Will they solve the riddle of the Athabaska tar sands?
The world’s largest oil supply is locked within these strange deposits. Nobody has successfully tapped it. Now another company is taking the gamble — to the tune of $ millions. Can it succeed where so many failed?
MAN’S VARIED ATTEMPTS TO SOLVE THE SECRET OF THE SANDS ^
Three hundred miles north of Edmonton the Athabaska River has gouged steep banks one hundred to three hundred feet high. Every traveler who comes down this highroad to the north—from Sir Alexander Mackenzie to the pathfinders of big business —has gazed in wild surmise upon the black veins of these cliffs, black sands that outcrop along the banks for a hundred miles, flaunting their fabulous wealth before all who pass.
There they are, in plain sight, the Athabaska Tar Sands, a gargantuan reservoir of oil, biggest in the world, 100 to 300 billion barrels. Here, potentially, is the world's most valuable single resource. All other known oil fields put together do not contain as much oil as these beds of oil-soaked sand. They underlay the muskeg over an area of at least three thousand and perhaps as much as thirty thousand square miles.
They have been a legend for years among oilmen. They've been known ever since fur trader Peter Pond first paddled downriver in 1778 and noted the Indians calking canoes with seeping pitch from the riverbank. “The empire's ace-in-the-hole," they were called, too optimistically, in World War II and, in another context, “the pot of gold at the end of the rainbow.” One thing about them has never been in dispute: a fortune awaits the man who can solve the riddle of these sands — how to separate the oil from its tarry compound of sand and clay and get it out of the wilderness cheaply enough to sell at a profit.
For sixty years this loeked-in wealth has taunted treasure seekers. Financiers and scientists from half a dozen countries have seen their greatest expectations founder onthese sands. They have tried to float the oil out. steam it out, wash it out, burn it out. The sands are a graveyard of dreams and hopes, yet still men respond to their challenge.
A fast-growing Calgary company, Royalite Oil. is the latest challenger. Its president. Ray Althousc, declares that his company will spend “at least fifty million dollars” to erect a separation plant, a sulphur plant and an oil refinery on the banks of the Athabaska. His engineers are blueprinting docks, an airstrip, a 350-mile pipeline to Edmonton anti a new town. All this promises a boom in the Athabaska area and opens another
chapter in the memorable saga of the sands.
In McMurray. a little river town that squats at the end of steel, the announcement will have a familiar ring. McMurray. since it was a trading post, has lived on the verge of a tar-sands development. Upriver at Pelican Rapids a gas well flares in the night, reminding oldtimers that federal geologist R. Ci. McConnell drilled there in 1897 expecting to find light oil. And that was the vear that a Cree-speaking. flute-playing German nobleman named Alfred von Hammerstein saw the sands on his way to the Klondike gold rush and returned to drill six dry holes that he tried to pass off as successful wells.
McMurray remembers J. O. Absher. an ingenious Montana oilman who tried to set fire to the sands and condense the vapors that resulted. "UNLIMITED DEVELOPMENT POSSIBLE IN NEXT TEN YEARS." the careful and well-informed Financial Post said then. But that was in 1926. Townspeople remember Max Ball, a geologist from Denver, later to be assistant U. S. oil controller in World War 11. and reputed to know more about Canadian oil than any Canadian. Ball built a plant called Abasand a mile from McMurray, but during the war the federal government took it over. Ball, embittered, went back to the U. S. The government spent more than a million dollars rebuilding the plant, but as a welder was making the last connection at the war's end a spark from his torch set the oil-soaked floor aflame and the plant burned down.
And sixty miles downriver from McMurray there is Bitumount. where two companies failed before the Alberta government stepped in with a $700.000 plant. They used a process perfected over a period of twentynine years by an Alberta Research Council chemist, Karl Clark. Clark hoped that the plant would prove once and for all to private industry that the oil could be extracted economically. His method was to flood the sand with hot water. The oil attaches itself to bubbles of air and rides to the surface.
