Flowing Gold

Less than a year ago, Redwater, Alta., 35 miles northeast of Edmonton, was a place to pick blueberries. Last week it was the center of the biggest oil boom in Canadian history.

With estimated reserves of 300 million barrels, the Redwater field already has 135 producing wells; new wells are being completed at the rate of 45 a month. Dozens of oil companies are in the field, the largest, Imperial Oil Ltd. of Canada, which is spending $500,000 on workers' housing alone.

The boom began at Leduc, 50 miles from Redwater, where the spouting of oil in February 1947 led to the proving of a field with an estimated reserve of 250 million barrels. Then, last Oct. 1, an Imperial crew of wildcatters struck oil on a Redwater farm.

These two fields, plus strikes in the surrounding area, add up to one of the major North American oil developments in recent years. Alberta's known reserves are generally estimated at a billion barrels, its potential as high as five billion. If it should prove to be five billion, Alberta might eventually rival west Texas, today the biggest oil-producing area in North America.

Money to Spend. During the 50 years before Leduc was brought in, $150 million was spent on oil exploration in Alberta. This year $100 million will be spent; next year the figure will probably reach $150 million.

Imperial, whose funds are furnished largely by its parent company, Standard Oil Co. (N.J.), will spend an estimated $40 million this year for a pipeline from Leduc to its refinery in Regina. At a time when U.S. capital is fighting shy of oil investments in Latin America, about 80% of the current spending in Canada is U.S. money.

For Alberta, the oil boom has meant the greatest golden harvest in the province's history. From fees, rentals and royalties (the province owns most mineral rights), the government last year got 20% of its total revenue.

Edmonton, within 50 miles of most of the new wells, has become the fastest growing city in Canada. Population: 137,500 (v. 111,800 in 1945). New hotels are being planned, theaters and office buildings are mushrooming.

Even tiny Redwater, with a population increase from 150 to 1,500 in ten months, has become a place where a man can spend some of his money. It has six new restaurants, a poolroom and bowling alley, three movie theaters. It also has a spanking-new hotel and beer parlor, where business is so good the waiters refuse to serve less than two beers at a time to a customer. Near Leduc, Imperial has bought a 160-acre field and built a village for 900 families.

Mountains to Climb. Because Alberta has not yet solved the problem of where to sell the oil, it has more of an explorers' than a producers' boom. The province's 890 wells already have a capacity of 100,000 barrels a day, and are expected to up this figure to 300,000 by 1951; but they are actually producing only about 60,000 barrels daily, enough to meet the needs of the prairie provinces. As fast as wells are brought in, they are being choked back.

The Rockies bar Alberta oil from British Columbia; rail rates are too high, and the demand for oil does not justify the high cost of building a pipeline across the mountains. Similarly, the high cost of transport tends to bar Alberta oil from the Ontario and Quebec industrial areas, which are supplied by pipelines from the U.S. and tankers from the Caribbean and the Middle East. Thus the fields' natural market is the oil-hungry U.S. Midwest, which can be reached easily from Alberta.

Because the U.S. now has an oil surplus, U.S. oilmen have been bringing pressure in Washington to cut down imports of foreign oil. Faced with that possibility, Alberta's producers have had to consider alternatives. One might be to pipe the oil from Regina to Port Arthur (see map). Another might be to carry oil to Duluth by pipeline under bond, then ship it by tanker to industrial cities in eastern Canada.

In Canada last week the more optimistic government leaders were certain that Alberta's dilemma would be resolved somehow. For one thing, the problem was closely tied to Canada's dollar-shortage problem: crude-oil imports ($200 million last year) were third on the list of her dollar spending (after coal and industrial machinery). The saving of $200 million would help to meet the dollar deficit. Oil sales in the U.S. would help still more, and Canadians thought that the U.S. would not ignore this fact in its concern for the western world's economic health.

Moreover, Canadian oil could not be overlooked as a big item in U.S.-Canadian defense. The joint defense planners must consider the importance of Alberta's strategically placed fields, and the possibility of their relieving the drain on other oil-rich areas in case of war.

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