Federal Control of Resources

Alberta became a province in September 1905, but ownership of its natural resources, including oil and gas, remained with the federal government. When the Dingman No. 1 well came in on May 14, 1914, Calgary Petroleum Products and any other prospective drilling operation had to work with federal authorities in Ottawa. With federal authority over natural resources also came federal regulations. The Government of Canada became concerned with the practices of the oil and gas industry, particularly with the flaring of natural gas. The government adopted and attempted to enforce conservation regulations, with only mixed success.

Conservation of gas resources had been a concern of the federal government for some time. The Mines and Yukon Branch of the Department of the Interior had been conducting inspections on drilling operations and wells throughout Alberta since 1912. In 1916, a permanent inspection office was established in Calgary to enforce federal oil and gas

regulations and to monitor all petroleum operations in Alberta. Primary among its concerns were conservation practices and preventing ground water pollution. Despite the inspections and the possibility of fines and cancellation of leases and drilling rights, the federal government had little success in enforcing its regulations.

In 1918, Oswald S. Finnie, an inspecting engineer with the Department of the Interior, was sent to Turner Valley to investigate and report on the Calgary Petroleum Products operation. He reported back that Calgary Petroleum Products was not refining petroleum in the same way as Ontario’s oil companies were doing, but was using a simpler process of separating the oil into its component parts – gasoline, kerosene and heavy oil. Finnie reported that since 1914 nearly 750,000 gallons (20,833 barrels) of gasoline and coal oil had been produced at Turner Valley, accounting for only about 2% of Canada’s total production. About 635,000 gallons (17,638 barrels) had been exported, the rest being consumed locally.

Finnie’s report also drew attention to the flaring of gas at the plant. Natural gas, which was separated from the gasoline and kerosene by the plant’s absorbers, was being produced by Calgary Petroleum Products in great quantities. However, the company had no markets for gas and needed very little for its own local purposes and so viewed the gas as a waste product to be burned, or flared off. The federal government viewed this practice as wasteful and urged Calgary Petroleum Products and other companies to end it.

A. W. Dingman of Calgary Petroleum Products responded that his company had little other choice but to flare the gas due to having limited markets and to lacking effective storage and transportation options. Many operators simply ignored federal regulations and authority.

Seeing that its deterrence options were ineffective, the federal government began to offer assistance in the form of expert advice in exchange for regulatory compliance. In 1920, it hired Calgary-based oilman, Charles W. Dingman, nephew of Calgary Petroleum Products’ A. W. Dingman, as a technical advisor to assist drilling companies in their operations and regulatory compliance issues.

Many Alberta-based drilling operations

continued to resist what they viewed as unwelcome and unnecessary federal government interference in their operations. Over the ensuing years of personal contact with oil companies, however, the staff of the federal mining branch’s Calgary office made tremendous steps in educating the industry about the need for proper record keeping and ground water sampling and monitoring. The federal government’s debate on flaring with Calgary Petroleum Products became a non-issue following the destruction of its Turner Valley operations by fire on October 20, 1920, and the dissolution of the company the following year.

Politically, the Government of Alberta wanted to exert more of its own influence over the province’s natural resources. Although the province would gain control over its natural resources in 1930, until that date, federal control over oil and gas resources exerted a direct impact on operations at Turner Valley. Through inspections, correspondence and reports, the federal government monitored Calgary Petroleum Products’ operations in Turner Valley. The federal government was particularly interested in the development of refined products at Turner Valley and in its production statistics, but it was also concerned about the practice of flaring excess natural gas.