The Canadian petroleum industry arose in parallel with that of the United States. Because of Canada's unique geography, geology, resources and patterns of settlement, however, it developed in different ways. The evolution of the petroleum sector has been a key factor in the history of Canada, and helps illustrate how the country became quite distinct from her neighbour to the south.
Although the conventional oil and gas industry in western Canada is mature, the country's Arctic and offshore petroleum resources are mostly in early stages of exploration and development. Canada became a natural gas-producing giant in the late 1950s and is second, after Russia, in exports; the country also is home to the world's largest natural gas liquids extraction facilities. The industry started constructing its vast pipeline networks in the 1950s, thus beginning to develop domestic and international markets in a big way.
Despite billions of dollars of investment, its bitumen—especially within the Athabasca oil sands—is still only a partially exploited resource. By 2025 this and other unconventional oil resources—the northern and offshore frontiers and heavy crude oil resources in the West—could place Canada in the top ranks among the world's oil producing and exporting nations. In a 2004 reassessment of global resources, the United States' EIA put Canadian oil reserves second; only Saudi Arabia has greater proved reserves. In 2014, the EIA now ranks Canada as third in World Oil Reserves at around , while Saudi Arabia is 2nd with around and Venezuela is ranked first with around of reserves.
Many stories surrounding the petroleum industry's early development are colourful. The gathering oilpatch involved rugged adventurers, the occasional fraud, important innovations and, in the end, world-class success. Canadian petroleum production is now a vital part of the national economy and an essential element of world supply.
Early origins In his blog entitled "Canadian Oil and Gas: The First 100 Years", Peter McKenzie-Brown said that the "early uses of petroleum go back thousands of years. But while people have known about and used petroleum for centuries, Charles Nelson Tripp was the first Canadian to recover the substance for commercial use. The year was 1851; the place, Enniskillen Township, near Sarnia, in present-day Ontario (at that time Canada West). It was there that Tripp started dabbling in the mysterious gum beds near Black Creek. This led to incorporation of the first oil company in Canada."
"Parliament chartered the International Mining and Manufacturing Company, with C.N. Tripp as president, on December 18, 1854. The charter empowered the company to explore for asphalt beds and oil and salt springs, and to manufacture oils, naphtha paints, burning fluids."
"International Mining and Manufacturing was not a financial success, but Tripp's asphalt received an honourable mention for excellence at the Paris Universal Exhibition in 1855. Several factors contributed to the downfall of the operation. Lack of roads in the area made the movement of machinery and equipment to the site extremely difficult. And after every heavy rain the area turned into a swamp and the gum beds made drainage extremely slow. This added to the difficulty of distributing finished products."
North American first According to Peter McKenzie-Brown, "[w]hen James Miller Williams became interested and visited the site in 1856, Tripp unloaded his hopes, his dreams and the properties of his company, saving for himself a spot on the payroll as landman. The former carriage builder formed J.M. Williams & Company in 1857 to develop the Tripp properties. Besides asphalt, he began producing kerosene."
"Stagnant, algae-ridden surface water lay almost everywhere. To secure better drinking water, Williams dug (rather than drilled) a well a few yards down an incline from his plant." In 1858 at a depth of Oil Museum of Canada the well struck oil. It became the first commercial oil well in North America, remembered as the Williams No. 1 well at Oil Springs, Ontario.May, Gary. Hard oiler! Dundurn Press, 1998, p 33. The Sarnia Observer and Lambton Advertiser, quoting from the Woodstock Sentinel, published on page two on August 5, 1858:Sarnia Observer and Lambton Advertiser, "Important Discovery in the Township of Enniskillen ," 5 August 1858, p 2. It was 12 years after drilling the first oil well in Baku settlement (Bibi-Heybat) in 1846 on Apsheron peninsula.
'Some historians challenge Canada's claim to North America's first oil field, arguing that Pennsylvania's famous Drake Well was the continent's first. But there is evidence to support Williams, not least of which is that the Drake well did not come into production until August 28, 1859. The controversial point might be that Williams found oil above bedrock while "Colonel" Edwin Drake's well located oil within a bedrock reservoir."
"We do not know exactly when Williams abandoned his Oil Springs refinery and transferred his operations to Hamilton. He was certainly operating there by 1860, however. Spectator advertisements offered coal oil for sale at 16 cents per gallon for quantities from to ."
By 1859 Williams owned 800 acres of land in Oil Springs. Williams reincorporated in 1860 as the Canadian Oil Company.Petroleum History Society, Petroleum History: Canadian Beginnings. His company produced oil, refined it and marketed refined products. That mix of operations qualify Canadian Oil as the world's first integrated oil company.
"Exploration in the Lambton county backwoods quickened with the first flowing well in 1860: Previous wells had relied on hand pumps. The first gusher erupted on January 16, 1862, when struck oil at . For a week the oil gushed unchecked at levels reported as high as , eventually coating the distant waters of Lake St. Clair with a black film."Earle Gray. Ontario's Petroleum Legacy: The birth, evolution, and challenges of a global industry (Edmonton: Heritage Community Foundation) 2008 There is historical controversy concerning whether it was John Shaw or another oil driller named Hugh Nixon Shaw who drilled this oil gusher; the newspaper article cited below identifies John Shaw.Johnson, Dana. The Shaw Investigation: A Review of Sources to Determine Who Drilled Canada's First Oil Gusher , Oil Museum of Canada, 2010.
