Strange, don’t you think, that it took an American to once and for all put an end to Ontario’s dominance of the federation:
A few years ago, a Billings petroleum geologist by the name of Dick Findley was working out of his basement – searching for oil in an area that had been barren for over 20 years. Things were rough and he was struggling to get by.
He even flirted with the idea of getting a second job as a restaurant cook. On a diet of nothing but Ramen noodles and hard-boiled eggs – how could you blame the guy?
But one thing kept Dick going – an unprecedented suspicion that this area, known as the Bakken Basin, contained more oil than Saudi Arabia, Iraq and Iran combined.
The Bakken Basin, located in Montana, North Dakota and Saskatchewan – was at one point coined “one of the largest disappointments in the oil industry.”
During this period, technology lacked the efficiency to make drilling worthwhile. And when oil hit all time lows in the late 90’s – the Bakken Basin was basically abandoned.
But Findley kept digging around.
And through sheer luck, he and his partner stumbled upon a porous layer of dolomite, 9000 feet below the ground of a ranch just outside Sidney, Montana.
This stumble turned out to be the largest on-shore oil discovery in decades. Little did he know, but Findley discovered enough oil to fuel the U.S. for 41 years.
Sure … it’s a promo, but the flood of oil money pouring into South Eastern Saskatchewan isn’t a fantasy.
Update: From Spike 1 in the comments:
The Bakken field can be developed because of a company and a gentleman that was from Arcola,Sask named mark Langfield.He introduced horizontal drilling to the Sask. oil patch and the rest is history.It was’nt “big oil” that brought in the Bakken,it was inovative individuals.The mud motor made it feasable.
To: Cjuck. Interesting topic!! I hung out in Montana and N. Dakota in the early 70’s. There were dozens of rigs in the area (Williston, Glasgow, Minot etc.) The place was swarming with cash. The V. Nam war was on, young able bodied guys were at war, otherwise I beleive the exploration would have been more intense!!
it’s a promo, but the flood of oil money pouring into South Eastern Saskatchewan isn’t a fantasy.
For the last 60+ years the Backward Province has screwed up every opportunity. I doubt that’s going to change just because of a short interlude with socialism lite.
Get your hole in the ground now boys … cause the last one in is going to suck dust.
Massive Oil Deposit
Let’s cut to the chase, can anyone surmise the stock symbols of these companies? A year ago I passed on BZP when it was below $5, it’s over 20 now, stupid me.
Here’s a winner:
http://www.newswire.ca/en/releases/archive/May2008/08/c5707.html
Incidentally, the estimated acquirable oil take with today’s technology (that’s todays…not what will be available eventually) is about $400 Billion barrels….(that’s Billion, son).
Want to know how much the Federal Courts will protect due to some tree hugging environmentalist organization filing suit for an injunction?
ALL OF IT!!!!
And the Ninth ‘Circus’ Court of Appeals will rubber stamp the decision on the injunction. The Supreme Court will not hear the case. Of course, the Environitwits will have to get creative to have the case heard out West…but they’ll succeed.
You fine folks north of our border are a bit more loving on the environment than we ugly Americans. So…there it will sit…black gold, Texas Tea…and nothing will become of the Bakken Field except for the sudden discovery of it being the breeding ground of the Great Horned Sniznack Worm…and how could we live with outselves if we infringed on such a courageous worm?
JR
JR: They are drilling like crazy in Sask. JR. Read the link in my 5:08.
and all it will take is a mere 5 million wells. about twice what has been drilled in all the canadian wsb to date.
hook the jacks to windturbines , pump oil , make electricity and gather already chopped ducks for dinner.
They have known about the Bakken formation since it was discovered in the 50s. The problem has always been the oil is in thin sections of shale rock. Only with the modern horizontal drilling and fracturing technology does it become economical to extract. The higher drilling costs, some put the figure at $5 million a well is offset only by the high oil prices.
The cost of a new refinery is pretty nebulous, but my best estimates (from so many disparate sources, I could faint!) is about $1,000 – 5,000 per (barrel per stream day capacity), depending on the capacity of the refinery. The lower the capacity the lower the unit bpd cost.
For example, a 20,000 bpd capacity refinery may cost $20 million, while a 100,000 bpd capacity refinery might cost $500 million.
