Canada Oil History

A historical companion toOur Petroleum Challenge7th edition

EvolutionOf Canada’s oil and gas industry

EVOLUTION of Canada’soil and gas industry

Copyright 2004 by the CanadianCentre for Energy Information

Writer: Robert D. Bott

Editors: David M. Carson, MSc and Jan W. Henderson, APR, MCS

Canadian Centre forEnergy InformationCalgary, Alberta, Canada T2R 0C5Telephone: (403) 263-7722Facsimile: (403) 237-6286Toll free: 1-877-606-4636E-mail: [email protected]: www.centreforenergy.com

Canadian Cataloguing inPublications Data

Main entry under title:EVOLUTION of Canada’s oil and gas industry

Includes bibliographical references

1. Petroleum industry and trade – Canada

2. Gas industry – Canada3. History – petroleum industry –

Canada I. Bott, Robert, 1945-II.Canadian Centre for EnergyInformation

ISBN 1-894348-16-8

Readers may use the contents of thisbook for personal study or review only.Educators and students are permittedto reproduce portions of the book,unaltered, with acknowledgment to the Canadian Centre for EnergyInformation. Copyright to allphotographs and illustrations belongsto the organizations and individualsidentified as sources. For other usage information, please contact the Canadian Centre for EnergyInformation in writing.

Centre for Energy

The Canadian Centre for Energy Information (Centre for Energy) is a non-profit organization created in 2002 to

meet a growing demand for balanced, credible information about the Canadian energy sector. On January 1, 2003,

the Petroleum Communication Foundation (PCF) became part of the Centre for Energy. Our educational materials

will build on the excellent resources published by the PCF and, over time, cover all parts of the Canadian energy

sector from oil, natural gas, coal, thermal and hydroelectric power to nuclear, solar, wind and other sources

of energy. For more information, visit www.centreforenergy.com or contact the Canadian Centre for Energy

Information at 1-877-606-4636.

About this publicationEVOLUTION is an enhanced version of historical materialthat appeared in the first six editions of Our PetroleumChallenge, published by the Petroleum CommunicationFoundation between 1978 and 1999. The seventh edition of Our Petroleum Challenge includes a brief historicaloverview of the Canadian oil and gas industry, along withcoverage of today’s conventional, oilsands, offshore, Arctic,midstream and downstream operations. EVOLUTION isintended for readers seeking a more complete and detailedhistorical perspective.

The oil and gas industry has been an important part ofCanada’s economy since the mid-19th century, but almostevery aspect has changed in ways the founders could not have imagined. This booklet describes the industry’sevolution from hit-or-miss, trial-and-error pioneering in the 1850s to the advanced science and technology ofthe 21st century. First, however, it briefly explains wherepetroleum is found and how it got there. The second section of the booklet describes the development of theindustry prior to the Leduc discovery in 1947. The remainderof the booklet outlines the evolution of the modernpetroleum industry since 1947.

A bibliography provides sources for further information.A glossary of specialized industry terms can be found inOur Petroleum Challenge or at www.centreforenergy.com.

Measurement and terminology

In 1979, the Canadian petroleum industry converted fromthe Imperial to the metric system of measurement. Most oiland gas operations in Canada are conducted in metric unitssuch as metres and litres. This booklet uses metricmeasurement only.

Some Imperial units, such as the barrel of oil and the cubicfoot of natural gas, remain in common usage in the industrybecause Canadians are involved in the world crude oil tradeand the continental natural gas market. For a full conversionand measurement list, see pages 53-55.

In this publication, the term “petroleum” includes naturalgas, natural gas liquids and bitumen, as well as crude oil.Gasoline is not abbreviated as “gas” to avoid confusion withnatural gas (methane) and other gases.

About the covers

James Miller Williams (upper inset) of Hamilton, Ontario,was the “founding father” of the Canadian oil industry.He dug and drilled the first commercial oil wells in south-western Ontario and established North America’s firstintegrated oil company. Eugene Coste (lower inset) was thepioneering entrepreneur of Canada’s natural gas industry,first in Ontario and later in Alberta. Imperial Oil unveiled thediscovery of a major crude oil field near Leduc,Alberta, onFebruary 13, 1947 (main photo). The Leduc discovery markedthe birth of the modern Canadian oil and gas industry. Theback cover shows oil sands pioneer Sidney Ells.

About this publication 1

Evolution of an industryCanada has a vast endowment of crude oil and natural gasresources. Developing these resources today provides hundredsof thousands of jobs for Canadians and contributes to ournational wealth and trade balance. Natural gas, petroleumproducts and the goods and services derived from them play avital role in almost every aspect of our economy and lifestyle.

Canadians’ present petroleum-based prosperity is due to eventsthat occurred on two very different time scales. During a half-billion years of Earth’s history, nature formed hydrocarbons inthe types of sedimentary rocks that are under parts of everyprovince and territory. Over the past century and a half,Canadians became skilled in extracting, processing andtransporting this buried wealth. Canadian companies andindividuals have played a role in developing petroleumresources at home and around the world.

There are both costs and benefits to producing and using crude oil and natural gas. As each cubic metre is consumed,companies must search for new resources to replace thatproduction. Equally important, there is the potential for adverseeffects on land, water, air, plants and animals, and human healthand safety. The benefits may be enjoyed in one region, while thecosts are borne in another. Oil and gas development can alsopositively or negatively affect Aboriginal communities andothers in rural and remote areas. Government regulation andpublic consultation are key tools in managing the social andenvironmental effects of petroleum development and makingsure that economic benefits are achieved.

Before examining the industry’s evolution and its effects onCanadian life, however, it is important to understand theindustry’s geological base.

2 Evolution of an industry

Contents 3

Contents

KKeeyy ddeeffiinniittiioonnss 44

PPeettrroolleeuumm rreeggiioonnss ooff CCaannaaddaa 55

SSeeccttiioonn 11RRiicchheess iinn rroocckkss 88

Geology – origins of crude oil and natural gas 99

Where is petroleum found? 1111

SSeeccttiioonn 22TThhee eeaarrllyy iinndduussttrryy 1133

Let there be light 1144

Birth of an industry 1155

North America’s first company 1155

The first oil boom 1166

Hard oilers 1166

Early refineries 1177

The Imperial Oil Company Limited 1177

Internal combustion triumphs 1188

A crucial decision on naval power 1188

A growing reliance on oil imports 1199

Lessons from the Second World War 2200

Getting more products from oil 2200

Blue flames 2211

Natural gas in Alberta 2211

Early drilling techniques 2222

Cable-tools to rotary rigs 2222

Underground mysteries 2233

The emerging science of geophysics 2244

SSeeccttiioonn 33AAfftteerr LLeedduucc –– tthhee mmooddeerrnn ooiill aanndd ggaass eerraa 2255

Drillers on the Leduc rig 2255

Crude oil and natural gas discoveries 2266

The turning point 2277

The growing importance of geophysics 2288

Frontier exploration and development 2299

Safe and efficient drilling 3311

Conservation and regulation 3311

Sweetening sour gas 3333

Acid rain 3344

Increasing sulphur recovery 3344

Oil from sands – the elusive bonanza 3355

Successes and failures 3366

Technological advances 3377

The difference between heavy and light oil 3388

Expanding operations 3399

In-situ bitumen 3399

Moving oil and natural gas 4400

The pipeline construction boom 4400

Deregulation 4411

Crude oil and natural gas in the political arena 4422

Global energy crises 4433

The National Energy Program 4444

Deregulation and competition 4444

The environment – a growing awareness 4466

A continually evolving industry 4488

Legacies 4488

Reviewers 4499

Selected bibliography 5500

Online information services 5522

Measurement 5533

About the author 5566

Key definitions4

Key definitionsHydrocarbons are compounds of hydrogen and carbon.The simplest hydrocarbon is methane (CH4), composed of one carbon atom and four hydrogen atoms.

Natural gas is mainly methane, although it can occur in nature as a mixture with other hydrocarbons such asethane, propane, butane and pentane and with othersubstances such as carbon dioxide, nitrogen, sulphurcompounds and/or helium. These components areseparated from the methane at processing plants locatednear the producing fields.

Crude oil is a naturally occurring liquid mixture ofhydrocarbons. It typically includes complex hydrocarbonmolecules – long chains and rings of hydrogen and carbonatoms. The liquid hydrocarbons may be mixed with naturalgas, carbon dioxide, saltwater, sulphur compounds andsand. Most of these substances are separated from the liquidhydrocarbons at field processing facilities called batteries.

Bitumen is a semi-solid hydrocarbon mixture. Thebitumen in Alberta’s oilsands is the world’s largest knownhydrocarbon resource.

Gasoline is a complex mixture of relatively volatilehydrocarbons, with or without small quantities of additives,suitable for use in spark-ignition engines.

Petroleum is a general term for all the naturally occurringhydro-carbons – natural gas, natural gas liquids, crude oiland bitumen.

Natural gas liquids are ethane, propane, butane andcondensates (pentanes and heavier hydrocarbons) that areoften found in natural gas; some of these hydrocarbons areliquid only at low temperatures or under pressure.

Liquefied natural gas (LNG) is supercooled natural gasthat is maintained as a liquid at or below -160° C. LNGoccupies 1/640th of its original volume and is thereforeeasier to transport if pipelines cannot be used.

Fluids are either liquids or gases – substances whosemolecules move freely past one another and that have thetendency to assume the shape of a container. Most forms of petroleum, except some bitumen, are fluids.

Petroleum regions of Canada 5

Atlantic Ocean

TofinoBasin Georgia

Basin

WinonaBasin

QueenCharlotte

Basin

Hudson Bay

Calgary

St. John

EdmontonGrandePrairie

Regina

Toronto

Halifax

St.John’s

Labrador Sea

Baffin Bay

Davis Strait

Beaufort Sea

Winnipeg

a

Hibernia Ben NevisTerra

Nova

WhiteRose

Sable

Fort McMurray

Saskatchewan

Manitoba

Yukon

Northwest

Ontario

Newfoundland

NovaScotia

NewBrunswick

PrinceEdwardIsland

Lloydminster

Nunavut

NormanWells

Amauligak

InuvikParsons Lake

Taglu

Niglintgak

Bent Horn

VancouverBritish

Columbia

AnticostiBasin

ScotianBasin

Jeanne D’ArcBasin

MagdalenBasin

ntea

st nWest

CANADA'S SEVEN HYDROCARBON REGIONS Percentage of Canada’s estimated conventional hydrocarbon resources

Region

Western Canada Sedimentary Basin* 57%

Atlantic Margin 18%

Arctic Cratonic 10%

Arctic Margin 6%

Pacific Margin 4%

Intermontane 3%

Eastern Cratonic 2%

* Excluding oilsands bitumen Source: Geological Survey of Canada

NOTE: These estimates were prepared by the Geological Survey of Canada to indicate the ultimate

geological potential of sedimentary regions. They are useful to indicate the order of magnitude of

various regions’ resources, but are not the same as reserves that have been determined by actual

drilling and can be produced economically. In some areas, such as the Western Canada Sedimentary

Basin, a significant proportion of reserves have already been produced, but most of the resources

remain in place. Also note that the estimates do not include natural gas from coal, gas hydrates or

the vast bitumen resources in the Alberta oilsands. Bitumen is a semisolid form of petroleum, dense

and resistant to flow.

Petroleum regions of Canada

1

2

3

Petroleum regions of Canada6

At a glanceWestern CanadaSedimentary Basin• Includes parts of all four western

provinces, the Northwest Territoriesand the Yukon

• In 2003, accounted for about87 per cent of Canada’s crude oil and 97 per cent of its natural gas production

• Natural gas first discovered in 1883near Medicine Hat, Alberta, withsubsequent discoveries throughoutthe basin

• Major sour gas discoveries since the1920s in Alberta, British Columbiaand the Northwest Territories

• Historically significant crude oildiscoveries: Turner Valley, Alberta,in 1914, 1924 and 1936; NormanWells, Northwest Territories, in1920; and Leduc, Alberta, in 1947

• Heavy crude oil discovered atWainwright, Alberta, in 1923

Fort Nelson

Turner Valley

Leduc

Fort St. John

Grande Prairie

Regina

Calgary

Edmonton

Oil Sands

Oil Fields

Heavy Oil

Gas FieldsFort McMurray

Lloydminster

SwiftCurrent

Estevan

Western Canada Sedimentary Basin

Petroleumregions

of Canada

Canada has seven large regions of sedimentary rocks – the kind of rocks that may contain crude oil and natural gas. Thesehydrocarbon regions are the Western Canada Sedimentary Basin,the Atlantic Margin, the Arctic Cratonic, the Arctic Margin, thePacific Margin, the Intermontane, and the Eastern Cratonic.

Maps 1 and 2 show the regions of Western and Eastern Canadathat account for nearly all of the nation’s current crude oil andnatural gas production. Map 3 shows the historic crude oil andnatural gas fields in southwestern Ontario, which continue toproduce petroleum on a small scale.

Other significant producing areas are the Norman Wells oil field and the Fort Liard natural gas field, both in the NorthwestTerritories. In addition, the Bent Horn field in Nunavut producedmodest amounts of crude oil from 1985 to 1996. The Ikhil field in the Mackenzie Delta has supplied natural gas to Inuvik,Northwest Territories, since 1999.

To date no commercial petroleum has been produced along the Canadian West Coast.

1

Petroleum regions of Canada 7

Halifax

QuebecCity

St. John’s

Atlantic Ocean

Labrador Sea

Hibernia

Terra NovaBen Nevis

Sable

WhiteRose

Labrador

Newfoundland

Nova Scotia

NewBrunswick

Prince Edward Island

AnticostiBasin

FlemishPass

Basin

ScotianBasin

Jeanne D’ArcBasin

MagdalenBasin

OrphanBasin

Gas Fields

Oil Fields

Lake Erie

Buffalo

Windsor

Sarnia

Lake Ontario

Lake Huron Hamilton

Toronto

EnniskillenTownship

Gas Fields

Oil Fields

• Bitumen, contained in oilsands,is the world’s largest knownpetroleum resource

• Bitumen has been upgraded intolight, low-sulphur synthetic crude oil since 1967

• Elemental sulphur began to beextracted from sour gas in 1952

• First natural gas from coal (coalbedmethane) produced commercially in southern Alberta in 2002

Eastern CanadaSedimentary Basins• Onshore natural gas discovered in

1859 in New Brunswick, but flaredas a waste product

• Small volumes of crude oil andnatural gas produced from onshorewells in New Brunswick from 1911 to 1991

• First offshore exploratory welldrilled off Prince Edward Islandduring the Second World War

• Drilling off the shores of NovaScotia and Newfoundland andLabrador began in 1966

• First major crude oil discovery in1979 at Hibernia site on the GrandBanks off Newfoundland and Labrador

• Terra Nova and White Rose crude oil fields discovered in 1984

• First crude oil production in 1992from the Panuke and Cohasset fields near Sable Island offshore of Nova Scotia

• Crude oil production began fromHibernia platform in 1997

• Natural gas production began in 1999 near Sable Island

• Terra Nova crude oil productionbegan in 2002, to be followed byWhite Rose in 2005 and eventually by development of nearby fieldssuch as Hebron, Ben Nevis and West Ben Nevis

• Onshore exploration continues in all the Atlantic provinces andQuebec, with some small-scalenatural gas production since 2003 in New Brunswick and since 1980 in Quebec

Southern OntarioProducing Areas• North America’s first commercial oil

well located in Enniskillen Townshipin 1858

• Natural gas discovered in 1866,used for heating and lighting since 1889

• Provided crude oil for the refiningindustry centred near Sarnia sincethe 19th century

• Relatively small amounts of crudeoil and natural gas productioncontinue today

Eastern Canada Sedimentary Basins Southern Ontario Producing Areas2 3

Section 1 Riches in rocks8

Canada is endowed with large areas underlain by petroleum-bearing rock.From the very beginning, our oil and gas industry has been focused on findingand developing this resource and turning it into useful products that enhanceour lives. The rocks came first – a long, long time before humans.

