History of The Petroleum Industry in Canada (natural Gas Liquids) - Amoco/Dome Synergies

Amoco/Dome Synergies

As the Turner Valley story illustrates, the extraction of natural gas liquids goes back to the industry's early years. However, the development of partnerships between the large American oil company Amoco and the young, dynamic Dome Petroleum to create sophisticated liquids infrastructure in Western Canada.

Headquartered in Calgary, Amoco Canada’s liquids marketing group had a great deal of independence in the early years. However, many synergies were possible through cooperation between Chicago and Calgary. As importantly, Amoco and Dome Petroleum formed a number of strategic partnerships in the liquids business during the 1960s. So extensive were those partnerships that, when Dome went on the block in 1986, it was inevitable that Amoco would be an aggressive suitor.

Alberta’s liquids business dates to the development of the Pembina field, when Dallas-based Goliad Oil and Gas received rights to recover solution gas from the field. Also known as “casing head gas” or “associated gas,” solution gas is dissolved in reservoir oil at underground pressures. Released under the relatively low pressures at Earth’s surface, it usually includes natural gas liquids. Often, as at Pembina, these can be profitably extracted. While Goliad received the gas from Pembina, the separated liquids were returned to the producers.

At about the same time, Dome developed a solution gas gathering business based on oilfields around Steelman, Saskatchewan. And in Alberta, plants like the one at Whitecourt began processing liquids-rich gas in 1961. Amoco began planning this gas plant in 1957, as local gas discoveries made it clear a major new plant was necessary. When it went into production, West Whitecourt quickly began to boast the biggest volumes of condensate production in Canada: 13,000 barrels per day (2,100 m3/d). And from there, volumes went up. Since that time, bigger plants have made the records of 1962 seem small. However, this plant was nonetheless an industry pioneer.