For example, in Nigeria, I recently read that the 12,000 bpd topping modular refinery for Akwa-Ibom is for $10 million, while the 100,000 bpd complex refinery being touted for Tonwei Refinery in Bayelsa is estimated at $1.2 billion.
Uh, JR…..
Google Earth “Stoughton, Saskatchewan”.
You can’t throw a stone in any direction without hitting a drilling rig. More, faster, please.
ol hoss,
never miss a chance to dump on this province do you?
I just can here the “greenies” and the Suzukis crying … Oh this is absolutely terrible news ! We should be burning food for fuel so the resulting starvation can assist in depopulating the earth !
Hey Sask, one question… Do you really want all those “eastern creeps and bums”?
The real money line
Oil Sands, Alberta 1.6 trillion barrels
How big is the Sask Oil Sand play ?
…soooooooooooooo, this means the price of gas is going down then eh?
tomax7… Such a comedian…
Fred
Sask oil sands is very early in its exploration but there is drilling that has proven 2 billion so far.
More info here http://www.oilsandsquest.com/our_projects/sask_oil_sands.html
does anyone remember when that red Forlorne Calvert tried to farm out all the Sask. oil sands to CNPC, the Chinese National Petroleum Corporation?
no. \
well I do.
Don’t get too excited guys, current estimates are that 1% are recoverable with current technology.
http://www.kansascity.com/news/breaking_news/story/570557.html
“The U.S. Geological Survey reported Thursday that an estimated 3 billion to 4.3 billion barrels of undiscovered crude oil could be tapped, using current technology, from a massive expanse of underground shale known as the Bakken Formation.”
using current consumption rates, that would last less then a year, not 41 years.
exactly allan, the good parts are at 6%, average well 85000 bbls. at only, ONLY , ONLY 2million buckeroos per well.
brokers say 150000bbls. but what do they know. onto the next deal , science be damned. a couple of commissions and away we go.
think brokers and the dot com era.
this will be remembered as the bak.kom oil play.
you heard it here first.
USGA has estimated that at current technology North Dakota could recover about 2bbl barrels of the 167 billion that are there.
Thats nothing to sneeze at. It’s a good start
We own the mineral rights in the oil area of Midale Sask and were phoned today by an oil co. that wants to lease our land. Apparently they will pay 15 % royalty if oil is found.(haven’t received any paperwork yet so I don’t know any other details) Does anyone know how the royalty is figured out- i.e. 15% of what?
Thanks
Horny Toad
We own the mineral rights in the oil area of Midale Sask and were phoned today by an oil co. that wants to lease our land. Apparently they will pay 15 % royalty if oil is found.(haven’t received any paperwork yet so I don’t know any other details) Does anyone know how the royalty is figured out- i.e. 15% of what?
Thanks
Horny Toad
“Hey Sask, one question… Do you really want all those ‘eastern creeps and bums’?”
Charming.
However, given the population base of Saskatchewan, it’s unlikely the province can develop or expand economically without them.
And anyway, just about everyone in Saskatchewan (less the native population) is a descendant of an “eastern creep or bum” of some sort.
Very interesting Cjunk, well done!
I saw the Pres or CEO of Crescent point energy on BNN a couple of weeks back talking about the Bakken field play. He said the zone is only 12 metres (40 feet) deep but with new horizontal drilling and frac techniques they are able to extract more oil than previously thought.
The same day, I think, the CEO of Trans Canada Pipelines was on BNN talking about building a nuclear power plant in SK since it was closer to the Uranium mines and that their analysis showed the locals were receptive to this sort of venture. He talked about the need to supply the oil snads in AB with power and that the SK oil sands would require the power as well in the not to distant future. I was in the hospital on morphine at the time so I don’t know if it is true 🙂
Can anyone verify some of this, hehe.
