Page 1 |
From this, AEC emerged with surefire assets. It was an all-Canadian, almost all-Albertan venture, a 50-50 public-private venture with half the $150 million start-up capital raised mostly from small Alberta investors. Its constitution decreed that no one, other than the Alberta government, could own more than one percent of the shares, and no foreign investors were allowed in. AI~C was endowed by Lougheed and his cabinet with assets that made it the only certain winning investor in the multi-billion-dollar Syncrude project. AEC got the right to build the pipeline to carry Syncrude's production from Fort McMurray to Edmonton, and two-thirds of the power plant, the two aspects that could hardly lose. Better yet, it had an option to back into as much as 20-percent ownership of Syncrude, after production established profitability. AEC wound up owning 13.75 percent of Syncrude, including 3.75 percent acquired from troubled Amoco Canada, burdened with debts from its Dome Petroleum acquisition.
AEC's other legacy was an oil and gas permit covering the entire 1,000-square-mile Suffield block a short distance northwest of Medicine Hat. Suffield had been a training ground for British, Canadian, and NATO military forces since the 1940s. Alberta owned the subsurface mineral rights but prohibited access to an area where tanks and troops roamed with the antelope had precluded oil and gas exploration until Lougheed managed to change that by cutting a deal with the federal and British governments. The Suffield block was then leased exclusively to AEC for $54 million. AEC drilled some 4,700 shallow gas wells and established one of North America's major gas storage and marketing hubs on the Suffield block.
AEC's third legacy property, acquired a few years later, embraced 1,400 square miles of oil and gas rights on the Primrose Lake Air Weapons Range in northeastern Alberta, where it drilled another 350 gas wells and in 2001 began in situ production from an estimated 1.5 billion barrels of recoverable oil sands bitumen, at rates scheduled to build up to 100,000 barrels per day by 2007. As in Suffield, the door to development of the Primrose property was opened when the Lougheed government obtained surface access to this military property from the federal government.
David Mitchell was in the process of leaving his post as president of Great Plains Development Company, a unit of Britain's Burmah Oil that was winding down its operations, when he agreed to take the top job at AEC in the fall of 1974. Mitchell's father had lost the family's Calgary home and bakery business in the Depression, and young Dave earned his way digging ditches before he earned his degree as a petroleum engineer. "I knew I was going to be in the oil business since I was 10," Mitchell told Oilweek editor Gordon Jaremko.2 When the Mitchell family visited relatives at nearby Turner Valley, "we used to collect the beer bottles," Mitchell recalled. "They were worth two cents each. I remember saying, 'Uncle Joe, who are these people so rich they can afford to throwaway beer bottles?' He said, 'oilmen.' I was so impressed."