Alberta’s Oilsands Turn 50

By Reid Southwick

On the morning of Sept. 30, 1967, dozens of jets and commercial aircraft landed on Fort McMurray’s airstrip — then its busiest day ever — carrying oil executives, government officials and other dignitaries for what Alberta’s then-premier declared a historic day.

The bespectacled Ernest Manning, 59 at the time, stood before a crowd of some 600 guests gathered north of the fledgling town for the dedication of the first commercial oilsands mine, a grand science experiment.

The long-term viability of the resource would remain clouded in serious doubt decades after Manning delivered his rousing speech. But he was steadfast in the apparent belief that Great Canadian Oil Sands — the precursor of Suncor Energy — was on the cusp of something big.

“We are gathered here for this ceremony to officially open this gigantic complex, which for the first time will tap commercially the vast supply of oil that until now has remained locked in the silent depths of these Athabasca tar sands,” Manning said.

“It is fitting that we gather here today to dedicate this plant not merely to the production of oil but to the continual progress and enrichment of mankind.”

Another man who believed doggedly in the pioneering venture, John Howard Pew, shared the stage with Manning. Pew, the chairman of Sun Oil Co., which owned a majority stake in the project, had first taken an interest in the oilsands in the 1940s.

Under Pew’s watch, Sun Oil invested heavily in research to better understand the resource he believed was vital to North America’s energy needs, and to build the technology to harness it. Pew was ultimately a driving force in the company’s decision to put up funds for construction.

“At the outset of this undertaking, I told our stockholders that unless projects of this character were periodically challenged and solved, our organization would become soft and eventually useless,” he told the crowd, according to video footage of the ceremony.

“My associates have conceived and built this magnificent plant so I trust that they may now take comfort in the knowledge that (the challenges) are not solved and that they continue to be most useful.”

Outside the blimp-like tent that housed the ceremony, the day was wet and frigid, but the downpour didn’t deter guests from taking a backstage tour of the very first commercial plant that extracted bitumen from sand.

The oilsands would become a roaring engine of Alberta’s economy, but the early days were bedevilled with massive costs, low oil prices, labour unrest and a vast array of other setbacks.

“We were trying to operate a plant that was designed on paper, but there was no other plant like it, nothing to model it on, other than experiments done in the lab,” said Bert MacKay, who worked in the extraction plant during its early days.

The first plant had been expected to cost $190 million in the early 1960s, but ultimately rang in at $240 million, a 26 per cent overrun.

After production began, company executives often questioned the wisdom of forging ahead as plant facilities lost power, froze up or ignited in flames.

Robert McClements, who served as chief engineer for Sun Oil during the plant’s construction and was later in charge of startup, said the challenge wasn’t separating the bitumen from sand or upgrading the tar-like petroleum. It was managing the scale of the project and handling massive volumes of materials, including the toxic tailings waste.

“It was the best time of my life, the biggest challenge,” said McClements, now 88. “It was pioneering. We carved a whole city out of the woods.”

Hugh Furber, who worked office jobs at Suncor from the age of 19 to his retirement, was a rare Fort McMurray native working in the oilsands. His father was American born but later settled in Alberta, where he delivered milk in Edmonton and worked on the Northern Alberta Railway out of Grand Prairie before moving to Waterways, a community now part of Fort McMurray.

Other than Great Canadian Oil Sands’ massive project, there was little industry in the area in 1967 when Furber left his job at a local service station to join the oilsands operation’s payroll office. There, he had a front-row seat to the project’s many stumbles and breakthroughs.

He remembers several fires and explosions in the mine’s initial phase.

“There were a couple of times that I was just about running up the hill to get the hell out of that plant,” he said.

During bouts of labour strife, the non-unionized office staffer was forced to make the unenviable decision of siding with the workers, which would have been an end to his job, or crossing the picket line. He stayed on to support his family and learned to drive front-end loaders and gravel trucks to fill in for striking or locked-out employees.

One day during a divisive strike and lockout in 1986, Furber recalls a bus ride across the picket line to work when he had to duck as a rock came flying at the window.

“I lived in a crescent and across the street was the union worker who didn’t like me going to work,” he said. “But it wasn’t the case that I was doing it to shun them; I was doing it to support my family and my children.”

Eric Newell arrived in Fort McMurray during the Suncor strike and still remembers the bitterness and the fears many workers had for their jobs.

Newell, who had just started as a vice-president at Syncrude, which was operating a rival oilsands mine, said there was another overwhelming feeling that was sweeping the town at the time.

“When we got there, there were very, very serious doubts amongst everybody about whether or not the oilsands could ever be viable,” Newell said, referring to concerns over high costs and low crude prices.

“And you could feel it in the community. It was palpable.”

Construction at Syncrude’s megamine at Mildred Lake north of Fort McMurray, capable of producing more than double Suncor’s initial capacity, began in 1973.

Other oilsands proposals had emerged in the 1960s and ’70s, but it was the Syncrude consortium — consisting of Imperial Oil, Atlantic Richfield, Canada Cities Service and Gulf Oil Canada — that built the second oilsands mine.

The operation launched in 1978, but not before much hand-wringing, setbacks and a legendary deal brokered in Winnipeg.

Rick Orman was 25 when he was tapped to be secretary to the Syncrude cabinet committee, which was charged with securing a funding agreement that at one point faced near-collapse.

Orman, who would become Alberta’s energy minister 16 years later, got a job in Peter Lougheed’s government on a whim in 1973 and was soon put to work recording by hand the meetings of Syncrude partners and government officials.

Orman said there were criticisms, especially in the media, that American members of the Syncrude consortium were involved in calling the shots over an Alberta resource. The negotiations also took heat, he said, because many believed government should not get involved in the private sector.

He remembers when representatives of Atlantic Richfield, among Syncrude’s largest backers, walked out of the room and abandoned the project. At the time, the price tag had more than doubled to $2 billion, but Orman said the partner had also disagreed with government on how to structure the deal.

“I remember thinking, ‘Oh my god; what just happened? The next question was, is this project going to survive?’ ” Orman said. “That created a real sense of urgency that we had to get this deal done because the longer we wait, the shakier it gets.”

The remaining partners and officials with the Alberta, Ontario and federal governments met in Winnipeg in 1975 to salvage a deal. The three governments agreed to replace Atlantic Richfield’s stake in Syncrude, collectively owning a third of its oilsands play.

As the afterglow of the deal faded and production began, Syncrude, Suncor and Imperial Oil, which started commercial operation of its Cold Lake oilsands project in 1985, suffered through falling world oil prices in the 1980s amid weak demand and an oversupply of crude.

By the time Newell arrived at Syncrude in 1986, oil prices collapsed as global attempts to control production fell apart and crude-producing countries like Saudi Arabia opened their taps.

Newell was also forced to contend with escalating costs, safety concerns and operational problems at the oilsands mine. As a vice-president and later as CEO of Syncrude, he set about trying to fix all three.

“The first times when I would go out and meet employees, they all wanted to know, are we actually going to survive? Are we going to shut down?” Newell said. “People saw the oil price drop and they were scared …

“I even had friends at Imperial Oil saying, ‘What the hell are you doing there? Why would you go out there? That will never work, that oilsands.’

“But we made it work.”