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Sixty-one years ago, a lowly Calgary employee of U.S. multinational Sun Oil Co. wrote a subversive letter to the company brass in Philadelphia. The message spit in the eye of his local managers in Alberta.
“I have long felt that our company should take a permit to explore for oil from the Tar Sands of Alberta,” 30-year-old Ned Gilbert wrote in September, 1951, in defiance of his immediate superiors, who opposed the idea of going any further than their first tentative steps in the area.
Mr. Gilbert appealed over their heads to Sun’s senior team, seeking the go-ahead to lease a tract of remote, undeveloped forest north of Fort McMurray that was believed to contain 800 million barrels of oil.
That letter set off a chain reaction that resonates to this day. Now 91 and living in a retirement home in Calgary, Mr. Gilbert helped tip the balance in persuading Sun, the precursor to giant Suncor Energy, to stay in the bitumen game. The company ended up becoming the first commercial developer of the economic juggernaut now known as the oil sands.
Mr. Gilbert, a rail of a man who still stands his full 6 foot 4 inches, cheerfully accepts the title of game-changer in the oil sands. Yet back in 1951, he admits, “I had no concept of how big they were going to be.”
The oil sands are now a vast, controversial resource trove, supplying more than half of Canada’s oil, and constituting the third-biggest stock of oil reserves in the world after Saudi Arabia and Venezuela. The resource dominates the public agenda, igniting fierce debates over its effect on Canada’s economic balance, the viability of proposed pipelines and, above all, the environment.
The story of how a low-ranking land man prodded the forerunner of one of Canada’s energy giants to explore the potential of the oil sands sheds light on the painstaking, decades-long efforts that culminated in the development of what has become a defining piece of the nation’s economy. Without the efforts of men like Mr. Gilbert, who looked past the high costs and challenging economics of the oil sands and saw a risk worth taking, the industry would not have gotten the start needed to hit its stride decades later just as oil prices soar amid relentless global demand. And for oil executives today, that belief in long-term success is as important as ever, as soaring costs for new developments and battles over oil transportation infrastructure test their resolve.
Suncor has emerged as the elite player among Canadian-controlled oil companies, valued at almost $50-billion. (Sun Oil divested its stake in the company in the early 1990s.) Suncor’s pre-eminence stems directly from Great Canadian Oil Sands, the first commercial oil sands project, which was launched by Sun Oil in 1967.
Born in Madison, Wis., the son of the head of the botany department at the University of Wisconsin, Mr. Gilbert joined Sun Oil in the 1940s and, just after the Second World War, was posted to its tiny Calgary office in the ornate Palliser Hotel. There was a staff of just two – one manager and himself. Mr. Gilbert spent his days typing geological reports to be sent back to Philadelphia.
But then, as a land man, he got a front-row seat to Canada’s emergence as an energy power after the Second World War. He was at Leduc, just south of Edmonton, in 1947, in the weeks that followed the magnificent blow-out that set off the Alberta energy boom. He also became aware of bullish geological reports on the oil sands and advances in bitumen upgrading technology.
Sun’s Calgary manager, George Dunlap, opposed oil sands development. His view was the same as that of most people in the oil patch: With all the easy oil flowing from Leduc and other sources, there was no way to justify carving out pipeline capacity for a difficult, costly oil sands scheme – certainly not with oil priced under $4 (U.S.) a barrel.
Mr. Gilbert argued that the vast sands were too attractive to ignore – and his impudent opinion carried the day.
Oil patch historian David Finch, who championed Mr. Gilbert’s 2011 induction into the Canadian Petroleum Hall of Fame, says this contrarian voice helped overcome rampant skepticism. As a land man whose job was acquiring energy leases, Mr. Gilbert could see the benefits of the oil sands’ extremely low land costs.
And he believed in bitumen’s long-term prospects even after witnessing spectacular outbursts of conventional oil from Leduc, and from Redwater, northeast of Edmonton, in 1948.
“You had to have your head turned by the events of Redwater and Leduc, with all that oil gushing out of the ground,” Mr. Finch says. “And you compare that with this long costly series of events in the oil sands.” Yet Mr. Gilbert still saw their potential.
For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/the-man-who-saw-gold-in-albertas-oil-sands/article4498369/?page=all