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Derrick Digest for Feb. 17, 2017: Seventy years ago, ‘one more hole’ transformed Alberta into an energy powerhouse

 

The Derrick Digest is a weekly collection of curated content, based on events from across the oil and gas industry, that caught our eye at Pennine Petroleum Corporation.

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Feb. 17, 2017

Seventy years ago this week, a little determination went a very long way.

The seminal 1947 discovery transformed Alberta from an agricultural backwater into what would become a global energy powerhouse—and it’s all because Vern Hunter decided to drill “one more hole.”

On Monday, Alberta’s provincial government declared Feb. 13 to be Oil and Gas Celebration Day—in honor of the Leduc No. 1 Discovery in what’s now Devon, Alberta, in 1947.

Imperial Oil, after constant fruitless drilling that had already yielded 133 dry wells just south of Devon, was convinced by its chief geologist Hunter (who’d earned the nickname Dry Hole because of his track record) on a minus-30 February day to give it one more try, 80 kilometres from any other drilling site.

The freezing temperatures caused equipment to fail. But in the midafternoon, with about 500 spectators on hand, “gas and oil and mud all mixed together. It threw a mushroom cloud just like an atomic bomb, and then smoke rings,” Hunter later recalled. “There were two or three very big smoke rings floating across the sky.”

Black gold in Alberta. It transformed the prairie province overnight. From its first day of operation, Leduc No. 1 produced up to 1,000 barrels a day, and the well is estimated to have produced 317,000 barrels of oil and 323 million cubic feet of natural gas before finally being decommissioned in 1974.

Leduc No. 1 “changed the area, changed the province, changed the country,” remarked Tim Hawkins, president of the Leduc/Devon Historical Society, during this week’s ceremony.

 

Alberta’s oilpatch on the upswing

The oilpatch red-eye is back in business.

According to Bloomberg News, the overnight flight from Edmonton International Airport to Canada’s East Coast—ferrying Alberta oil sands workers back home for a quick respite, before returning to the patch—has begun ramping up again.

Gary Miller, a pipefitter who works for Suncor Energy Inc., tells Bloomberg that he’s seen a handful of major Alberta oil sands projects “on again.”

As for hard evidence:

  • Canada exported C$22.7 billion in energy products in the latest quarter, the most since 2014;

  • Oil and gas output in November grew by 6.1% from December 2015, four times the pace of growth for Canada’s overall economy;

  • Active drill rig totals topped 300 in the past month, almost 50% more than a year earlier and moving back toward 2014 levels; and

  • Heavy crude exports climbed to 396,000 barrels a day, a new record, amid rising production in November, according to the National Energy Board.

 

U.S., Canada vow to strengthen energy ties

In the face of protectionist talk, in the face of across-the-board import Trump-style tariffs, a meeting between Donald Trump and Justin Trudeau in Washington this week went surprisingly well.

Trump and Trudeau committed to improved energy trade, while pointing to TransCanada’s Keystone XL pipeline as an essential infrastructure project.

“We have built the world’s largest energy trading relationship,” reads a joint statement released by Trump and Trudeau following Monday’s meeting. “We share the goals of energy security, a robust and secure energy grid, and a strong and resilient energy infrastructure that contributes to energy efficiency in both countries.

“As the process continues for the Keystone XL pipeline, we remain committed to moving forward on energy-infrastructure projects that will create jobs while respecting the environment,” adds the statement.