BUSINESS/ECONOMY

A long-shot hunt for oil

MARC CLARK August 5 1985
BUSINESS/ECONOMY

A long-shot hunt for oil

MARC CLARK August 5 1985

A long-shot hunt for oil

Francis (Franc) Joubin takes great delight in proving his detractors wrong. In the early 1950s, when he was prospecting in Northern Ontario, the maverick geologist found few backers. “It took me four years to raise a lousy $35,000,” he says ruefully. But in 1954, after Joubin discovered what was then the world’s largest uranium deposit near Blind River, the price of stock in Joubin’s company shot from $1 a share to $135, making him a millionaire and leaving his doubters shaking their heads. And last week, as a drill ship and four escorts organized by Joubin and his partners bashed through pack ice into Hudson Bay, he was challenging the skeptics again. If the expedition discovers oil in the vast, shallow bay, Joubin, 73, will cap a brilliant prospecting career. Said Joubin: “I like to be ridiculed all the way to the bank—not for the money; just to prove them wrong.”

The Dutch-registered Neddrill 2 was scheduled to begin drilling the first of two exploratory wells this week in waters that Joubin says are Canada’s equivalent to the oil-rich North Sea. The ship is on contract to a group of nine Canadian oil companies including Sogepet Ltd. of Toronto, a company Joubin

formed in 1962 to promote exploration of Hudson Bay. Key players include Toronto-based Consumers Gas Inc., which owns 45 per cent of Sogepet, and ICG Resources Ltd. of Winnipeg. Two provincial governments are also involved: Ontario, through provincially controlled Onexco Oil and Gas of Toronto, and Trillium Exploration Ltd. of Calgary and Quebec, through the provincially owned Société québécoise d’initiatives pétrolières (Soquip) of Ste-Foy, Que.

By industry standards, the plan to drill two exploratory wells is modest—$40 million—and a long shot, but the participants are excited by the possibilities. “The risks are substantial,” said Ben Smith, the Calgary-based vicepresident in charge of exploration for ICG Resources Ltd. “But the area and size of the potential oil-bearing rock are such that there is potential for enormous reserves of oil —billions of barrels.”

The decision to drill this summer was influenced by Ottawa’s abolition of the Petroleum Incentives Program (PIP). After March, 1986, PIP grants will no longer cover as much as 80 per cent of the cost of frontier exploration. Said Philippe Hervieu, a Montreal-based oil analyst with Nesbitt Thomson Bongard Inc.: “The whole thing is just a geologist’s dream. But it is worth having a look before the grants run out.” Still,

Smith added, ICG “would have gone in no matter what. Hudson Bay is one of the few places where, for a relatively small investment, you stand a chance of turning a small company into a very large company overnight.”

For Joubin, who was made an officer of the Order of Canada in 1983, discovering Hudson Bay oil would be the pinnacle of an outstanding career. From 1964 to 1984, between bouts of promoting Sogepet, Joubin did pioneering work from Patagonia to Poland as a geological consultant for the United Nations. Some of his discoveries: uranium in Somalia, natural gas in the Caribbean, potash in Poland and numerous deposits of copper in Central America. Said Ronald Johnson, a Calgary geologist who has known Joubin for 25 years: “Frank has been and done things that most geologists only dream of.”

Joubin’s belief in Hudson Bay oil took root in the late 1940s, when he was prospecting for lead along the bay’s “brutally beautiful” eastern edge. At low tide, he encountered a strange mineral that proved to be anthroxalite, a relatively rare compound that can be formed from crystallized crude oil. Joubin was intrigued. In 1963, when he returned to the Arctic, he put out word to local Inuit that he was seeking rocks that burned. Eventually, a teenager on Southampton Island, at the north end of

the bay, reported that his grandfather had showed him such rocks. Joubin subsequently discovered huge beds of oil shale—similar to those in northern Alberta—up to 15m thick and stretching for 200 km.

At the same time, federal geological surveys demonstrated that virtually all of Hudson Bay, as well as large parts of the Manitoba and Ontario coasts along the western and southern edges of the bay, were part of a vast sedimentary basin formed under ancient seas—and sedimentary basins produce oil. In 1966 Joubin was encouraged when he found “residual bitumen”—oil stains—on core samples drilled near the Manitoba coastline, but three wells drilled in the bay over the next eight years proved disappointing. Then, in 1975, the search was abandoned when Ottawa suspended the Canada Oil and Gas Act, eliminating certain tax breaks for exploration.

In 1982, after Ottawa introduced the National Energy Program and the PIP grants, Joubin once again began hunting for partners to finance exploration. ICG’s Smith told Maclean's last week that he responded immediately. “It is almost a totally unexplored basin,” he said. “It has to be drilled.” Added Joubin: “We have oil shale to the north and residual bitumen to the south. With a basin 700 miles long and 400 miles wide, there has got to be oil in between.”

Despite the optimism, Smith acknowledged that the best oil deposits generally are found in rock younger than the Hudson Bay structures. And the bed of potentially oil-bearing sedimentary rock under Hudson Bay is relatively thin —about one-quarter to onethird the thickness of that in the huge Hibernia field off Newfoundland. But Smith pointed out that “very significant” oil deposits have been found in rocks of similar age and thickness.

Hudson Bay offers other advantages as a drilling site, among them an average depth of just 300 feet, and ice is light or totally absent for 100 to 120 days a year. As a result, Joubin estimates that development wells could be drilled for roughly $5 million each, compared with $50 million in Hibernia and $75 million in the Beaufort Sea. In addition, Hudson Bay is closer than either of the other fields to major markets in Central Canada and the eastern United States.

After all his efforts, Joubin says he will continue the project, whatever the results of this summer’s tests. “It is my work, it is my pleasure, it is my delight—it is all I live for,” he said. “Other men chase golf balls. I go hunting oilfields.” As for the skeptics, Joubin adds bluntly, “I’m convinced we will find something, and when we do we will make them all look like a bunch of inept bastards.” -MARC CLARK