After running the plant for the summer of 1949 Clark invited a former assistant to visit Bitumount. This was Sidney Blair, a research engineer, now president of Canadian Bechtel, a leading pipeline builder. Blair came north with Ed Nelson, vice-president of Universal Oil Products, a Chicago research firm.
"What do you think we should do?" Clark asked. “Should we go on running the plant?"
"No." they both said. "You won't learn any more in the next ten years. You can separate the oil—you're doing it. You can mine the sand—it's just a variation of openpit mining. Refining? We know all about that. The same with pipelines. What you need now is a survey to find out how much it costs to mine a ton of sand, separate the oil and ship it. Then we'll know if this oilsands project is fifty years away or not."
The resulting Blair Report roused a flurry of interest. It said, in effect, that oil from the sands is a present-day possibility. The total cost of extracting this oil and delivering it to the Lakehcad would be $3.10 a barrel. It would sell for $3.50 a barrel, bringing a profit of forty cents. The Alberta government held a conference and 125 experts—geologists, engineers and chemists from every important oil company on the continent and from Sweden, Germany and Brazil — came north to talk about what could be done with the tar sands.
Getting oil from sand beguiled world experts, then the Pembina strike killed their interest
The following spring—1952—a group of seven companies, headed by Calvan Consolidated, went to work exploring near Bitumount. In quick succession Mobil, Shell, Sun, Socony and others began to prove up eleven regions. Then Pembina blew in and this rich easy central Alberta oil field blunted interest in the north. “They all dropped out except two,” recalls Hubert Somerville, Alberta’s deputy minister of mines.
One of the two that stayed was the Calvan group, a joint-exploration venture with a millionaire oilman and publisher, Max Bell, as its leading spirit and somewhere in the background the brothers McMahon (Pacific Petroleums and Westcoast Transmission). Calvan’s secretarytreasurer, J. Lambert, says, “We’ve spent about $400,000 to find out what we’ve got . . . Having found substantial deposits, then it’s just a question of getting a method of mining and a market—the mechanics will work themselves out. We’ve solved tougher problems than this in other parts of the world.”
The other company to stick it out was Can-Amera Oil Sands Development. This is the firm behind Royalite’s announcement. Its story began in 1951 with a chunky, grey-haired Calgary contractor, G. R. “Bud” Coulson.
Coulson over the years had sunk much of his hard-earned profits in wildcat oil drilling. “This usually resulted,” he says drily, “in owning a piece of a dry hole.” He began to brood on the risk involved in drilling for oil—three or four dusters for every producing well—when Blair’s report put the tar sands back in the news. Coulson decided they might be a better gamble than wildcat drilling.
He drove up to the Edmonton conference and took home a box of tar sand. In his basement he tested the methods tried in the past, mostly types of hotor cold-water washing. “They got out the coarse sand easily,” he says. “That’s just what fooled everybody into thinking that washing was economical. But they left a lot of fine clay and water in the oil. Modern refineries don’t want oil that has more than one-percent foreign mate-
rial—it just gums up everything.”
A centrifuge, he felt, would solve the problem. “If you drop a stone coated with oil in a pool of water,” he says, “under one g. of gravity, which is normal, it will settle slowly with the oil still on it. If you force it through the water the oil is stripped away. What you’re doing is multiplying gravity, which is just the same as multiplying the weight of the stone. Basically, that’s what a centrifuge does. The particles that won’t settle because they’re so light and fine will settle in a centrifuge because they now weigh so much more and they'll settle at a higher rate.”
Sitting one day in his basement wondering where he could find a centrifuge big enough to test his theory, Coulson spotted his wife’s spin-drier. He ladled the tar sand, diluted with light oil, into two quart sealers and placed them in the machine’s bowl so that one balanced the other. He flicked the switch, let it run a few minutes, then lifted out the sealers. On the top was a clean-cut layer of oil, in the middle a layer of water, on the bottom a layer of fairly clean sand.
For a year Coulson worked with the spin-drier, trying for just the right combination of sand, oil, water and speed. Sometimes the sealers would burst, usually on washday, and Coulson would laboriously clean out the grimy oil-spattered bowl. Eventually he had to buy his wife a new spin-drier. But by then he was ready to patent his process and test it commercially.
