Canada 150: ​Canada’s world-class natural gas business began as a mistaken water well in southern Alberta

Drilling near Medicine Hat, Alberta circa 1905. Image: Government of Alberta

In 1883, an accident of chance resulted in the birth of a city and an industry that continues to build in importance to Canada’s future.

Workers at a Canadian Pacific Railway (CPR) crossing 40 kilometers northwest of what is today Medicine Hat were drilling a well in search of water, but they encountered natural gas.

The Petroleum History Society’s Micky Gulless uncovered how the “singular phenomenon” was described in The Calgary Herald.

“The well-borers have reached a depth of 1,120 feet without finding water, but a gas which rushes out of the tube, which on taking fire emits a flame sufficient to light up the surrounding country,” the newspaper reported on Dec. 12, 1883.

“They still purpose going deeper for the water, but have given up working at night, not considering it safe.”

It took awhile for the CPR to realize that the strange stuff coming from the well might actually have some value, as detailed in a short story in the Herald on Oct. 29, 1884.

“The gas from the well is being utilized for fuel,” the newspaper reported. “Pipes have been run from the well to the section house, into both cooking and heating stoves, no other fuel being required for either.”

The town closest to Langevin, where Alberta’s (and Canada’s) natural gas industry was born, no longer exists. It has been renamed twice and is now called Alderson. There “isn’t much there anymore,” Gulless says, but there is a commemorative sign nearby.

City of Medicine Hat archivist Philip Pype says the discovery had unexpected repercussions.

“It was probably seen as a nuisance, until it was realized you could build a city based on it,” he says, adding that forward-thinking town officials were able to capitalize on the opportunity.

The lessons from Medicine Hat helped build out Canada’s natural gas industry across Alberta and into northeast British Columbia, which is considered to be a central piece of the country’s energy future.

The economics of dry natural gas drilling in southern Alberta today pale in comparison to the more northern liquids-rich opportunities.

“You would need to drill 10,000 wells in the Medicine Hat area to be able to produce one billion cubic feet of gas per day,” says Bill Gwozd, now the head of his own Calgary-based consulting firm but formerly vice president of Solomon Associates LLC and prior to that of Calgary-based Ziff Energy Group, which was purchased by Solomon.

“In northeast B.C., which is the future of Western Canada’s gas business, you would just need to drill 100 wells to produce 1 bcf/d.”

Gwozd predicts that in the future, as LNG export plants are built on B.C.’s west coast, gas replaces coal-fired power and more gas is used in the oilsands as it continues to expand, Western Canada’s gas production will grow from about 11 bcf/d now to 30 bcf/d in a decade and to 50 bcf/d in 20 to 30 years.

The Canadian Energy Research Institute estimates that $405 billion could be collected in personal, corporate and indirect taxes across Canada from Western Canadian natural gas production over the next 20 years.

And it all started with a mistaken water well.

This article is part of an editorial series marking important events in the development of Canada's oil and gas industry, looking how lessons from the past will inform the future as the country celebrates 150 years since Confederation.

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