Excerpt from The Syncrude Story:
Hundreds of millions of years ago, there were seas where there is now land, swamps where there is now frozen tundra, deserts where there are now seas. The ocean was home to a multitude of tiny creatures and vegetation. When they died, they sank to the bottom and mixed with particles of rock. Somehow, over time, they were transformed by time, pressure and some kind of chemical action into oil.
Millions of years passed and layer upon layer of rock was built up at the bottom of the sea. Enormous pressure from volcanoes and earthquakes causes the oil to move and in the region of what is now northeastern Alberta, seep into the surface sediment. A treasure of oil trapped in time.
“Gordon, what have you done to my washing machine?”
Imagine the surprise on Mrs. Gordon R. Coulson’s face when she discovered her husband had loaded her washing machine full of some sticky tar-like substance, water and kerosene.
In fact, Coulson, a Calgary contractor, was trying to separate the sand and the clay from the oil, rather than the conventional process of removing the oil from the host material. He later patented this centrifuge process, which began in his wife’s washing machine, and formed Can-Amera Oil Sands Development Company Ltd.
In 1949, the Alberta Government had constructed a 500 ton oil sands sands separation plant at Bitumount to utilize the hot water separation process that had been developed by the Research Council of Alberta. Coulson’s company, now named Can-Amera Export Refining, purchased the plant in 1955 and used it to test his centrifuge process.
In 1955, Can-Amera made an agreement with Royalite Oil Company Limited calling for Royalite to carry on the research work and purchase the Bitumount plant for $180,000. Royalite and Can-Amera acquired what is now Oil Sands Lease Number 17 in December of 1955.
Since 1957, Cities Service Company had been paying a catskinner in the Fort McMurray area to ship pails of oil sand to its Lake Charles, Louisiana refinery for testing of a warm water extraction process. Cities Service, a major US oil refinery, bought 90 percent interest in the Can-Amera-Royalite Project at Bitumount in 1958.
Encouraged by their results, Cities Service built a 35 ton per hour pilot plant at Mildred Lake on Oil Sands Lease Number 17 in 1959. By then, Royalite (which had amalgamated with Gulf Oil Canada Limited) and Cities Service had been joined by Imperial Oil Limited and Atlantic Richfield Canada Ltd.. Cities Service Athabasca Ltd. directed all the research and development for the four company consortium.
A reporter from the “Oil and Gas Journal” visited the site and described the environment as inhospitable.
“From the time the snow flies in September or October, winter grips the isolated camp until April. The mercury plunges as low as 59 degrees below zero. When the thaw finally comes, much of the country is bottomless muskeg that can swallow a man or a drilling rig. The searing heat of summer sometimes sends the thermometer to 105 degrees.”
Nevertheless, a major research and testing program was conducted at the project site at Mildred Lake, with the facilities including a large tar sands extraction pilot plant, mining and materials handling equipment, a steam plant, power plant, shops, laboratory, warehouses, air strip and housing and commissary for an average crew of about 125 people. In addition, an engineering and office staff of about 50 people was located in Edmonton.
In the meantime, Great Canadian Oil Sands Ltd., or GCOS (now Suncor), had applied to the Alberta Oil and Gas Conservation Board for a permit to build a 31,500 barrel a day plant. Their application was deferred for two years.
This in no way dampened the spirits of Cities Service which announced in a press release in 1960 that they planned to go ahead with, ” the most comprehensive research project ever undertaken to release liquid hydrocarbons from the Athabasca oil sands of northern Alberta.”
During the work on site at Mildred Lake, the warm water oil extraction process proved to be economically less attractive than a new extraction method, the modified dense phase process. Experimental testing for the new method took place on a unit which was constructed on the site, in addition to the main pilot plant.
On May 9, 1962, Cities Service Athabasca Inc., on behalf of the four company group, made an application for a license to produce 100,000 barrels per day of synthetic crude and 500 tons per day of sulphur. The application was heard by the Alberta Oil and Gas Conservation Board in January, 1963.
In March, 1963, reporters from all across Canada and the United States were invited to visit the pilot plant at Mildred Lake. One “Edmonton Journal” reporter was impressed by what he saw.