Section 1

Riches inrocks

Source: ConocoPhillips

GGeeoollooggyy aanndd ggeeoopphhyyssiiccssGeologists depend on clues such asrock outcroppings to determine wherecrude oil or natural gas might befound. The best indication is crude oilor natural gas seeping to the surface,but much can also be learned fromprevious drilling in the area (if any),the characteristics and topography ofrock formations, and the similaritiesto other areas known to producecrude oil or natural gas. Since the1920s, the science of geophysics hasprovided an additional powerful tool,the seismic survey, to develop a morecomplete “picture” of deeply buriedrock formations. Geophysicists canidentify the structures most likely tocontain petroleum, but the only wayto find out for sure is to drill a well.

Source: Brian Harder

Geology – origins of crude oil and natural gasThe Earth is about 41/2 billion yearsold. According to the organic theoryof petroleum formation, the earliest of the sediments that produce almostall crude oil and natural gas weredeposited about 560 million years ago.

To understand the time scale involved,imagine that one second equals oneyear. If you started counting onenumber per second, you would reachone million in 111/2 days, and onebillion in 311/2 years. On this acceleratedtime scale, petroleum resources havebeen accumulating for more than 16 years and the Canadian petroleumindustry, nearing its 150th birthday,has been around for 21/2 minutes.

The Earth is not the fixed, solid massthat we usually envision. It is actually a sphere of solids and molten rockthat are gradually but continuously

moving and changing. For example,South America is drifting away fromAfrica at about the speed yourfingernails grow. Earthquakes andvolcanoes are reminders of the Earth’s instability and changing face.

The Earth’s crust is divided intonumerous tectonic plates. These platespush against and override each other,rise and fall, tilt and slide, buckle andcrumple, break apart and mergetogether. As a result, sediments fromthe bottom of ancient seas can todaybe found in rocks on the tops ofmountains. In fact, the 8,850-metresummit of Mount Everest is marinelimestone, formed from coral reefs in an ancient sea.

For more than half a billion years,photosynthesis has made life as weknow it possible on Earth. Plants and

algae absorb solar energy and use it to convert carbon dioxide (CO2) and water into oxygen and sugar.Additional processes convert sugarinto starch and cellulose. Thesecarbohydrates and other organicmaterials from decaying organismseventually settle on land or on thebottoms of lakes and seas.

As the organic materials become more deeply buried, heat and pressuretransform them into solid, liquid orgaseous hydrocarbons known as fossilfuels – coal, crude oil or natural gas,respectively. Coal is formed from theremains of terrestrial (land-based)plants. Peat moss is an example of thetype of material that becomes coal.Crude oil is typically derived frommarine (water-based) plants andanimals, mainly algae, that have beengently “cooked” for at least one millionyears at a temperature between 50° and 150° C. Natural gas can beformed from almost any marine orterrestrial organic materials, under a wide variety of temperatures and pressures.

Section 1 Riches in rocks 9

?Did you know? Most crude oil and naturalgas originate from plant

and animal life that thrivedin oceans and lakes

millions of years ago.

Seep near Canada’s first oil well in Ontario. Source: Robert D. Bott

Due to their buoyancy and the pressurecreated by the overlying rock layers,crude oil and natural gas seldom stayin the source rock in which they areformed. Instead, they move throughthe underground layers ofsedimentary rocks until they eitherescape at the surface or are trapped by a barrier of less permeable rock.

Most of the world’s petroleum hasbeen found trapped in porous rocks under a layer of relativelyimpermeable rock. In such reservoirs,the petroleum is not collected in anunderground “lake” but rather is heldin the pores and fractures of rock likewater in a sponge. These reservoirs are often long distances away from the original source.

A seep occurs when hydrocarbonsmigrate to the Earth’s surface. Overtime, huge amounts of these hydro-carbons have been degraded bybacteria or escaped into the atmosphere.Flowing water can also wash awayhydrocarbons. Sometimes only thelighter, more volatile compounds areremoved, leaving behind reservoirs of heavier types of crude oil.

The Alberta oilsands are differentfrom most petroleum reservoirs, inboth size and how they were formed.Fifty million years ago, huge volumesof oil migrated upward and eastwardthrough more than 100 kilometres of rock until they reached large areasof sandstones at or near the surface.Bacteria then degraded thehydrocarbons for millions of years.Geologists believe the original volumeof crude oil digested by the micro-organisms was at least two or threetimes larger than what now remains as bitumen, and yet the Albertaoilsands are still the world’s largestknown hydrocarbon resource.

Bacteria usually degrade the simplesthydrocarbons first, converting theminto carbon dioxide and water, andleave behind the big hydrocarbonmolecules such as asphalt and othersubstances that cannot be digestedsuch as nickel. The bacteria may alsomodify some of the simpler sulphurmolecules, leaving complex sulphurcompounds. As a result, there aremore heavy hydrocarbons, complexsulphur compounds and metals in bitumen than in conventionalcrude oil. This makes extraction andprocessing more difficult and expensive.


Not written in stoneThe above description is based on the organic theory of the origins of petroleum. It is the most widely accepted theory among geologists, and it appears to explain how most of the world’s crude oil and natural gas reservoirs ended up in the places where they have been found. However, there are other theories, including the inorganic theory thatmaintains hydrocarbons were trapped inside the Earth during the planet’s formation and are slowly moving towards the surface. Scientists continue to explore the possibility that some hydrocarbons might be formed from non-fossilsources and might be found at greater depths than known crude oil and natural gas resources. Laboratory experimentsand deep drilling have provided some evidence in support of this theory.

?Did you know? At 8,850 metres above

sea level, the summit ofMount Everest is actually

limestone from anancient seabed.

Source: Suncor

OOiillssaannddss mmiinniinnggOilsands mines in the Athabascaregion near Fort McMurray, Alberta,have provided an increasingproportion of Canadian crude oilproduction since 1967. Thick, stickybitumen – a semi-solid form ofpetroleum – is extracted from thesand and upgraded into a syntheticcrude oil similar to light, low-sulphurconventional crude oil.

Section 1 Riches in rocks 11

Crude oil and natural gas are found in sedimentary rocks formed overmillions of years by the accumulationof sand, silt, mud and the remains ofliving creatures in sedimentary basins.Canada has seven distinct regions ordomains of sedimentary rocks. Everyprovince and territory includes at least a portion of a sedimentary basin.These basins cover the majority of theland area of Alberta and Saskatchewanand large areas off the East Coast.

The most productive hydrocarbonarea is the Western CanadaSedimentary Basin, which includesmost of Alberta and Saskatchewanand parts of British Columbia,Manitoba, Yukon and the NorthwestTerritories. In 2003, the WesternCanada Sedimentary Basin accountedfor 87 per cent of Canada’s crude oil and 97 per cent of natural gasproduction. The Geological Survey of Canada (GSC) estimates this basincontained 57 per cent of Canada’soriginal in-place conventionalpetroleum resources. This figure does not include natural gas from coal or the non-conventional bitumenresources of the Alberta oilsands,the world’s largest known petroleumresource. The vast majority of currentcrude oil and natural gas explorationand production activities areconcentrated in the Western CanadaSedimentary Basin.

The Atlantic Margin extends along theEast Coast from the U.S. border to thecoast of Baffin Island. This area is thesite of major offshore crude oil andnatural gas deposits discovered sincethe 1970s. The region’s first crude oilproduction was from 1992 to 1999from the Cohasset and Panuke oil

fields off Nova Scotia, and muchlarger oil production began in 1997from the Hibernia project offNewfoundland and Labrador. TerraNova, another project in the samevicinity, began crude oil production in 2002, and the White Rose projectis scheduled to begin production in2005. The region’s first natural gasproduction began in 1999 from theSable Offshore Energy Project offNova Scotia. The Geological Survey of Canada estimates that the AtlanticMargin contained 18 per cent ofCanada’s original in-place conventionalpetroleum resources. It is anincreasingly important contributor to the nation’s petroleum supply.

Substantial crude oil and natural gasresources have also been identified in the Arctic Islands, Beaufort Sea and the Mackenzie Valley, butdevelopment has been slow due to Aboriginal land claims, the longdistance from markets and theabsence of pipeline systems. Tworegions of sedimentary rocks – theArctic Margin and the Arctic Cratonicregions – are estimated to hold 16 percent of Canada’s total conventionalpetroleum resources. (Cratonic rocksare those that have been relativelyundisturbed since pre-Cambriantimes, generally found in interior areasof continents.) The only productionto date has been tanker shipments ofcrude oil from 1985 to 1996 from theBent Horn well in the Arctic Islands(Arctic Cratonic region), and naturalgas production from the Ikhil field inthe Mackenzie Delta (Arctic Marginregion) since 1999 to supply thecommunity of Inuvik 50 kilometresaway. One tanker load of crude oil was also shipped to Japan in 1986

following an extended production of the Amauligak discovery well in the Beaufort Sea (Arctic Margin).

The Eastern Cratonic region includesparts of Manitoba, Nunavut, Ontario,Quebec, the Maritime provinces and Newfoundland and Labrador.However, this region’s sedimentaryrocks are estimated to contain just twoper cent of Canada’s original in-placeconventional petroleum resources.One area of Eastern Cratonic rock isthe portion of the Michigan Basin thatincludes an area of southern Ontarioand the adjacent Great Lakes. Thisarea has been producing crude oilsince the 1850s, and it continues toproduce a small portion (less than one per cent) of Canada’s currentcrude oil and natural gas supply.

The Intermontane region is the area of British Columbia and the Yukonlocated between the CanadianRockies and the West Coast mountainranges. There has been someexploration in Intermontane areas,which are estimated to contain threeper cent of Canada’s original in-placeconventional petroleum resources.

The Pacific Margin off the B.C. coastis estimated to contain another fourper cent of the nation’s original in-place conventional petroleumresources, but there has been noexploration since 1972 when thefederal and provincial governmentsimposed moratoria on offshore oil and gas activities in the area.(Since 2001, the B.C. and federalgovernments have been reviewing the bans; a federal panel beganhearings in 2004.)

Where is petroleum found?

Formation ofa sedimentarybasin

Petroleum is most often found in a sedimentary basin. A sedimentary basin is adepressed area of the Earth’s crust where tiny plants and animals lived or weredeposited with mud and silt from streams and rivers. These sediments eventuallyhardened to form sedimentary rock. The soft parts of plants and animals,exposed to heat and pressure over millions of years, gradually changed to oil and natural gas. Temperature, pressure and compaction of sediments increase at greater depths.


Rivers carrysand to thebasin

Swampmay formcoal ifcovered

Whitebeachsand

Coralreefs

Bahama-likeisland

1

2

34

5

6

7

9

10

11 12

1314

15

8

Increasingtemperature,pressure andcompaction

500 – 1 ,000 k i lometres

Legend

Delta sand

Coal

White sandstone (compacted beach sand)*

Black mud settled from ocean water

Shale formed by compaction of mud

Brown sandstone (formed by compaction of river and delta sand)*

Ancient shale (the heat down here turns organic matter into oil)

Ancient sandstone*

Limestone (compacted lime mud)*

Lime mud washed offshore

Ancient reef*

Oil migrates from shale to the reefand forms an oil reservoir*

Lime, sand and shell debris

Limestone (rock) formed by compaction of lime sediment*

Dolomite formed by groundwateraltering limestone*

* Potential future oil or gas reservoir

1

2

3

4

5

6

7

8

10

11

12

13

14

15

9

© Petroleum Communication Foundation/Canadian Centre for Energy Information 2004

Aboriginal people in Western Canada sometimes sealed their canoes with amixture of spruce gum and the tar-like residues from oil seeps and oilsandsdeposits. In September 1714, Hudson’s Bay Company fur trader James Knightrecorded in his journal at Fort York (in what is now Manitoba) that Indians toldhim of a “great river” far inland where “there is a certain gum or pitch that runsdown the river in such abundance that they cannot land but at certain places.”Five years later, another fur trader on the western shore of Hudson’s Bay,Henry Kelsey, recorded that a Cree named Wa-Pa-Sun had brought him asample “of that gum or pitch that flows out of the banks of the river.” Thus,the first word of the West’s petroleum resources reached Europeans more than 35 years before any of them set foot in the territory that would become Alberta.

Since the earliest recorded history, there have been accounts of crude oil andnatural gas seeping to the Earth’s surface. The oil was used to caulk boats andbuildings, grease wheels and dress the wounds of people and animals. Untilthe refining process was developed in the 1850s, oil was not commonly used as fuel because of its foul-smelling fumes.

Section 2 The early industry 13

Section 2

The earlyindustry

Source: Northwest Territories archives N-1979-073.0567

Source: Natural Resources Canada.

Athabasca region

Section 2 The early industry14

Natural gas fed the celebrated“perpetual fires” at Delphi in Greece,Baku on the Caspian Sea and othersites in the ancient world. In the thirdcentury AD, the Chinese transportednatural gas in bamboo pipes to lighttheir temples. They also used naturalgas heat to extract salt from water.

Discoveries of crude oil and naturalgas became more common in the 18th and 19th centuries as people dugdeeper wells in search of water.“Rockoil” or petroleum (from the Latinroots petra for rock, and oleumfor oil) was once a popular patentmedicine in Canada and the United States.

Although natural gas was used insome areas, it was mostly coal gas thatprovided the “gas lights” in Europeanand North American cities in the 19th century. Coal was heated in aclosed vessel to produce a flammablemixture of hydrogen, carbon monoxideand methane. Coal gas first lit the

streets of London, England, in 1807,Montreal in 1836, and Toronto in 1841.

In North America, people tappedsafer, cleaner-burning natural gas forthe same purpose as early as 1821when it was piped through hollowlogs to Fredonia, New York – “the bestlit city in the world.” However, naturalgas was not widely used elsewhereuntil the end of the 19th centurywhen better drilling techniques andcast iron pipes were developed.

The demand for improved lightingalso led directly to the first widespreaduse of crude oil. The need was urgent.By the 1850s, the best available lampoil, obtained from whale blubber, wasselling for $2.50 U.S. per gallon, or 66 cents per litre – a lot of money in those days, equivalent to about $55 U.S. per gallon in 2003. Growingdemand for this oil decimated whalepopulations, putting some species atrisk of extinction.

Let there be light

Source: Enbridge Inc

?Did you know? Prior to the development

of the internal-combustionengine late in the 19th

century, gasoline was oftendiscarded as waste.

Light and heat in the 20th century. Source: Glenbow Archives ND-3-6587b

An Edmonton family’s parlor in 1933.

A 19th century street lampadvertisement.

Birth of an industryThe Canadian crude oil industry was born in a boggy area of southwestern Ontario, EnniskillenTownship, in and around the neighbouring hamlets of Oil Springs and Petrolia. From humblebeginnings in the 1850s, the industry brought several decades of great prosperity, and continues to produce small amounts of crude oil a century and a half after the first discovery.

North America’sfirst oil company

In 1850, geologist Thomas SterryHunt of the Geological Survey ofCanada reported seepages of crude oil in the swampy “gum beds” ofEnniskillen Township, LambtonCounty, Ontario. A year later,businessman Charles N. Tripp of Woodstock, Ontario, founded the International Mining andManufacturing Company to exploitthe asphalt beds and oil springs. It was the first registered oil company in North America.

Tripp obtained a chemist’s reportindicating the crude oil could be usedto produce solvents, lamp fuel andother chemicals. It prompted him to build the first asphalt productionplant, winning an honourablemention for this product at theUniversal Exhibition in Paris in 1855.

