The discovery of Leduc, up to 1,000

The subsidiary Imperial Oil Limited, also known as
Esso, is one of the largest oil companies in Canada. The company is heavily
involved in the petroleum industry, partaking in the exploration, production,
and sale of natural gas and crude oil. Being in one of the most profitable
industries, Imperial Oil has made a significant impact on shaping the oil
industry in Canada and making it the predominant business it is today. This
effect can be explained by Imperial Oil’s initial and crucial impact on the
Canadian economy during the mid to late 1900s, the negative impacts on the
environment caused by the exploration of oil, and finally, the positive impacts
on innovation through the creation of unique processes of finding, selling, and producing oil. The culmination of
these factors plays an important role in
how the industry operates today because early economic successes and failures
led to a more stable and predictable oil industry. The increased environmental
regulations and public awareness impacted how oil companies, including Imperial
Oil, conduct business practices. Lastly, the earlier discovery of various
processes and technologies by Imperial Oil to find, produce, and sell oil had a
significant impact on how oil is sold and consumed in today’s market.

Focusing mainly on Alberta in the early 1930s, historians
observed that the overall economic landscape did not seem promising for Canada,
especially due to the great impact the great depression had on the economy. The
source for most of Canada’s oil was imports
from other parts of the world and mainly the US. However, this situation hit a
turning point when Leduc No. 1 was discovered in Alberta after Imperial Oil
spent $20 million and drilled its 134th hole in the ground. This moment was a
major turning point for Alberta and Canada as a country because it meant that
they could capitalize on the oil through various methods to boost the Canadian
economy. After the discovery of Leduc, up to 1,000 barrels were being produced
each day. This production caused a stir of events leading to other companies
coming to drill around the site. However, Imperial Oil continued to drill more
wells in the same area, resulting in more productive oil extraction.

 Eventually, in
1948, the company found another site to drill north of Edmonton, resulting in
926 more wells producing 30% of the province’s output. This oil boom caused
massive amounts of revenue inflow for Alberta. Therefore, naturally, Ottawa stepped
in due to its control over the country, resulting in efforts to transfer oil to
Ontario through pipelines in the 1950s. The main emphasis on this discovery of
oil in the west is the ability to generate extensive amounts of revenue, which
was unheard of for Canada at the time, especially after a period of economic
downturn. Imperial Oil set in place the foundation to help boost Canada’s
economy to the next level by helping shape the modern Canadian oil industry and
turning an oil-deprived nation into one of the largest oil exporters.

To emphasize the effects of the Leduc discovery, by
1957, Alberta controlled 85% of Canadian crude oil reserves and delivered a total
production of 137 million barrels of oil. The oil industry ended up employing
16,000 more people, and by 1947, the Government of Alberta had generated $625
million in revenue from petroleum royalties alone. A crew member working on
Leduc stated, “It was the greatest
economic event to ever happen in Canada. It was really
a boom”. Additionally, the lifestyle of most of the people in Western
Canada became urbanized with plenty of buildings and newly paved roads making
cities like Calgary unrecognizable and an expanded provincial highway. The
government started to impose tariffs on exports of oil to other countries,
taking full advantage of the revenue potential during the oil boom. Along with higher employment, salaries were rising,
meaning spending on goods and services was greater, education became much more
prevalent, and all factors contributed to a better overall Canadian economy.

In general, Imperial Oil’s persistence in finding and
drilling wells for oil led to critical discoveries for the industry that
resulted in the exporting of crude oil, which set in place a chain of events
leading to a significantly greater economy. However, a major problem associated
with having an economy heavily reliant on the oil industry occurred during the
oil bust of the 1980s. The industry became stagnant, thus having a crucial
effect on the economy. When the price of oil dropped to $10 US per barrel, the
supply from the oil sands in Alberta was still high. Because costs such as
giving subsidies to oil-dependent industries exceeded the revenue stream being made, this situation led to considerable
budget deficits and an economic downturn. Being too reliant on one industry can
have negative consequences, which was again proven
in the later 1990s. These events helped predict the changes in and shape of the
oil industry today.

In terms of
the environment, there have been significant negative impacts that have led to a
backlash against companies such as Imperial Oil that hindered their ability to
continue drilling as they pleased. During the early days of petroleum
discovery, the use of crude oil and natural gas was not considered particularly
harmful and was readily available, boasting convenience and low prices. Additionally,
looking for oil meant harming the environment. This
harm was evident just before the Leduc No. 1 discovery when Imperial Oil
drilled hundreds of holes in the ground to look for oil, paying no attention to
the land or animal habitats. Furthermore, burning petroleum was considered
better than the use of coal or wood because it was deemed to be a “cleaner”
solution. Before the 1960s, issues related to environmental problems or health
were not prominent; if they existed at all, they were very local. However, the
rapid change of attention on environmental issues during the 1960s led to
increased awareness through books being
published on chemical pollution and documentaries such as the Canadian
Broadcasting Corporation’s Air of Death.
This information sparked a large amount of interest in research by universities.
However, change in the business actions or governmental policies for the oil
industry remained minimal until 1970.

