Great Canadian Oil Sands Limited in the historic Ruth Lake lease near Fort McMurray was the first operational oil sands project in the world, owned and operated by an American parent company. When the US$240 million dollar plant officially opened 30 September 1967, with a capacity of 45,000 bpd, it was a majority-owned subsidiary of the Philadelphia Pew family's Sun Oil Company. Its opening marked the beginning of commercial development of the Athabasca oil sands. In the initial agreement with the Alberta government, J. Howard Pew, CEO and chair of Pittsburgh-based Sun Oil Company, the twelfth largest oil company in the United States, negotiated that Sun Oil would be the major purchaser of oil from GCOS plant for their extensive refinering operations in the United States.
Suncor claims that the 1960s marks the birth of the Suncor’s future. The U.S. parent company's multi-million dollar investment in 1963 was the "largest, single private investment in Canada’s history" and was called "a daring venture into an unknown field" and "the biggest gamble in history."[1]
History
editIn 1949 Pew made his interests in the oil sands known to the newly-appointed manager of Sun’s Canadian operations, George Dunlap." George Dunlap lived in Tulsa where he was employed by Sun Oil Co. After WWII George returned to Sun Oil and was transferred to Dallas, Texas. In February 1949 he was transferred to Calgary where he remained.
"During the 1950s, Sun Oil Company Ltd. invested almost half a million dollars in oil sands research on bitumen extraction and separation in its lead-up to establishing a major commercial Alberta oil sands operation. Then, in 1958, Pew’s company signed an agreement with Great Canadian Oil Sands. GCOS would use its technology to produce an integrated oil sands project on its Ruth Lake lease near Fort McMurray, and Sun agreed to buy 75% of the oil produced at the site at a pre-established price. Pew and his company later financed development of the Great Canadian Oil Sands plant.
— Government of Albert Culture and Tourism
Peter McKenzie-Brown, a Calgary-based author and writer who worked for the Canadian Petroleum Association (CPA) and Gulf Oil Canada, claimed that the Great Canadian Oil Sands was the product of visionary industrialist J. Howard Pew.[2] Premier Ernest Manning and J. Howard Pew both believed in the importance of the oil sands to Canada and Alberta. , and shared those beliefs in his long friendship with J. Howard Pew, the president, CEO and chair of Pittsburgh-based Sun Oil Company. Sun was the twelfth largest oil company in the United States and was continually looking for ways to find enough crude to feed its extensive refining operations.
Texas of the North
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On February 13, 1947, a rare and famous "blowing in" or geyser at Imperial Oil Limited's Leduc No. 1 gushed with conventional oil proving to Albertans and the world that there were never imagined oil reserves under the wheat that would transform Alberta from a struggling, have-not province to an oil wealthy province with resource revenues pouring into Ernest Manning's Social Credit government's treasury.
Imperial Oil had drilled 133 wildcat wells throughout the province, all of which failed to yield significant quantities of oil.[3]
The 1948 blowout of the nearby Atlantic No. 3 well aided provincial growth as the derrick collapse and resulting inferno made international headlines and alerted the world to Alberta's oil strikes.[4]
American oil men took an interest in oil in Alberta with its proven reserves of 2 billion bbls and even more potential reserves, like "a great oily sea buried deep under the province's fields, lakes and mountains."[5]
After Leduc, more than US$300 million was invested in Alberta oil— "one of the freest and fastest streams of American private capital ever sluiced into a foreign country." "45 new oilfields have been spudded in across the province. Portable derricks, lumbering over the land like giant steel giraffes, have drilled more than two new wells a day."[5]
"Oil company owners, many of them American themselves, identified strongly with their U.S. cousins, and Alberta was often described as a sort of second-string Texas. The American free-enterprise spirit and the cult of the individual is strongly embodied in the oil-patch culture."