“An excavator, with a nine-foot diameter bucketwheel, is used to gnaw oil sand loose from the hillside…The oil is separated from the sand in a weird-looking assembly of pipes, tanks and towers called an extraction unit. From 1,000 to 2,000 pounds of oil sands material per hour is dumped into the unit, flushed with hot water and agitated. A black froth – containing oil, water and some solids – is recovered. It is taken to other equipment for additional processing.”
The conservation board, however, was not as impressed as the reporters. It announced deferment of the application in October, 1963, but the applicants were invited to re-submit their application or amended application before the end of 1968. Later, the board granted a permit to GCOS instead.
The board said it was impressed with the experimental work that had been done by Cities Service, but didn’t feel there was a sufficient market for that much oil sands. Both Cities and Shell Canada, which had also made an application for a large plant, were asked to reapply. At that time, they were told their applications would receive “preferential consideration.”
Government policy stated that production of bituminous sands was not to be more than five percent of the total commercial oil production in Alberta. This was a major stumbling block until February, 1968, when a more liberal policy was introduced.
The deferral of the application caused a change in the character of the project being operated at Mildred Lake. It was decided to close down the plant at Mildred Lake.
The announcement that the pilot plant would be shutting down came the same day that US President John F. Kennedy was assassinated, November 22, 1963. Many employees were laid off and most of the equipment at the pilot plant was packed up and stored in the hangar where the company plane had been kept.
It was about this time that Imperial Oil sent in their manager of the Athabasca Tar Sands Department, a man named Frank Spragins, to run the show. Spragins and Research Manager Dr. Clem Bowman, who was also from Imperial, began a new direction for Cities Service.
An oil Canadian Liquid Air warehouse was purchased in Edmonton and after six months of renovations, the warehouse was turned into a laboratory. Operations were moved to Edmonton where a basic research laboratory as well as a pilot plant capable of processing tar sands at the rate of 1,500 pounds per hour were built and placed in operation.
From the head office, Spragins lobbied vigorously for his company, urging the government not to cause unnecessary delay in the development of the oil sands. He warned that if they waited too long, the oil sands would be replaced by alternate sources, such as oil from shale in the US.
On December 18, 1964, Syncrude Canada Ltd. was incorporated and as of January 1, 1965 took control of the $16 million Mildred Lake project for the four companies in the group. The company itself served as an operator for its four shareholders on a no-profit, no loss basis, in controlling and managing the project.
Since 1963, there were several developments which made the Syncrude project seem more attractive. First, oil sand reserves were found closer to the surface, reducing overburden estimates and making the sands more readily processed. Second, it was established that mining could be done with conventional scrapers, resulting in lower mining costs than estimated in 1962. Third, a market study set more realistic value on the synthetic crude oil and the potential for the sale of other specialty oils. Fourth, studies had increased confidence in the feasibility of the entire process.
In September of 1965, the Syncrude management committee had begun discussions with the provincial government to try and convince them to revise their oil sands policy. The four participants had reached the point where they had to decide if they wanted to continue with a project that had cost approximately $24 million so far and still was not in operation.
Syncrude submitted several briefs to Alberta’s Premier Manning which, together with briefs from other companies and associations, led to a new policy tabled in the Legislative Assembly on February 20, 1968.
On May 3, 1968, Syncrude submitted an amended application to the Conservation board requesting permission to build a $200 million plant which would produce 80,000 barrels per day by 1973. The application was deferred again when huge oil reserves were discovered in Alaska. The discovery created what appeared to be a surplus of conventional oil, leaving no market for the oil sands
A number of companies attended the Syncrude hearing and expressed opposition to the project. The board asked Syncrude to reapply in a year’s time to, “clarify statements made at the hearing in respect of the recent Alaskan oil finds and their effects on the US market.” Another hearing was scheduled for November, 1969.
As if that bad news wasn’t enough, an explosion and fire rocked the research facility in the spring of 1968. In an area separate from the laboratory, called “the garage,” tests were being conducted by running wet bitumen froth through a heated salt bath. the salt bath was contained in a metal shed off the garage. Something apparently happened to the temperature control on the salt bath and the whole metal building blew up.
Miraculously, no one was injured in the explosion, but there was extensive damage to an adjoining building, and a spectacular light show.
The participants in the Syncrude project concluded that it was unlikely that sufficient additional information about the probable extent of the Alaska reserves would be available by November, 1969 to satisfy the board. Company officials met with the government to try and change its mind about the application.
