Canadian portion of the Williston basin humming with work

May 26, 1997
Spurred by a pro-industry environment in both Saskatchewan and Manitoba, Canadian exploration and development action is intensifying in the Williston basin. Companies north of the international boundary, which divides the U.S. portion of the basin from the two provinces, are capitalizing on incentive-based regulatory schemes and supportive provincial governments. In Saskatchewan, activity and interest are building over discoveries in the Midale area in the southeastern part of the province (see

Spurred by a pro-industry environment in both Saskatchewan and Manitoba, Canadian exploration and development action is intensifying in the Williston basin.

Companies north of the international boundary, which divides the U.S. portion of the basin from the two provinces, are capitalizing on incentive-based regulatory schemes and supportive provincial governments.

In Saskatchewan, activity and interest are building over discoveries in the Midale area in the southeastern part of the province (see related story, p. 18).

Industry action is expected to continue to build as 1998 implementation of Regina's deep-rights reversion program approaches, slated first for the currently hot Weyburn-Estevan area, a geographic corridor of heavy industry activity between the towns of Weyburn and Estevan, reports Saskatchewan Energy and Mines Minister Eldon Lautermilch.

In adjacent Manitoba, long-standing incentive-based drilling and producing programs are aiding the province and new Energy and Mines Minister David Newman in efforts to lure oil and gas operators to the province in increasing numbers.

Saskatchewan output up

Saskatchewan has experienced a 68% increase in production since the current government was first elected to office in 1991.

"We've been able to develop a very positive working relationship with industry," said Lautermilch. "Their knowledge of Saskatch- ewan-and the fact that Sas- katchewan is a relatively unexplored area-has created all measure of optimism; and through that, land sales that have set unprecedented records."

Saskatchewan's most recent sale in April realized $23.4 million (Canadian). The first sale of 1997, in February, generated $54.4 million compared with the $25.8 million produced by the two sales held in 1996.

Land sale revenues in 1996 were the second-largest in province history, and seismic applications were up 40% compared with 1995-nearly four times greater than 5 years ago.

Lautermilch said the provincial government hopes to implement the reversionary rights' program in the spring 1998. Unexplored acreage below depths that have already been drilled will revert to the Crown and then be re-sold if operators don't exercise their rights by drilling. "Alberta has a similar plan, and they saw a tremendous increase in drilling and land sales," he noted.

Saskatchewan's stats

Continually advancing horizontal well, enhanced oil recovery, and 3D seismic technology, as well as a relatively secure return on investment-coupled with well successes and enthusiasm generated by the Midale area find-have boosted industry activity in Saskatchewan.

"Many of the companies that we're dealing with are indicating they're going to be increasing the number of wells they're drilling by 100% this year over last year," Lautermilch said.

"Our drilling licenses issued and our wells drilled were running at about double the pace for the same period last year, and last year was a record year," an Energy and Mines spokesman said in April. "A lot of companies are gearing up for our deep rights reversion."

As of early April, total wells drilled in the province during 1997 were at 710 compared with 477 for the same period in 1996. Total wells drilled for 1996 were 2,862.

Drilling in Saskatchewan has been slowed due to a lack of available rigs, but that situation is expected to improve as more units continue to move in from other locations.

Operators are benefiting from reductions in the provincial sales tax, which took effect in March, and from special exploratory permits that allow companies to bid on land in some of the less-explored areas based on work commitments instead of purchasing or licensing the land.

Energy and Mines reports the combined effect of the incentives has aided the province in achieving 2 years of record oil production. Production in 1996 was 131.4 million bbl compared with 117.9 million bbl in 1995.

Horizontal drilling accounts for about half the province's oil production, but horizontal wells represent a much smaller fraction of the number of total wells drilled.

Natural gas production was 286 bcf in 1996, up slightly from 1995 but well below previous year totals, Energy and Mines said.

Manitoba action

A variety of E&D work is under way in southwestern Manitoba, according to Energy and Mines, Winnipeg.

Activity is spread out over Manitoba's producing area, limited to the southwest corner of the province, which overlies the northeastern portion of the Williston basin. The area includes about two-hundred 36-sq mile townships.

Among the activity:

  • Northrock Resources Ltd., Calgary, is pressing exploration to the Bakken and other formations near the town of Birtel.

  • Renaissance Energy Ltd., Calgary, is working in the St. Lazare area, looking for Jurassic age sands and other pay zones.

  • Canadian Natural Resources Ltd., Calgary, is active in the Pipestone area, looking for Mission Canyon pay.

  • Enron Oil Canada Ltd., Calgary, is working in an older field area in the Mountainside area, near the town of Boissevain, about 12 miles north of the U.S.-Manitoba border.

"Late last year they went in and drilled a development location," said Bob Dubreuil, director of the petroleum and energy branch of Energy and Mines.

"It turned out really good... they've subsequently staked a whole bunch more locations and done some 3D seismic and seem to have quite a nice little play developing there."

Manitoba incentives

Manitoba is seeing increasing drilling activity.

Through the end of April, 39 wells had been drilled compared with 11 drilled for the same period in 1996.

For all of 1996, operators drilled 57 wells in the province vs. 43 in 1995, and oil production of about 11,000 b/d in 1996 is slowly increasing.

"We are quite a bit ahead of...previous years," said Energy and Mines' Dubreuil.

Manitoba enacted a deep rights program in 1978, providing that deep rights would revert to the Crown beginning in 1988, and it also has a generous drilling incentive program.

The drilling incentive program provides for "holiday volumes" earned by drilling wells. Operators are exempt from paying royalties and freehold production taxes for a maximum period of 10 years on a maximum volume of 63,000 bbl. An incremental tax is applied on freehold properties and freehold production.

Another incentive program is the Petroleum Exploration Assistance Program, which provides an operator drilling an exploratory well with an outright grant of as much as 20% of the costs of eligible field activity expenditures. The program totals $1 million/year province-wide, and operators are eligible to receive as much as $200,000/year.

The program started in February 1996.

"We've had 13 new operators that weren't previously active in Manitoba that have applied under the program," Dubreuil said. Another half dozen operators have also applied.

Among other criteria, operators get funding preference if they plan to drill a new field wildcat to a deeper formation (defined as anything below Mississippian) and for wildcats above the Mississippian. The amount of exploration that has been conducted below the Mississippian has been limited.

"The level of activity we've seen here over the last 6 months indicates we're doing something right," Dubreuil said. "We just have to have some geological successes to convince people that this is a good place to look for oil."

Eldon Lautermilch
Saskatchewan Energy and Mines Minister
"We've been able to develop a very positive working relationship with industry. Their knowledge of Saskatchewan-and the fact that Saskatchewan is a relatively unexplored area-has created all measure of optimism; and through that, land sales that have set unprecedented records."

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