The Largest Independent Producer

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But resource development was not-at least at first-the CPR's real interest in its subsidy of 25 million acres of railway lands between Manitoba and British Columbia, some of which was turned back to the gov­ernment to settle construction loans. The CPR wanted the West developed so there would be traffic for its railway, and to attract settlers offered farm lands at low prices and easy terms. Initially the subsurface mineral rights went with the lands, but when the government in late 1887 began reserv­ing ownership of subsurface rights on lands it gave to homesteaders, the railway followed suit. At first it reserved the rights to coal, then "coal and valuable stone," then "coal, petroleum and valuable stone," and finally, "all mines and minerals" under the lands it sold.1 By 1912, when Canadian Pacific formed its Calgary-based department of natural resources, it had ownership of 9.6 million acres of freehold oil and gas properties — 8.26 mil­lion acres in Alberta, more than one million in Saskatchewan, and some 266,000 acres in Manitoba. Outside of provincial and federal governments, it was the largest Canadian owner of prospective oil and gas properties. CPR's new department of natural resources was organized just in time to benefit from the prolonged development of the Turner Valley field. Slowly its petroleum lease and royalty revenues began to grow.

Leduc brought an acceleration of revenue, but still the CPR continued to operate its oil properties as a passive landlord, collecting rents and roy­aIties for another 11 years at rates that built up to $8 million in 1957 ($60 million in 2004 dollars). The following year, CPR president Noris (Buck) Crump steered the railway on an aggressive diversification program focused on transportation and resources development, setting up its own oil company, Canadian Pacific Oil and Gas.

Heading CPOG's management was English-born John Taylor who had come to Canada to visit relatives in 1937, decided to stay, and spent the war years as a night lieutenant with the RCAF, including four years as a prisoner-of-war in Italy and Germany. After earning a degree in petroleum engineering at the University of Oklahoma, Taylor joined CPR's natural resources department three years before CPOG was formed. Under Taylor's management, CPOG was soon one of the most active oil explorers in Canada, from the U.S. border to the Arctic Islands.

CPOG's parent, Canadian Pacific Investments, in 1964 began buying shares in one of the most successful post-Leduc wildcat firms, eventually resulting in a merger that would change CPOG's name and accelerate its fortunes.

The acquisition was Central-Del Rio Oils. Its founder was Neil McQueen. A few months after he had resigned his job as managing direc­tor of Pacific Petroleums, Imperial Oil had started drilling its Leduc well. With the first whiff of oil at Leduc, McQueen rushed to file on 16,000 acres of CPR leases south of Edmonton, at 10 cents an acre. lie then shared these leases with his friend D.C. (Skinny) McDonald. McQueen promoted a well on a 40-acre sublease just 400 feet from a dry hole, and brought in a small oil well on the edge of the Leduc reef. With that and other nearby CPR leases, he formed an oil company. "The thing that sold stock at that time was the name Leduc," McQueen has said. "There was already a West Leduc oil company and an East Leduc oil company, so we decided that we would call our company 'Central Leduc.'" A public offering of shares at 28 cents in 1947 raised working capital of $112,000. McDonald, meanwhile, had formed Del Rio Producers and the two firms eventually became Central-Del Rio Oils.

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