, many of whom rely on diesel-burning farm machinery. Diesel users were stung extra-hard by the run-up in fuel prices, and due to supply-demand quirks diesel fuel remains significantly more expensive than gasoline.
Part of CountryMark's refinery expansion was the installation of new equipment that can extract more diesel from crude. The result is more diesel heading to Indiana pumps--diesel refined entirely from low-sulfur, Illinois Basin crude that Smith says is a higher-quality oil than that pumped in the Middle East. Not only can the refinery pump out more diesel, the expansion has increased the refinery's energy-efficiency, allowing it to refine more crude and produce more fuel without using any more energy in the process.
To that new refinery capacity, CountryMark is adding more oil. Most of the Illinois Basin oil that the company refines is acquired from other suppliers, but "we just recently drilled our first few wells," Smith says. The plan is to drill at as many as 10 sites a year, proceeding cautiously at first while it's determined just how productive each site promises to be.
The first drilling at a given site, he says, is a vertical well that offers a peek at the reservoir hundreds of feet below the surface. That well may come across, say, a 10-foot section of oil. If it seems promising, additional drilling will run more sideways through the reservoir to allow a higher output. "Horizontal wells have come into fashion in the last 10 or 15 years," Smith says.
THE STORY OF COUNTRYMARK
CountryMark Cooperative got its start in the 1920s when a group of member co-ops began collectively buying lubricants for farm implements. In 1930, the Indiana Farm Bureau Cooperative Association was formed, linking 77 member co-ops in a joint venture that within a decade or so was getting into the business of drilling for oil, refining it into gasoline and byproducts, and distributing it across the state.
In the 1950s, the company began building a private pipeline to deliver fuel from its southwest Indiana refinery to five fuel terminals. In the 1960s, it launched its flagship diesel product, Super Dieselex-4. As the organization grew, it built up other agricultural-related services, including grain elevators, but in more recent years divested those to focus more narrowly on its energy business. It took its present name in 1991.
Today, says Smith, the company employs about 350 and has revenues of about a billion dollars. Last year it recorded net income of $56 million. "We're not one of the big guys," Smith acknowledges, "but $1 billion is a lot of money."
Smith, a Crown Point native who joined the oil industry as an engineer and signed on at CountryMark about six years ago, knows that his industry hasn't been especially popular in the public eye lately, due to market forces over which a company like CountryMark has virtually no control. "When people take aim at the oil companies, they're thinking of ExxonMobil and Shell," he observes.
He just wants Hoosiers to remember that the people of CountryMark are neighbors, selling local products and spending the profits locally "We're happy to be part of the economy."
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