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History of the Petroleum Industry in Canda

Posted on February 01, 2014 in Oil & Gas Industry

Although the petroleum industry in Canada evolved simultaneously with the production throughout North America, the development of the industry makes Canada perfectly unique. Beginning in 1851 with Charles Nelson Tripp, the first Canadian to gather petroleum, the nation’s first oil companies were formed.

The Early Years
Tripp was investigating some mysterious gum beds in present-day Ontario when he discovered the petroleum near Black Creek. He became president of International Mining and Manufacturing Company in 1854, the first corporation officially chartered. With the Canadian Parliament’s blessing, the company beginning searching for oil and salt springs in asphalt beds while also manufacturing oils, burnable fluids, and other varnishes made from the recently discovered petroleum.

The company experienced many setbacks in the manufacture and distribution of their products due to the production equipment’s location; few roads in the area combined with swampy grounds made travel to and from the company nearly impossible.

James Miller Williams offered his interest in the struggling corporation in 1856, and Tripp jumped at the chance to leave the company’s presidency. Tripp’s group became J.M. Williams and Company just a year later, and under Williams’ guidance, the corporation began producing kerosene.

While searching for better drinking water, Williams dug a deep well and struck the first free oil well in North America at Oil Springs, Ontario. Shortly thereafter, he moved his refinery at Oil Springs to a more permanent production office in Hamilton, where he began selling coal oil and changed his name to The Canadian Oil Company. Canadian Oil produced, refined, and marketed oil as the world’s first integrated company.

The Boom of Oil Refineries
Following the first gusher discovered on February 19, 1862, most oil producers became oil refiners as well. Each individual who discovered a pocket of oil began producing and refining his own product, leading to a boom of oil refineries across the Canadian oil lands.

As more and more refineries were erected and began operation, an increased amount of oil was being produced. Because of the increased oil available, the price per barrel began to decrease based on the supply being greater than the demand. By the time 1870 began, both Oil Springs and a nearby field were devoid of all oil, but ambitious drillers began tapping and forming new oil fields ripe for drilling.

Canadian petroleum drillers invented the pole-tool method for drilling oil. Especially useful in rocky terrain, this technique used rods or poles that were linked together and then attached to a drilling bit that was tied to the end of the amassed rod. The weight of the drill string, formed by all the rods linked together, caused a pounding of force into the ground from a wooden derrick. This pounding produced a hole for the oil drilling itself.

Accidental Natural Gas Discovery
An explorer searching for oil in the early stages of discovery in 1859 accidently found a natural gas leak in Moncton, New Brunswick. Additionally, an 1866 discovery of a gas field full of poisonous hydrogen sulfide in Port Colborne, Ontario, led to the development of many gas fields in the southwestern area of the province. Each of these explorers found these gases purely by accident while searching for petroleum.

A young geologist named Eugene Coste began the first natural gas well in Ontario in 1889. Coste, widely considered the father of Canada’s natural gas industry, assisted in the development of the underground pipeline that stretched from the Essex gas field to Detroit and Toledo, Ohio, by 1897. The permits for this pipeline would later be revoked in 1907 as the Ontario government decided to reserve its natural gas.

After the early days of discovery in the eastern regions of Ontario, Canada’s petroleum industry really began to produce results following the westward expansion to Alberta. The Western Canadian Sedimentary Basin was the perfect breeding ground for useful and plentiful reserves, specifically those of natural gas.

The first well drilled in 1883 near Medicine Hat, Alberta, yielded an unexpected flow of natural gas, leading to a second drill in 1890. This well, although searching for coal, also produced natural gas. These double discoveries of natural gas encouraged workers to drill with the specific purpose of harnessing the gas in the area.

Elsewhere in northern Alberta, the government initiated a drilling program aimed to help the region drill with more focus. Contractor A.W. Fraser began drilling in 1893, but he abandoned that location the following year after not having much success. Fraser struck gas in 1897 near Pelican Rapids, northern Alberta, and his well flowed uncontrollably there for 21 years until A.W. Dingman was able to harness it in 1918. Dingman formed the Calgary Natural Gas Company in 1908, and he provided gas to the area from that point forward.

With the discoveries of natural gas by Eugene Coste in south central Alberta, the natural gas companies of Canada began to change. Coste founded the Canadian Western Natural Gas Company in 1911 following a merger of the Calgary Natural Gas Company, the Calgary Gas Company, and his own corporation.

Westward Petroleum Expansion
A gas and oil gush at Turner Valley in Calgary led to the investment of many businessmen eager to get started in the petroleum industry. This 1914 oil discovery was made primarily of a compound of hydrocarbon that was pure enough to use in the tanks of automobiles but smelled foul. However, the wells in this area were not true oil wells; instead, they were a type of “wet” natural gas well that soon caused disappointment for avid drillers.

The Royalite Oil Company, also known as the Calgary Petroleum Products Company, begin drilling its No. 4 well in Turner Valley. This well blew, caught fire, and burned for 21 days before experts used dynamite to stop the explosion. This blowout led to continued efforts by Royalite, and finally in 1936, the company’s No. 1 well struck Canada’s first major oil field. Although considered a huge find at the time, in retrospect this first field was not comparable to the reserves discovered later. Despite its modest size, this field helped to develop Canada’s oil programs in the western sphere of the country, and it established the expertise of the oil drillers in Calgary as the best in the nation.

Following the discovery of massive amounts of wasted gas and oil in this newly profitable region, the Alberta Petroleum and Natural Gas Conservation Board, known today as the Energy Resources Conservation Board, was called to order in July 1938 to help organize Canada’s petroleum industry. By the late 1940s, this governing board had curbed most of the wasteful production tendencies in the oil and gas industries.

After the 1940s, the Turner Valley fields were quickly depleting, until Imperial Oil struck oil in what would later become the Leduc Formation, a geological area along the Albertan coast. Leduc No. 1 and Leduc No. 2 produced huge amounts of oil and natural gas until the late 1980s, when the two resources were mostly tapped out and useless. Since that time, the petroleum industry in Canada has slowly transitioned into other petroleum resources such as oil sands deposits and more intensive natural gas liquids extraction facilities rather than oil drilling and recovery.

1st Commercial Credit provides accounts receivable financing for the oil and gas industry, please see more information if you are interested in a line of credit using your receivables for your oil company.