He knew this would take money. Coulson’s lawyer, Ted Tavender, told him to talk to Stan Paulson, a Calgary promoter. Paulson was then, in 1952, a prematurely grey thirty-nine, an easy-mannered newcomer to the oil business. Three years before he’d resigned his air-force commission to go leasing land for an oil company. Within a year he had more than a hundred men working for him and was paying more income tax than he’d earned in ten years in uniform.
Fascinated by what he calls Coulson’s “conjuring trick” with the .’spin-drier, Paulson put up $25,000 for patents and for a search across the continent to find a commercial machine. But no standard machine would deal with material more than five-percent solids. The tar sands were eighty-percent solids. Finally, at Poughkeepsie, N.Y., in the lab of the De Laval Separator Company, Paulson and Coulson built a small centrifuge of their own design. The tests were encouraging but far from conclusive. They needed a larger machine and a great deal more money.
One day Paulson dropped around to Coulson’s house with a friend from Delaware, the bearer of one of America’s great names, Eugene Dupont HI. Dupont watched Coulson put his tarry mixture into the drier and bring it out in three clean layers. Impressed, he stayed most of the afternoon talking. “When you have your patents in order,” he said, “come and see me.” ,
Out of this came Can-Amera, with such eminent directors as William Casey, the New York tax expert, F. T. Barton, a Pittsburgh steel executive, Edward Skae, head of the Equipment Manufacturing Company of Detroit, and William Clay Ford, youngest of the three Ford brothers.
“I went to these people, their friends and associates,” Paulson says, “and I told them, ‘Look, we’ve got a wild crazy idea here. It’s so fantastic you won’t believe it. But if we can have half a million dollars we think we can show that it’s practical.’ And, strangely enough, we found fifty people who would go along with us, knowing that they could I, se their money, and that even if we succeeded it might be a long time before :hey got it back.”
The half million bought them a fiftybarrel-a-day centrifuge in 1953 and, the following year, a 500-barrel machine. It leased them the Alberta government’s plant at Bitumount. Here was a readymade base—a machine shop, a power plant, a small refinery, and machinery for mining, conveying and mixing the sand.
But their centrifuge would not stand the strain of continuous operation. The sand was hard as glass. It cut through steel like a hacksaw through wood. At the speed the centrifuge had to revolve to separate the light clays, machine parts wore out so fast that De Laval engineers were doubtful if any machine could be made to handle such huge quantities of sand. Nevertheless it had proved, Coulson says, “that we could feed sand into it and get out a clean, good oil.”
“So now we asked ourselves, what do we do now?” Paulson says. “It was obvious that success would depend on a large operation. Marketing became tremendou§]y important. We had to find a company that had the handling, refining átVdí nianMing experience and facilities.” ll^^P^A'ÿëra’s directors looked over the
field and decided to approach Royalite. It had been a small Imperial Oil subsidiary for twenty-eight years and control of it had been sold in 1949 to the Bronfman brothers, “Mr. Sam” and “Mr. Allan.” heads of the House of Seagram distilling empire. The Bronfmans put up a six-storv Calgary landmark, known to local wits as the Rye-alite Building, and brought up Ray Althouse from Cities Service Oil in Oklahoma to guide their company into the big time. By 1955 they had 350-odd wells, four refineries, control of the Mid-Saskatchewan and Saskatoon pipelines, a chain of filling stations in Alberta and Saskatchewan, 750 employees and assets of sixty million dollars. To Can-Amera. the company looked big enough now to handle the oil sands but not so big that it wouldn’t give the deal top priority.
“We told Royalite to look it over.” Paulson says. “We said, in effect, ‘We've spent better than half a million on research, patenting, and so on. Here's what we have. If you think it’s worth carrying on we’ll get together and make a deal!’ ”
Royalite decided to come in.
In Kamloops, É. B. Lay received a phone call from Ray Althouse. Lay and his partner, Lincoln Clark, own Caribou Engineering. They specialize in building and dismantling oil refineries. Althouse asked them to check Can-Amera’s work.
