Rampant Optimism, Tremendous Drive

With deep roots, the great Bitumount oil sands plant (pictured above in the 1930s) was an industrial pioneer

By Peter McKenzie-Brown

Alberta became active in oil sands research at the beginning of the Roaring Twenties, but could not have anticipated the importance of an incorporation registered in 1925. Robert C. Fitzsimmons’s International Bitumen was a seminal effort for the province, although for the man himself it was ultimately a business tragedy.

The company used a hot water process to produce bitumen, and in 1930 made its first sale of commercially produced bitumen in Edmonton. Because it couldn’t be upgraded at this point, the bitumen was used as fence post dip, for roof tar, and for setting pavement.  

Confidently naming his business the International Bitumen Company in 1927, by 1930 Fitzsimmons had constructed a small oil separation plant at Bitumount (Fitzsimmons gave the place its name) on a federal lease. The long-term significance of his operation and its successors can’t be overstated.

Located 89 kilometres north of Fort McMurray, the plant used a process similar to the hot-water separation process developed by Dr. Karl Clark of the Alberta Research Council, but without the chemical additives and refinements. It was constructed on the cheap, mostly from scavenged parts.  

In essence, Fitzsimmons’ approach was to crush the ore, heat it in hot water, divert it into settling tanks, then skim off the oily gunk that rose to the surface. These efforts were only half as efficient in terms of oil recovery as Clark had achieved with his process. The plant was designed to produce 750 barrels per day, but on a good day produced only 250.  However, in the early years the facility did generate a profit. 

After International Bitumen made its first deliveries, the Edmonton Journal gushed that “those shipments of absolutely pure bitumen are the first and second and only shipments in the history of McMurray tar sands to be made for commercial purposes and it certainly (augurs) well for the future development of the much talked of tar sands of northern Alberta.” 

Fitzsimmons had a passion for the oil sands and he was as stubborn as a mule, but two storms were brewing against him. One was the Great Depression. The other was a flood of light crude oil from Texas and Oklahoma, which was driving down prices. In the Dirty Thirties oil prices were as low as $0.67 per barrel ($9 in inflation-adjusted terms), and markets were lousy. Fitzsimmons’ strategy was to focus on roofing and road surfacing as the most likely markets for his bitumen.

He expanded his facilities, adding a small upgrader (he called it a refinery) in 1937-38. By then he had spent the funds entrusted to International Bitumen’s shareholders. Sales were slow, and cash flow problems began frustrating his dreams. In the vernacular of the period, his company was a day long and a dollar short. By the end of 1938, the company was insolvent. 

Fitzsimmons sought support in capital markets in eastern Canada and Chicago without success. In a final attempt to succeed, he established Tar Sands Products Limited in 1941 to sell International Bitumen Company products. The strategy didn’t help, and he couldn’t secure the $50,000 he needed to keep the plant running, eventually applying to the provincial government for either a straight loan or an advance on bitumen for road paving.

After the province declined to help, in 1943 Fitzsimmons sold the failing enterprise to a hard-nosed financier from Montreal, Lloyd Champion, reserving for himself a job as operations advisor. Frustrated, he left that position in 1944 but was soon called back to get the plant, which had been sitting idle for five years, back in operation. Once he got the plant going again, Champion fired him.

Embittered, Robert Fitzsimmons later wrote a document to tell shareholders “what happened to prevent the company’s success after it had reached the stage of commercial production of oil…and also to inform them how its accomplishments were nullified by obstructive tactics in government quarters.”  The cover page of his pamphlet illustrates the depth of his bitterness. Self-published in 1953, its title proclaims that it is “The truth about Alberta’s tar sands.” The cover then asks, “Why were they kept out of production? What happened to International Bitumen Co. Ltd.? Who solved the problem of separation and pioneered the production of oil from these sands? Who stood to gain by suppressing their development?” 