In the same year, Tripp sold hiscompany to James Miller Williams,a carriage maker from Hamilton,Ontario. The energetic Williams soondiscovered that the deeper he dug,the more oil flowed into the hole. By1858, his 15-metre-deep well was


Source: BP Canada Energy Company

James Miller Williams, a carriagemaker from Hamilton, Ontario, wasthe first man to bring in a commercialoil well in North America.

Source: Glenbow Archives, Calgary, Canada, NA-302-9

In the 1860s, hundreds of oil wells dotted the landscape aroundPetrolia, Ontario. The wooden derricks were left in place afterdrilling and were used to raise and lower tools needed to maintainthe flow of oil from the wells.

producing significant quantities ofcrude oil. From the producing wellsaround Oil Springs and Petrolia,Williams’ company transported crudeoil 200 kilometres to Hamilton,refined it there and sold lamp oil andother products. It was the first fullyintegrated petroleum company inNorth America, and Williams is oftencalled the founding father of Canada’spetroleum industry.

Tripp and Williams owed theirsuccesses in part to the work ofanother Canadian. Between 1846 and1853, Abraham Gesner of Halifax,Nova Scotia, developed a techniquefor producing a new synthetic lampoil from coal. He obtained a patent on this product – originally called‘keroselain’ but soon afterwardsknown as kerosene – and opened hisfirst plant in New York in 1854. In1855, American chemist BenjaminSilliman Jr. applied the same process,called fractional distillation, to asample of Pennsylvania rock oil and found it produced high-qualitylamp oil.

The first oil boom

In 1859, self-proclaimed “Colonel”Edwin Drake found a practical way toproduce large quantities of crude oilwhen he used a cable-tool drilling rigto punch into an oil reservoir at OilCreek in Pennsylvania. His well wasimportant because it penetrated alayer of rock into the pressurized oilbelow. Williams also drilled throughrock into a producing formationsometime in 1858 or 1859, althoughthere is some uncertainty aboutexactly when he went from digging to drilling.

Crude oil was already being producedfrom wells in Ontario and easternEurope, but the publicity surroundingDrake’s well unleashed the first real oilboom. Especially in U.S. references, itis often cited as the beginning of themodern oil era.

During the oil boom of the 1860s and1870s, entrepreneurs set up about 18small, primitive refineries in andaround the Enniskillen Township oil

wells. (By 1866, a thriving town alsosprang up in the oilfield; Petrolia,sometimes spelled Petrolea in theearly years, was formally incorporatedas a municipality in 1874.) However,most of the Ontario crude containedundesirable sulphur compounds,which caused odours, and theproducts had trouble competing withthose from Pennsylvania and Ohio.In addition, the output from mostwells was small.

The sulphur in “sour” crude oil was a serious problem for the oil-refiningindustry until 1888 when HermanFrasch, a German-American chemicalengineer, invented a process to extractthe sulphur compounds using copperoxide powder. The Frasch process wasused after 1895 to treat petroleumproducts in the Canadian oil industry.

Hard oilers

As the first drilling boom tapered off around Petrolia, experiencedCanadian drillers and their bossestook their skills to other new oil fields


Geological Survey of CanadaThe Geological Survey ofCanada (GSC) was establishedin 1842. It was Canada’s firstscientific agency, and one of the nation’s first governmentorganizations of any kind. TheGSC’s initial focus was to lookfor coal and other minerals.Throughout its long history, theGSC has played a key role ingathering, recording andanalyzing basic informationabout Canada’s naturalresources and other importantaspects of the nation’s geology.

Petrolia opera house. Source: Robert D. Bott

around the world. The Canadiandrillers called themselves “hard oilers.”It was certainly hard work, dependingon luck as much as geologicalknowledge, but the name may alsohave referred to the hard rock throughwhich they drilled. Beginning around1874 and continuing for about halfa century, the hard oilers worked inexotic locales such as Russia, theMiddle East, Indonesia and SouthAmerica, but they called Petrolia“home.” The wealth of the hard oilersbuilt elegant Victorian homes and evenan opera house in the Ontario town.

Early refineries

In the late 19th century, as oil fieldswere developed in southwesternOntario and elsewhere around theworld, the oil industry focused almostentirely on making and sellingkerosene, also known as lampolene.Paraffin, grease and lubricating oilfound ready markets, but the morevolatile products were considered adangerous nuisance. Gasoline wasoften just discarded as waste.

The first refineries were no morecomplicated than a tea kettle or awhisky still. Crude oil was heated in aclosed vessel to vapourize the lighter,more volatile hydrocarbons. As thevapour cooled, the liquids wouldcondense. A little cooling wouldcapture kerosene, while more coolingwould collect gasoline. The remainingheavy oil and coke – known as theresiduum – could be removed andburned to provide heat for the nextcooking cycle. Processing residuumwith chemicals produced lubricants,waxes and asphalt.

Although kerosene lamps would bewidely used for another 50 years – andsome are still lighting remote cabinstoday – the oil industry faced theprospect of a long, slow decline aftercities such as Toronto, Montreal andOttawa introduced electric lighting in the 1880s.

The Imperial OilCompany Limited

Partly to fend off competitors such as John D. Rockefeller’s Standard OilTrust, 16 Ontario producing andrefining companies merged in 1880 to form the Imperial Oil CompanyLimited. Imperial Oil consolidated itsrefining operations in 1898 at Sarnia,Ontario, on the south end of LakeHuron. This gave the company accessto U.S. crude oil supplies to supplementOntario’s declining production.

In 1898, Rockefeller acquired controlof Imperial Oil and merged it withStandard Oil’s other Canadianaffiliates. When U.S. courts broke up the Standard Oil Trust in 1911,Imperial Oil became an affiliate ofRockefeller’s new flagship, StandardOil of New Jersey (renamed ExxonCorporation in 1972 and ExxonMobilin 1999). Although Imperial Oil never lost its title as Canada’s largestintegrated oil company, it soon facedcompetition from affiliates of U.S.and British rivals as well as a numberof homegrown Canadian firms.


Source: Imperial Oil LimitedLamp oil for CanadiansIn the 19th century, southwestern Ontario was Canada’s petroleum-producingcentre. The oil was refined into kerosene and other products.

As the industry expanded early in the 20th century, many firms began to seek vertical integration – pullingtogether all aspects of the businessfrom exploration to retail sales withinone company. These followed in thefootsteps of the world’s first integratedoil company created by Canadian oilpioneer James Miller Williams inHamilton, Ontario, in 1866.

Internal combustiontriumphs

Human life was transformed by the development of the internal-combustion engine late in the 19thcentury. By 1905, automobilespowered by spark-ignited gasolineengines were clearly outperformingsteam- and electric-powered rivals.The gasoline engine dominated therapidly growing auto market and spunthe propellers of the first airplanes.

Oil companies recognized thepotential of this new market for fuelsand lubricants, and became heavilyinvolved as sponsors and promoters of races, tours, shows and other eventsfor automobiles and airplanes. Thisinvolvement continued through thefollowing century – and is still evidentat auto races and car shows.

Meanwhile, a sparkless engine design,invented by Rudolph Diesel in 1892,gained popularity as the power forindustrial machinery and ships.However, diesel engines were tooheavy for mobile use until RobertBosch invented the fuel injector in 1924 and began commercialproduction in 1927. As diesel enginesimproved, they were used forlocomotives, trucks, tractors, buses,military vehicles and eventually

automobiles. Diesel engines were evenused in some aircraft in the late 1920sand 1930s, including one that stayedaloft without refueling for 84 hoursand 32 minutes, an endurance recordunsurpassed from 1931 to 1986.(Interestingly, fuel-efficient dieselengines for light aircraft beganattracting renewed attention in the late 1990s.) Diesel fuel is similar tokerosene and considerably less volatilethan gasoline.

A crucial decisionon naval power

At sea, engineers discovered thatthick, black bunker oil – anotherformer waste product of refining –fired boilers as efficiently as coal butrequired far less labour. WinstonChurchill, the minister in charge ofthe Royal Navy, made a crucialdecision in 1911 to switch the fleetfrom coal to oil. This was essential, hebelieved, for Britain to retain masteryof the seas as military tension grewbetween Britain and Germany.

The First World War, from 1914 to1918, established crude oil as a keystrategic commodity. Horses andtrains gave way to tanks, trucks,airplanes, motorcycles and auto-mobiles – all powered by gasoline.In the 1920s, consumers rushed tobuy automobiles, much improved by production methods developedduring the war. Service stationsopened across Canada to providegasoline, lubricants and repairs.

Then came the Great Depression ofthe 1930s. The symbol of prairiepoverty was the “Bennett buggy,” a carpulled by a team of horses because theowner could not afford gasoline.


Source: Imperial Oil Limited

Hitting the roadA group of businessmen in Windsor,Ontario, established the Ford MotorCompany of Canada in 1904, a yearafter Henry Ford began manufacturingcars in Detroit, Michigan. In 1907, Col.R.S. McLaughlin converted his family’scarriage company at Oshawa,Ontario, into an automobile plant (the precursor of General Motors ofCanada). From a mere handful at theturn of the century, the number ofcars on Canadian roads had soared to 50,000 by 1913. According toStatistics Canada, there were about18.6 million road motor vehiclesregistered in Canada in 2002. Of thistotal, 17.5 million or 94 per cent werepassenger cars and light vehicles suchas pickup trucks and minivans. Theremainder consisted of 79,300 buses,350,000 motorcycles and mopeds,and 644,300 truck tractors and trucksweighing at least 4,500 kilograms. Inaddition to these road motor vehicles,4.2 million trailers and 1.4 million off-road, construction and farmvehicles were also registered.

?Did you know? The 159-litre barrel, usedas a standard measure forcrude oil since the 1850s,

was the size of barreladopted in the 15thcentury by the kings

of England and Norwayas the standard container

for herring.

A growing relianceon oil imports

In the late 19th century and early20th century, Canadian oil companiesrelied on imported crude oil, mainlyfrom the United States, to supplementthe declining production of south-western Ontario. After 1911, whennaval fleets began converting fromcoal to oil, the government urged the industry to find and developdomestic oil supplies.

The far-reaching exploration effortshad one success – a crude oildiscovery by Imperial Oil in 1920 at Norman Wells in the NorthwestTerritories – but it was too far frommarkets. A small refinery was built at Norman Wells in the 1920s tosupply fuel oil and gasoline to thesurrounding region, and a larger onewas completed there in 1939. Smallerdiscoveries at Turner Valley, southwestof Calgary, Alberta, provided fuel fornearby areas after 1914. Heavy crudeoil, discovered near Wainwright,Alberta, in 1923, was used to produceasphalt for paving and roofing.However, until the giant Leducdiscovery near Edmonton in 1947,Canada depended on imports for upto 90 per cent of crude oil supplies.

Canadian companies concentratedfor several decades on finding anddeveloping crude oil resourcesabroad, mainly in Central and SouthAmerica and the Caribbean. ManyCanadian geologists and engineerslearned their trade in tropical jungles.Tanker fleets were a key component of the larger Canadian oil companies.



Ted Link, Imperial Oil’s legendary geologist, led the discovery of crude oil atNorman Wells, Northwest Territories, in 1920. Link later played a major role in the Leduc discovery near Edmonton.


Gasoline from Turner ValleyThe availability of gasoline from crude oil produced in Turner Valley near Calgarywas one reason British Empire air crews trained in Western Canada during theSecond World War.

Lessons from theSecond World War

Oil played a dominant role in theSecond World War. Many Allied air victories were assisted by theavailability of high-octane gasolinefrom British and U.S. refineries.Armies in North Africa, Europe andthe Soviet Union were crippled whentheir oil supplies were interrupted.Lack of oil helped end the effectivenessof the Japanese navy in the Pacific and destroyed Japan’s domesticeconomy in the final year of the war.

Wartime oil shortages hit Canada too.Gasoline rationing affected everyone.German U-boats sank dozens oftankers carrying oil to Eastern Canadafrom the Gulf of Mexico and South America.

The wartime experience showedCanadians the danger of relying soheavily on imports. To shorten theEast Coast tanker voyage, a pipelinewas built in 1943 from Portland,Maine, to refineries in Montreal,Quebec. A year later, the U.S. ArmyCorps of Engineers completed theCanol Pipeline, an expensive, butshort-lived, pipeline system carryingcrude oil from Norman Wells to a newrefinery at Whitehorse, Yukon, andrefined oil products to Fairbanks andSkagway, Alaska. The Canol pipelineonly operated for a year and wasdismantled by 1947. The Whitehorserefinery was also dismantled andtransported by truck and train toprovide the original components in1948 for Imperial Oil’s Strathconarefinery in Edmonton (built in theaftermath of the nearby Leducdiscovery).

During the war, the Alberta andfederal governments stepped upresearch on ways to extract usable oil products from the vast bitumenresources of the Athabasca oilsands.As the war ended, Canada’sconventional crude oil supplies were so limited that Imperial Oilseriously considered using a Germantechnology (the Fischer-Tropschprocess) to convert western Canadiannatural gas into gasoline.

Wartime experience also demonstratedthe advantages of diesel engines intanks and other heavy equipment.Most notably, diesel power helpedSoviet tanks to outperform gasoline-powered German tanks on the easternfront. By the end of the war, dieselengines were well-established as thepreferred propulsion for militaryvehicles, railway locomotives, trucks,tractors, buses, and many types ofboats and ships.

The mechanization of farming andforestry, delayed by the Depression,sped ahead in the labour-short,commodity-hungry 1940s. Workhorses soon disappeared from wheatfields and logging operations. The first jet engines for airplanes appearedas the war ended. They burned jetfuel, a product similar to kerosene and diesel fuel.

Getting moreproducts from oil

After the automobile gainedpopularity early in the 20th century,refiners faced a problem. For each litreof natural crude oil they processed,the conventional distillation processonly produced about one-quarter ofa litre of gasoline. Refiners wanted a

higher yield from the oil to meetrising demand for gasoline.

In 1914, Imperial Oil added a processcalled “cracking” to its Sarnia refinery.Thermal cracking uses heat to breaklarge hydrocarbon molecules intosmaller molecules used to makegasoline.

Cracking was later improved by theuse of catalysts. This became knownas “cat cracking” and was usedspecifically during the Second WorldWar to meet the demand for high-octane aviation fuels. Imperial Oilintroduced cat cracking at its Sarniarefinery in 1940. Hydrocracking – aprocess that breaks up the carbon-rich molecules of heavier oil and addshydrogen in the presence of a catalyst– subsequently produced anotherimprovement in gasoline output.

The invention of nylon in 1936, thefirst plastic made from petroleumproducts, set off a wave ofpetrochemical innovation thatcontinues today. During the Second



Eugene Coste, an entrepreneur fromsouthwestern Ontario, was the firstCanadian to find and develop naturalgas resources on a large scale.

World War, the federal governmentbuilt a major petrochemical facility at Sarnia to produce synthetic rubber.Most of Canada’s petrochemicalplants today are located near Sarnia,Montreal and Edmonton.

Blue flames

The other fuel of the petroleum era,natural gas, did not reach mostCanadian cities until large, long-distance pipelines were built in the late1950s. However, it had been availableto some Canadians since the 1880s.

Natural gas had been discovered inNew Brunswick in 1859 and in

southwestern Ontario in 1866, but theearly discoveries were not developed.Gas found with oil in Ontario wasconsidered a waste product – eitherburned (flared) or vented into theatmosphere – until pioneer entrepreneurEugene Coste came along.

In 1889, Coste began drilling fornatural gas in Essex County, Ontario,to supply nearby communities withfuel for lighting, heating and cooking.A year later, he drilled a well nearNiagara Falls, Ontario, and beganexporting natural gas to Buffalo,New York. By 1895, Coste waspipelining Essex County natural gasto Windsor, Ontario and across theriver to Detroit, Michigan. As thenatural gas supply dwindled, theOntario government moved to protect consumers and banned Coste’s exports in 1901.

