As an incentive to complete the trans-continental railway, the Government of Canada granted the CPR 25 million acres of land, including mineral rights, in Manitoba, Saskatchewan, and Alberta.

In 1883, while the railway was under construction, a crew drilled a well 35 miles west of Medicine Hat in search of water for the company's steam locomotives.

In 1906 the CPR hired Eugene Marius Coste (1859–1940) to manage its gas operations, and in 1912 set up its Department of Natural Resources, based in Calgary.

The new subsidiary, whose president was the English-born John McGuire Taylor (1917–1995), began exploring and developing oil and gas actively on its land holdings.

CP Investments managed the company's non-rail businesses, which included petroleum, forestry, minerals, steel, real estate, and hotels.

He shared his leases with Duncan Charles MacDonald (1884–1953), who formed a company called Del Rio Producers Limited.

Upon its creation, PanCanadian held the largest base of freehold petroleum leases of any Canadian oil company.

Initially, the company worked out of One Palliser Square, an office tower Canadian Pacific had opened in 1970 on the site of the former Department of Natural Resources Building.

Named PanCanadian Plaza, the tower was built by Marathon Realty – the real estate arm of Canadian Pacific Investments – and was designed by the Leblond-Koch Partnership.

Despite its excess of supply, Rombough's cautious leadership helped PanCanadian through the 1980s oil glut, during which time the company managed to increase its profits.

The breakup saw Canadian Pacific Railways, PanCanadian Petroleum, Fording Coal, CP Ships, and Fairmont Hotels spun out into independent companies.

In 2013, author Peter C. Newman assessed the breakup, writing, "the idea was 'to unlock shareholder value,' but in the process the new little duchies lost the protection of the parent empire.

"[7] Following the breakup, on Sunday, 14 October 2001, president David Tuer announced his resignation abruptly, allegedly after a clash with the board of directors over the company's future direction.

[9] On 16 October 2001, the president of the Alberta Energy Company Limited, Gwyn Morgan, telephoned PanCanadian chairman O'Brien.

In late October, O'Brien initiated "Operation Zebra" to create a plan for the companies to merge, or "change their stripes."

By Christmas Morgan and O'Brien had settled on the name EnCana for the merged organisation, and on Sunday, 27 January 2002, announced the plan.