Mary Clark Sheppard on her Father, Karl Clark

Mary Clark Sheppard on her father - Karl Clark - and the quintessential oilsands research breakthrough.

This article appears in the September issue of Oilsands Review. 

By Adriana A. Davies

The renowned "father of the oilsands," Karl Clark spent his entire working career technically outside of his discipline. An inorganic chemist by training, Clark's life work was in organic chemistry. His daughter and biographer, Mary Clark Sheppard, recently described his path.

After being awarded a Ph.D. in Chemistry by the University of Illinois in Urbana in 1915, Clark went to work for the Geological Survey of Canada. Because he had previously done soil surveying in Ontario, he was assigned to road materials research.

In July 1917, Eugene Haanel, Director of the Mines Branch, asked Clark to read a collection of working papers written by Sidney C. Ells, titled “Notes on Certain Aspects of the Proposed Commercial Development of the Deposits of Bituminous Sands in the Province of Alberta.” Mary notes that Clark was uncomfortable reading a senior colleagues’ work and critiquing and making sense of it but, together with geologist/topographer J. Keele, he wrote a 5,000 word review.

In summer 1918, Clark went to Manitoba as part of his field work and was able to see first-hand the difficulty of road maintenance. He worked around Brandon and, in Mary’s words, “noted that the soil made wonderful roads in the summertime when it was hot and dry, but the clay – everything slipped apart when it got wet, and he thought if you could only – it sounds pretty simplistic now – if you could only waterproof the clay then that might be a way of preserving roads. Of course, after the war and certainly by the early 1920s, roads were big. I mean everybody had a car then, and farmers had to get things to the railway and all the rest of it.”

Clark began to ponder a solution involving the water repellant properties of oil. This theory, in brief was that, if he could obtain oil from tar sands and mix it with the clay surfaces, he could waterproof them. Mary continues, “So back in his lab, in Ottawa in the winter, he got some tar sands and he thought if he could emulsify them ...you could put this emulsification on the road. Well, instead of getting an emulsion he got a separation. That was the big ‘ah ha’ moment. He got this separation. He’d got... sand in the bottom, oil in the middle, and water on the top. So he’d got these three things, but he had to get the oil out without the sand and the water; particularly, the sand. He tried everything possible but the oil and water got mixed up again.”

In chemical terms, what Clark had succeeded in doing was a “colloidal suspension” (the suspension of a solid in a liquid, in this case two “solids’ since bitumen is thicker than water). This discovery has spurred oil sands research until today. Mary noted that this happened in 1919 but he was told to stop the research and that the orders “came down from on high.” She believes that it was because Ells had returned from the war and that Ottawa and Alberta were fighting about the bituminous oilsand resources.

The feds had tried sinking a well at Athabasca Landing as early as 1894 but that and several other efforts had failed. Federal bituminous sands research was under the control of the Honorary Advisory Council for Scientific and Technical Research. The proprietary attitude of Ottawa with respect to resource development did not sit well with the government of Alberta or University of Alberta President Henry Marshall Tory. Mary notes: “Tory, I think quite rightly said, ‘If this is going to go on in my university, it’s going to be under my control’.”

In 1919, Tory visited Ottawa looking for someone who could take on research on oil and coal in Alberta. His vision was that the University that he helped to found would support province-building through research leading to economic development. In the Mines Branch, he heard of the great excitement about Clark’s discovery and, according to Mary, “he went straight to my Dad and persuaded him to come out to Alberta. Correspondence between the two continued on Tory’s return to Alberta and, by September [1920], my Mom and dad were in Alberta.” Tory wanted Edgar Stansfield of the Mines Branch to come out first to head up coal research but Stansfield had work to tie up that would take him a year. Thus, Clark became the first full-time member of the Research Department with a focus on tar sands research. On January 6^th, 1921, by an Order-in-Council, the Industrial Research Council of Alberta was established (becoming in 1930, the Research Council of Alberta; in 1981, the Alberta Research Council; and, most recently, Alberta Innovates Technology Futures).

Tory was a staunch supporter of Clark’s efforts and a railway line to Fort McMurray made it easy to get supplies of bituminous sands for research. To facilitate Clark’s research, in the winter of 1919, Tory had secured about six tons of the bituminous sand and stockpiled it on campus. He instructed Clark to begin his research from scratch without reference to the previous work of Ells (Ells was interested in the use of super-heated steam for separation). Clark would focus his research on separation based on the use of a chemical reagent.

In 1922, Sidney Blair came to the University of Alberta and was hired by Clark as his assistant. He began surveying up north as a part of his Master’s degree program. Mary has described her father as “a quiet self-effacing intellectual” while Blair was “worldly, self-confident and aggressive.” Together they forged a solid team working together for three-and-a-half years.

