Freeing the Slave

In the Great Slave Lake area 540 miles north of Edmonton, where Canada's timberlands fade into bleak muskeg swamps stretching northward toward the pole, the signs of oil are as persistent as the mosquitoes. The first Canadian explorers found lakes covered with oil seeping from holes in the ground. Indians and traders skimmed it off for their cook fires, scooped up fistfuls of the rich black muck to waterproof their boots. But to commercial oilmen, the potential of the Great Slave oil has long been only a tantalizing dream. No one had much encouragement until this year. Then Phillips Petroleum and Home Oil Co., which were exploring in the Peace River area far to the south where oil had already been found (see map), brought in three wildcat wells near Lesser Slave Lake in a previously untapped rock formation that was the same as that at Great Slave Lake. The discovery touched off Canada's biggest oil play since the great Leduc and Pembina oilfields were tapped in 1947 and 1953.

Last week northwest Canada's barren muskeg was crawling with oilmen. To get in on the continent's hottest oil play, well over 200 companies will spend $160 million for exploration this year alone, and they are just getting started. Says Home Oil Geologist Alexander Clark: "This region is where Texas was 30 years ago. In the next 25 or 30 years, it is not unreasonable to expect there will be found hundreds of fields, some small, but others as big as anything yet found."

Geological Whodunit. Behind all the excitement, which has sent Canadian oil stocks gushing up as much as 70% in recent months, is a geological thriller to rival any detective story. Back in 1921 Imperial Oil Ltd., Jersey Standard's Canadian subsidiary, tried to tap Great Slave's potential with a test well at Windy Point on the western tip of the huge lake far up in Canada's frozen Northwest Territories. The area was littered with natural oil seeps oozing from a rock strata identified as Devonian limestone. But as so often happens when oil-bearing strata touch the surface, the well proved a dud. Disappointed oilmen all but gave up on the formation's outcropping at Great Slave until last fall, when Phillips and Home Oil geologists decided that Imperial had tried to tap Windy Point's Devonian limestone in the wrong place. In a historic gamble, the two companies decided to drill near Lesser Slave Lake, 450 miles to the south, hoping to find a heavy cap of nonporous rock that had trapped the oil in pools.

On April 22, as company officials gathered round Phillips' Kaybob well, the drill stem broke through to a formation of oil-bearing limestone nearly 10,000 ft. down. The first tests showed a natural flow of more than 2,600 bbl. a day. Nearby, Home Oil's Swan Hills and Virginia Hills wells augered down into the same limestone formation, also found heavy concentrations of oil.

Oilmen from coast to coast awoke to what Phillips and Home Oil had suspected: the entire area from Great Slave south to Lesser Slave Lake and west to the Rockies, some 100,000 sq. mi. in all, was probably underlain with a thick common bed of rich oil-bearing formations, forming a vast new oil domain, where a wildcatter could spend a lifetime drilling and not exhaust the chances of a new find. Said Phillips' divisional manager, D. L. Potter: "This opens up a virgin wilderness of vast potential."

Early Bird. The man who did the most to open up northwest Canada's wilderness--and convince oilmen of its treasures--is Frank M. McMahon, 54, chairman of Pacific Petroleums Ltd. and president of Westcoast Transmission, whose new 650-mile pipeline will start carrying gas this fall from the Peace River area to Vancouver and the U.S. border. The Canadian-born son of a wandering hard-rock miner, Oilman McMahon quit college to become a prospector himself, bounced from drilling rig to drilling rig until the 1940s, when he moved into the Peace River area above Edmonton in search of gas and oil. When the provincial government lifted leasehold restrictions on Peace River lands in 1947, McMahon snapped up an original 300,000 acres and started prospecting. The first two holes were dry. Then in 1952 at Fort St. John, 345 miles from Edmonton, his Pacific Petroleums drillers brought in a promising gas well at shallow depth, followed it with dozens more, the biggest producing 137 million cu. ft. of gas daily.

