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After 100 years, Shell emerges as an oil and gas leader in Canada

By Shaun Polczer, Calgary Herald March 18, 2011

CALGARY – Before there was the Seven Sisters of the oil world, there was Shell.

Just four years after the merger of Royal Dutch and the Shell Transport and Trading Company, Shell Canada was incorporated in Montreal in 1911 with startup capital of $50,000 and six employees.

At the time there were only 34,000 cars registered in the entire country, consuming less than 22 million litres of gasoline per year. From those humble beginnings, Shell emerged as a dominant competitor in the country’s oilsands, natural gas and Arctic frontiers. Today it employs more than 8,200 people with oil and gas operations in just about every part of the country including the East and West Coasts.

“We think of it as a century of innovation,” says Dr. Clinton Tippett, the company’s head geologist and de facto historian. “It’s got to be seen as a success story … certainly I think the future is bright.”

Tippett, who is also the president of the Calgary-based Petroleum History Society, is a self-described “Shell-brat” whose father joined the company when Shell bought North Star Oil in 1961. Tippett himself has been with Shell Canada for 31 years.

Over the years he’s been witness to many firsts, including the first self-serve gas station, the first tunnel car wash and the first refinery in the world (at Scotford near Edmonton) to run 100 per cent synthetic crude from the oilsands.

The Scotford upgrader is the only facility in Canada to use hydrogen-addition technology to upgrade bitumen rather than coking, which creates mounds of petroleum coke as a byproduct of the process. Shell is also a major sulphur producer, in part because it helped perfect the technology for processing sour gas.

More recently, Tippett was the lead geologist on the Quest carbon dioxide sequestration project which is being touted as a model for the company’s worldwide efforts to reduce greenhouse gases.

“To me that’s a fantastic example of Shell people coming together to do something that’s good for Shell and good for the people of Alberta and Canada.”

Although Shell has had a continuous presence in Canada over the years, activity ebbed and flowed over two world wars and the changes in Canadian society that saw the oil industry take an ever increasing role in the economy.

It didn’t become an active explorer until 1939 when it opened a Calgary exploration office in the hunt for oil in Western Canada, jockeying with Imperial, Gulf and Sun Oil for the next big discovery after Turner Valley. It was a colourful period that became the stuff of oilpatch lore and ushered in the modern industry we know today.

According the late Aubrey Kerr’s account of the time, “Redwater,” Shell gave up the rights to the land that eventually yielded the Leduc and Redwater discoveries at the end of 1946. The rest, as they say, is history.

Likewise, Carl O. Nickle, the publisher of the Daily Oil Bulletin who would later go on to become a Calgary member of Parliament, called Shell’s decision a “heartbreaker.”

“Those are the breaks of the oil game,” he wrote in 1948. “Shell played an important role in the pioneer days of Alberta Foothills and Plains exploration preceding Leduc. Conditions brought on by the war forced the group to retrench, a tough decision made doubly tough by the subsequent limelighting of Alberta by important favourable developments.”

Tippett is quick to point out that other companies, including Imperial, were also ready to abandon the hunt before Vern “Dry Hole” Hunter’s wildcat blew in south of Edmonton on Feb. 13, 1947.

“We were sort of discouraged like everybody else, and we gave up the land,” he said. “Unfortunately, six weeks later Leduc was discovered.”

Although it was largely precluded from the Alberta oil rush that followed, Shell made important natural gas discoveries in the Foothills at Jumping Pound, Waterton and Caroline that established it as the country’s leading gas producer. In Saskatchewan, it discovered the Weyburn oilfield and the company remains an international monitor for the International Energy Agency’s CO2 monitoring project.

In 1963 the company held an initial public offering of shares, and Shell remained a publicly traded company until it was taken private by Royal Dutch in 2007 in an $8.7-billion deal.

In 1999 it made a seminal decision to develop the Athabasca Oil Sands Project, which eventually made it one of the country’s largest oil producers. The unconventional gas revolution and natural gas’ reputation as a clean burning fuel means the company will have an increasingly important role in the next 100 years.

Lorraine Mitchelmore, the company’s country chair for Canada, will use the occasion of the company’s centennial next week to announce a series of initiatives that will lay the groundwork for that future.

Mitchelmore told a Calgary Chamber of Commerce audience last fall that Canada “is well poised to become a clean energy superpower” in the 21st Century.

“No one can be certain how all this will come together and no one can know precisely what the next 100 years will bring,” she said. “But of one thing we can be certain. Those who have spent their lives working in or with the energy sector … know that our industry will, and must, play a major role in shaping the next one hundred years.”

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