 He died alone in Edmonton in September, 1971. According to oil sands historian Joseph Ferguson, “It is doing great injustice to Canadian initiative, imagination and determination to allow the courage of men like Robert C. Fitzsimmons to be forgotten.” 

The Champion

Champion had acquired Bitumount through a company named Oil Sands Limited. With Fitzimmons out of the picture, in 1944 he transferred most of the Oil Sands assets to a holding company owned by himself and his wife, Ruby.  He then arranged for the province of Alberta to finance to the tune of $500,000 a new and larger plant (costs eventually rose to $750,000), with construction to be undertaken by Oil Sands Limited. The idea was to investigate Karl Clark’s extraction methods in a large-scale demonstration project. Development dragged on until well after the war. 

“The government is building a $500,000 fireproof pilot plant at Bitumount that should be in operation next July,” wrote William Elmer Adkin, the project’s operating engineer, in 1946. “Unless I miss my bet, we’ll prove to the world that oil can be extracted from the tar sand at less than $1 per barrel, a figure that we believe would warrant a large-scale commercial development.”  Adkin did lose his bet, but his comments reflect the determination and optimism of oil sands pioneers that ultimately led to commercial success.

Although Nathan Tanner was the province’s Minister of Mines and Lands, Premier Ernest Manning was the project’s champion. In a speech to the Legislature in 1944, he said “It has been established beyond question that a successful and efficient simple process exists for the separation of oil from the sands and for its refinement into commercial products. Members of the Government have inspected the plant while in actual operation and producing a sufficient volume of clear sand free of oil to prove the practicability of the process.”

Manning supported the funding for the project and had the entire legislature visit the plant in 1949, its second year of operation. Despite his efforts, the plant soon closed. The plant went on production in 1948. However, operations ended after new wells, including the spectacular blow-out at Atlantic Leduc #3, confirmed that the 1947 Leduc light-oil discovery was not a fluke.

The flurry of effort to develop commercial activity in the oil sands, which had climaxed during and just after World War Two, was over. The reason was Alberta’s Leduc oil strike and the other petroleum finds that quickly followed. Bitumen couldn’t compete with inexpensively produced conventional light oil. 

Though interest waned in those years, it did not die.

Manning commissioned an independent evaluation by Sidney Blair. The oil sands expert, who began his career as Karl Clark’s research assistant, based his report on the Bitumount project. Published in 1950, Blair’s study concluded that oil sands development could be economic for projects producing 20,000 barrels or more of oil per day. He envisioned such a plant costing $43 million and generating a 5 to 6 percent annual return on investment. He believed that such an operation could profit in a market where conventional oil was fetching only $2.70 per barrel, because synthetic oil is an attractive feedstock that can yield more valuable refined products than a barrel of conventional oil. Blair concluded that the oil sands were “a commercially viable source of crude oil that could compete on the world market.”

The plant was down, but Lloyd Champion was not out. In 1953 he began forming the Great Canadian Oil Sands consortium, based on his oil sands assets and his business acumen and drive. The Great Canadian Oil Sands consortium, which would later become the Suncor oil sands plant, included Abasand Oils, Canadian Oils Ltd. and Oil Sands Ltd. That effort lurched from crisis to crisis until J. Howard Pew got into the conversation. The chairman of Philadelphia-based Sun Oil Company, Pew soon became the primary financial backer of the project. The Great Canadian Oil Sands plant went into operation in 1967.

Champion sold his interest in the plant around the time it was being commissioned and, like Sidney Ells and Robert Fitzsimmons, died in 1971. As for the Bitumount site, it remained a place for oil sands experimentation and testing until abandoned at the end of the 1950s.

However, on December 4th, 1974 the province declared it a provincial historic site, and today it serves as an important interpretive centre and testament to Alberta’s oil sands pioneers. Its skeletal remains can be found in eight clusters. These range in interest from Fitzsimmons’ small cabin to primitive industrial equipment to garbage dumps and latrines. Bitumount may not look like much, but this is where the modern oil sands industry began.