When more drilling proved evidence of either gas or oil in nine different zones in the area, the migration that Phillips and Home Oil later turned into a rush was on.

Fortnight ago, with 5,043,960 acres of land under lease, Pacific Petroleums' McMahon announced two more wells in the Peace River Boundary Lake region, one producing gas, the other oil. Eight other Peace River wells have already come in this year, boosting the company's holdings to an estimated $70 million. And at Fort St. John, McMahon is busy building a $2,500,000 housing development for the expanding crews of both his Pacific Petroleums and Westcoast Transmission Co. All told, his personal fortune is currently estimated at $200 million, and the assets he controls in partnership with other promoters total something close to $500 million.

Battle of the Giants. McMahon's stakes are likely to look like small potatoes compared to the fortunes the giants of the industry are preparing to bet on the entire vast area from Great Slave southward to Edmonton. Virtually all major companies, plus a host of independents, are deep in the search, have formed dozens of combines to help one another. Because Canada's provincial governments hold up to 90% of all mineral rights and in the West usually lease them in 100,000-acre blocks (price to Imperial recently: $1,700,000), even the biggest outfit often finds it wise to have allies rather than shoulder the expensive risk alone. Texaco, for example, is the chief operator of the four-company Northern Foothills Agreement Group, which holds drilling rights to 3,500,000 acres in Peace River's Boundary Lake area. Some other big-time gamblers pushing out from Peace River:

P:Union Oil Co. has drilled eight wells near Red Earth, four of them successful, plans to drill six more this summer, and has built a 125-mile road (average cost per mile: $13,000) to move up equipment from the town of Peace River in all weather.

P:A combine of Colorado Oil & Gas, Canada Oil Lands, Okalta Oils and several others recently hit two oil wells on a leasehold at Normandville, reports production of 200 bbls. daily.

P:Mobile Oil of Canada, a Socony subsidiary with some 7,000,000 acres under lease, brought in its first discovery well 55 miles southeast of Peace River in 1955, has hit two more wells this year, is now pushing exploration crews northward.

P:Canada's Bailey Selburn Oil & Gas Ltd., with nearly 3,000,000 acres under lease, much of it in the Peace River area, has found substantial quantities of oil at Cutbank, 40 miles south of Grande Prairie, but must wait until a pipeline is laid before it can get the oil out.

P:Shell Oil Co. already has several well tests under way north of Lesser Slave Lake, and flatly predicts that it will be doing "a lot of drilling and a lot of finding in the next 20 years in the Northwest Territories."

P:Sinclair Oil last week brought in a wildcat gas well in the wilderness 23 miles south of Fort Nelson, on land farmed out by Pacific Petroleums. The well caught fire, killing one roughneck and critically burning two others, was still raging out of control at week's end.

Only the Beginning. For the companies expanding their oil frontiers from Peace River northward over the muskeg, the work is incredibly rugged. Except for four months each year, when winter ice makes the bog passable for the oilmen's 40-ton rigs, the muskeg is an impenetrable morass of quicksand-like muck and swarming mosquitoes. In winter, temperatures drop to 40 below zero, and dropped wrenches shatter like glass. At temporary camps, roughnecks swaddled in four-inch-thick layers of clothing labor eight to twelve hours day in and day out, with no amusements save an old movie or two shown in the cook shack at night.

But last week, with nearly 100 new oil and gas wells in the first six months of 1957, the face of the land was changing as all-weather roads pushed over the frontier to carry men and material for a year-round assault on North America's last great oil frontier. Fort St. John, where Pacific Petroleums' Frank McMahon brought in his first gas well in the area, expects to have a population of 2,500 by September. As McMahon says: "This appears to be only the beginning of the discoveries, for the Canadian sedimentary beds stretch for thousands of square miles over the provinces of Saskatchewan, Alberta, British Columbia and far into the north. These beds are so large that their full potential has barely been touched, and their ultimate reserves are unknown. Alberta's gas potential alone may exceed 100 trillion cu. ft., or nearly half the present known reserves of this continent."

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