After 1970, the massive 2.5 million–litre oil spill by
Imperial Oil on the coast of Nova Scotia led to significant actions by both the
government and the companies, especially after raised concerns from the public about
environmental pollution. Trying to be more environmentally conscious, Imperial
Oil implemented its official policy on environmental conservation. Parts from a
report drafted in 1974 state its oil spill policy: “Imperial should be
responsible for initiating oil cleanup activity, where, in the opinion of its
management, the Imperial name or the name of any affiliate is clearly associated or likely to be associated
with the spilled oil”. As well, various
actions were being taken in terms of air, water, and soil conservation, such as “complying with
regulations and keeping the employees, government officials and public informed”.
This document was not the only one published; many other reports that are
available to the public show viable efforts by Imperial Oil to try to reduce its
negative impact on the environment. These efforts included hiring environmental
committees and increasing research to try to understand the environment further
and help minimize the damage. An updated report today shows similar but more
thorough policies that are the direct result of past actions by oil companies
such as Imperial Oil.

The government also placed sanctions on the oil
industry due to the sheer amount of attention given to the problem by the
public and the negative actions of the oil companies. A common example of
regulation for land includes governmental standards for creating pipelines to
minimize the chances of spills. Also, for water, the government implemented the
Canada Water Act, preventing the addition of any substances that could harm the
potential user and resulting in the treatment
of the water if anything does go wrong. Lastly, for air, rules regarding the
number of harmful additives to be added to petroleum were imposed, resulting in
decreased amounts of hydrofluorocarbons emitted by cars. As a result, the
government regulations on the industry combined with company policies of the
past have had a large impact on how the industry operates today. Not considering
the environmental effects of operating in the oil industry could have
considerably changed the current industry and the environment negatively. Clean
water, fresh, breathable air, and plentiful land are just some of the good
things to come out of implementing preventative actions and regulations. Therefore,
based on past regulations and company actions, the oil industry today has
greatly shifted towards becoming more environmentally conscious, resulting in a
more sustainable future.

During the early-mid-1900s,
looking for oil proved to be quite a challenge. Before
implementing the seismic survey method, Imperial Oil had drilled many holes but
had no luck finding a source to continue the business. The long wait and high
costs led to almost abandoning the search for the commodity in the west. However,
technology had advanced, leading to more imaging methods available to find and
drill for oil. Imperial Oil was one of the first companies to implement the
seismic survey method in the west, which proved to be fruitful with the
discovery of Leduc No. 1. After this major discovery using the seismic survey
method, many companies joined the search for oil in the west, leading to the
wide expansion of the oil industry in Canada. This expansion led to more
technologies and further innovation in both producing and drilling for oil;
greater amounts of wells were being drilled
in other provinces such as Saskatchewan and Manitoba.

Imperial Oil’s processes were at the forefront of
innovation and could also be showcased when
it came to producing oil. The company implemented a process called
hydrocracking, which simply produced more gasoline than previous methods. Also,
it used a ground-breaking method for extracting oil known as CSS, which steamed
and pumped bitumen out of the ground. Innovation, as well as research, was a
huge factor that led to Imperial Oil’s success early on. This creativity and
desire to be a leader in the industry led to highly advanced oil extracting and
production methods as showcased today on the company’s website.

Not only did Imperial Oil excel at the drilling and
producing aspects of the industry, but a considerable source of revenue
resulted in how it managed the sales of its products to consumers. A company
book known as the Salesmotor was issued
from 1920 to1960. The book was comprehensively detailed, covering major aspects
related to retailing and selling the company’s oil. It included points such as
a detailed competitor business analysis, monthly quotas to be achieved, the most
profitable product, and an overview of all the products that it sold at the
time. Paying close attention to sales combined with the size of the company helped Imperial Oil gain an advantage
over competitors. Furthermore, the company had other innovations, such as
introducing the first self-serve retail stations, increasing convenience for
its customers. It was also involved heavily in sponsorships throughout the mid-1900s
and beyond, resulting in people getting to know the brand better. In all,
Imperial Oil had major success producing, drilling, and selling oil. The
company was highly innovative, resulting in increased sales and better brand
recognition, thus laying the foundation for the future of improved sales in the
oil industry.

Imperial Oil had a considerable impact on shaping
the current oil industry. Through the success of Leduc, the company completely
changed the economy of Alberta and Canada by helping change the nation from
oil-starved into a major oil exporter, as well as helping showcase what to
expect through oil booms and economic downturns. Furthermore, Imperial Oil and
the government played a crucial role in setting up environmental regulations
and policies to help the industry minimize the harmful effects of waste and
pollution on land, air, and water, especially for the future to come. Lastly,
through innovation and perseverance, the company pioneered methods of oil
extraction and production, resulting in decreased costs and the development of
highly advanced techniques for the future extraction and production. The
company achieved all of this while effectively keeping track of product sales
and using creative methods such as the Salesmotor to improve sales and maximize
profit. Overall, Canada today is a diverse nation with an economy thriving in
many major industries. Natural resources such as oil, natural gas, and wheat
are prevalent in the western provinces while production of manufacturing goods
is prominent in Ontario and Quebec. The country is a leading exporter of goods
and services, making it one of the global leaders in the world economy.

Go Top