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If he is remembered at all, Americans interested in
business history think of J. Howard Pew as an industrialist who created what
was once one of the world’s largest energy companies. For Canadians,
though, he was the legendary force behind the harnessing of the oilsands. Though his efforts in the oilsands
sector were a cash drain for his company – at the time, one of the 20
largest in the United States – for this country he created an industry.
The thumbnail sketch of his life is this: Born in
1882, J. Howard Pew graduated from high school at age 14, from university at
18 and became president of Sun Oil at age 30. With his brother Joseph he
transformed Sun (founded by his father; now called Sunoco) by introducing new
refining, marketing, and distribution techniques. He was astute. During the
First World War he responded to the war-time demand for crude by building a
navy of tankers. That fleet became one of Sun’s most profitable
businesses.
A publication celebrating Sun Oil’s centenary
in 1986 described the man, who had died in 1971. “Tall and
broad-shouldered, with bushy eyebrows, he was often seen clutching an
enormous cigar in his fingers as he moved about Sun’s corridors. He was
intense, sure of himself and deliberate in his speech even in old age.”
The Venerable Pew: An extreme conservative
in his religious and political views, Pew was passionate about his work.
“Working for Sun Company these years has been not merely a job,”
he said in 1956. “It has been participation in an exciting adventure
– a way of life providing satisfaction in the accomplishment of our
goals. So our people have become a great team, welded together by great
ideals and purposes accepted by each of us.”
In the 1940s the venerable Pew took a serious
interest in the oilsands, in part because of an
investigation of potential crude oil sources Sun undertook during the Second
World War. In the early 1950s, George Dunlap had a remarkable interview with
Pew before moving to Calgary to set up Sun’s Canadian exploration and
production operations.
“I have one area that I am interested in and
would like to share with you my interest,” Pew told him. He went to a
cabinet to pull out a thick file marked “Athabasca Tar Sands,”
then shared his vision of the future importance of the oilsands.
He told Dunlap to ensure that “Sun Oil always has a ‘significant
position’ in the Athabasca Tar Sands area!”
The Canadian division’s land manager, Edward
(Ned) Gilbert, first recommended that the company acquire a four-section
block in the Athabasca area. According to an analysis by the federal
government, that holding hosted 200 million barrels of recoverable oil per
section. Sun acquired the land for about $3,600, or $1.40 per acre, then successfully approached Abasand
– a company with roots going back to the 1930s – for an interest
in its Mildred-Ruth Lake lease. Over the following eight years, Sun invested
just less than half a million dollars in oilsands
research. Then, in 1958, the company signed an agreement with Oil Sands
Limited (another storied company with long roots) by which it would use its
technology to construct an integrated oilsands
project on the Ruth Lake lease.
There is a fascinating story about the decision by
Sun’s board to approve that project. Pew asked Gilbert and his boss,
George Dunlap, to sit in as visitors at a board meeting. “We were in
the room and the board of directors were at a big table” according to
Gilbert. Pew “proceeded to tell his board that he wanted their approval
for the company to build this project….I don’t remember whether
they hummed and hawed but they weren’t very happy about taking on this
strange thing (GCOS). I heard him say, ‘Gentlemen, either you approve
this or I’m going to do it on my own.’ Well, that made up their
minds that Sun Oil had better do it.”
The venture was called Great Canadian Oil Sands
Limited (now the Suncor plant), and in 1962 the Oil and Gas Conservation
Board (today the ERCB) granted approval for the company to proceed with a
31,500 barrel-per-day, $122 million plant, but imposed severe environmental
restrictions on the plant. The partners had serious concerns about economies
of scale for such a small project. Costs began to rise and financial difficulties
ensued. By 1964 it was clear that a company with deep pockets – not
Canadian Oil Sands Ltd. – was needed to lead GCOS. Sun took on that
responsibility. The capacity of the proposed plant increased to
45,000 barrels per day and the cost escalated from $122 to $190 million.
