Alberta Centennial 2005

Oil & Gas

Alberta enjoyed its first oil boom in 1902, and reaped the benefits from subsequent short-lived oil and gas booms in 1914 and 1936. But it wasn't until 1947, when a major oil strike occurred at Leduc, that oil and gas replaced agriculture as the principal drivers of Alberta's economy and put Canada on the road to becoming the world's tenth-largest energy producing nation.

The first boom occurred in what is now Waterton Lakes National Park and fizzled out within six years. Local Natives had long known about the "stinking waters" located near Cameron Lake, but found no practical use for them. An Irish-born frontiersman named John "Kootenai" Brown became the first person to exploit the oil seepages, soaking up the oil in gunny sacks to use as a lubricant for his wagons and as fuel for his lamps. He also devised a crude collection system similar to the sluice-box operations used in gold mining to draw the oil into barrels and sell it to his neighbours for a dollar a gallon.

As word of the Waterton oil discovery spread, claim-staking speculators and commercial drilling companies flooded into the area. The most successful of the drilling companies, Rocky Mountain Development Company, drilled what became Canada's first "discovery well," initially producing a steady flow of about 300 barrels a day. That was enough to precipitate the beginnings of a shantytown development, optimistically called Oil City. A townsite was cleared, streets were surveyed, and buildings were constructed, including a bunkhouse, dining hall, cabins and even the foundations for a small hotel.

The flow from the first well dwindled to a trickle within a few years, leading to later suggestions by some industry analysts that it was, in fact, a "salted" well, perhaps fraudulently charged with extraneous oil to make the source appear more valuable than it actually was. Rocky Mountain Development drilled two more wells on the site, but both came up dry. By 1908, Alberta's first oil boom had finally fizzled out and Oil City was abandoned. The search for oil and gas then moved 220 km north to Turner Valley, just south of Calgary.

An Okotoks rancher named William Stewart Herron made one of the first significant gas discoveries in Alberta in 1911, when he noticed gas seeping from rocks along the banks of Sheep Creek, near Turner Valley. He sent away the gas for analysis and when he discovered it contained naphtha, a petroleum derivative used as tractor fuel, he formed a partnership with a Calgary entrepreneur named Archibald Dingman to exploit the resource. In May 1914, a flow of naphtha and natural gas from the "Dingman Discovery Well No. 1" marked the birth of a vibrant new industry in the grain fields and cattle country of southern Alberta. Speculators formed more than 500 new petroleum companies overnight, and Turner Valley became known as "Little New York," full of brawling roughnecks, poker games, dancehalls and bawdy houses.

Imperial Oil - the Canadian subsidiary of Standard Oil of New Jersey - and its subsidiary, Royalite Ltd., were largely responsible for developing the Turner Valley gas fields after the First World War. However, natural gas had limited commercial value then because a pipeline hadn't been built yet to carry the product to markets in central Canada and the United States. During the 1920s, Turner Valley became known as "Hell's Half Acre" because of all the flaring the companies did to get rid of the excess gas.

Outside investment capital for gas exploration and drilling in Turner Valley dried up during the first part of the Depression. Then, in 1936, a Calgary businessman named Robert "Streetcar" Brown hit pay dirt. Acting on the belief that a substantial pool of crude oil must lie beneath the gas fields of Turner Valley, he mortgaged his house, borrowed on his insurance policies, formed a company called Turner Valley Royalties, and started drilling. A burst of crude soaring upwards from the Turner Valley Royalties No. 1 well ushered in the second important era in Alberta's oil and gas industry. By 1939, the Turner Valley field had 70 operating wells producing annual revenue of $10 million. However, the resource dwindled over the next six years, and exploration companies turned their sights northward.

The post-Second World War oil boom for Alberta began in February 1947 when Imperial drilled the first successful well in what turned out to be a 200 million-barrel oilfield at Leduc, south of Edmonton. This and subsequent oil and gas discoveries transformed Alberta's economy and resulted in a rapid increase in population. By the late 1950s, more than half of Western Canada's population - a total of 1.3 million people - lived in Alberta. The construction of oil and gas pipelines that connected Alberta to eastern Canada and to the United States became the "megaprojects" of the 1950s and a key to the province's continued prosperity. These pipelines were as important to Alberta's development from the mid-20th century onward as the Canadian Pacific Railway had been in the early 20th century. The commercial development of the Athabasca oil sands starting in the late 1960s gave Alberta yet another promising source of energy revenue when it became clear that the conventional oil fields would eventually be exhausted.

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Interactives

Untitled Document

The Leduc Bonanza

The Great Canadian Oil Sands

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