Clark’s oil sands research continued throughout the Great Depression of the 1930s when most of the research staff at the Council were let go. Clark and Stansfield became part of the Faculty of Applied Science. When they had moved to the employ of the Research Council, in a far-sighted move, Tory had insisted that they be given Faculty status. The Research Council was revived in December, 1942, nearly 10 years after it effectively ceased operations. The new chairman was N.E. Tanner, minister of Lands and Mines.

While initially, Clark continued his research in relation to finding a waterproof coating material for roads, eventually, he realized the importance of the tar sands as a source of refined oil products. He had his separation facilities in the University power plant, Everything was carefully tested from the amount of sodium silicate used as a surface-active agent or soap, to the temperature of the water, amount of power consumed and duration of heating period. His process and technology was eventually piloted at Bitumount and Abasands.

In December, 1949 just after the Abasands plant closed for the winter, Blair was commissioned by the government of Alberta to make a comprehensive study of both the technical and economic viability of actual mining, separation, delivery and sale of oil derived from tar sands to southern Ontario refineries. The Blair Report, officially, The Development of the Alberta Bituminous Sands was published a year later. Mary notes: “Blair concluded, even though the price of oil was only $3 a barrel – it seems hard to believe – his reckoning was that you could produce it for $2.50. That was challenged later as they said he didn’t take into account all the capital investment for background things like roads and whatnot. That was assuming everything was in, which of course it wasn’t.” The next step was the convening of an international symposium in September 1951 on all aspects of the oil sands, which was attended by one hundred and twenty delegates.

Clark, Blair and Tanner would usher in the next era of development. The prototype science and technology were in place to be shared with industry; the Government of Alberta wanted to see the oil sands developed; and, finally, the destabilization of the Middle East (the Suez Crisis in 1956) made the oil companies look more seriously at tar sands development.

Mary had a final observation on the name oil sands: “You see, they were always known as bituminous sands officially. They were known as tar sands colloquially. It was like a nickname – a loving nickname. But that’s all it was, but after the Blair Report came out, and they knew that they could produce a crude oil because refining techniques had so improved. Then, Dad and Blair said they should no longer be called bituminous sands, or tar, because we now know they are a source of crude oil. They were now oil sands, and so officially by the Research Council, by order of something or other. I’ve got it written down in one of my books. That’s when they were officially reclassified as oil sands.” This was confirmed when the Alberta Oil Sands Authority was set up in 1973 by Premier Lougheed.

This article is the second in a series that reflects information from the Petroleum History Society’s current Oil Sands Oral History Project, which is recording the stories of oilsands pioneers in their own words. As with its previous oral history projects, transcripts and recordings will reside in Calgary’s Glenbow Archives. Adriana Davies is part of the team of researchers/writers behind the project.

How Public Money Saved Syncrude

This article appears in the August issue of Oilsands Review. 

A quarter-century after Peter Lougheed retired as Alberta’s first Progressive Conservative premier, he is sitting in Calgary’s historic Lougheed House (a mansion built by his grandfather a century ago), reflecting on his government’s impact on the oil sands.

By Peter McKenzie-Brown
Lougheed won a seat in Alberta’s Legislature in 1967, the year the doors opened on the Great Canadian Oil Sands (now Suncor) mine and upgrader; he became premier four years later. During 14 years at the helm, he took an active role in oilsands development. “It was obvious that the oil sands were owned by the people of Alberta,” he says. “We consistently and constantly made sure that the industry understood that the Government of Alberta was the owner and we weren’t just there in a supervisory or regulatory way. We were extensively involved because we were the owners.”

Fast-forward to 1974, when the province’s resource ownership and its commitment to play an active role in development helped revive Syncrude during a near-death experience.

The project had received regulatory approval in 1968, but by 1974 the projected cost of the plant had more than doubled to $2 billion. At year-end Atlantic Richfield Corporation, which was developing its Prudhoe Bay assets, sent its partners a telegram saying that effective January 1st they were pulling out. The remaining participants – Cities Service Canada, Imperial Oil and Gulf Canada – were paying $666 per minute for an increasingly dicey-looking project.

Energy Shock and Energy War
The world’s first energy shock was in high gear. During the previous three years, global oil prices had more than tripled to $11.50 per barrel. While this should have created an energy boom, in Canada it didn’t.

The environment in 1973 was one of high inflation and rising oil prices, and in September Prime Minister Pierre Trudeau asked the western provinces to agree to a voluntary freeze on domestic prices. Nine days later, his government imposed a $0.40 tax on every barrel of exported oil. The tax equalled the difference between domestic and international prices, and the revenues were used to subsidize imports for refiners in eastern Canada.