Natural gas in Alberta

In Western Canada, a crew workingfor the Canadian Pacific Railway(CPR) accidentally found natural gaswhile drilling for water at Langevin

Siding near Medicine Hat, Alberta, in1883. The gas was used for cookingand heating at the nearby CPR sectionhouse. After another discovery justoutside the town in 1890, villageleaders in Medicine Hat borrowed aCPR rig and began drilling to supplynatural gas for the cooking, heatingand lighting needs of the town.Private citizens even drilled their own personal wells.

Natural gas helped Medicine Hat andnearby Redcliff to attract industriessuch as plaster and brick manufacturingand meat processing. The natural gaswas even compressed in metal bottlesto provide lighting on CPR passengertrains. When the author RudyardKipling visited in 1907, he wasimpressed by the booming economyand sights such as a giant natural gas-powered engine and a huge flare froma newly drilled well. He told the localnewspaper, "This part of the countryseems to have all hell for a basementand the only trapdoor appears to bein Medicine Hat." The handy energysupply was envied by other townsacross the prairies.


Source: Oil Museum of Canada or Fairbank Collection/National Archives

Primitive drillingThe spring pole was used to drill early oilwells in Ontario. The bit was suspendedfrom the pole on a cable or shaft. Thedriller jumped on the pole to push downthe bit, and then jumped off so theflexible pole could lift up the apparatus.

?Did you know? Medicine Hat, Alberta, was

celebrated in Ripley’sBelieve It or Not for burning

its lights 24 hours a day,because it was cheaper

than hiring a lamplighter.(Continuous burning alsoextended the life of the

lamp mantles.)


From the 1850s to the 1930s, most of Canada’s crude oil and natural gaswells were drilled with a primitivedevice called a cable-tool rig. Theheavy, chisel-like bit was suspended ona cable and dropped repeatedly intothe rock at the bottom of the hole.

Cable-tool drilling was very slow, hardwork – and sometimes very dangerous.Progress of just 100 metres per monthwas not uncommon. A modern rig cansometimes drill that far in less than a day. The bits had to be pulled andsharpened frequently. Drillers pouredwater into the wellbore and removedthe cuttings by bailing out the resulting“mud.” If the bit encountered areservoir, the pressure could shoot the tool up through the rig like abullet out of a rifle barrel.

Rotary rigs, predecessors of the typesused today, were introduced in Texasin the 1890s and in Turner Valley,Alberta, in 1925. However, they werenot used widely in Canada untilexploration in Turner Valley in 1936

indicated there were larger oil reservoirsto be found at greater depths thanearlier discoveries. After the SecondWorld War, most cable-tool rigs were retired in favour of rotary rigs, although a few cable-tool rigs have continued to operate in southern Ontario.

The first well-logging instrumentsappeared in Canada in the 1920s. Oneversion combined a camera, a plumbbob and a compass. This primitivedeviation gauge was lowered to agiven depth and snapped a picture of the compass and the weighted line.The developed picture would telldrillers if the well was tilted and, if so,in what direction. A simpler instrumentfor this purpose was just a heavy glassbottle filled with acid; when this wasleft in the hole for a while, the acidwould etch a line on the inside of thebottle. These instruments helped avoida common problem of wells veeringfar off course in the tilted and fracturedunderground rock formations nearTurner Valley.

The first modern well-logginginstrument measured the electricalresistance in rocks around thewellbore; a higher resistance oftenindicated the presence of crude oil.Electric logging, invented in France in1927, was first used in Canada on awell near Turner Valley in 1939. Moresophisticated well-logging instruments,designed to measure many characteristicsof the wellbore and the surroundingrock, were introduced in the 1950s,and new instruments continue to bedeveloped and introduced in the field.

Early drilling techniquesCable-tools to rotary rigs

Source: Robert D. Bott

Early drilling toolsHand-forged drilling tools were usedin the 19th century on oil wells insouthwestern Ontario. Each tool was designed for a specific purpose,such as removing an obstruction from the wellbore or scraping thewalls of the hole.

?Did you know?Early cable-tool rigs used

from the 1860s to the1930s would typically drill

about 100 metres permonth. A modern rig cansometimes drill this far in

less than a day.

After his Ontario wells ran dry in1904, Eugene Coste moved west witha bold plan to supply all the towns ofsouthern Alberta with natural gas. Hedrilled along CPR rights-of-way andfound gas at a half-dozen places,including a huge discovery called “Old Glory” at Bow Island in easternAlberta in 1909.

In 1912, Coste’s Canadian WesternNatural Gas Company built a 270-kilometre pipeline from Bow Island toCalgary.At the time, it was one of thelongest and largest-diameter gaspipelines ever built. The city already had a 40-kilometre coal gas system,established in 1903, which supplied1,800 customers, and the natural gas wasconsidered a great improvement.“Thenatural product has supplanted theartificial,”declared the Calgary Herald.

Edmonton switched to natural gas in 1923 after completion of a 130-kilometre pipeline from Viking,Alberta. Many southern Alberta

communities,and a few in Saskatchewanand southwestern Ontario, usednatural gas for cooking and heating.However, electricity was quickly takingover the lighting market.

Underground mysteries

Early petroleum explorers simplylooked for areas where crude oil andnatural gas were seeping to the surfaceor had been encountered accidentallywhen drilling water wells. Thisunsophisticated but locally effectivetechnique led to the discoveries ofsouthern Ontario crude oil in the1850s and 1860s, eastern Albertanatural gas in 1883, Turner Valleycrude oil and natural gas in 1914,and Norman Wells crude oil in 1920.

The understanding of geologicalstructures also grew as the oil and gasindustry expanded. As early as 1861,T. Sterry Hunt of the GeologicalSurvey of Canada described howhydrocarbons would pool in the crests

(anticlines) of folded sedimentarylayers. This same “anticlinal theory”helped entrepreneur Bill Herron selectthe most promising site to drill nearTurner Valley in 1914.

Some of the successes were fleeting.For instance, the Geological Survey of Canada reported seeps along OilCreek near Waterton in southwesternAlberta in 1870, and for many yearslocal residents collected the crude oilby soaking it up with gunny sacks.When a well was finally drilled in1902, it reportedly flowed oil, and thisset off a five-year exploration boom,based in a shanty town optimisticallynamed Oil City. However, the firstwell’s production quickly dwindled,and all the other wells were dry,leading to a suspicion that the “gusher”had been a fraud. Ironically, the jury isstill out on the crude oil potential ofthis region, which is now part ofWaterton Lakes National Park. Nearbyareas produce substantial volumes ofnatural gas.



The Bow Island to Calgary pipelineHorses pulled lengths of 406-millimetre-diameter pipe from railway sidings to the route of the Bow Island to Calgary pipelinein 1912. Steam-powered trenching machines dug the ditch for the 270-kilometre pipeline, but men and horses did most of theother work.

Underground mysteries were graduallyunravelled by the developers of theTurner Valley oil field southwest ofCalgary. Each of the three waves ofexploration successes around TurnerValley – beginning in 1914, 1924 and 1936 – was based on animproved understanding of the area’scomplex geology and hydrocarbondistribution. Each time, a largeraccumulation was found at a greaterdepth than the previously discovered producing pool.

Based on apparently promisingsurface geology in the area, Canada’sfirst offshore well was drilled from an artificial island off Prince EdwardIsland between 1943 and 1945. Thewell reached a depth of nearly 4,500metres and cost $1.25 million(equivalent to $14.2 million in 2003).At the time, it was believed to be themost expensive well ever drilledanywhere. However, it did not findcommercial quantities of oil or gas.

The emerging scienceof geophysics

Advances in earth sciences andinstrumentation during the 1920s and1930s paved the way for the dramaticimprovement in drilling success ratesin the following decades.As geophysicsbecame more sophisticated andprecise, it was no longer necessary to rely solely on surface geology anddrilling results to determine where to drill next.

Increasingly accurate gravimeters andmagnetometers allowed the mappingof small variations in the Earth’sgravity and magnetic fields. As this

data could be correlated with thelocation of known crude oil andnatural gas fields, it helped geologiststo determine where new fields mightbe found. Instruments such as theearly “torsion balance” gravity meterbore some resemblance to thetraditional dowser’s divining rods,and geophysicists are still sometimesknown as “doodlebuggers.” (Adoodlebug is any kind of instrumentor gadget with no recognizedscientific method but supposedly able to find oil, gas, water or minerals;the term also refers to someonelooking for oil or water using non-scientific means.)

The most important tool of moderngeophysics, the seismic survey,originated from attempts during theFirst World War to locate enemyartillery by measuring sound wavestraveling through the ground. Itbecame evident that the sound wavesspread at different rates throughdifferent kinds of rock. A Germanscientist, Ludger Mintrop, patentedthe first seismic surveying method in 1919, and two British scientistspatented a similar method a year later.Mintrop’s company first applied themethod to oil and gas fields inOklahoma in 1921 and helped find a major oil field, Orchard Park, inTexas in 1924. The first Canadianseismic survey was conducted in the Turner Valley field in 1929.

Seismic knowledge and methodsimproved over the next two decades.More accurate recording instruments,developed during the Second WorldWar, made geophysics a full partner inpetroleum exploration. A seismic

survey led to Shell Canada’s majornatural gas discovery at JumpingPound, west of Calgary, in 1944.

In 1946, Imperial Oil commissioned a major seismic survey in Canada on an east-west line across centralAlberta. The survey was originallyplanned for southern Saskatchewan,but was moved to Alberta after theSaskatchewan government wasrumoured to be considering atakeover of the oil and gas industry.The Alberta survey indicated a large,potentially oil-bearing formation –which turned out to be a Devonianreef, similar to the structure of theNorman Wells field far to the north.The target was located near Leduc, ahamlet south of Edmonton. ImperialOil decided to drill an exploratorywell there during the following winter.

Prior to its big success at Leduc,Imperial Oil had drilled 133 wells inwestern Canada without finding amajor new oil field. Although therehad been a number of smaller crudeoil and natural gas discoveries, thecompany was on the verge ofabandoning exploration in WesternCanada. (The oft-repeated storyabout 133 “dry holes” or non-commercial wells prior to Leduc wasperpetuated, in part, by driller VerneHunter who received the nickname“Dry Hole.”) The Leduc discovery was certainly a reward for greatperseverance, but equally important it marked the arrival of seismic as a key exploration tool.


Drillers on the Leduc rig

The pivotal event in Canadian oil history occurred on February 13, 1947, whenImperial Oil finally struck oil at its Leduc No. 1 exploratory well. It marked thebeginning of Canada’s transition from oil-poor to oil-rich.

The Leduc well had penetrated a Devonian reef similar to the one discovered at Norman Wells in 1920. It led to a series of discoveries in the area aroundEdmonton. Within a year, a major oil boom was underway in Western Canada.There were also several large finds of natural gas in Alberta in the 1940s.

Section 3 After Leduc - The modern oil and gas era 25

Section 3

After Leduc -The modern oil

and gas era


A tough, dirty jobSuccess of the Leduc well createdopportunities for thousands of oilworkers, many of them returning tocivilian life after military service. Theinflux threatened to overwhelm thesmall town of Leduc, so Imperial Oilhelped to build a new community,Devon, just north of the No. 1 well,to house its workers. A roughneck on a rig in 1947 earned about 90 centsan hour, equivalent to $9.45 in 2003.No special training was required, andmany young Albertans went directlyfrom the farm to the rig.

Section 3 After Leduc - The modern oil and gas era26

Crude Oil (green)

1. 1851 Petrolia, Ont.

2. 1914 Turner Valley, Alta.

3. 1920 Norman Wells, N.W.T.

4. 1923 Wainwright, Alta.

1924 Turner Valley, Alta.

5. 1947 Leduc, Alta.

6. 1951 Daly, Man.

7. 1953 Midale, Sask.

8. 1953 Pembina, Alta.

9. 1957 Swan Hills, Alta.

10. 1957 Clarke Lake, B.C.

11. 1965 Rainbow Lake, Alta.

12. 1966 Pointed Mountain, N.W.T.

13. 1969 Atkinson Point, N.W.T.

14. 1973 Panuke-Cohasset, N.S.

15. 1973 Bent Horn, Cameron Island

16. 1977 West Pembina, Alta.

17. 1979 Hibernia, Nfld.

18. 1981 Hebron-Ben Nevis, Nfld.

19. 1984 Amauligak, N.W.T.

20. 1985 Terra Nova, Nfld.

21. 1985 White Rose, Nfld.

Natural Gas (red)

1. 1859 New Brunswick

2. 1866 Southwestern Ontario

3. 1883 Medicine Hat, Alta.

4. 1889 Essex County, Ont.

5. 1904 Cessford, Alta.

6. 1904 Suffield, Alta.

7. 1909 Bow Island, Alta.

8. 1954 Westerose South, Alta.

9. 1955 Elmworth, Alta.

10. 1956 Crossfield, Alta.

11. 1956 Clarke Lake, B.C.

12. 1959 Brazeau River, Alta.

13. 1959 Waterton, Alta.

14. 1961 Kaybob South, Alta.

15. 1962 Edson, Alta.

16. 1962 Yoyo, B.C.

17. 1965 Sierra, B.C.

18. 1969 Drake Point, Nunavut

19. 1969 Parson’s Lake, N.W.T.

20. 1972 Thebaud, N.S.

21. 1979 Venture, N.S.

22. 1980 Issungnak, N.W.T.

23. 1983 Hamburg, Alta.

24. 1986 Caroline, Alta.

25. 1997 Fort Liard, N.W.T.

26. 1997 Shackleton, Sask.

27. 2000 Ladyfern, B.C.

28. 2002 Greater Sierra, B.C.

29. 2002 Monkman, B.C.

Crude oil and natural gas discoveries

Atlantic Ocean

Hudson Bay

CalgaryVancouver

Fort St. John

Edmonton

Fort Nelson

Regina

Toronto

Halifax

St. John’s

Labrador Sea

Baffin Bay

Davis Strait

Beaufort Sea

Winnipeg

Ottawa

Montreal

Fort McMurray

British Columbia

Alberta Saskatchewan

Manitoba

Yukon

Northwest Territories

Ontario

Quebec

Newfoundland

NovaScotia

NewBrunswick

Prince EdwardIsland

Labrador

Estevan

Lloydminster

Swift Current

Nunavut

NormanWells

BentHorn

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15

© Canadian Centre for Energy Information 2004.


The turning pointOn February 13, 1947, Imperial Oil invitedmedia, dignitaries and members of the publicto witness the production test and public debutof Leduc #1, a wildcat well on Mike Turta’sfarm 15 kilometres west of Leduc and about 50 kilometres south of Edmonton. SinceNovember 20, 1946, Verne Hunter and his crew had drilled 1,544 metres to reach the oil-bearing formation on February 3. A drillstemtest confirmed it was a major discovery.“I was the first one to see that live oil,” said rig geologist Steve Cosburn. Ten days later, thecrowd arrived at 10 a.m. to witness the bigevent, but some equipment broke down andthe crew worked frantically through the day to complete repairs. It was a chilly day, with a high temperature of –7º C and some lightsnow. Finally, at 4 p.m., drilling mud coughedout of the hole, followed by a soft whoosh as crude oil flowed into a pit. When the crewignited the natural gas that emerged alongwith the oil, smoke and flame soared into the evening sky.

Source: Provincial Archives of Alberta, P.2733

The Leduc discovery was followed by years of stunning explorationsuccesses in Western Canada.These included discoveries at Daly,Manitoba, in 1951; Midale,Saskatchewan, and Pembina, Alberta,in 1953; Swan Hills, Alberta, andClarke Lake, British Columbia, in1957; Rainbow Lake, Alberta, in 1965;and West Pembina, Alberta, in 1977.