HT: How it’s done in Canada I’ve no idea … in the States it depends on what state you’re in, but unless you own a lot of land (say, more than a square mile) and all the minerals, more than one lease (often many) will be aggregated for a single well. Your royalty share under the terms you mention will be 15% of the production proceeds attributable to whatever your lease’s share in the well is. If your lease is, e.g., 50% of the acreage attributed to the well, your lessee will be entitled to 50% of any production: that is the totality attributable to your leased premises, and you and your lessee will split the proceeds of that production 15% (you) and 85% (lessee). Obviously, the smaller the lease, the smaller the share of proceeds. Royalty interests aren’t cost-bearing; if the well is a dry hole you lose nothing except the apparent value of your mineral estate goes ‘way down for future lease purposes. Sorry if this sounds confusing; it will sound even more confusing when the lease broker shows up. Check with your neighbors, see who’s approaching them and what terms they’re being offered. Don’t take the first deal handed, if this is looking to be a hot area. Just sayin’.
JJM, I think that was intended to be a facetious remark.
Go Saskatchewan; go.
Horny Toad.
Go talk to a lawyer. They deal with they contracts frequently. I would recommend Tom Schuck in Weyburn. You will need tax planning if you are like some of the farmers who make 6 (and even 7) figures from royalties.
If I’m not mistaken, and I stand to be corrected, but haven’t they discovered that CO2, injected back down, offers up an additional 15% recovery.
Check the SDA archive, as I think it’s in there. Didn’t Kate post about CO2 recovery and how it’s added a whole new life to the Bakken.
Tristar Oil and Gas, for one, is hitting oil in well over 90% of its drill sites in the Bakken, and each is productive. If the flood of companies diverging onto the Bakken is any indication, this is going to be huge. The companies drilling there now, are claiming far cheaper costs for recovery than the tar sands … so that says a lot in itself. Tristar just announced huge profit increases first quarter 2008, and they are going all out on this project.
Now, if they are increasing profits, at this stage when output costs are at their max … imagine what awaits down the road.
CO2 fracing isn’t a new technology. The problem seems to be getting the CO2 in the first place (ironic a bit?).
For any useful stored volumes, it needs to be liquefied and ages ago while working for Liquid Carbonic I seem to recall that getting a rich enough offstream “waste gas” supply wasn’t that easy.
Technologies similar to SAGD are being researched now.
Have any of folks seen Granny?
The new wells in S/E Sask are very different than the Vertical. The Rig moves onto a “surface” lease and may drill 5 horizontal wells in different directions. The 20 new wells in my area are on 4 surface leases. The oil is said to be Light.. Simple to “Shake off Water” and into the pipe line.
Interesting that ND is also drilling like mad, and they are using Calgary for Engineering…
(Calgary may have replaced Tulsa)
BTW: An investment in Canadian Oil Companies takes more than Luck. Its an insiders play that requires constant attention.
The new wells in S/E Sask are very different than the Vertical. The Rig moves onto a “surface” lease and may drill 5 horizontal wells in different directions. The 20 new wells in my area are on 4 surface leases. The oil is said to be Light.. Simple to “Shake off Water” and into the pipe line.
Interesting that ND is also drilling like mad, and they are using Calgary for Engineering…
(Calgary may have replaced Tulsa)
BTW: An investment in Canadian Oil Companies takes more than Luck. Its an insiders play that requires constant attention.
A diamond exploration company hit two core holes with 30 meters of metallurgical coal north of Hudsons Bay, Sask.
Check out their stock chart, GSX on the TSE.
25c to $5.00.
At the SaskRocks mining show one of the oilmen there said the Bakken wells were $2 to $2.5 million to drill and complete. The hard part is the completions and finding the right technique to recover the most oil.
Water flooding is one of the tricks.
Another oil man was telling me that the technique of logging while drilling, LWD, was one of the secrets, it increases the accuracy of where the drill bit is.
tomax 7:
The short answer is “yes – oil prices will come down”, likely precipitously in the next 2 to 5 yrs. Huge new oil reserves are being found or technology is unlocking them – bakken is one of several examples. (Do not heed the pooh-poohing of current recoverable %ages as the technology – horizontal fracing – is in its infancy relatively speaking.)
That, coupled with significant changes in consumtion habits in the developed and developing world (go talk to an RV dealer right now to get a taste of what’s happening), will see the highly inelastic demand curve snap back prices to $40/bbl or even lower if these 120 plus prices carry-on for much longer.