— Time Magazine 24 September 1951
Bitumount
editIn 1925 Robert C. Fitzsimmon, from Prince Edward Island, founded the International Bitumen Company, a small-scale oil sands company.[6] In 1930 Fiztsimmon built the first small oil separation plant, the Bitumount plant, 89 kilometres north of Fort McMurray, on a federal lease.[7][8] The Bitumount plant used a process similar to the hot-water separation process developed and patented in 1929 by Dr. Karl Clark of the Alberta Research Council.[7] Fitzsimmons struggled financially during the Great Depression There "was a flood of light crude oil from Texas and Oklahoma, which was driving down prices. In the Dirty Thirties oil prices were as low as $0.67 per barrel ($9 in inflation-adjusted terms)." The province of Alberta refused his requests for financial assistance and he was forced to sell during World War II.[7] In 1943 Fitzsimmons sold the enterprise to Lloyd Champion, a "hard-nosed financier from Montreal",[7] investor and tar sands promoter. Champion's company Oil Sands Limited was formed in at that year. Fitzsimmons remained with Oil Sands Limited as operations advisor but left the position in 1944 in frustration. He was called back to the plant "which had been sitting idle for five years" to get it "back in operation. Once he got the plant going again, Champion fired him."[7] Chamion, from "late in 1944 to 1948 was associated with Ernest Manning and the Alberta government in building an experimental extraction plant.[9] The plant conducted successful tests in 1948/49 then closed, partly because the 1947 Leduc No. 1 discoveries of the more accessible conventional oil, had lessened interest in the oil sands.
According to Alastair Sweeny, author of Black Bonanza, while Champion was a good salesman but a very poor manager of an oil business. By 1948 he bowed out of the Bitumount project with Manning's government as he was unable to honour his part of the deal.[10]: 97
That project lurched from crisis to crisis until Alberta Premier Ernest Manning brought his friend, J. Howard Pew, the chairman of Philadelphia-based Sun Oil Company, into the conversation. In 1953 Champion, with his "oil sands assets and his business acumen and drive" and Pew as the primary financial backer of the project, formed "the Great Canadian Oil Sands Consortium with Sun Oil Ltd. of Philadelphia."[9]
In 1952 Champion incorporated Great Canadian Oil Sands in Toronto.[10]: 97 In 1953 he acquired Abasands Oils and Canadian Oils Ltd as part of GCOS. Champion hoped that their combined leases would attract major investors like Sun Oil.[10]: 97
In 1954 President Eisenhower cancelled Truman's World War II synthetic fuels program which made synthetic crude from Athabasca oil sands more attractive.[10]: 98
By 1954 the Pews had invested heavily in the oil sands.[10]: 98
"As Champion had hoped, the Pews bought into the GCOS consortium in 1954, acquiring a 75 percent interest in the Abasand Oils in the 4,000-acre lease number 86 beside Tar Island. Sun moved quickly and in 1958 hired GCOS to mine a process the sands from lease number 86 (subject to royalty payments to Sun and Abasand), while Sun also contracted to purchase 75 percent of production from a plant proposed by GCOS which would produce 31,500 barrels per day of synthetic crude."
