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Startup becomes land giant
Oilsands Quest, which is trying to lead Saskatchewan into a commercial oil sands era, now holds what it claims are the largest contiguous leases in Canada after spending C$10 million to acquire more than 45,000 acres of oil sands parcels — crossing the border back into its home province of Alberta to make the purchase.
The new parcels, picked up at the Alberta government’s second land sale of 2008, give the company 90,000 acres of oil sands exploration permits in Alberta, on top of 618,000 acres in Saskatchewan, where it also holds 490,000 acres of oil shale prospects.
The Alberta land is adjacent to its Axe Lake discovery in northwestern Saskatchewan.
Oilsands President Chris Hopkins said the Alberta additions are a strategic fit with his company’s Saskatchewan plans and are among the last large parcels of government land that are available in Alberta.
The decision to bid stemmed from an evaluation of two-dimensional seismic data obtained in early January.
Winter drilling at Axe Lake Meanwhile, Oilsands is proceeding with a full-scale winter drilling program at Axe Lake. A series of reservoir tests this year will yield about 600 barrels per day and give some shape to plans for a 10,000 bpd pilot project which is scheduled to come on stream in 2009.
Oilsands currently has four rigs operating in Saskatchewan and Alberta to delineate an estimated 1.5 billion barrels of contingent reserves in the Axe Lake discovery area and future exploration efforts will try and firm up an additional 3 billion barrels outside that area.
In addition, the company is acquiring three-dimensional seismic data and just established a wholly owned technology company to evaluate new thermal technologies that could be used to recover oil.
Desjardins Securities analyst Adam Zive told the Calgary Herald that Oilsands’ next major advances would be to launch the pilot project and find an established industry partner to bring Axe Lake to commercial production about 2012.
He described the latest land addition as consistent with the company’s long-term strategy and “another positive move in the right direction.”
—Gary Park
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