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As a budding exploration geologist in the 1970s, Donald Rae worried about his career choice. Convinced that Alberta was running out of oil, oil companies were laying off geologists and engineers in big numbers and Peter Lougheed, Alberta’s premier at the time, wanted to diversify the economy.
Mr. Rae stuck with it, pioneered the discovery of tight oil in Canada, and is now is at the controls of another hot junior, Coral Hill Energy Ltd., focused on a play in the Swan Hills area of west central Alberta that could hold up to four billion barrels of light oil.
Meanwhile, Alberta is producing more oil than ever. “It’s the thrill of the hunt,” Mr. Rae, 63, said in explaining why he started another company. “I love what I do and I have great people with me, so we have a lot of fun.”
The enthusiasm may seem disconnected from the bad news beating up the Canadian oil patch today – anti-oil activism, weak prices, pipeline bottlenecks, disinterested investors.
Far from ceding the field to energy alternatives, Mr. Rae is one of the entrepreneurs working on new ideas to keep expanding the business – from finding oil and gas in new places to squeezing more out of old ones, from arranging new transportation options to using new financing models that don’t involve public markets.
Indeed, thanks to trailblazers like Mr. Rae, Canada is experiencing a light oil renaissance. According to the Canadian Association of Petroleum Producers’ latest production outlook, light oil production has not only reversed declines but is expected to grow more than anticipated as a result of tight oil discoveries in Western Canada.
“This industry has always found a way to make things economic, to find new things,” Mr. Rae said. “And we always find a way around the problem. And I believe we will, but we have to be smart about it.”
Mr. Rae knows it pays to be smart, and even more to be first.
After working for some of Canada’s biggest companies — Husky Energy Inc., Dome Petroleum Ltd., Penn West Exploration Ltd. — he started Wave Energy Ltd., the first private junior he ran, because he disliked the trend toward converting companies into trusts, which in the early days meant getting away from exploration and harvesting known pools to distribute cash to shareholders.
When many in the industry were piling into natural gas and the oil sands because light oil was thought to be past its prime, he set his sights on the Lower Shaunavon formation in southwest Saskatchewan, where he drilled the first successful horizontal well in 2006.
Horizontal drilling and hydraulic fracturing are household words today, but not then. The technologies were “being used in Texas in the Barnett Shale and places like that, often in gas, but we thought there was an opportunity to use it in oil up here,” Mr. Rae said. “And the Saskatchewan government — I’ll give them credit — were the ones who encouraged horizontal drilling.”
Wave was eventually sold in 2009 to Crescent Point Energy Corp. for $665-million. Most shareholders quadrupled their money.
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