Pembina: The Hidden Elephant

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"No one had ever paid that much at an Alberta sale before, and we were confident that we would get the parcel," Nielsen later recalled. But when the sealed tenders were opened that day in the offices of the provincial Department of Mines and Minerals, the high bidder for the parcel was Texaco Exploration with a cheque for $13 million. The second reservation was purchased by Imperial Oil for $11 million. Imperial subsequently drilled a series of dry holes on its block, and eventually abandoned the entire acreage without finding a drop of oil. Imperial's block lay just off the edge of the big field.

During the next four years, Pembina accounted for nearly half of all the oil wells drilled in Western Canada. Drayton Valley, in the centre of the field, blossomed from a tiny, isolated village with a population of less than 100 to a model community with a population of more than 2,000.

Close to one billion dollars was spent to develop the Pembina oil field, and more than 5,000 oil wells were drilled. Fifteen years after the discov­ery well, the field had produced nearly half a billion barrels of oil. Geologists estimated that close to eight billion barrels of oil had been trapped in the sandstone reservoir, of which about 1.7 billion barrels might be economically recovered with the aid of hydrofracing and secondary recovery techniques. The Alberta government reaped close to a quarter of a billion dollars from competitive sales of oil and gas rights and lease rental fees. With an added royalty on each barrel of oil produced, total revenue for the Alberta government from the Pembina field might exceed $1 billion by the time the last barrel of oil is produced.

Nielsen wasn't too involved in the subsequent development of the field. A year after the discovery well was completed he was transferred to Regina as district geologist for southern Saskatchewan, and later became explo­ration manager of the company's U.S. Gulf Coast division. In 1967, at 41, he was the first Canadian to become president of Mobil Oil Canada Ltd. As head of one of the principal subsidiaries of the giant U.S. parent, Nielsen took over the reins of a firm with 800 employees, more than $60 million a year in oil and gas sales, and an aggressive exploration program which spanned Canada from the U.S. border to the Arctic Islands, from British Columbia to the continental shelf offshore from Nova Scotia.

But there were still some surprising turns in Nielsen's career. In 1977 he left Mobil to head Canadian Superior Oil, subsidiary of the Superior Oil Company of Nevada, founded in the 1920s by wildcatter William Myron Keck, who found large oil reserves in California. Canadian Superior was one of Canada's largest independent oil and gas producers, its assets including more than a million acres of mineral rights in Alberta, which came with its 1965 acquisition of the Calgary & Edmonton Corporation.

Mobil did not look kindly upon Nielsen's departure and launched a law­suit, claiming he had taken with him, locked in his mind, corporate secrets. The final twist came in 1984, when heirs to the Keck fortune were locked in a well-publicized dispute about whether or not the family jewel should be sold. Howard Keck, son of the founder of Superior Oil and for­mer chairman, was staunchly opposed; his sister, Willametta Keck Day, took out full-page newspaper ads urging shareholders to permit a sale. Sister won. The Superior Oil Company, the largest independent oil and gas producer, was purchased by Mobil for US$5.7 billion.

With its ownership of two Canadian subsidiaries, Mobil made Nielsen president of both Canadian Superior and Mobil Oil Canada, a position he held until his retirement in 1994. In 2000, his numerous business and technical awards were culminated by the one he prized most, an honorary doctorate from his alma mater, the University of Alberta. It had been a long road for a boy who had never expected to leave the family farm.

NOTES:

1. Socony Vacuum was formerly Standard Oil Company of New York, one of the companies in the original Rockefeller oil  trust. It was later named Mobil Oil. In 1999, Mobil merged with Exxon, formerly Standard Oil of New Jersey, the biggest of the Rockefeller oil companies. The merged firm is called ExxonMobil.
2. A.R. Nielsen, “Cardium Stratigraphy of the Pembina Field,” Journal of the Alberta Society of Petroleum Geologists, vol. 5, no.4 (Apr. 1957).
3. Copies of communication from Nielsen to Mobil’s Calgary office about developments at the Pembina discovery well were supplied to the author.
4. Nielsen, author interview, Mar. 3, 1967.
5. J.A. Warke, “the Marvel of Pembina,” Petroleum Engineer, Feb. 1955.
6. Nielsen, author interview, Mar. 3, 1967.

From The Great Canadian Oil Patch, pgs. 143 to 152, reprinted with kind permission of JuneWarren Publishing and Mr. Earle Gray