Large post-war discoveries of crudeoil and natural gas in Western Canadareduced anxiety about the nation’sdependence on imported oil supplies.Development brought economicgrowth to crude oil and natural gasproducing areas, especially in Alberta.Jobs were created in an array of newbusinesses from drilling to pipeliningand refining. Pipelines were built eastto Sarnia and west to Vancouver toprovide markets for the newproduction. The pipelines wereamong the largest industrial projectsever undertaken in Canada. By 1953,large volumes of Canadian oil wereflowing to new markets.

In the early 1950s, crude oil replacedcoal as Canada’s largest source ofenergy. Canadians embraced the newproducts and services of the oil age,from shiny cars and plastics to airtravel. In most regions of Canada,wood and coal furnaces were steadilyreplaced with cleaner, more convenientoil or natural gas heating.

The discovery of huge natural gasreservoirs in Alberta and improvementsin the technology of pipeliningcreated new possibilities. After muchpolitical wrangling, pipelines broughtnatural gas to Vancouver, Winnipeg,Toronto and Montreal in the late 1950s.

The old coal gas systems were shutdown, and natural gas was soonproviding clean, inexpensive energyfor homes and businesses from BritishColumbia to Quebec. Natural gas also was a raw material for makingfertilizer and other chemical products.Natural gas liquids – mainly propaneand butane – found industrial usesand offered an alternative heating fuelfor more remote regions.

After oil prices began to rise sharplyin the 1970s, many consumers andindustries switched their furnacesfrom heating oil to natural gas. In the 1980s, some consumers and fleetoperators, such as taxi companies,converted their vehicles to run onpropane or, in a few instances,natural gas.

The growing importanceof geophysics

Geological science continued toevolve rapidly in the followingdecades. Once the geologists knewwhat formations contained crude oiland natural gas, seismic surveysallowed geophysicists to map thestructures.

In the 1960s, the processing,presentation and interpretation ofseismic data was revolutionized by theintroduction of computers, digitallyrecorded data, and the common-depth-point method of shooting andrecording. The reliability of seismicdata improved dramatically, and thisgreatly improved the chances ofdrilling success. These sophisticatedgeophysical techniques then helpedexplorers to find more elusive targetssuch as the pinnacle reefs at Rainbow

Lake and Zama in northern Alberta.Early seismic surveys left a trail ofshotholes and cutlines across thelandscape. These scars were slow toheal in forest and muskeg areas. Newtechnologies have greatly reduced theland disturbance. Offshore seismicsurveys use compressed air togenerate signals and a towed array ofhydrophones to receive the reflections.



Geophysical surveysAfter the Leduc discovery in 1947,workers across Western Canada laidout thousands of kilometres ofseismic lines to locate geological trapscontaining crude oil and natural gas.

?Did you know? Three-dimensional seismicsurveying was introduced

in the search for crudeoil and natural gas

in the 1980s.

Frontier explorationand development

Geophysics became even more crucialas companies turned their attention to frontier areas of Northern Canadaand East Coast and West Coastoffshore areas. Onshore and offshoreseismic surveys played a key role inidentifying sites for drilling, butscientists also used other techniquesto narrow down the search. Satellitesurveying helped to outline regionalgeological structures and to search forsurface signs of possible crude oil andnatural gas deposits. Aerial surveys –photographing the surface andmeasuring magnetic fields, gravityand radiation – also aided inidentifying the sedimentary basinslikely to contain petroleum. However,the presence of oil or gas could onlybe confirmed by drilling.

Off the coast of British Columbia, 14wells were drilled in the late 1960s butfailed to find commercial quantities of crude oil and natural gas.Environmental concerns, mainlyabout proposed oil tanker traffic from Alaska, led the federal and B.C.governments to impose moratoria onoffshore oil and gas activities in 1972.Various assessments of the area’spotential indicate it could containlarge crude oil and natural gasreserves. A provincial scientific reviewpanel reported in 2002 “there is noinherent or fundamental inadequacyof the science or technology, properlyapplied in an appropriate regulatoryframework, to justify retention of theB.C. moratorium.” However, bothlevels of government would have toapprove any renewed exploration.

Some frontier efforts in the NorthwestTerritories met with success, such as

natural gas discoveries in theMackenzie Delta, crude oil in theBeaufort Sea and huge natural gasreserves in the Arctic Islands. Becauseof high development and transportationcosts, and the availability of suppliescloser to densely populated southernregions, these discoveries have not yetbeen developed. However, a group ofoil and gas companies with interests in the Mackenzie Delta and theMackenzie Valley Aboriginal PipelineCorporation (MVAPC) announced in 2002 their intention to beginpreparing regulatory applicationsneeded to develop onshore natural gasresources in the Mackenzie Delta, aswell as a 1,300-kilometre MackenzieValley Pipeline. A preliminaryinformation package for the projectwas submitted to federal andterritorial authorities in June 2003. Ifapproved, the project could beginshipping natural gas by 2010.

After drilling the industry’s first deepEast Coast offshore well off PrinceEdward Island in 1943, Mobil OilCanada acquired the first East Coastoffshore petroleum licences in 1959 inthe Sable Island area and initiated thefirst seismic survey there in 1960. Sincethat time, more than one millionkilometres of seismic data have beenrecorded off the East Coast. Drillingbegan off Newfoundland andLabrador in 1966 and off Nova Scotiain 1967. The industry has drilled morethan 380 offshore wells since then.

Natural gas was first found near SableIsland off the coast of Nova Scotia in1968. Natural gas and crude oildiscoveries off Nova Scotia in the1970s included the Panuke-Cohassetoil fields, which began production in1992, and the Venture natural gasfield, which began production in

1999. These were followed by the firstbig crude oil discoveries offNewfoundland and Labrador at theHibernia field in 1979, whereproduction began in 1997, and theTerra Nova field in 1984, which beganproduction in 2002. The White Rosefield, also discovered in 1984, is due to begin production in 2005.

Under agreements reached in 1985with Newfoundland and Labradorand in 1986 with Nova Scotia, thefederal government and thoseprovinces jointly manage offshorecrude oil and natural gas resources.Federal-provincial boards issue andadminister exploration anddevelopment rights, protect theenvironment, ensure safe workingconditions, collect and distributeinformation, and manage resourceswith the goal of maximum recoveryand minimum waste.



Drilling in the Mackenzie DeltaExploratory drilling began in theMackenzie Delta in 1963. By the mid-1970s, large reserves of natural gashad been discovered – the largestdiscovery, the Taglu field, was made in 1971 – but development awaitedconstruction of a pipeline to southern markets.


Source: Sable Offshore Energy Inc.

Liquids processing facility

Gas plant

Natural gas liquids pipeline

Subseagathering line

Maritimes& Northeast Pipeline

Alma

North TriumphGlenelg

Venture

SouthVenture

Venture

NorthTriumph

Thebaud

Sable Island

THEBAUDCENTRALFACILITIES

POINT TUPPER AREA

GOLDBORO,GUYSBOROUGHCOUNTY

Point Tupper

Goldboro

Source: Shell Canada Limited

Sable Island natural gasNatural gas began flowing fromoffshore wells near Sable Island in1999, the culmination of explorationand development efforts that begannearly 40 years earlier.

WWeesstt CCooaasstt ddrriilllliinnggSedco 135-F, the first offshore

drilling vessel constructed in Canada,was commissioned in a dockside

ceremony in Victoria in 1967. Thesemi-submersible platform cost

$10 million to construct and wascapable of drilling to depths of 3,700

metres. It drilled wells off the WestCoast between 1967 and 1969.

In 1949, the Petroleum IndustryTraining Service (PITS) was foundedby the Canadian Association ofOilwell Drilling Contractors, theAlberta government, and anotherindustry association that later becamepart of the Canadian Association ofPetroleum Producers. PITS hasbecome a key centre for trainingCanadian workers, including manywho work in frontier and offshoreareas. Specialized skills for offshoreoperations are taught at institutionssuch as the Marine Institute and theOffshore Safety and Survival Centrein Newfoundland and Labrador andthe Marconi campus of the NovaScotia Community College.

The drilling industry expandedrapidly from the 1940s to the 1970s,and contractors placed an increasingemphasis on worker safety andtraining. Rigs became morecomplicated. Environmentalregulations required that greater carebe taken in preparing and restoringsites. Hundreds of millions of dollars

were spent to ensure safety andenvironmental protection duringexploration and production.

In the 1980s, even higher standardsfor rig operation and worker trainingwere established. One catalyst was the sinking of an offshore drillingplatform, the Ocean Ranger, 300kilometres off Newfoundland andLabrador, with the loss of the entire84-person crew. Another turningpoint was a major release of sour gascontaining toxic hydrogen sulphide in 1982 from a well blowout nearLodgepole, Alberta. The blowoutlasted 68 days, and two workers diedduring operations to control the well.Wide-ranging inquiries followed bothincidents and led to major changes in equipment and operations.Companies adopted environmentaland safety management systems thatemphasized training and prevention.Reporting and analysis of “near-miss”incidents were key elements of thesemanagement systems.

Significant improvements were alsomade in the formulation and handlingof the drilling fluids (mud) used tocontrol well pressure, cool the drill bit and return rock cuttings to thesurface. Until the 1980s, the used fluidwas dumped in pits or sumps at welllocations, but now the fluid is separatedfrom the cuttings and reused.Companies are cleaning up the sites of former waste pits.

Horizontal drilling, a technologyoriginally developed to extend wellsfrom offshore platforms, was adaptedfor onshore use in Western Canada in the late 1980s. New rig designs,downhole mud motors andequipment such as measurement-while-drilling (MWD) tools made it possible to drill wells that curvefrom vertical to horizontal and stay in a horizontal producing layer fordistances that may extend up to ninekilometres. In fact, it is now possibleto drill horizontal laterals – additionaldrainage wells branching off from a wellbore.


Source: BP Canada Energy Company

On the rig floorBy the 1950s, workers wore metal

hard hats in dangerous jobs such asthreading sections of pipe on drilling

rigs. Over the following decades,training and safety equipment

reduced the risks in crude oil andnatural gas field workplaces.

Improvements included better hardhats, safety glasses, protective

footwear and fire-retardant clothing.Automated equipment also reduced

the number of “brute strength” tasks.

Safe and efficient drilling

The new drilling techniques enablethe operator to avoid disturbing anenvironmentally sensitive area on thesurface by drilling a series of wellsfrom a single location. These wells can reach a larger area of petroleum-bearing rock and allow for therecovery of more oil or gas. Thisapproach has become a vital tool forimproving recovery, especially fromheavy oil reservoirs. In 2003, about1,700 wells – seven per cent of thewells drilled in Canada – were drilledhorizontally.

Conservation andregulation

Crude oil and natural gas productionwas sometimes a chaotic businessuntil the 1930s when governmentsstepped in to bring order to productionpractices. Alberta, the heartland ofthe Canadian petroleum industry inthose days, was a leader in introducingmeasures to conserve the resource.

Early practices were often wasteful.Operators of adjacent wells tappingthe same reservoir would rush toproduce as much as they could beforethe crude oil or natural gas flowedfrom the neighbour’s well. Thispractice, called competitive drainage,caused a premature loss of reservoirpressure and left large quantities ofpotentially recoverable petroleum inthe ground.

In the 19th century when WesternCanada was surveyed and began to be settled, the federal governmentgenerally retained rights to theminerals underlying the land. TheseCrown mineral rights had been

transferred from the federalgovernment to the western provincesin 1930. The federal government, andlater the provinces, issued explorationlicences on land with Crown mineralrights and collected royalties as the“owner’s share” of production ifresources were found and developed.The Alberta government decided toexercise its authority more directlyafter a large new oil find at TurnerValley in 1936.

In 1938, the Social Credit provincialgovernment established the Petroleumand Natural Gas Conservation Board– now the Alberta Energy and UtilitiesBoard or EUB – to ensure orderlydevelopment of the resource.

The board’s initial efforts werepartially thwarted during the SecondWorld War when the federalgovernment’s Wartime Oil Companyencouraged companies operating inTurner Valley to develop the fieldmore intensely so as to increase crudeoil production in support of the wareffort. However, the board gainedinvaluable experience and establisheda regulatory framework before theLeduc discovery in 1947 ushered inthe era of large-scale oil and naturalgas development.

The early regulations dealt with issuessuch as well spacing and also ensuredthat production did not exceed therates dictated by good engineeringpractice. Other producing provincesand the federal government alsoeventually enacted conservationregulations, although not ascomprehensive as those in Alberta.

Government regulations expanded to cover many aspects of explorationand production, from technicalspecifications and safety rules toenvironmental protection and publicconsultation. Although regulationssometimes increased costs, theyenabled companies to compete usingthe same ground rules.



Turner ValleyIn Turner Valley, the largest oil field in Alberta prior to the Leduc discoveryin 1947, widespread flaring of naturalgas produced along with oil resultedin a huge waste of the resource andalso reduced the reservoir pressureneeded for oil production.

Petroleum is “sour” if it containssignificant quantities of sulphurcompounds such as hydrogensulphide (H2S). The first major sourcrude oil and natural gas deposits inWestern Canada were found nearTurner Valley, southwest of Calgary,Alberta, beginning with the famousRoyalite No. 4 discovery in 1924.

Along with natural gas, the wellsproduced a substantial quantity ofliquids, called condensate. Thecondensate, also known as naphtha orcasing-head gasoline, could be burnedin the cars of the day without anyfurther refining. However, there wasno mistaking the foul-smelling exhaustof a vehicle fuelled with Turner Valleycondensate, commonly known as“skunk oil” in the 1920s and 1930s.

Despite the presence of about 1.5 percent hydrogen sulphide, some of thenatural gas was used, withouttreatment, to heat homes and lightstreets in the area. Unwanted gas wasburned in the open air (flared). Thehuge flare pit near Turner Valley wasnicknamed “Hell’s Half Acre.”Residents of Calgary and southernAlberta learned to live with the odour,which they sometimes referred to as“the smell of money” in reference to the value of the accompanying oil and gas.

In 1924, the first plant to “scrub” H2Sfrom natural gas was built in TurnerValley. Most of the recovered H2S waseither flared or vented directly into the atmosphere. Such practices werecommon in Alberta until the 1950s

(and flaring continues to be usedtoday to dispose of small quantities of sour gas, although there has been a determined effort to reduce oreliminate the practice).

In 1952, the first sulphur recoveryplant was built at Jumping Pound inthe foothills west of Calgary. Theimpetus for change came from thediscovery by Shell Canada Limited in1944 of a major sour gas reservoir atJumping Pound. This was followed by a similar find in 1948 by BritishAmerican Oil at Pincher Creek in thesouthwest corner of the province.More discoveries followed in a bandeast of the Rockies, extending into theFort St. John area of British Columbia.


Sweetening sour gas

Source: Shell CanadaJumping Pound Sulphur Plant, 1952.

As natural gas production increased,a market for sulphur developed in thefertilizer, mineral refining and pulpand paper industries. For example,sulphuric acid was needed to extracturanium from ore produced by mines in the Northwest Territories,Saskatchewan and Ontario. (TheUnited States, which had traditionallyprovided sulphur for Canadian needs,restricted exports during the KoreanWar to ensure supplies for itsmunitions plants.) Sulphur recoverythus served two purposes: to sweetensour gas for residential and industrialuse, and to produce elemental sulphuras a valuable by product.

In 1961, Alberta established airquality standards – including limitson H2S and sulphur dioxide (SO2)emissions – and gave industry fiveyears to comply. The first response was to build taller exhaust stacks to

disperse the pollutants more widely,but the longer-term approach was toimprove the efficiency of sulphurrecovery processes. The rising value of sulphur on world markets alsoprovided an economic incentive.

Average sulphur recovery atprocessing plants increased from 88 per cent in the 1950s to 95 per centin 1971. By the late 1970s, large gasplants were being built with recoveryrates greater than 99 per cent. In 1988,Alberta’s average sulphur plantrecovery rate was 98 per cent. Due tostronger regulations and improvedtechnology, the rate is now nearly 99 per cent throughout the province.

