Ask any of Canada's exploration professionals when Western Canada's oil industry
began, and you will get one of two answers. The first is the Dingman #1
discovery, which began disgorging wet gas at Turner Valley in 1914. The second is
Imperial's 1947 oil discovery at Leduc. (A more comprehensive answer is that Dingman was the critical event for the industry's early years, while the modern
era began at Leduc).
I want to suggest that another event was equally pivotal. The
year was 1914. The occasion was an expedition down the Mackenzie River by a
British geologist, Dr. T.O. Bosworth. There are direct links between that trip
and the modern industry's birth.
Two Calgary businessmen, F.C. Lowes and J.K. Cornwall, had commissioned
Bosworth's journey. They wanted to investigate the petroleum potential of
northern Alberta and beyond, and to stake the most promising claims. Bosworth
did not disappoint. His confidence that the north was highly prospective is
apparent on almost every page of the 70-page report he produced upon his
return.
Bosworth's own words suggest how ambitious the expedition was.
"The undertaking was planned in March 1914," he says. "ln April I consulted with
the officers of the Government Geological Survey and other Departments in Ottawa
and gathered from them all available information; maps and literature bearing on
the subject.
"At the beginning of May, I journeyed from London to Canada accompanied by three
assistant geologists and surveyors, and on May 19th, the expedition set out from
Edmonton to travel northwards in the Guidance of the Northern Trading Company.
We returned to Edmonton September 24th."
During that period, the Bosworth expedition covered huge distances. And
according to his report, there were excellent exploration prospects in three
general regions: "The Mackenzie River between Old Fort Good Hope and Fort
Norman; the Tar Springs District on the Great Slave Lake; and in the Tar Sand
District on the Athabasca River."
His report offered concise, well-written geological descriptions
of rocks, formations and structures. It also included chemical reports on both
rocks and oil from seepages. Some of his greatest praise came from
investigations north of Norman Wells, areas which to this day have not yielded a
major oil discovery. "Near Old Fort Good Hope (lat. 67 30') in the banks of a
tributary stream, the shales are well exposed ... from the fossils it is evident
that the shales are of Upper Paleozoic Age and probably belong to the Upper
Devonian," he said. "This remarkable series of Bituminous Shales and Limestones,
of such thickness and of such richness contains the material from which a vast
amount of petroleum might be generated and might pass into an overlying porous
rock. It is admirable as an oil generating formation."
In a discussion of the evidence of good reservoir rock, Bosworth points to a
nearby occurrence of "gray clay shales and shaley sandstone," and to another of
"greenish shaley sandstone containing occasional fossils
– corals, chenetes and
rhynconella."
Both of the reservoir rocks Bosworth speculates upon lie above the Devonian
shales. He was looking specifically for "overlying porous rock" to form the
reservoir. It does not seem to have occurred to him that reefs within the shales
could have served as reservoirs, even though he specifically noted the presence
of Devonian corals.
The exigencies of the Great War, which exploded while he was on his expedition,
postponed exploration on Bosworth's claims. When the war was over, however,
Imperial drilled on one of Bosworth's claims. The company's first well brought
in the great Norman Wells discovery.
Imperial Oil Limited's legendary exploration geologist, Ted
Link, led the drilling expedition. By train, scow and riverboat, he and his crew
followed Bosworth's route north to Fort Norman, just south of the Arctic Circle.
They had taken with them the wherewithal to assemble a cable-tool drilling rig,
and they soon set to work. One valuable member of the party, an ox named Old
Nig, supplied heavy labour during the summer and steaks and stew as freeze-up
began killing off the forage.
Link's crew found oil in 1920, but there was no practical way to get it to major
markets. Because demand in the Northwest Territories was marginal, Imperial had
little reason to develop the field. However, the company constructed a tiny
refinery at Norman Wells to supply missions, mines and other local customers in
the 1920s and 1930s.
Imperial's geologists did not really understand the reservoir, however. The
single well it had drilled was enough to meet local needs, and therefore did not
require further investigation.