News of the gusher spread quickly and was reported in the Hamilton Times four days later:Extraordinary Flowing Oil Well , Hamilton Times, Author Unknown, "Extraordinary Flowing Oil Well," 20 January 1862, p 2.
"Following Williams' example, practically every significant producer in the infancy of the oil business became his own refiner. Seven refineries were operating in Petrolia, Ontario in 1864 and 20 in Oil Springs - together, they processed about 80 cubic metres of oil per day." There were also refineries in Wyoming, where the Great Western Railway (later Grand Trunk Railway) could take oil to market.Elford, Jean Turnbull. Great West's Last Frontier – A History of Lambton (Wyoming excerpt) , Lambton County Historical Society, 1967.
"In 1865 oil was selling for $70 per cubic metre ($11.13 per barrel). But the fields of Ontario delivered too much too quickly, and by 1867 the price had dropped to $3.15 per cubic metre ($0.50 per barrel). In 1866 the oil industry in Oil Springs came to an abrupt standstill and the population plummeted overnight: by 1870, Oil Springs and Bothwell were both dead fields, but other booms followed as drillers tapped deeper formations and new fields."Oil Springs: boom and bust , Oil Museum of Canada Many local drillers moved several kilometers north to Petrolia, where operations began in earnest after the Oil Springs boom subsided.
"Although the industry had a promising start in the east, Ontario's status as an important oil producer did not last long. Canada became a net importer of oil during the 1880s. Dependence on neighbouring Ohio as a crude oil supplier increased after the automobile rolled into Canada in 1898."
Canadian drillers According to McKenzie-Brown, "Canadians developed petroleum expertise in those early days. The Canadian "oil man" or driller became valued the world over."
"Petrolia drillers developed the Canadian pole-tool method of drilling which was especially useful in new fields where rock formations were a matter for conjecture. The Canadian technique was different from the American cable-tool method. Now obsolete, cable-tool drilling uses drilling tools suspended from a cable which the driller paid out as the well deepened."
"Canada's pole-tool rig used rods or poles linked together, with a drilling bit fixed to the end of this primitive drilling "string." Black-ash rods were the norm in early Petrolia. Iron rods came later. Like the cable tool system, pole-tool drilling used the weight of the drill string pounding into the ground from a wooden derrick to make hole."
"The record is not complete enough to show all the locations Canadians helped to drill. However, Petrolia drillers unquestionably helped drill for oil in Java, Peru, Turkey, Egypt, Russia, Venezuela, Persia, Romania, Austria and Germany. One of the best-known Canadian drilling pioneers was William McGarvey. McGarvey acquired oil properties in Galicia (now part of Poland) and amassed a large fortune - then saw his properties destroyed when Russian and Austrian armies swept across the land during the First World War."
McKenzie-Brown said in 2008 that Canadian drillers moved to "far away places to practise their widely respected skills."
Eastern natural gas McKenzie-Brown said that the "natural gas industry was also born in eastern Canada. Reports from around 1820 tell of youngsters at Lake Ainslie, Nova Scotia, amusing themselves by driving sticks into the ground, pulling them out, then lighting the escaping natural gas."
"In 1859 an oil explorer found a natural gas seep near Moncton, New Brunswick. Dr. H.C. Tweedle found both oil and gas in what became the Dover field, but water seepage prevented production of these wells."
"An offshoot of the oil drilling boom was the discovery of gas containing poisonous hydrogen sulfide ("sour" gas) near Port Colborne, Ontario. That 1866 discovery marked the first of many gas fields found later in the southwestern part of the province."
"Eugene Coste, a young Paris-educated geologist who became the father of Canada's natural gas industry, brought in the first producing gas well in Essex County, Ontario, in 1889. Canada first exported natural gas in 1891 from the Bertie-Humberstone field in Welland County to Buffalo, New York. Gas was later exported to Detroit from the Essex field through a 20-centimetre pipeline under the Detroit river. In 1897, the pipeline stretched the Essex gas supply to its limit with the extension of exports to Toledo, Ohio. This prompted the Ontario government to revoke the licence for the pipeline. And in 1907 the province passed a law prohibiting the export of natural gas and electricity."
"In 1909, New Brunswick's first successful gas well came in at Stoney Creek near Moncton. This field still supplies customers in Moncton, although the city now has a propane air plant to augment the limited natural gas supply."
"The year 1911 saw a milestone for the natural gas industry when three companies using Ontario's Tilbury gas field joined to form Union Gas Company of Canada, Limited. In 1924, Union Gas was the first company to use the new Seaboard or Koppers process to remove poisonous hydrogen sulfide from Tilbury gas." Union became one of the largest corporations in Canada before its acquisition by Duke Energy, a US firm.
Westward move