The larger plant received approval in 1964, partly
because Pew wrote a letter to the Petroleum Resources
Conservation Board (now the ERCB) saying “I believe in the future of
this project and I will put up my own money without reservations if the
permit is approved.” Read aloud at a meeting of the Conservation Board,
that letter carried the day. By the time GCOS reached completion in 1967,
costs had risen to $235 million.
Building the Plant: The engineer in charge of
construction was Robert (Bob) McClements, Jr., who
later became chairman and CEO of Sun Oil. McClements
described Pew as “one of the strongest influences on my life.”
Pew would visit the construction site and “we
would have engineering (and other) discussions. He would ask ‘How much
does it cost to feed a man an average twelve hours on a shift?’ He was
very, very detailed. I still remember: it was six to eight pounds of food per
person per day and a little less than $2.00 per person to feed a construction
worker… Anyway, there was a side of J. Howard that I don’t think
has really been widely recognized. I think many people would describe him
first perhaps as an industrialist. He was certainly known as the leader of a
large corporation. Sun was always in the top 20 of the Forbes list of
companies. It was a huge company. But there was also a spiritual side to him.
He was a very religious individual. His conversations often included two
words: faith and freedom, and they were welded together….”
The Sun Company McClements
joined in the 1960s was much different from those in today’s oilpatch. “There was no retirement plan, there was
no healthcare plan, there was no sick plan. When you
were sick, you took your own time off….You would pay for that time.
When you retired – and nobody quit and nobody was ever fired at the Sun
Company – you retired at 50% of your pay. There were no documents
explaining this in those days.”
McClements described the only
meeting he attended between Pew and Premier Ernest Manning. “I’m
telling you I’ve never been in a business meeting in my life like that.
It was like you and me sitting here talking. There were no hard specifics.
(There) was a feeling of absolute trust between the two of them. And I
remember when I went back to the plant, somebody asked me about it. Without
thinking, I said ‘Those two men just reeked with honesty.’ The
relationship they had was unbelievable, exactly the same wavelength.”
McClements served as master of
ceremonies at the official GCOS opening. A Sun Company publication
commemorating the event quoted him as saying “synthetic crude is a
natural for petrochemicals. I see no reason why the stretch along the
Athabasca (river) cannot become an industrial valley in time.”
McClements vividly remembered the
official opening. “It was the end of September in 1967 at the
dedication of the plant. Pouring rain, not a very good day at all.”
Premier Ernest Manning and Pew (then 85 years old) both addressed the
audience of about 200.
According to Manning, “no other event in
Canada’s centennial year is more important or significant.… It is
fitting that we are gathered here today to dedicate this plant not merely to
the production of oil but to the continual progress and enrichment of
mankind.” For his part, Pew told the assembly that “No nation can
long be secure in this atomic age unless it be amply
supplied with petroleum. It is the considered opinion of our group that if
the North American continent is to produce the oil to meet its requirements
in the years ahead, oil from the Athabasca area must of necessity play an
important role.”
McClements, who was the first plant
manager for GCOS, recalled a tour he gave Pew once production had begun.
“We had visited the mine and were in the refining section of the plant
(when he) asked to see a sample of what we were running and I asked an
engineer to pull a sample of the product we were making at the moment. Mr.
Pew took the bottle and held it up to the light. It was water white. He
unscrewed the cap, held one nostril and sniffed the oil again. Finally, he
stuck his finger in the bottle and tasted the oil. When he did, you could
just see his face beam.”
A broad view of the GCOS story comes from Paul Chastko, a renowned oilsands
historian. “When Great Canadian Oil Sands began production in 1968, it
represented a remarkable achievement,” he wrote: “a Canadian
company, backed by the investment capital of a U.S. multinational
corporation, used a separation process researched and developed by scientists
funded by the governments of Canada and Alberta to produce a synthetic oil
capable of competing against conventional Saudi crude in world oil
markets.” All true, but the energy behind this effort was the vision of
J. Howard Pew. The impact on the oilsands of this
one man has been immeasurable.
Peter McKenzie-Brown
Language Instinct
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