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Pembina: The Hidden Elephant

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A well with just 30 feet of net pay capable of producing some 200 barrels a day of oil appeared to most of the industry to be no more than a very minor pool, compared with the big Devonian reef fields with 300 feet or more of pay and wells capable of producing several thousands of barrels of oil per day.

What was not generally appreciated was the type of oil accumulation that had been discovered at Pembina. At all the other large oil fields in Canada, structural features had provided the trap in which oil had accumulated, predominantly in the Devonian reef structures. At Pembina, there was no structure. Instead, there was a comparatively thin and relatively imperme­able sandstone, spread over a very large area. The wedge-shaped sandstone lay tilted at an angle, the porosity pinching out into impervious shale at the up-dig edge. Oil had migrated through this sandstone until it had become trapped by the shale, forming what geologists call a stratigraphic pinchout trap. There is only a modest amount of oil beneath each square mile of the Pembina field, but the entire producing area covers 1,000 square miles-in area, the largest oil field in North America. But who could know this at the time the first well was completed?

Following the Pembina discovery, Socony drilled a second well 12 miles to the northeast. Here the Cardium formation was mostly shale, with the rock slightly oil stained, and the well was abandoned. A third test was drilled mid­way between the discovery and the abandonment, and from the Cardium sandstone flowed oil at a rate of 240 barrels a day. Only then did the signifi­cance of the Pembina discovery start to become apparent. Oil companies rushed into the area to buy land and drill as quickly as they could.

Under Alberta regulations, Socony and Seaboard had to convert their 100,000-acre reservation into 50,000 acres of checkerboard leases: the 50,000 acres reverting to the government were offered to the industry bit by bit at competitive lease sales. First such sale on January 26, 1954
"exploded Pembina possibilities to the world," Warke later wrote.5 Leases of 160 acres in the proven area sold for prices as high as $500,000 and a pair of reservations of 100,000 acres each brought in a total of $24 million.

The reservations were the big prize at the sale. Socony and other com­panies drilled as close as possible to these reservations to acquire informa­tion on which to base their bids. Daily reports from these key wells were highly secret, and although scouts from competing oil companies kept the wells under the constant surveillance of their field glasses, they learned lit­tle. At his home in Edmonton, Nielsen had installed a powerful radio trans­mitter and receiver. Daily reports were radioed to Nielsen's home, in code. From there, the information was relayed to Calgary and New York.

On the day of the sale, H.R. Moorman, the head of Socony's Canadian operations, arrived in Edmonton with a $7-million cheque for the reserva­tion block closest to production.

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