Long before, members of the Kutenai discovered the presence and medicinal value of oil seepages along Cameron Creek. This knowledge slowly filtered to incoming white settlers such as Kootenai Brown, who soaked up the oil with gunny sacks to use it as a lubricant and for medicinal purposes.

William Aldridge, from Cardston, was one of the first to develop the Cameron Creek seepages for commercial use. Today, seepage ponds continue to be used as a "dip" by wildlife. The oil also acts like a natural bug repellent.

In 1901, Rocky Mountain Development Company began to successfully drill for oil. At 311 meters (1,020 feet), oil was struck, producing a flow estimated at 300 barrels per day. The site of this "Discovery Well" is located along Akamina Parkway, 8 kilometers from the townsite. The strike generated a lot of excitement, development plans and further drilling, but not much oil. Large storage tanks were set up, a railway branch line expected and the plans laid for a booming new town - Oil City. As with many "booms", this one soon went "bust".

In 1904, some pieces of drilling equipment became stuck inside the casing, reducing flow to an erratic trickle. By 1906, the well was closed for good. This brief oil strike not only sparked an interest in oil that later led to the famous Turner Valley oil boom, but also inspired other companies to come to Waterton to drill for oil. The Western Coal and Oil Company was responsible for the first settlement in the present townsite. In 1904, it drilled several holes, but no more than a barrel a day was ever produced. This, too, was eventually shut down, and although several attempts were made over the next few decades the dreams of oil riches in the area were gone forever by the 1930's.

Geologists explain that the first oil strikes in Waterton were a fluke. The oil had seeped in from great depths to underground reserves and had become trapped along a fault plane not far below the surface. The rock layers, forming part of the Lewis Overthrust, was a vast sheet of pre-Cambrian rock too old to produce oil. The Lewis Overthrust overrode younger Cretaceous rock. Geologists now know the oil was formed and originated in this much younger rock.