— Sweeny 2010 page 98
As a result, the Great Canadian Oil Sands plant (today the Suncor oil sands plant) went into operation in 1967- the year of Canada's Centennial celebrations. Mr. Champion sold most of his interests between 1966-1967, but his Oil Sands Ltd. was not liquidated until 1976, five years after his death.[9][7]
Ernest Manning
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Ernest Manning, Alberta Social Credit Party, who was Premier of Alberta from 1943 to 1968 [2] was spurred on by the Leduc spectacle[2] and became a strong advocate for the oil industry. Under Manning's Social Credit government, the oil industry enjoyed "the golden decade"—fifteen uninterrupted years of development from the benchmark discovery of the Leduc oil field in 1947."[11]: 51 Alberta's annual total production in 1946 was 7.7 million barrels from 416 wells[12] and over ninety percent of Canada's oil requirements were imported from the United States. By 1957 Canada was producing sixty-five percent of the nation's requirements, despite a three-fold increase in consumption.[13]
J. Howard Pew was Ernest Manning's "close and remarkable friend."[11]: 51
Ernest Manning, J. Howard Pew and Sidney Blair, who was one of Ernest Manning's son Preston's professors, "worked together since 1949 to get an oil-sands industry started and were engaged in the advanced planning of the first plant."[11]: 51 Beginning in 1949, Manning and J. Howard Pew, who were both devout and practicing Christians, and whose wives became close friends, vacationed together for a week each year. They shared convictions that the oil sands development was beneficial to the province and to the oil industry.[11]: 44
In 1950 his government commissioned Sidney Blair’s pivotal Report on the Alberta Bituminous Sands known as the "Blair Report" in 1950 which sparked widespread interest in Alberta's oil sands. It proposed that efficient, large-scale oil sands surface mining and bitumen refining projects could be competitive in the Canadian petroleum marketplace. In 1951, the Alberta government hosted the first international Athabasca Oil Sands Conference at the University of Alberta with "one hundred and twenty one scientists, engineers and oil industry personnel assembled in Edmonton to share their information and to hear about the results of the Alberta Government Oil Sands Project at Bitumount."
During the opening ceremonies of the GCOS Manning said, "This is a red letter day, not only for Canada but for all North America. No other event in Canada's centennial year is more important or significant."[1]
Manning's last election win was in 1967 was the same year as the Great Canadian Oil Sands plant was opened. When Manning retired in 1968 Harry Strom became leader of the Social Credit party and was soon eclipsed by the leader of the Progressive Conservative party, a young lawyer Peter Lougheed. Lougheed won the 1971 election and ended Social Credit's 36-year hold on power and began the PC's forty years of unchallenged power in Alberta.[14]
J. Howard Pew
editThe American J. Howard Pew, the Sun Oil heir and chief executive, who was "[o]ne of the ten wealthiest Americans of his day", "took a serious interest in the oil sands during World War Two, when his company hunted for oil as part of the war effort."[2]
He was the son of Joseph Newton Pew (1848–1912), who transformed a family business, Sun Oil Company into a global conglomerate known as Suncor.[15]Sun Oil Company into a global conglomerate known as Suncor.[15] By 1971, the Pew family were ranked by Forbes magazine as one of the half-dozen wealthiest families in America.[15] McKenzie-Brown listed industrialist J. Howard Pew as one of the six visionaries who built the Athabasca oil sands, along with chemist Karl Clark, Premier Ernest Manning; US corporate executive Frank Spragins; Premier Peter Lougheed; and Suncor’s former chairman and CEO, Rick George.[2]
In the 1960s there was an oil glut in Alberta and conventional oil producers lobbied against the development of the oil sands.[10]: 98
With Pew’s support, in 1962 Sun Oil's majority-owned subsidiary, Great Canadian Oil Sands (GCOS), filed an application for a commercial oil sands project in Canada – the first ever constructed.[1] The GCOS project had been rejected in 1960 by the Alberta Oil and Gas Conservation Board on technical and economic grounds,[10]: 98 but Pew was able to convince Manning that it was mutually beneficial. In September 1962 Manning's government tabled an oil sands policy for the orderly development of the oil sands limiting production so it would not displace current market arrangements for conventional oil producers. The Alberta Oil and Gas Conservation Board approved the proposed US$122 million 30,000 bbl a day plant. Sun Oil was the major purchaser.: 99 By 1964 Sun Oil took over the entire operation and negotiated a larger project, US$190 to extract 45,000 barrels a day.
Construction of the Great Canadian Oil Sands plant began in 1964. At that time GCOS CEO, J. Howard Pew, said,[1]
"This is a great challenge to the imagination, skill and technological know-how of our scientists and engineers ... I am convinced this venture will succeed, and that it will be the means of opening up reserves that will meet the needs of the North American continent for generations to come."
— GCOS CEO, J. Howard Pew
In 1967, Pew told his audience at opening ceremonies for the Great Canadian Oil Sands plant that “No nation can long be secure in this atomic age unless it be amply supplied with petroleum... It is the considered opinion of our group that if the North American continent is to produce the oil to meet its requirements in the years ahead, oil from the Athabasca area must of necessity play an important role.”[16] Today, GCOS is known as the Suncor oilsands plant.
