Canada's early petroleum discoveries took place near population centres or along lines of penetration into the frontier.
The first oil play, for example, was in southern Ontario. The first western natural gas discovery occurred on a Canadian Pacific Railway right-of-way. The site of the first discovery in the far north, the 1920 Norman Wells, Northwest Territories wildcat, was along the Mackenzie River, at that time the great transportation corridor into Canada's Arctic.
From those haphazard beginnings the search for petroleum spread to the fringes of continental Canada – and beyond those fringes onto the ocean-covered continental shelves.
Exploration in those areas involves huge machines, complex logistical support systems, and large volumes of capital. Offshore wells in the Canadian sector of the Beaufort Sea have cost more than $100 million. Across the International border, a well drilled in the US sector of the Beaufort – Mukluk by name – cost $1.5 billion, and came up dry.
For the petroleum sector, Canada's geographical frontiers are the petroleum basins in northern Canada, in the Canadian Arctic Archipelago, and off the coast of Atlantic Canada. These areas are difficult and expensive to explore and develop, but successful projects can be profitable using known production technology.
As the world's onshore oil reserves deplete, offshore resources – in Canada, also known as frontier resources – become increasingly important. Those resources in turn complete the full cycle of exploration, development, production and depletion.
Some frontier crude oil production – for example, Bent Horn in the Arctic and the Panuke discovery offshore Nova Scotia – have already been shut down after completing their productive lives. Similarly, some natural gas fields in the frontiers are now in later stages of decline.
In part, this history illustrates how important changes take place in the economies of newly producing regions, as frontier exploration shifts from wildcat drilling through oil and gas development into production. It also explores the ingenuity needed to drill in those inhospitable areas, and the deadly challenges explorers sometimes face.
True North
Norman Wells
The first great story in Canada's exploration of the geographical frontiers is that of Norman Wells in the Northwest Territories. During his voyage of discovery down the Mackenzie River to the Arctic Ocean in 1789, Sir Alexander Mackenzie noted in his journal that he had seen oil seeping from the river's bank. R.G. McConnell of the Geological Survey of Canada confirmed these seepages in 1888. In 1914, British geologist Dr. T.O. Bosworth staked three claims near the spot. Imperial Oil acquired the claims and in 1918–1919 sent two geologists of its own, and they recommended drilling.From North to South: How Norman Wells Led to Leduc
Led by a geologist, a crew composed of six drillers and an ox (Old Nig by name) later began a six-week, journey northward by railway, riverboat and foot to the site now known as Norman Wells. They found oil – largely by luck, it turned out later – after Ted Link, later Imperial Oil's chief geologist, waved his arm grandly and said: "Drill anywhere around here." The crew began digging into the permafrost with pick and shovel, unable to put their cable tool rig into operation until they had cleared away the mixture of frozen mud and ice. At about the level they encountered their first oil show. By this time, the river ice had frozen to and the mercury had plunged to . The crew decided to give up and wait out the winter. They survived, but their ox did not. Old Nig provided many a meal during the long, cold winter.
Drilling resumed in the spring and a relief crew arrived in July. Some of the original crew stayed around to help the newcomers continue drilling. On August 23, 1920, they struck oil at . The world's most northerly oil well had come in. In succeeding months, Imperial drilled three more holes – two successful, one dry. The company also installed enough equipment to refine the crude oil into a type of fuel oil for use by church missions and fishing boats along the Mackenzie. But the refinery and oil field closed in 1921 because northern markets were too small to justify the costly operations. Norman Wells marked another important milestone when in 1921 Imperial flew two all-metal Junkers airplanes to the site. These aircraft were among the first of the legendary bush planes which helped to develop the north, and forerunners of today's commercial northern air transport.
A small oil refinery using Norman Wells oil opened in 1936 to supply the Eldorado Mine at Great Bear Lake, but the field did not take a significant place in history again until after the United States entered World War II.
This discovery indirectly contributed to post-war exploration in Alberta, and the decision to drill Leduc No. 1. Like Leduc, the Norman Wells discovery was drilled into a Devonian reef. After the Second World War, Imperial identified what it thought might be the same kind of structure in Alberta, and consequently located the great Leduc oil field.From North to South: How Norman Wells Led to Leduc
Canol: When Japan captured a pair of Aleutian Islands, Americans became concerned about the safety of their oil tanker routes to Alaska and began looking for an inland oil supply safe from attack. They negotiated with Canada to build a refinery at Whitehorse in the Yukon, with crude oil to come by pipeline from Norman Wells. If tank trucks had tried to haul the oil to Alaska, they would have eaten up most of their own load over the vast distance.
This spectacular project, dubbed the Canol Road – a contraction of "Canadian" and "oil" – took 20 months, 25,000 men, 10 million tonnes (9.8 million long tons or 11 million short tons) of equipment, each of road, and telegraph line and of pipeline. The pipeline network consisted of the crude oil line from Norman Wells to the Whitehorse refinery. From there, three lines carried products to Skagway and Fairbanks in Alaska, and to Watson Lake, Yukon. Meanwhile, Imperial was drilling more wells. The test for the Norman Wells oil field came when the pipeline was ready on February 16, 1944. The field surpassed expectations. During the one year remaining of the Pacific war, the field produced about 160,000 m³ (1.4 million barrels) of oil.