“Frankly, I was lukewarm,” says Lay, a tall, drawling engineer - promoter, known from Toronto to his home state of Texas as “E.B.” “There's been a lot of skepticism about this project, and justly so.” Nevertheless he managed to lure Clark, at forty-nine a widely respected process engineer, out of semi-retirement in Los Angeles.
Amid the rusting pumps and tanks of the plant at Bitumount the two refinery men watched water, light oil and oil sand feed into what looked like a giant mixmaster. The bowl hung on a suspended shaft. It was only four feet wide but it weighed a ton and a half. “You get that rotating at fourteen hundred revs a minute,” says Clark, “and you’re impressed with the power. Everybody was scared stiff of it. We called it ‘the big black monster.’ ”
They ran out of the plant in fright eight times that summer. “It was a real Rube Goldberg contraption,” Lay says. “If it was the least bit out of balance everything would fly apart. One time we thought it was going to leave the building.”
Working with the inventor, Clark redesigned the feeds, corrected the balance and installed automatic controls. The ed. Then he stepped tip the speed to pull out the fine clays. When they tested a revised machine last sum mer at Bitumount there was no percep tible wear and tear, they say. "We didn't run out of the building once." says Clark.
Lay, in the meantime, was trying to find out more about mining in general while keeping the project a secret—what an oil company calls “a tight hole.” He watched open-pit phosphate mining in Illinois and Florida, copper mining in Utah, coal in Pennsylvania. He brought in a maker of bulldozers and draglines, Gene Evancoe, whom tractor people call “Mr. Dirt," and “Chick” San, an expert on hydraulics. “We could guesstimate all day,” Lay says, “but we had to have people whose word would carry weight.” All the work was checked by Eavenson. Auchmuty and Summers — U. S. consultants, who reported two months ago that “success or failure hinges on developing a practical low-cost method of mining."
In 1951 Sidney Blair had set mining costs at fifty-five cents for a barrel of oil. Since then new machines have come into use, giant draglines that weigh 2,500 tons, with arms 235 feet long. In just over a minute they dig, lift and dump forty-five tons of sand. By investing eight mVi'iioTi doi'tars in mining equipment. it has been estimated, at least sixteen cents a barrel could be shaved from
Tilair's "TStimate of getting the sand.
Royalite decided to go ahead. So far they haven’t announced what their expenses will be, but they do claim that their centrifuges will whirl sand and oil apart for “a fraction of the cost” of the hot-water process on which Blair reported. Since Blair’s survey, they say, ad-
vanees in refining make it possible to convert a heavy crude like the oil from the tar sands into a waste-free synthetic crude that is worth one dollar a barrel more than natural crude as it Hows from drilled wells. They plan to build a minesite refinery and pump this synthetic, semi-refined crude through a 350-mile pipeline to Edmonton. “It's a manufacturing operation," Link Clark, the process engineer, sums up. “We’ll get our oil as a result of a tremendous investment. Our job was to get the gamble out of that investment and we feel we've done that.”
Royalite says that selling the oil, which could be a headache, will offer no problems. Every week the company is raising its “big R” over a new filling station. Four months ago it bought out Top Alta Gas and Oil Co., whose thirty-four stations service the Peace River district. Next year it plans to push outlets up the Alaska Highway. “This next summer, I hope.” Ray Althouse says, “you’ll be able to travel from Winnipeg to Vancouver and as far north as Fairbanks, Alaska, using Royalite products.
The company holds 50,000 acres of tar sand fronting the river for four miles, low flats that stretch back to a steep twohundred-foot cliff, the former riverbank. The land beyond this bank is among the richest in all the tar sands. It contains, by federal estimate, a thousand million barrels, and the overburden is light. If Royalite’s estimate of production at twenty thousand barrels a day should stand up its land would still be good for more than a hundred years.
The company pictures two great draglines rumbling up and down the old rivetbank above the flats, tearing away the black sands, loading two fifty-ton diesel trucks every sixty-five seconds. It pictures a fleet of nineteen diesels trundling across the flats, a maximum haul of 2.3 miles, to dump their loads in the hopper that feeds the separation plant.