“The applicants have been seeking a permit to develop Alberta oil sands since 1962 and need a prompt decision. We are finding it exceedingly difficult, both individually and jointly to continue financial support for oil sand development without the definite foreseeable goals and we must emphasize that any additional substantial delay may well have the effect as a denial of application,” wrote Spragins in an impassioned submission to the government.
The company put pressure on the government to hear its case sooner. the government promised a new hearing within eight weeks if Syncrude would submit a new application. On March 24, 1969, Syncrude submitted an amended application proposing a three-year delay in startup depending on US supply and demand figures. The hearing was held on May 26, 1969.
On September 12, 1969, the Conservation board authorized Syncrude Canada Ltd. to build a plant with 80,000 barrels per day capacity, to go onstream not before July 1, 1976. Canadian Utilities Ltd. had also indicated its interest in building a major utilities plant in connection with the Syncrude project. This investment, when combined with the outlays required for the mining, extraction and upgrading complex, and the pipeline facilities would bring the total capital expenditures to approximately $300 million.
Everyone on staff at the time, which was about 100 to 150 people, received a certificate proclaiming they were a “genuine Syncrude original.”
“The Albertan” newspaper called it ” the hardest fought dogfight of the oil industry in modern times.”
The Syncrude site was cleared in 1973 and construction began in 1974. There was still a lot of work to be done. In 1973, the first dragline, “Little Beaver,” was brought to site to see if it was feasible for mining the oil sand. On the way to site, the dragline fell off its trailer as the transport truck made its way up the old Supertest hill.
Despite this unfortunate incident, Little Beaver was used successfully in a test pit, 100 feet deep, on the north east side of the mine. Oil sand from the pit was dug up and brought to Edmonton in truckloads for testing in the research laboratory.
Problems arose again in December, 1974 when Atlantic Richfield, one of the four original owners of the Syncrude project, withdrew its financial support. The governments of Canada, Alberta and Ontario stepped in to help out and avert another crisis.
The three governments signed the Winnipeg Agreement on February 3, 1975, giving Canadians 15 percent ownership of the Syncrude project, Albertans 10 percent and Ontarians 5 percent.
In 1976, $1.5 million in additions and renovations were completed on the Edmonton Research facility. Employees were finally all under one roof as they moved from offices downtown, from temporary trailers and from the Research Evaluation Lab on Argyll Road to new quarters on 17th Street. Employees were glad to see the addition of a paved parking lot for 130 cars, after wading through the muddy unpaved lot for so many years.
At Mildred Lake, construction began with the foundations of the fluid cokers, as a work force of 7,000 swarmed to the site in the peak construction periods of 1976 and 1977. Canadian Bechtel was the managing contractor for the project.
The project used 325,000 cubic yards of concrete, 27,920 tons of structural steel, 2.8 million linear feet of piping and 9.6 million linear feet of wire and cable.
Syncrude entered the computer era in 1975 when first generation computing came along and the company bought its first computer. By the end of 1976, construction was 50 percent complete with assembly underway on the first two of the four huge 6,500-ton draglines which will be used to mine the oil sand.
In the summer of 1976, construction was completed on the interim operations building, located in lower camp. In July, more than 80 operations people cleared their offices out of Petroleum Plaza and the Financial Building in Edmonton, and formed the first wave of operations people permanently located in Fort McMurray. Operations was divided into six divisions: Mining, Upgrading, Conservation, Central Mechanical Services, Financial and Administrative Services and Employee Relations.
The same year, Syncrude signed the Indian Employment Opportunities Agreement along with the Alberta Indian Association and the federal government. The agreement committed Syncrude to hire qualified Treaty Indians to operate its oil sand plant and also provided federal funds for academic upgrading for applicants who do not have the necessary educational requirements.
Two new bridges had to be built, one over the Athabasca River and one over Poplar Creek. Each had to have a load capacity of 450 tonnes to handle the immense weight of the equipment being brought to the site. The course of Beaver Creek, which ran through the centre of the 7,000-acre mine site, was rerouted and a cost of about $27 million.
It was decided that the start-up date had to be delayed another year to January, 1978.
The official plant opening was celebrated in 1978. It was completed at a cost of approximately $3 billion, making it one of the largest single construction projects in Canadian history.