That changed after Pearl Harbor. When the Americans became involved in the
Second World War, they were extremely concerned about supplying oil to the
Pacific Fleet. They, therefore worked with Canada to develop Norman Wells. This
project was known as the Canol Project – a name derived from the contraction of
Canadian and oil.
Imperial drilled while construction crews built a 1 000-kilometre oil pipeline
over the Mackenzie Mountains to a newly constructed refinery in Whitehorse. The
pipeline was built over some of the
most difficult terrain in the country, and much of the work had to be done in
bitter cold. Crews also laid product pipelines to Skagway, Alaska. In total, the
crews constructed 2 560 kilometres of pipeline and by any standard the pipelines
were terrible.
Long sections were laid on the surface of the ground. The crude oil pipeline
leaked onto the permafrost. So did the product pipelines, which delivered diesel
and gasoline to a fuelling station in Skagway, Alaska.
This extraordinary project did not contribute meaningfully to
the war effort. First oil flowed through the pipeline in 1944, but the refinery
operated for less than a year before being mothballed.
The threat to westcoast shipping had disappeared. It was clear
that the war would soon be won. And Canol was one of the greatest white
elephants in petroleum hisstory.
The total cost of the project (all paid by U.S. taxpayers) was
$134 million, in 1943 U.S. dollars. Total crude production was 1.98 million
barrels (46,000 barrels of which spilled.) Crude cost was 67.77 per barrel.
Refined petroleum product output was just 866,670 barrels. Cost per barrel of
refined product was thus $155 per barrel, or 97.4 cents per litre. Based on the
U.S. Consumer Price Index, the crude oil cost today would be US $670 a barrel.
The cost of refined product would be $1,528 per barrel or $9.62 a litre.
"And that's before taxes," says Robert Bott, a prominent Calgary
writer. "I wonder if that makes it the most expensive oil ever produced?"
In a recent article, Helene Dobrowolsky chronicled the project's
environmental impact on Whitehorse, Yukon. Her work had given her the
opportunity to prepare a case study of one aspect of the Canol legacy. Her work
included the report "World War II, the Canol Project and the Maxwell Tar Pit: A
Case Study".
Appalling disposal and clean up practices during the Canol
debacle created an oily mess that was finally declared an environmentally
contaminated site in 1998. Forty years earlier, a man had stumbled into the pit
and got stuck. He later died in hospital. The Maxwell Tar Pit has still not been
cleaned up.
Although Canol had little impact on affairs of state, it had a
huge impact on oil development in Western Canada. As the result of field
development at Norman Wells, Imperial learned the field's sandstone that
Bosworth had hypothesized. It was a Devonian reef.
Armed with this knowledge, Imperial's geologists
– led by Ted
Link, who by this time was in charge of Imperial's exploration efforts
–
rethought their approach to Western Canada.
Experimenting with primitive seismic technology, the company began to look for
Devonian reefs. Their first success was the famous Leduc #1.
Until the end of the Second World War petroleum geologists had been more-or less
convinced that big plays in Alberta would look, walk and talk like Turner
Valley.
They would be roughly 340 million years old, and they would be thrusted
anticlines of Paleozoic age in a Mississippian formation. Much fruitless
drilling in the foothills sought the next Turner Valley.
While Bosworth's analysis was technically wrong in important areas, his work led
to the realization that Devonian reefs were the key to Canada's petroleum
wealth.
That geological idea brought forth a series of these great discoveries,
beginning with Leduc. On February 21, 1947, that well finished drilling into the
foundation for one of the world's first great post-war oil booms. This led to
the creation of the modern Canadian oil and gas industry.
It is easy to think of Canada's petroleum industry as one that began in the
south, grew wealthy, then began exploring and developing the North.
Viewed from that perspective, the industry's attempts to develop frontier
production are a relatively modern phenomenon. Worse, many proposals have gone
nowhere – at great cost to taxpayers, consortia and individual companies.
From this perspective, the excitement surrounding Fort Liard and renewed
interest in the Mackenzie Delta are merely contemporary examples from a post-war
tradition.
I believe the Norman Wells story suggests a far more interesting angle. Briefly
put, Northern exploration has played a critical role in the industry's
development in the earliest years of oil and gas exploration in this country.
People on the Move
