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January 15, 2009

Saskatchewan and North Dakota Oil

As of mid-October, 2008, Saskatchewan had 1,050 wells capable of producing in the Bakken. Of these, the vast majority (979) have been drilled since October 2004. Over the first eight months of 2008, the Bakken accounted for about 8.6 million bbls (an average of 35,250 bbls a day) of Saskatchewan's oil production of 105.7 million bbls (approximately 434,000 bbls a day).

In Saskatchewan, Bakken wells at Viewfield were drilled in 2004 by Bison Resources Ltd. The company was acquired by Mission Oil & Gas Inc., which was in turn acquired by Crescent Point Energy Trust, currently one of the three major players in the Bakken (along with TriStar Oil & Gas Ltd. and Petrobank Energy and Resources Ltd.).

Advances in horizontal well techniques that offer maximum exposure to the reservoir, coupled with the application of new fracturing and completion technologies, have been the key to unlocking the economics of the Bakken. Petrobank pioneered the use of the Packers Plus StackFrac system, which has become the industry standard in the Canadian Bakken.

In 2007, operators drilled 292 Bakken wells (269 horizontal and 23 vertical). To mid- November of this year, about 600 wells targeting the Bakken had been drilled. Although a breakdown isn't yet available, the vast majority would have been horizontal wells, according to a government spokesman.

Operators such as TriStar, with current production from the Bakken of more than 4,700 BOE per day, are continuing to focus on improving potential primary recovery factors in the play. In the second and third quarters of this year, the company drilled several shorter horizontal wells (approximately 600 metres compared to 1,400 metres for full-length horizontals), while continuing to fracture stimulate the wells using the same number of fracs as full-length wells. This technique reduces the inter-fracture distance and increases effective reservoir contact per metre of horizontal wellbore. Early production results from these shorter length wells are very encouraging with initial production very similar to what would be expected from longer-length horizontal wells, according to the company.


As of November, 2008 North Dakota is producing 215,000 barrels of oil per day and most of that is from the Bakken oil formation. This is over 6 million barrels of oil per month or 72 million barrels of oil per year.




TriStar has drilled 10 (6.5 net) of the shorterlength wells with the oldest on production for more than eight months.

TriStar's current oil reserve booking is based on a recovery factor of 1.1% of the estimated net total original oil in place. Achieving a primary recovery factor of 12.5% consisting of four wells per section at current average reserve engineer bookings would yield up to 70.5 million bbls of additional recoverable oil to its current booked reserves, the company has calculated.

TriStar has set a $285-million budget for 2009, of which two-thirds will be spent in southeast Saskatchewan including $165 million for the Bakken. Spending will include construction of key infrastructure to support the company's significant development plans for the area. TriStar has more than 235 (155 net) sections of development and exploration lands on which it has identified more than 813 (549 net) Bakken drilling locations.

Crescent Point's Bakken technical team conservatively expects over time it could achieve a 15% recovery factor on primary production, based on detailed simulation work that suggests up to 19% recovery with infill drilling at eight wells per section. Crescent Point, with its privatelyheld offshoot Shelter Bay Energy, holds about 600 sections of land in the play, making it the largest landholder in the Bakken.

Another option is enhanced recovery with water or carbon dioxide (CO2) floods. Crescent Point is in the early stages of determining how best to apply water and/or CO2 flooding to the formation with the objective of increasing its recovery rate to as much as 25-30%.


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