The total cost of the project (all paid by U.S. taxpayers) was $134 million, in 1943 U.S. dollars. Total crude production was 315,000 m³ (2.7 million barrels) of which 7,313 m³ (63,000 barrels) were spilled. The cost of the crude oil was $426 per cubic metre ($67.77 per barrel). Refined petroleum product output was just 138,000 m³ (1.2 million barrels). Cost per barrel of refined product was thus $975 per cubic metre, or 97.5 cents per litre ($3.69 a gallon). Adjusted to current dollars using the U.S. consumer price index, in 2000 dollars the oil would have cost $4,214 per cubic metre ($670 a barrel), while the refined product would have been worth an astonishing $9.62 a litre ($36.42 a gallon).
After the war, there was no use for the Canol pipeline. It simply fell out of use, with pipe and other equipment lying abandoned. The Whitehorse refinery kept on going – in a different locale. Imperial bought it for $1, took it apart, moved it to Edmonton, Alberta and reassembled it like a gigantic jigsaw puzzle to handle production from the fast-developing Leduc oil field near Devon.
The Norman Wells story is not yet complete. The field entered its most important phase in the mid-1980s, when a pipeline connected the field to the Canada-wide crude oil pipeline system. Oil began flowing south in 1985.Canadian Oil and Gas – The First 100 Years
Norman Wells was a frontier discovery. It was not Arctic exploration, however, since it was located south of the Arctic Circle and also outside the narrowly defined Arctic environment (see map).
The definitive push into the Arctic took place in 1957 when Western Minerals and a small exploration company called Peel Plateau Exploration drilled the first well in the Yukon. To provision the well, some from Whitehorse at Eagle Plains, Peel Plateau hauled 2,600 tonnes (2,559 L/T or 2,866 S/T) of equipment and supplies by tractor train. This achievement involved eight tractors and 40 sleighs per train, for a total of seven round trips. Drilling continued in 1958, but the company eventually declared the well dry and abandoned. Over the next two decades, however, Arctic exploration gained momentum.
Arctic frontiers Stirrings of interest in the Canadian Arctic Archipelago (Arctic Islands) as a possible site of petroleum reserves came as a result of "Operation Franklin," a 1955 study of Arctic geology directed by Yves Fortier under the auspices of the Geological Survey of Canada. This and other surveys confirmed the presence of thick layers of sediment containing a variety of possible hydrocarbon traps.
Petroleum companies applied to the Government of Canada for permission to explore these remote lands in 1959, before the government had begun regulating such exploration. The immediate result was delay. In 1960, the Diefenbaker government passed regulations, then granted exploration permits for of northern land. These permits issued mineral rights for work commitments – that is, for agreeing to spend money on exploration.
The first well in the Arctic Islands was the Winter Harbour #1 well on Melville Island, drilled in the winter of 1961–62. The operator was Dome Petroleum. Equipment and supplies for drilling and for the 35-man camp came in by ship from Montreal. This well was dry, as were two others drilled over the next two years on Cornwallis and Bathurst Islands. All three wells were technical successes.
The federal government's eagerness to encourage Arctic Islands exploration, partly to assert Canadian sovereignty, led to the formation of Panarctic Oils Ltd. in 1968. That company consolidated the interests of 75 companies and individuals with Arctic Islands land holdings plus the federal government as the major shareholder.
Panarctic began its exploration program with seismic work and then drilling in the Arctic Islands. By 1969 its Drake Point gas discovery was probably Canada's largest gas field. Over the next three years came other large gas fields in the islands, establishing reserves of 500 billion m³ (4,324 billion barrels) of sweet, dry natural gas.
There were two significant blowouts during this drilling program. Panarctic's Drake Point N-67 well, drilled in 1969 to 2577 m on the Sabine Peninsula of Melville Island, was the first major discovery in the Arctic Islands. This giant gas field has been delineated by 14 wells, (including the 1969 discovery well and two relief wells drilled to control a blowout of the discovery well). A well drilled in 1970 on King Christian Island resulted in another blowout, though of spectacular proportions. King Christian D-18 blew wild for 91 days, and, after catching fire, was the source of an 80-metre (250 ft) column of flame. It may have been emitting as much as of gas per day.
Panarctic also located oil on the islands at Bent Horn and Cape Allison, and offshore at Cisco and Skate. Exploration moved offshore when Panarctic began drilling wells from "ice islands" – not really islands, but platforms of thickened ice created in winter by pumping sea water on the polar ice pack.
The company found abundant gas and some oil, too. In 1985, Panarctic became a commercial oil producer on an experimental scale. This began with a single tanker load of oil from the Bent Horn oil field (discovered in 1974 at Bent Horn N-72, the first well drilled on Cameron Island). The company delivered its largest annual volume of oil – 50,000 m³ (432,424 barrels) – to southern markets in 1988. Production continued until 1996.