In this plant Clark visualizes banks of powerful centrifuges, some fifty in all. “as far as possible automatic—we might have three operators.” The clean waste sand will be pumped out on the low-lying
flats. The oil will be pumped to the plant that removes the sulphur, 140 tons a day according to a formula based on Blair's report, enough to supply ail of western Canada. Then the sulphur-free oil will flow to the nearby refinery, employing three hundred to three hundred and fifty people. Royalite plans to house them in a townsite tentatively planned for fourteen hundred people.
The big construction job will be handled by Caribou Engineering, whose field engineer. Tommy Bareham, a young British ex-commando, says, “By the summer of next year we’ll have around a thousand men working. We’ll get the foundations and shells up for every unit. We'll pour concrete twenty-four hours a day and as fast as equipment arrives we’ll install it. The pipeline will be laid in the summer of 1959. By 1960 we hope to be ready to operate.”
Royalite will spend a minimum of fifty million dollars. “We don’t know exactly how much yet.” Althouse says. “Someone might like to buy part of the pipeline. Somebody might like to develop the townsite—we’re not anxious to put up a company town.” When I talked with him he hadn’t yet sought outside capital. “But I will say this—we’re not anticipating any difficulty in raising it."
What do other oil companies think of a tar-sands operation? The president of Imperial Oil, Jack White, told Maclean's that he does not think that extracting oil from the tar sands by any method is economically feasible yet.
“It’s just a question of costs,” says Robert Heathcott of Sun Oil, which holds acreage beside Royalite. “Royalite claim they have a good method. Maybe they have. Let's face it. The way science is advancing somebody’s going to lick this thing soon and we're all afraid not to be in on the ground floor of such a tremendous deal.”
If the project is successful will it revolutionize the industry? "Let’s put it this way, says Paul L. Kartzke. vice-president of Shell, which is also exploring the sands and researching a process of its own. “Would you say Pembina (Canada's richest field so far) revolutionized the industry? They’ve taken about a hundred million barrels out of Pembina in the past three years. I’d be very surprised if anybody took a hundred million barrels out of the oil sands in three years. It's a matter of long-term growth, of adding to the reserves. But if they develop a workable process it certainly will produce a rush of companies into the field.”
But Bud Coulson, the inventor, insists “It will change the face of that area. A great many mines are not operating now because of the cost of barging in fuel. Here's hundreds of millions of barrels of it, unlimited cheap fuel.” He sees "tremendous possibilities” in by-products. “The waste sand is an excellent glass sand. The main materials of a glass industry arc heat and silica sand. The glass plant at Medicine Hat pays seventeen dollars a ton to bring in sand from Illinois. If somebody paid us seventeen cents a ton we'd be happy.”
He adds that the sands contain about
twenty rare minerals and that an economic way may eventually be found to recover them. But the first problem is to find out how to recover the greatest possible amount of oil.
Only a small percentage of the oil in the tar sands is concentrated enough, or close enough to the surface, to be “mined” by the draglines. Some other method will have to be developed to recover the rest. In California, where there are deposits of oil shale. Magnolia Oil. an offshoot of Socony. has been fieldtesting a method that might work with
tar sands. This is to drill a series of holes called a “five-spot.” similar in pattern to the “5" on a dice, set fire to the shale at the bottom, and pump air down the middle hole to keep the fire going. The fire distills the oil. leaves coke for the fire to burn on, and the free oil is forced up the corner holes.
Other methods have been studied by men interested in oil-bearing sands in Venezuela. Czechoslovakia and other countries and oil-bearing shale in many parts of the world, including Canada’s Atlantic provinces.
Whether any of these methods is satisfactory has yet to be established. Meanwhile. as all men do when they hope they are on the verge of something important. Bud Coulson is dreaming big* dreams—dreams of the Athabaska deposits pumping petroleum, the lifeblood of modern industry, through arteries of steel to every part of the continent. The tar sands, down through the years, have inspired dreams like this in other men— men who gambled but lost. Will Coulson's dream come true, or even partly true? The future alone can tell. ★