British Columbia generally followedAlberta’s lead in both regulation andindustry practices; average sulphurrecovery at B.C. plants is currentlygreater than 99 per cent. The relatively

small amount of H2S produced alongwith conventional crude oil andnatural gas in Saskatchewan is flaredor incinerated.

Using new technologies, manydeveloped in Canada, the industrykept pace with increasingly stringentregulations. Total volumes of naturalgas production grew considerably, buttotal emissions of SO2 continued todecline between 1995 and 2000.

In addition to sulphur compounds,considerable volumes of carbondioxide (CO2) are present in rawnatural gas. Thus far, the processingplants have simply separated CO2from the gas stream and vented it tothe atmosphere. Due to concern aboutthe effect of greenhouse gases such as CO2 on global climate, research isnow underway on other options suchas reinjecting CO2 underground.

Increasing sulphur recovery


Acid rainBetween 1983 and 1989, a comprehensive $10.4-million study called the Acid Deposition Research Program (ADRP) was undertaken to measure the effects of sulphur and nitrogen oxides on the Alberta environment. The oil and gasindustry is a major source of these emissions, which cause acid rain.

Funded by industry and government, with participation from scientists and the general public, the ADRP conductedseveral important studies. One compared the health of residents near the Pincher Creek sour gas plants with acommunity without sour gas emissions. It found the Pincher Creek residents “healthy by any Canadian standard”although there was a small increase in respiratory symptoms near the plants.

Another ADRP study collected extensive air quality data and concluded that “regional scale impacts of acid rain inAlberta are not demonstrated today, and likely are absent.”

Research is continuing on the effects of emissions associated with oil and gas operations on soil, plants, livestock and humans.

Oil from sands – the elusive bonanzaCanada’s largest petroleum resource, the Athabasca oilsands, was easy to find. Natives were alreadyusing the tar-like bitumen to caulk their canoes when the first European explorers arrived in the 18th century. Alexander Mackenzie wrote in the 1790s of bituminous seeps along the Athabasca into which a six-metre pole could be inserted “without the least resistance.” The oil potential wasevident when 19th century geologists visited the area.

” Long after the noises [of the camp] ceased I lay and thought of the not far-distantfuture when other sounds than those would wake up the silent forest; when the whiteman would be busy, with his ready instrument steam, raising the untold wealth whichlies buried beneath the surface, and converting the present desolation into a bustlingmart of trade.”

– Diary of John Macoun, September 7, 1875, written at a camp by the Athabasca River near the present-day location

of Fort McMurray. When the journal was published, the editor titled this entry “Prophetic Vision.”


Source: Syncrude Canada LtdPioneer scientistKarl Clark (left) of the Alberta Research Council developed a method for separating bitumen from sand. This process was key to the eventual development of large-scale oilsands mining projects.

Successes and failures

To evaluate the crude oil potential ofthe oilsands region of Alberta, drillingbegan in 1894. However, crewsunexpectedly struck a reservoir ofnatural gas near the Athabasca Riverat Pelican Portage. The well blew wildfor 21 years before it finally wasbrought under control. (Back then,developers had neither the equipmentnor the resources to control blowoutsin remote locations.)

Sidney Ells, an engineer in the federalDepartment of Mines, found onepossible commercial use for theoilsands in 1915 when he shippedseveral tonnes by water, sleigh and railto Edmonton for road paving. It madea poor surface because it would notharden, and the transportation costwas high. Nonetheless, the material wasused on roads for a number of years,and one shipment was actually sent toOttawa for a demonstration project.

Ells realized that some processingwould have to be done on-site, andwas the first to suggest hot water as a means of separating bitumen fromsand. In 1925, Karl Clark of theAlberta Research Council perfected a method using hot water and causticsoda, which is the basis for the systemused in most oilsands mining projectstoday. Newer projects have eliminatedcaustic soda, however, thus returningto Ells’ original concept.

Meanwhile, businessman R.C.Fitzsimmons founded theInternational Bitumen Company in1927 and built a small plant nearBitumount, 80 kilometres north ofFort McMurray, to produce bitumenfor roofing and road surfacing. The


Source: University of Alberta Archives

Sidney EllsSydney Ells, an engineer with the federal Department of Mines, demonstrated thefirst commercial uses of the oilsands. Ells was the first to suggest the use of hotwater to separate the bitumen from the sand.

John Macoun of the Geological Survey of Canada (GSC) visitedthe Athabasca oilsands in northeastern Alberta in 1875 andreported on the “tar mingled with sand.” After a further report by R.G. McConnell and George Dawson of the GSC, Parliamentpassed a bill in 1893 authorizing funds for the agency toinvestigate the oilsands as a source of petroleum.

operation had some technical success,but little profit, and went broke in thelate 1930s.

Abasand Oils Ltd., a more ambitiousproject that used hot water andsolvents to extract the bitumen, wasestablished in 1936. It was the first toobtain gasoline and fuel oil as well asasphalt from the bitumen.Unfortunately,just as it was beginning to operateefficiently, the Abasand plant burnedto the ground.

During the Second World War, thefederal government rebuilt theAbasand plant. The Albertagovernment underwrote a similar

mining-refining project on theBitumount site immediately after thewar. Both operated long enough todemonstrate that their technologycould work.

Technological advances

Interest in the oilsands waned forabout a decade after the Leducconventional crude oil discovery in1947. In the 1950s, however, a numberof oil companies looked again at theoilsands area’s great potential. Themost dramatic proposal in that eracalled for the detonation of anunderground atomic explosive deviceto melt the bitumen. In 1959, the

Alberta Oil and Gas ConservationBoard released a report on thepotential of nuclear devices in theoilsands, but the idea was notpursued.

Great Canadian Oil Sands (GCOS)won approval for the first of themodern oil sands projects in 1964 and began production in 1967. Thisstarted the transformation of FortMcMurray area, including nearbyWaterways (then a separatecommunity), from a fur trading post,river port and railway outpost of1,300 people into the bustling city of nearly 50,000 that it is today.


Source: Glenbow Archives, Calgary, Canada, ND-3-7666a

Oilsands for road pavingIn 1915, with great effort, Sidney Ells shipped several tonnes of oilsand by water, sleigh, and rail to Edmonton for a road pavingexperiment. Two additional shipments were sent to Ottawa for similar trials on Wellington Street and on Parliament Hill.Other notable oilsands paving projects of the day included the access road to the Jasper Park Lodge in Jasper National Park,Alberta, and 22 blocks of sidewalk in Camrose, Alberta.


The difference between heavy and light oil

API Gravity Specific Gravity

Industry Government

light

medium 900 (25.7° API)

light

heavyDeg

rees

on

th

e A

mer

ican

Pet

role

um

Inst

itu

te (

API

) gr

avit

y sc

ale

Den

sity

in k

ilo

gram

s pe

r cu

bic

met

re

800

825

850

870

875

900

920

925

950

975

1000

1025

1050

1075

heavy

45.4°

40.0°

35.0°

31.1°

30.2°

25.7°

22.3°

21.5°

17.4°

13.6°

10.0°

6.5°

3.3°

0.1°extra heavy (crude bitumen)

The “weight” of different crude oilscan be measured on either the metricdensity scale (kilograms per cubicmetre) or the American PetroleumInstitute gravity scale (°API).Government authorities in Canadaonly distinguish between “heavy”and “light” crude oil types, whilevarious other definitions are used by the industry. The illustration shows definitions suggested by thePetroleum Society of the CanadianInstitute of Mining and Metallurgy.

Light crude oil contains many small,hydrogen-rich hydrocarbon molecules.Light oil flows easily through wellsand pipelines. When light oil isrefined, it produces a large quantity of transportation fuels such asgasoline, diesel and jet fuel. Light oilcommands the highest price per barrel.

Heavy crude oil contains many large,carbon-rich hydrocarbon molecules.Additional pumping is needed tomake heavy oil flow through wells andpipelines. Heavy crude oil contains asmaller proportion of natural gasolineand diesel fuel components andrequires much more extensive refining

to make transportation fuels. Heavyoil commands a lower price and thedifference in price per barrel is calledthe differential.

Synthetic crude oil is a hydrocarbon liquid produced by upgradingconventional heavy oil or bitumenextracted from oilsands. The mixtureconsists of hydrocarbons derivedfrom heavy crude oil or bitumenthrough the addition of hydrogenand/or the removal of carbon.Synthetic crude oil sells at a premiumprice compared to most other crude oils.

© Petroleum Communication Foundation/Canadian Centre for Energy Information 2004

The Great Canadian Oil SandsOperation, now part of Suncor EnergyInc., combined the features of anopen-pit mine and an oil upgrader.It was initially designed to produceup to 5,000 cubic metres per day ofsynthetic crude oil. The plant pioneeredtechnology that would unleash thepotential of the world’s largest knownoil resource, but breakdowns, freeze-ups and fires created many challengesin the early years.

Expanding operations

In 1978, Syncrude Canada Ltd. – aconsortium of oil companies and thefederal and provincial governments –opened a far bigger, 20,000-cubic-metre-per-day mining and upgradingproject near the Great Canadian OilSands Operation site. The governmentpartners eventually sold their interestsin Syncrude. Both projects producelight, low-sulphur synthetic crude oil.

Although the federal governmentcontrolled Canadian conventional oil prices from 1974 to 1985, the oilsands projects were allowed to chargeworld prices to help overcome theirhigh cost of production. When oilprices were deregulated in 1985 andthen fell sharply in 1986, the projectswere forced to cut costs and improveproductivity. They eventuallysucceeded thanks to technologicalimprovements and innovativemanagement.

In the 1990s, oil sands mining costswere less than one-half of what theywere in the 1970s. As the economics of the operations improved, the

companies also invested substantiallyin systems to reduce emissions andother environmental impacts.

The economics of oilsands projectsimproved in the late 1990s due tochanges in provincial royalties andfederal taxes, rising crude oil pricesand the continuing improvements in oil sands technology. Thesedevelopments led to a series of newproject announcements. If all arebuilt, they will eventually quadrupleproduction of bitumen and upgradedcrude oil. In 2002, oilsands miningprojects produced more than 69,000cubic metres per day of syntheticcrude oil.

In-situ bitumen

Imperial Oil Company Limitedoriginally planned an upgradingmegaproject at Cold Lake, Alberta, butdropped that plan in the early 1980sbecause of falling oil prices. However,Imperial continued development ofin-situ bitumen production. A numberof similar projects, mostly using steamto improve recovery, producedincreasing volumes of heavy oil andbitumen in Alberta and Saskatchewanin the 1980s and 1990s. Most ofthe newer in-situ projects used anAlberta-developed technology calledsteam-assisted gravity drainage(SAGD). In SAGD, two parallelhorizontal wells are drilled through the underground oil sands formation;steam is injected into the upper well,and heated bitumen flows into thelower well. In-situ production ofoilsands bitumen was 49,500 cubicmetres per day in 2002.

The Husky Energy LloydminsterUpgrader and the NewGradeUpgrader at Regina process part ofthe in-situ bitumen production intosynthetic crude oil, while theremainder is diluted with natural gasliquids and shipped by pipeline toU.S. refineries. Both upgraders havehigh-efficiency facilities to remove99.9 per cent of the sulphur from theheavy oil they process.


What’s thedifference betweensynthetic crude oiland synthetic oil?Synthetic crude oil is producedby breaking, or “cracking,” thelong molecular chains that makeup bitumen and heavy oil intomuch smaller molecules,removing carbon and stabilizingthe new, smaller molecules withhydrogen. The end result of thisprocess, called upgrading, is asubstance with composition,densities and viscosities similarto conventional light crude oil.The term synthetic is usedbecause the original hydro-carbon mix of the bitumen orheavy oil has been altered.

Synthetic oil refers primarily to lubricants that are developedfrom synthetic base stocksrather than refined crude oil.These base stocks are madefrom molecules designed andsynthesized for specificlubrication purposes.


Moving oil and natural gasBefore the Second World War, only a few pipeline systems existed in Canada. One oil pipelineconnected Sarnia refineries to Ohio oil fields and another extended from Turner Valley to Calgary.Pipelines also carried natural gas from producing areas in Alberta to local distribution systems inCalgary and Edmonton.

The pipeline construction boom

During the Second World War,security concerns led to constructionof the pipeline from Portland, Maine,to Montreal, Quebec, which is still inoperation. Another project, the Canolpipeline system, connected NormanWells in the Northwest Territories tothe Yukon and Alaska, but was shutdown after a year because it wasexpensive, inefficient and no longerneeded for military purposes. TheCanol project cost $134 million – ahuge amount at that time, equivalent to $1.6 billion in 2003 – and itsconstruction involved 4,000 troopsand 12,000 civilians.

The great postwar discoveries inWestern Canada sparked a long-lasting boom in pipeline construction.At the same time, improvements inwelding methods and the quality ofsteel pipe and construction equipmentmade longer-distance, higher-pressure crude oil and natural gastransportation systems possible.

The first section of the InterprovincialPipe Line Inc. (now EnbridgePipelines Inc.) crude oil pipeline was laid from Edmonton to Superior,Wisconsin, in 1950. It was then thelargest single-season pipelineconstruction project in the world.Initially, fast tankers carried crude oil from Superior to Sarnia, Ontario,during the ice-free shipping season on the Great Lakes. The pipeline was

extended to Sarnia in 1953 and itscapacity expanded repeatedly as crudeoil production from Western Canadaincreased.

The Trans Mountain PipelineCompany (now Terasen Inc.) crudeoil pipeline running from Edmontonto Vancouver was completed in 1953.The line crosses environmentallysensitive areas, including JasperNational Park, and difficult,mountainous terrain. In 1957, theWestcoast Energy Inc. system begandelivering natural gas from north-eastern British Columbia to the lowermainland and to U.S. markets in thePacific Northwest.

After a long and heated parliamentarydebate in 1956, the federal governmentagreed to support the building of theTransCanada PipeLines Limitednatural gas pipeline across the Prairiesand through the rocks and bogs ofnorthern Ontario. Natural gas beganflowing from Alberta to Ontario andQuebec in 1958.

The pipelines continued to expandover the following decades, by addingpumping or compression capacity,laying additional pipe, or both.Computers and remote controls,introduced in the 1960s, helped makethe systems more efficient. Anextensive network of pipelines wasalso developed to carry natural gas

liquids such as ethane, propane andbutane, which became crucialfeedstocks for the petrochemicalindustry.

During the energy crises of the 1970s, pipelines were again politicallycontroversial. To reduce dependenceon imported oil, the federal govern-ment financed the extension ofInterprovincial’s pipeline from Sarnia to Montreal.

Meanwhile during the 1970s, the FirstNations, Inuvialuit and environ-mentalists argued vehemently against a proposal for a natural gas pipelinethrough the Mackenzie Valley in theNorthwest Territories.Although analternative plan for a pipeline carryingboth Alaskan and Mackenzie Deltanatural gas down an Alaska Highwayroute was eventually approved, theproject was shelved because of lowernatural gas prices and a surplus ofnatural gas production in WesternCanada and the United States.A newproposal for a Mackenzie Valley naturalgas pipeline was announced in 2002.

In 1985, Interprovincial completed apipeline to carry light crude oil fromNorman Wells to Alberta. As the firstpermanent, buried pipeline in theCanadian Arctic, it demonstrated new ways of building and operatingsuch lines with minimal environmentalimpact.

In the late 1980s and the early 1990s,the pipeline systems again expandedtheir capacity. Natural gas linestransported greater volumes to U.S.and Canadian markets, and oil linescarried increasing amounts of heavycrude oil and refined products.Several new oil pipelines were built toserve the heavy oil and oil sands areasof Alberta and to transport crude oilfrom Western Canada into the RockyMountain States.

