Sun Oil Sands History

The oil sands are located within one of the world’s most admired democracies and they represent the largest source of crude oil directly available to the North American Market (pg. 24). The dream of recovering oil from the Alberta bitumen on a commercial basis was born in 1900s, when John Rockefeller was building Standard Oil, that is now known as ExxonMobil. Over the years, many companies took interest, and Sun Oil, began processing bitumen from the oil sands in 1967 (pg. 3).
Suncor’s parent company, the People’s Natural Gas Company, was founded in Pittsburg, Pennsylvania, in 1886 and soon became the Sun Oil Company (pg. 6). It took on variations of the name Sun Oil and Sun Company before eventually becoming Sunoco in 1998. In Canada, it
had opened Sun Company of Canada as a subsidiary in 1919, and from 1923 the company was known as Sun Oil until 1979, when it became Suncor, and ultimately Suncor Energy in 1997 (pg. 6).
The Canadian arm began to develop the oil sands soon after the Second World War, and Sun Company became the majority shareholder in the Great Canadian Oil Sands, or GCOS, in 1967 (pg. 6). Within a few years, GCOS was rolled into Sun Oil Canada, or Suncor, with the entire oil sands development managed from Dallas, Texas (pg. 6).
Between production costs that floated near or above market prices and an apparently endless cycle of fires and freeze-ups, the oil sands operation was costing Sun Oil about $100 million each year. The company began selling many of its Sunoco service stations in Canada, using the revenue to buoy up its oil sands operations (pg. 6). 25 percent of Suncor had been sold to the province of Ontario in the 1980s.
After 20 years of unproductive effort, Sun Oil’s CEO, Tom Thomson, recruited George to oversee operations (pg.
4). George was originally from Brush, Colorado, and had been working in London, England, in charge of Sun Oil’s international operations on the upstream side, which included exploring for oil, developing reserves, producing the oil and transporting it to the customer (pg. 4). In 1991, he moved from London to Toronto, Ontario, and went from being COO to CEO (pg. 8). In 1993, the government of Ontario divested in interest in Suncor, and by 1995, Sun Company divested its interests as well. Suncor was a 100 percent public, Canadian company (pg. 63). And within three years, the capital market value of Suncor exceeded that of its former parent, Sun Company (pg. 61). In 2009, Suncor acquired Petro-Canada, with 98 percent Suncor shareholders and 96 percent of Petro-Canada’s approving it (pg 108). This takeover reduced the total annual costs by more than $800 million per year (pg.
121).
George points out that gasoline, and most other products derived from crude oil, is a commodity (pg.
14). By definition, commodities vary by price rather than by any substantial difference in their qualities (pg. 14). Price and supply are at the opposite ends of the spectrum, and are inversely proportional. It follows that whoever controls the supply controls the price, and for the last half-century the controls have been in the hands of the Organization of Petroleum Exporting Countries, or OPEC (pg. 14). While production figures vary from week to week, about half of the 80 million plus barrels of oil consumed around the world each day are produced and marketed by OPEC members. Among those members true power rests in the hands of Saudi Arabia. With the world’s largest conventional oil reserves and a highly developed and sophisticated production system, the Saudis have dominated global oil production for more than half a century. At least a third of all production from OPEC countries originates in Saudi Arabia (pg.
14).