McKenzie-Brown listed industrialist J. Howard Pew as one of the six visionaries who built the oil sands, along with chemist Karl Clark, Premier Ernest Manning; US corporate executive Frank Spragins; Premier Peter Lougheed; and Suncor’s former chairman and CEO, Rick George.[2]
Technology
editIn 1926, Karl Clark of the University of Alberta received a patent for a hot water separation process which was the forerunner of today's thermal extraction processes. Several attempts to implement it had varying degrees of success.
Sun Oil Company's Earl W. Malmberg developed a separation process using surfactants which was used in 1967 by the new GCOS plant.
In 1963 bucketwheels or bucketwheel excavator, was the "technology of choice". Each excavator weighed 1,600 tonnes and was taller than a ten-storey building.[1]
GCOS and Syncrude's mine, which opened in 1978, were the pioneer oil sands mines and they had a steep learning curve to deal with before their bitumen mining techniques became efficient.
In the intervening years, more effective in-situ production techniques were developed, particularly steam assisted gravity drainage (SAGD). In-situ methods became increasingly important because only about 20% of the Athabasca oil sands were shallow enough to recover by surface mining, and the SAGD method in particular was very efficient at recovering large amounts of bitumen at a reasonable cost.
See also
editReferences
edit- ^ a b c d e "The Oil Sands Story (1960s, 1970s & 1980s)", Suncor, nd, retrieved 29 January 2015
- ^ a b c d e f McKenzie-Brown, Peter (22 January 2013), "Six visionaries who built the modern oil sands", The Petroleum History Society, Canadian Association of Lifelong Learners and, Calgary, Alberta, retrieved 29 January 2015
- ^ "Hundreds saw No. 1 'blow in' at Leduc". Calgary Herald. 16 February 1957. p. 39. Retrieved 23 September 2011.
- ^ Farrell, Jim (1997-02-13). "Safety rules toughened after 1948 well blowout". Calgary Herald. p. L9.
- ^ a b "Canada: Texas of the North", Time Magazine, 24 September 1951, retrieved 30 January 2015
- ^ McDermott, Vincent (16 November 2013), As oilsands expand, historic Bitumount rots, Fort McMurray, retrieved 30 January 2015
{{citation}}: CS1 maint: location missing publisher (link) - ^ a b c d e f McKenzie-Brown, Peter (10 April 2011), Language Matters: Rampant Optimism, Tremendous Drive, retrieved 30 January 2015
- ^ R.C. Fitzsimmons, Alberta Online Encyclopedia
- ^ a b c "Lloyd Champion", University of Alberta, Finding Aids
- ^ a b c d e f g Sweeny, Alastair (April 2010), Black Bonanza: Canada's Oil Sands and the Race to Secure North America's Energy Future, pp. 272 pages, ISBN 978-0-470-16138-8
- ^ a b c d Dabbs, Frank (2000), "Preston Manning: Roots of Reform", Greystone, p. 228, ISBN 13-97815-50547504
{{citation}}: Check|isbn=value: length (help) - ^ "Oil facts". Calgary Herald. 1997-02-13. p. L17.
- ^ "Post-Leduc oil boom continues". Calgary Herald. 1957-02-13. p. 40. Retrieved 2011-09-28.
- ^ Gerson, Jen (14 September 2012), "A legacy rich as oil: Ex-Alberta premier Peter Lougheed's ideas imprinted on party still in power 41 years later", National Post, retrieved 3 February 2015
- ^ a b c Fleeson,, Lucinda (27 April 1992), "How A Foundation Reinvented Itself", Philly.com, retrieved 29 January 2015
{{citation}}: CS1 maint: extra punctuation (link) - ^ McKenzie-Brown, Peter; Jaremko, Gordon; Finch, David (1993), The Great Oil Age, Calgary: Detselig Enterprises Ltd.