The Maritimes & Northeast pipelinewas built in 1999 to bring natural gasto markets in the Maritime provincesand northeastern United States fromnatural gas fields 160 kilometres offNova Scotia. An undersea pipelinebrings the natural gas to the shore.The Canadian portion of the mainline stretches 568 kilometres from

Goldboro, Nova Scotia to St. Stephen,New Brunswick. A smaller, 124-kilometre pipeline transports naturalgas from the main transmissionpipeline near Stellarton, Nova Scotia,to Halifax. Another 110-kilometrepipeline transports natural gas fromthe main transmission pipeline nearBig Kedron Lake, New Brunswick, toSaint John. U.S. markets served by the pipeline include Maine andMassachusetts.

Deregulation

In the late 1980s, free trade andderegulation of natural gas pricesopened up new opportunities forCanadian natural gas producers,U.S. and Canadian consumers, andpipeline companies. Gas transmissioncompanies, which formerly bought

natural gas in producing areas andresold it to distribution companies inconsuming areas, became open to allshippers, more like oil pipelines andrailways. However, pipeline tolls,construction plans and operatingstandards continued to be regulated.

Provincial governments alsocontinued to regulate the rates chargedby local distribution companies fortransporting natural gas to consumers,businesses and other end users.However, governments began topermit “market pricing” of the energycomponent of consumers’ bills. Insome provinces, beginning withOntario in 1998, independentmarketers were allowed to sell naturalgas to end users in competition withlocal distribution companies.


Source: Enbridge, Inc

The world’s longest oil pipelineThe Interprovincial crude oil pipeline (now part of Enbridge Inc.) was built between Edmonton, Alberta, and Superior,Wisconsin, in 1950, and extended to Sarnia, Ontario, in 1953. Later additions connected the system to refineries in Chicagoand Montreal and as far south as Oklahoma. Another branch of the Enbridge system, completed in 1985, extends fromnorthern Alberta to the oil field at Norman Wells in the Northwest Territories. The pipeline system was – and remains – the world’s longest crude oil pipeline network.

Crude oil and natural gasin the political arenaDuring the boom years after Leduc, two kinds of companiesemerged. The independents were generally smaller and wereoften controlled by Canadian owners and managers. They wantedto sell their crude oil and natural gas as quickly as possible.Their rivals were the larger companies that were usually affiliatedwith foreign firms. These majors wanted to ensure the mosteconomical oil supplies for their refineries and could take alonger-term view of marketing.

42 Section 3 After Leduc - The modern oil and gas era42

Source: Imperial Oil LimitedArctic explorationFears about depleting oil and natural gas resources in Western Canada, combinedwith government incentives for frontier exploration, sparked a far-reaching searchfor new supplies in the 1970s and early 1980s. This well was located on anartificial island in the Beaufort Sea.

The situation was complicated until1970 because the United Statesproduced more oil than it consumed,so there was not much market therefor growing Canadian production.The independent producers wantedMontreal refineries to use Alberta oil,while the majors preferred to refinemore economical imported crude.The debate brought oil into thepolitical arena.

Natural gas was already a politicalissue. In the early 1950s, the Albertagovernment delayed marketingnatural gas outside Alberta until it was assured there was enough for the province’s own long-term needs.Then there was a prolonged wranglebetween competing companies’proposals to carry natural gas east toOntario. The Liberal government ofprime minister Louis St. Laurentfinally chose the all-Canadian route of TransCanada PipeLines Limitedand invoked closure to speed thenecessary legislation throughParliament in 1956.

The Liberals were defeated a year later.After the election, Conservative primeminister John Diefenbaker appointeda Royal Commission on Energy.The commission’s findings led to the creation in 1959 of the NationalEnergy Board to oversee interprovincialand international energy trade.

In 1961, the Diefenbaker governmentsettled the dispute over who wouldsupply Montreal refineries. Under the government’s National Oil Policy,Montreal could continue to useimported crude, while refineries west of the Ottawa Valley would useWestern Canadian oil.

Low crude oil and natural gas pricesin the 1960s encouraged rapid growthin Canadian petroleum consumption.However, low pricing caused financialdifficulties for many Canadian oil and gas firms and led to takeovers by foreign companies.

Through the late 1950s and 1960s,there were fewer and fewer largediscoveries in Alberta, British Columbiaand Saskatchewan. Some companiesredirected exploration efforts to thesedimentary basins off the east andwest coasts and in the CanadianArctic, where they hoped to emulatethe bonanza arising from the 1968Prudhoe Bay oil discovery in Alaska.There were some finds, mostly naturalgas rather than crude oil.

In 1971, the National Energy Boardrefused to approve additional long-term natural gas exports on the

grounds that proved reserves were no longer sufficient for expectedCanadian demand and existingexport commitments. At the sametime, influential think-tanks such asthe Club of Rome issued dire forecastsabout looming global shortages ofpetroleum and other resources. Thisprompted a growing debate over thesecurity of Canada’s energy supplies.The debate overlooked an importanteconomic principle – that higherprices would stimulate industry todevelop additional supplies.

Global energy crises

The Arab oil embargo of October1973 set off the first global energycrisis. Responding to nationalistconcerns about foreign ownership,as well as the oil embargo, then-primeminister Pierre Trudeau’s Liberalminority government imposed a


sweeping series of measures in late 1973:• government-decreed “made-in-

Canada” crude oil prices well belowworld levels

• a tax on oil exports to subsidize thesuddenly expensive imports thatstill supplied Eastern Canada

• the establishment of Petro-Canadaas a Crown oil company, and

• government-financed extension ofthe Interprovincial Pipe Line Inc.(now Enbridge Pipelines Inc.) oilpipeline from Sarnia to Montreal.

The measures gave short-term pricerelief to Canadian consumers, butdelayed the efficiency gains that worldmarket prices prompted in othercountries. Petroleum-producingprovinces and many oil industryleaders objected to the federal policies.Despite the policies, however, theindustry grew and even prospered inthe late 1970s, in part because naturalgas prices were allowed to rise muchmore rapidly than crude oil prices.

The National EnergyProgram

A second international oil crisis,following the Iranian revolution in 1978-79, led to even greatergovernment intervention in theindustry. The National EnergyProgram (NEP) of October 1980reinforced the made-in-Canada pricepolicy. It took away a large share ofproduction revenues through newtaxes, and paid frontier explorationincentives to companies according to their level of Canadian ownership.

The NEP ran into problemsimmediately. The oil-and-gas-producingprovinces fought bitterly against whatthey saw as a federal intrusion into theirjurisdiction. Some companies redirectedtheir investment to the United States.

A severe recession and very highinterest rates in the early 1980s causedfinancial disaster for firms with highdebt loads; many had borrowed to take

advantage of NEP incentives based onCanadian ownership levels. Crude oiland natural gas drilling slumped, oilproduction continued to decline,industry growth slowed, and profitsplunged.World oil prices did not rise aspredicted and soon actually began tofall. This upset the economic forecastsof governments and companies.

Deregulation andcompetition

Soon after winning the 1984 federalelection, then-prime minister BrianMulroney’s Conservative governmentstarted to dismantle the NEP. Anagreement called the Western Accordderegulated crude oil prices in June1985, and Canada’s borders wereopened to imports and exports.Natural gas prices were deregulatedmore gradually. The governmentphased out the complex system oftaxes and incentives and decided toprivatize Petro-Canada, which beganto sell shares to the public in 1991.


The price shocks of 1973-74 and 1978-79 ended a 20-year decline in world oilprices. Allowing for inflation, the price in 1999 was about the same as in 1926.

Through deregulation, the Canadianpetroleum industry finally obtainedmarket prices for its products.However, the world oil price dropped50 per cent in 1986 and recoveredslowly except for a brief upward spikewhen Iraq invaded Kuwait in August1990. During more than a decade ofcompetitive pricing and deregulation,crude oil and natural gas prices variedconsiderably on a yearly, monthly andeven daily basis.

Relatively low crude oil and naturalgas prices were not the only problemsfacing the industry after 1986. Pricesalso fell sharply for sulphur – a by-product of the industry. Meanwhile,the operating costs for olderproducing fields rose steeply, andthere were additional expenses for

environmental protection, surfaceaccess, regulatory fees and publicconsultation.

Between 1986 and 1992, relativelyhigh interest rates created a heavyburden for companies with largeamounts of debt, and low profitsmade it difficult to attract equityinvestment. Many companies laid offstaff and sold assets or merged withstronger firms. With lower interestrates, improved commodity pricesand more efficient operations, theindustry began to prosper again in themid-1990s. Despite a dip in crude oilprices in the late 1990s, the industrywas on a more even keel as the UnitedStates provided a reliable and growingmarket for Canadian energy.

Only the pipeline and natural gasdistribution companies – utilitieswhose rates of return were establishedby regulatory boards – emergedrelatively unscathed from theindustry-wide slump of the late 1980sand early 1990s. Many pipelinecompanies subsequently negotiatedincentive tolling agreements withproducers. These agreementsencouraged pipelines to become moreefficient and to share the cost savingswith customers. As U.S. demand for Canadian crude oil increased,the pipeline between Sarnia andMontreal, originally built to carryWestern Canadian crude oil eastward,was reversed in 1999 so that it nowbrings imported and offshoreCanadian oil production westward to Ontario refineries.

The downstream refining andretailing sector also went through amajor transition after the “oil shocks”of the 1970s. Cars became more fuel-efficient and more complex tomaintain, which meant that Canadaneeded fewer refineries andconventional gasoline stations.Between 1990 and 2003, the numberof retail service stations in Canadadeclined by almost one-third, fromabout 19,000 to 13,000.

Environmental protection, includingreformulation of fuels, added torefining and marketing costs at a timewhen competition was intense. Taxesraised the price of gasoline in Canada.Recession and global over-capacityhurt the petrochemical producers in the late 1980s and early 1990s,although they recovered in the mid-1990s.


$ 2001$ Money of the day

5.67

5.10

4.54

3.97

3.40

2.83

2.27

1.70

1.13

0.57

0.00

200

180

160

140

120

100

80

60

40

20

0

HISTORICAL WESTERN CANADA NATURAL GAS PRICES($Cdn per thousand cubic metres) ($Cdn per thousand cubic feet)

TransCanadagas pipeline completed

Deregulation of pricing and marketing

N.A.F.T.Asigned

Alliance Pipelinein service

Western Accordcommits to deregulation

U.S./CanadaFree Trade Agreement signed

National EnergyProgram announced

Export floorprice for

natural gasadopted

1961 1981 2001

Source: Canadian Association of Petroleum Producers

Historical Natural Gas PricesNatural gas prices in Canada rose steeply after the 1973 Arab oil embargo, andnatural gas became a major source of revenue for Canadian oil and gas companies.Allowing for inflation, the price reached a peak in 1980 that was not exceededuntil 2001. Prices moderated in the 1980s and 1990s due to the large increase in supply brought on by the earlier high prices. Periodic shortages of pipelinecapacity from Western Canada to consuming regions also affected prices. Strongdemand, combined with increased pipeline capacity, led to a new upsurge in prices since 1999.

The environment –a growing awarenessDuring most of the early petroleum era, consumers used crude oiland natural gas because they were inexpensive, readily availableand convenient. Protecting the environment was not a majorconcern, although petroleum was generally cleaner-burning thanthe coal or wood it replaced.

In the 1960s, however, Canadians started to worry about theurban air pollution caused by industrial activity and vehicles.People living near crude oil and natural gas production facilities,processing plants, pipelines, refineries and service stationsbecame increasingly concerned about impacts on human healthand the environment. Governments brought in regulations toprotect air and water quality.


Source: Suncor EnergyWetlands conservation area in northern Alberta.

Industry responded by progressivelyreducing environmental impacts.Explorers and producers found betterways to prevent spills and blowouts.Industry co-operatives wereestablished to deal with spills that might affect water resources.There were major advances in waste management and landreclamation methods.

New technologies greatly reduced thesulphur dioxide emissions from gasprocessing plants. Pipeline companiesstepped up their maintenance andmonitoring programs. Refineriesdecreased emissions of air and waterpollutants. Gasoline retailers installedcorrosion protection on undergroundfuel storage tanks and upgraded spill-prevention training.

Canadian refiners eliminated the useof a lead compound as a gasolineadditive in 1990, completing a phase-out that had begun in 1973. Furtherreductions in environmental impacts

were achieved in the 1990s as theindustry improved refinery efficiency,reduced the sulphur content of fuels,reformulated gasoline, capturedhydrocarbon vapours, and workedwith stakeholders to betterunderstand public concerns.

The international oil-supply crises of1973 and 1979 stirred new concernsabout industrialized societies’ relianceon crude oil resources and ledgovernments, consumers and industryto focus on energy conservation. Oneresult was an improvement in the fuelefficiency of motor vehicles. Oilconsumption was reduced sharplythrough conservation, a switch toalternative fuels and the introductionof more efficient engines andfurnaces. In many instances, naturalgas replaced oil products.

At the United Nations Conference on Environment and Development(Earth Summit) in Rio de Janeiro in1992, Canada and more than 160

other nations adopted a philosophy of sustainable development –development that meets today’s needswithout compromising the ability of future generations to meet theirneeds. The nations also agreed tobegin limiting emissions of greenhousegases that may contribute to globalclimate change. They set a target ofstabilizing emissions at 1990 levels bythe year 2000, a goal which was notachieved for a wide range of reasons.

In 1997, world leaders reached anagreement in Kyoto, Japan, to furtherlimit greenhouse gas emissions earlyin the 21st century. In December2002, Canada ratified the KyotoProtocol obliging the nation to reduceits greenhouse gas emissions to six per cent below 1990 levels by 2012.In February 2003, the federalgovernment committed $1.7 billiontowards a climate change actionpackage. The strategy includesmeasures to encourage conservationin the residential sector and support


Increases in coal consumption for electricity and steam generation, growth in fossil fuel production (mainly for export), andincreases in Canadian transportation energy consumption have affected emission growth in recent years.

2000 CANADIAN GREENHOUSE GAS EMISSIONS - ALL SECTORSCO2 emissions (million tonnes CO2 eqivalent )

264

179

119

77

6026

Energy industries

Electricity generation

Petroleum industry 3

Freight

Other passenger transportation 4Light duty gasoline cars and trucks

Vehicle transportation

Industry 1

Agriculture

Other 2

Residential andcommercial

136

128

81

8513

1 Includes industrial processes, manufacturing, solvent and other products, construction, mining and other fuel combustion.

2 Includes land use change and forestry, and waste.

3 Upstream and downstream activities, including pipelines and fugitive emissions.

4 Includes motorcycles, light-duty diesel vehicle (cars), propane and natural gas vehicles, and the passenger portion of air (81%) and rail (3%) travel.

36%

25%

16%

11%

8%

4% Source: Environment Canada

for renewable energy, in particularwind and solar power, as well asalternative fuels such as ethanol andbiodiesel, clean-coal technology,hydrogen fuel cells and initiatives thatstore carbon dioxide rather thanrelease it into the atmosphere.

In April 2003, the CanadianAssociation of Petroleum Producersreleased the Calculating GreenhouseGas Emissions guide, which providesCAPP members with a standardizedapproach to benchmarking andestimating greenhouse gas emissions.CAPP and its members said theyintend to work with federal, provincialand territorial governments on a planthat allows Canadians to continue tobenefit from the production andexport of oil and natural gas whilepromoting technological advancesthat lead to long-term solutions toclimate change.

A continually evolvingindustry

Some things have not changed sincethe 19th century. Hundreds of wellsaround Oil Springs, Ontario, stillproduce crude oil with essentially thesame technology used in the 1860s.Fractional distillation, the processinvented by Abraham Gesner in the1840s, is still the heart of a modern oilrefinery. Natural gas systems like thosepioneered by Eugene Coste stilldeliver clean-burning fuel toconsumers. The corporate descendentof Coste’s company still operates inCalgary, and Imperial Oil, founded in1880, continues to be a major part ofthe Canadian oil and gas industry.The drill bit is still the only way toconfirm that a particular rockformation will actually produce crudeoil or natural gas.