“Peak-oil” scares have been recurring ever since oil was first drilled for by colonel drake back in PA. This most recent scare is no different. There are trillions of BBLs of accessable oil in CDA alone not to mention gigantic NG reserves.
It is worth keeping in mind that oil was as low as $15/bbl (in 2007 dollars) less than 10 years ago.
could you put the “little mosque” on the map
Megaera at 10:10 PM,
What you explain rings very true and similar to a Friend*s royalty income dribbling in from a shared well-site property in Alberta.
Four family farms get a shared income but from the downward adjustments of royalty payments, I have questions about the honesty of the pumper.
Seems there is too much trust in the oil collector*s counting of harvested barrels.
I heard of one tough farmer who said the estimate was BS and he would find another operator to get a better return.
They suddenly admitted their errors and offered him an much enhanced figure.
Foxes in the henhouse? = TG
HornyToad, mineral leases haven’t been at 15% for a few years ! They’ve been at 17% and are now moving up to the 20% area, that is for any land thats still open and in the Bakken. I would strongly advise you to consider a lawyer, as there are new items to consider when drawing up a lease now days (off-sets, shut-ins, zones, blends, time, acreage payments!) The cost of a lawyer would be far less than one weeks production from the Bakken, and if they drill, you’ll likely never see your minerals freed up again, so be sure to make it a good contract!
PiperPaul:
“JJM, I think that was intended to be a facetious remark.”
Let’s hope so.
JJM,
I am supposed to feel sorry for eastern creeps and bums? For much too long western Canada has been at the mercy of the them. Harper having done a wonderful job of dividing them prevents them from stealing the resources of the west.
The “easterners” who built the west are the eastern europeans. No thanks to Canadas east.
Correct me if I’m wrong but where not the enviro-nuts bleating 30 years ago that the world would run out of oil in 30 years?
There are so many assumptions about oil that are being disproved all the time.
For example:
We will run out some day. (that appears doubtful)
Oil is a fossil fuel. (even that may be a mis-nomer)
Paul – You mentioned Tristar in an earlier post. Looks like a real winner in the Bakken play. They are a very significant player. Have you seen their share price this morning? They reported 1st quarter results at the close of markets yesterday. I’v held the stock for a few years now and am counting on that company to look after my financial needs into my retirement.
Hey, ‘eastern creeps and bums’, that does mean their politicians, doesn’t it?
different bob: Great choice! BMO raised them to 25.00 this morning … if you’ve owned TOG since they were in the 2.50 range, you’ve done good … awesome actually. I don’t own a lot of TOG … but what a stock with a future.
I suppose for you the tough choice some day will be deciding when to sell … people fall in love with some stocks and can’t get rid of them. But, remember what Warren Buffet says … “you ain’t got nothing until you sell em.” It’s knowing when to pull the trigger that’s tricky. But I bet TOG won’t be there for years to come.
Cheers!
The Bakken field can be developed because of a company and a gentleman that was from Arcola,Sask named mark Langfield.He introduced horizontal drilling to the Sask. oil patch and the rest is history.It was’nt “big oil” that brought in the Bakken,it was inovative individuals.The mud motor made it feasable.
Paul,
You and Buffet are right in . . .
** you ain’t got nothing until you sell em. ** It’s knowing when to pull the trigger that’s tricky.
Not exactly clear on your meaning . .
** But I bet TOG won’t be there for years to come. **
Did you think moneybags like Texas Pacific Group, Blackwell, or Jimmy Pattison*s take-over
team would buy them out, or some bigger energy conglomerate? = TG
Paul – I got into Tristar kind of through the back door. I was holding stock in a company called Bulldog and they got taken out by Tristar last year. Bulldog was in the $8 range when they got taken out so for every share of Bulldog we got .69 of a share of Tristar that was at about $12. The good news is that I got most of my Bulldog at between $2.50 and $3. Its been a sweet ride. I don’t plan on selling anytime soon.
Anonymoose – you’re absolutely right. A company like Crescent Point could step up with a big offer and Tristar could be gone in minute. Crescent point has the financial where-with-all to pull it off. I would have no problem holding Crescent Point Energy Trust in place of Tristar. If I’m not mistaken, Crescent Point is the dominant player in the Bakken. It is a very run company. Their share price has been on a bit of a tear lately also.