Outraged that Ottawa would tax a provincial resource, Alberta retaliated in early October. The province cancelled the Alberta Oil Revenue and Royalty Plan effective at yearend, eliminated maximum royalty provisions in all leases and introduced a price-related royalty system. Days later came the Arab/Israeli Yom Kippur War and an embargo by Arab states on oil deliveries to the US and Western Europe. As international prices skyrocketed, so did Ottawa’s export tax. For the rest of the 1970s, OPEC sat in the oil price driver’s seat.

In December Trudeau announced a National Oil Policy “designed to reach Canadian self-sufficiency in oil and oil products before the end of this decade.” Among other measures, this policy added fuel to the crude oil firestorm by making royalties a non-deductible expense for corporate income tax calculations and putting price caps – euphemistically called “made-in-Canada prices” – on oil production for domestic use. Alberta responded with plans to implement a 65% surroyalty on oil. The 1974 Liberal budget made some concessions but retained in principle the right of the federal government to tax provincial royalties.

As Canadians worried about the country “running out of oil,” the producing provinces felt hoodwinked and betrayed. In effect, they argued, the feds were arrogating the fiscal benefits of rising oil prices unto themselves and encroaching on provincial resource ownership. These moves precipitated the bitterest intergovernmental conflicts in Canadian history. The first of two political wars had begun, and battles would rage for a decade.

The political environment was toxic, and it remained so during the Syncrude crisis. According to Hans Maciej, who at the time was the Canadian Petroleum Association’s technical director, “The first energy war did not end until the end of 1975 after the federal government introduced price increases for crude oil and natural gas and, most importantly, recognized the role of royalties paid prior to the price upheaval as a legitimate business expense.”

An Early Thaw
At the beginning of the Syncrude crisis, the consortium created two management teams – one team of executives to plan ways to deep-six the project; another to find ways to keep it alive. In addition to two top executives from each of the three partners, the life-support team included an executive vice president from Cities Services, Calgary-based Bill Mooney. According to Lougheed, “Everybody knew Bill and he just had a way with him of getting people involved and he’s one of the funniest guys I’ve ever met. Mooney played a major behind-the-scenes role in getting people together.”

Though the political environment was toxic, these men had the task of getting government participation in the Syncrude project. Absent other industry partners, public money was the only alternative to a shutdown. The team of seven made a dozen cross-country trips in 17 days. One breakthrough came toward the end of January, when Mooney walked unannounced into Minister of Energy, Mines and Resources Donald Macdonald’s office suite. Hearing that Macdonald was too busy to see him (meetings all day), Mooney decided to wait him out.

When Macdonald returned from Cabinet, Mooney accosted him: “I’ve got to see you.” During a brief meeting the minister outlined the concessions the federal government was willing to make. As Mooney was leaving, Macdonald said “If you tell anyone about this I’ll call you a goddamned liar.”

The Winnipeg Agreement of February 3, 1975 was the outcome of the Syncrude rescue team’s countless phone calls and meetings, and it represented an early thaw in the political climate. The participants in the 12-hour session convened to reach consensus included many of Canada’s key decision-makers. The chairmen of Cities Service, Imperial, Gulf and Shell were there, along with other executives from their companies. Three provincial ministers accompanied premier Lougheed: energy minister Bill Dickie, intergovernmental affairs minister Don Getty and attorney general Merv Leitch. Ontario Premier Bill Davis also brought key ministers to the negotiations. Federal players included Macdonald and Jean Chretien, president of the Treasury Board.

There was give-and-take from everyone except the Shell delegation, which stormed out of the meetings after an hour. They would have considered taking an equity stake in the project, but CEO Bill Daniel first wanted a government-guaranteed base price for production. His team went home empty-handed.

Many people remember the Winnipeg Agreement as a successful effort to replace with government money the 30% equity vacuum created by the departure of Atlantic Richfield: Ottawa took 15%, Alberta 10% and Ontario 5%. The private partners agreed to take a $1.4 billion interest in the project, but Cities Service and Gulf gave Alberta the option to convert a $200 million loan into equity. The province also agreed to construct a pipeline and a power plant, which were risk-free.

Particularly innovative was a royalty structure reflecting technological risks. “When Syncrude came along and we got into the negotiations,” according to Lougheed, “it was clear we could not approach (royalties) from a gross-revenue point of view. It wasn’t really fair because of the risk element involved in such a new process.”

It took eighteen months to prepare legal documentation for the Winnipeg Agreement, and signing took two days. The second day of signing, for dignitaries, was planned for the Saskatchewan Room in Edmonton’s Westin Plaza hotel. For the occasion, Bill Mooney used a pair of table knives to pry off the room’s nameplate. He replaced it with the one that said The Alberta Room.

This article is the first in a series which reflect information from the Petroleum History Society’s current Oil Sands Oral History Project, which is recording the stories of oilsands pioneers in their own words. As with the society’s previous oral history projects, transcripts and recordings will reside in Calgary’s Glenbow Archives. Peter McKenzie-Brown is a member of the team of researchers/writers behind the project.