Yet, there have been profound changesin every facet of the industry too. Theproducts and uses for petroleum havemultiplied many times over the years,as have the expectations ofconsumers. The application ofemerging science and technology hasmade possible a precision in findingand producing crude oil and naturalgas that could not have been imaginedeven a few decades ago. There is farless waste, in both the production anduse of crude oil and natural gas, andfewer effects on the environment. Thehealth and safety of workers and thepublic have become centralconsiderations in planning andoperations. Perhaps most important,the body of knowledge about all theaspects of petroleum has continued togrow, helping to ensure that thenation’s hydrocarbon wealth will beused wisely and well.

Legacies

The legacies of the oil and gasindustry’s long history in Canadainclude:

• a vast body of knowledge about thenation’s geology and petroleumresources, available to all industryparticipants through federal andprovincial reporting requirementsand databases

• highly skilled professional andtechnical personnel, many withinternational experience

• extensive experience withchallenging resources (sour gas,heavy oil, oilsands) and withchallenging environments such asthe Arctic and offshore

• an infrastructure of plants,pipelines and facilities supportingand linking every aspect of a far-reaching industry

• training and educationalinstitutions to prepare workers andspecialists for the industry’s needs

• laws, policies and regulatory authorities to ensure the industryoperates in the public interest.

However, past practices also led toimpacts on land, air and waterresources and affected plants, animalsand humans. As scientific knowledgeexpanded and society’s expectationsincreased, government and industrycontinually raised performancestandards and attempted to addressthe effects of earlier activities.Similarly, there was an ongoingimprovement in measures to protectthe health and safety of workers andnearby residents.

Readers should turn to Our PetroleumChallenge, 7th Edition, to learn more about the ways science andtechnology are used today to find,produce, process, deliver and utilizecrude oil and natural gas as well as thechallenges we face in developing andusing these resources. Currentinformation about Canada’s oil andgas industry is available through theCentre for Energy web portal atwww.centreforenergy.com.


ReviewersThe following individuals have generously provided their time and expertise to assist in the development of this publication:

Bill AyrtonAyrton Exploration Consulting Ltd.

Dick BissettBissett Resource Consultants

Bruce CameronNova Scotia Petroleum Directorate

Brian ChristiansonOlds College

Allan J. Clark, Suzanne Clément-Cousineau and Maureen MonaghanNatural Resources Canada

Roger ConnellyInuvialuit Regional Corporation

Bruce DeBaieEnbridge Inc.

Onno DeVriesCanadian Association of Petroleum Producers

Michael ErvinM. J. Ervin & Associates

Geoff Granville and Simone MarlerShell Canada Limited

Tom HeganRimbey Area District Clean Air People

Derek HibbardCanadian Association of Oilwell Drilling Contractors

Ross HicksNational Energy Board

Lynn LehrChevron Canada Resources

Eric LloydPetroleum Technology Alliance Canada

Tony PargeterPetro-Canada

Andy PickardConsultant

Bill ReynenEnvironment Canada

Barbara RileyNova Scotia Community College

Stephen Rodrigues and Ian ScottCanadian Association of Petroleum Producers

Clint TippettPresident, Petroleum Historical SocietyGeologist, Shell Canada Limited

Colin WhiteKeyano College

Reviewers 49

Selected bibliography The following publications provide additional information about the Canadian and international petroleum industries.Note that some of these publications may only be available through reference libraries or private collections. A more complete bibliography of petroleum history references is posted on the website of the Petroleum History Society:http://petroleumhistory.ca (bibliography URL: http://petroleumhistory.ca/history/phsBiblio3.pdf).

Anderson, Allan. Roughnecks and Wildcatters. Toronto: MacMillan of Canada, 1981.

Bellemare, Barbara (editor). The Syncrude Story – In Our Own Words. Fort McMurray: Syncrude Canada Ltd., 1990.

Bott, Robert. Mileposts: The Story of the World’s Longest Pipeline. Edmonton: Interprovincial Pipe Line, 1989.

Breen, David H. Alberta’s Petroleum Industry and the Conservation Board. Edmonton: The University of Alberta Press, 1993.

Bregha, Francois. Bob Blair’s Pipeline. Toronto: James Lorimer, 1979.

Bryson, Connie, ed. Opportunity Oil Sands. Winnipeg: Fleet Publications Inc., 1996.

Chandler, Graham. The Gathering Place: Creeburn Lake. Calgary: The Athabasca Oil Sands Project, 2004.

Clark, K.; Hetherington, C.; O'Neil, C.; Zavitz, J. Breaking Ice with Finesse: Oil and Gas Exploration in the Canadian Arctic.Calgary: Arctic Institute of North America, 1997.

Dabbs, Frank. Branded by the Wind: The Life and Times of Bill Herron. Calgary: Marjorie A. Herron, 2001.

de Mille, George. Oil in Canada West: The Early Years. Calgary: George de Mille, 1969.

Finch, David, and Jaremko, G. Fields of Fire – An Illustrated History of Canadian Petroleum. Calgary: Petroleum HistorySociety, Detselig, 1994.

Finnie, Richard. CANOL: The Sub-Arctic Pipeline and Refinery Project Constructed by Bechtel-Price-Callahan for the Corps ofEngineers, United States Army 1942-1944. San Francisco, CA: Taylor & Taylor, 1945.

Gray, Earle. Forty Years in the Public Interest – A History of the National Energy Board. Vancouver: Douglas & McIntyre, 2000.

Gray, Earle. The Great Canadian Oil Patch. Toronto: MacLean-Hunter, 1970.

Gray, Earle. Super Pipe: The Arctic Pipeline – World’s Greatest Fiasco. Toronto: Griffin Press, 1979.

Hilborn, James D. (editor). Dusters and Gushers. Toronto: Pitt Publishing, 1968.

Selected bibliography50

Hoffman-Mercredi, Lorraine D. iukonze – The Stones of Traditional Knowledge. Edmonton: Thunderwoman Ethnogrephics, 1999.

Kennedy, Tom. Quest: Canada’s Search for Arctic Oil. Edmonton: Reidmore, 1988.

Kerr, Aubrey. Atlantic 1948 No. 3. Calgary: S.A. Kerr, 1986.

Kerr, Aubrey. Corridors of Time. Calgary: S.A. Kerr, 1988.

Kerr, Aubrey. Corridors of Time II. Calgary: S.A. Kerr, 1991.

Kerr, Aubrey. Judy Creek and Beyond. Calgary: S.A. Kerr, 1999.

Kerr, Aubrey. Leduc. Calgary: S.A. Kerr, 1991.

Kerr, Aubrey. Redwater. Calgary: S.A. Kerr, 1994.

Leffler, William L. Petroleum Refining for the Nontechnical Person. 2nd ed. PennWell Publishing Company, 1985.

Imperial Oil. The Trail of '48. Toronto: Booklet prepared by Imperial Oil Ltd. as a souvenir of the opening of the EdmontonRefinery, 17 July 1948.

May, Gary. Hard Oiler! The Story of Early Canadians’ Quest for Oil at Home and Abroad. Dundurn, 1998.

McKenzie-Brown, Peter; Gordon Jaremko, and David Finch. The Great Oil Age. Calgary: Detselig Publishers, 1993.

Stahl, Len. A Record of Service: The History of Western Canada’s Pioneer Gas and Electric Utilities. Edmonton:Canadian Utilities Limited, 1987.

Stenson, Fred. Waste to Wealth: A History of Gas Processing in Canada. Calgary: Canadian Gas Processors Association, 1985.

The Royal Tyrrell Museum of Palaentology. The Land Before Us – The Making of Ancient Alberta. Red Deer College Press, 1994.

Thomas, Alister (editor). The Super Roughneck: 50 years of Canadian Oilpatch History as reported in The Roughneck.Calgary: Northern Star Communications Ltd., 2002.

Yergin, Daniel. The Prize. New York: Simon & Schuster, 1991.

Selected bibliography 51

Online information sourcesThe Centre for Energy portal (www.centreforenergy.com) provides an overview of the Canadian oil and gas industry,a timeline, glossary and links to Web sites with relevant historical information.

Additional online historical resources include:

Black Gold: Canada’s Oil Heritage http://collections.ic.gc.ca/blackgold

Canadian Petroleum Hall of Fame www.canadianpetroleumhalloffame.ca

Canadian Petroleum Interpretive Centre (Leduc) www.c-pic.org

Heavy Oil Science Centre (Lloydminster) www.lloydminsterheavyoil.com

History of Development: Alberta’s Natural Resources http://collections.ic.gc.ca/ABresources/history/index.html

Nickle’s History (Daily Oil Bulletin) http://www.nickles.com/history/

Nova Scotia Petroleum Directorate http://www.gov.ns.ca/petro/nsoilgasindustry/history.htm

Oilsands Discovery Centre (Fort McMurray) www.oilsandsdiscovery.com

Petroleum History Society www.petroleumhistory.ca

Petrolia Discovery (Ontario) www.petroliadiscovery.com

Turner Valley (Alberta) Gas Plant Historical Site

http://www.cd.gov.ab.ca/enjoying_alberta/museums_historic_sites/site_listings/turner_valley/index.asp

This publication was prepared by the former Petroleum Communication Foundation and produced by theCanadian Centre for Energy Information (Centre for Energy). Although the Centre for Energy endeavours toprovide accurate, current information, it does not:

• make any warranty or representation, expressed or implied, with respect to the accuracy, completeness or usefulness of the information in this publication;

• assume any responsibility or liability to any party with respect to the use of, or for any damages resulting from the use of, or reliance upon, or the negligence of the Centre for Energy or the former PetroleumCommunication Foundation in preparation of any information, method or process described in this publication or;

• endorse any organization, product, service or process which may be described or implied in this publication.

Online information sources52

MeasurementCrude oil, natural gas liquids and refined oil products

In metric (Système International or SI), a standard unit of volume measurement is the cubic metre (m3). A cubic metre issimply the volume of fluid held by a container with dimensions of one metre by one metre by one metre. One cubic metre of oil would fill 1,000 one-litre milk cartons.

The traditional North American unit of oil measurement is the barrel. The barrel, which holds 159 litres or 42 U.S. gallons,was the original container used to store and transport crude oil during the horse and wagon era. Barrels are commonlyabbreviated as bbl. A standard bathtub holds about one barrel of oil.

Canadians collectively use more than 250,000 cubic metres (1.5 million barrels) of crude oil each day. This is equivalent to the volume of about 600 public swimming pools. Volumes of gasoline and motor oils are normally measured in litres inCanada, and in U.S. gallons and quarts in the United States.

Before 1979, Canada used the Imperial measurement system. One Imperial gallon is equal to 4.546 litres, and there are 35 Imperial gallons in a barrel.

Liquid measurement conversionsTo convert from: To: Multiply by:Cubic metre Barrel 6.292Barrel Cubic metre 0.15891Litre Barrel 0.006292Barrel Litre 158.91Litre Cubic metre 0.001Cubic metre Litre 1000.0

Other conversions1 kilogram = 2.2 pounds1 metre = 3.28 feet1 kilometre = 0.62 miles1 centimetre = 0.4 inches1 hectare = 2.47 acres1 U.S. gallon = 3.79 litres1 Imperial gallon = 4.55 litres1 barrel = 35 Imperial gallons/42 U.S. gallons

Measurement 53

Natural gas

In SI, the official basic unit for natural gas volume measurement is one thousand cubic metres (103 m3), measured at standardtemperature and pressure (15° Celsius, 101.325 kilopascals).

The volume occupied by a large office desk is almost one cubic metre. This amount of natural gas would heat water for about600 cups of coffee.

The following units and abbreviations are commonly used:

1 thousand cubic metres = 103 m3

Energy used by one water heater for a year

1 million cubic metres = 106 m3

Enough to heat 180 homes for one year*

1 billion cubic metres = 109 m3

Enough to heat 180,000 homes for one year*

*Varies according to house size and weather conditions.

In the U.S. and Imperial systems, the basic unit for natural gas volume measurement is the cubic foot (cf) measured atstandard temperature and pressure (60° Fahrenheit, 14.73 pounds per square inch). Common multiples are one thousandcubic feet (Mcf), one million cubic feet (MMcf), one billion cubic feet (Bcf) and one trillion cubic feet (Tcf).

Measurement54

Energy

The joule is the basic SI unit used to measure energy content. One joule is the equivalent of the energy required to heat onegram of water by approximately one quarter of one degree Celsius, or to lift a 100-gram object (such as a television remotecontrol) one metre vertically. Since the joule is such a small unit of energy, the natural gas industry normally works in largemultiples. Completely burning one wooden match would release the equivalent of approximately 1,000 joules.

1 thousand joules (103 J) = 1 kJ (kilojoule)1 million joules (106 J) = 1 MJ (megajoule)1 billion joules (109 J) = 1 GJ (gigajoule)1 trillion joules (1012 J) = 1 TJ (terajoule)1 million gigajoules (1015 J) = 1 PJ (petajoule)410 MJs = Used by one home in a day*150 GJs = Used by one home in a year*

*Varies according to house size and weather conditions.

In the U.S. and Imperial systems, energy content is measured in British Thermal Units (BTUs). One BTU is the heat requiredto raise the temperature of one pint of water one degree Fahrenheit.

Natural gas measurement conversionsTo convert from: To: Multiply by:Cubic metre Cubic foot 35.301Cubic foot Cubic metre 0.0281,000 cubic metres (103 m3) Million cubic feet (MMcf) 0.035

Million cubic feet (Mmcf) 1,000 cubic metres (103 m3) 28.328Joule BTU 0.00095BTU joule 1054.615Gigajoule Million BTUs (MMBTU) 0.948Million BTUs (MMBTU) Gigajoule 1.055

Measurement 55

About the author56

About the authorThe author of the 5th, 6th and 7th editions of Our Petroleum Challenge, RobertBott is a Calgary-based writer, editor and consultant who specializes in energy,forestry and the environment. Over the past three decades, he has written aboutenergy issues as a journalist with United Press International and The CalgaryHerald, managing editor of Energy Magazine, writer for the CBC-TV program“Business Watch,” editor of energy articles for The Canadian Encyclopedia,columnist for The Calgary Herald and Oilweek, and as a contributor to magazinessuch as Canadian Business, Report on Business Magazine, Financial Post Magazine,Saturday Night and Canadian Geographic.

Bott was co-author of Life after Oil: An Alternative Energy Strategy for Canada(Hurtig, 1983) and author of Mileposts: The Story of the World’s Longest PetroleumPipeline (Interprovincial Pipeline, 1989). In the 1990s, he helped to develop andwrite the Backgrounder series of publications for the Petroleum CommunicationFoundation. He is the recipient of four National Journalism Awards, one WesternMagazine Award, and a Lifetime Achievement Award from the Petroleum History Society.

The Canadian Centre for Energy Information (Centre for Energy) is a non-profit organizationcreated in 2002 to meet a need for informationabout all parts of the Canadian energy sector fromoil, natural gas, coal, thermal and hydroelectricpower through to nuclear, solar, wind and othersources of energy.

From freestanding information kiosks to our printpublications and Web portal, the Centre for Energydelivers accurate, factual and current informationon Canadian energy.

We believe that an informed public makes betterbusiness decisions related to energy, choosescareers in energy, invests in energy and uses energymore wisely.

For current information about the Canadian Centrefor energy Information and its publications, pleasevisit www.centreforenergy.com

Evolutionof Canada’s oil and gas industryA historical companion to Our Petroleum Challenge, 7th Edition

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Canada Oil History

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