HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS PETROLEUM NEWS BAKKEN MINING NEWS

Providing coverage of Alaska and northern Canada's oil and gas industry
August 2009

Vol. 14, No. 33 Week of August 16, 2009

Bakken is cookin’

Feeling the pressures from its western flank, Alberta is also being squeezed from its eastern side, as Saskatchewan gets a thumping vote of confidence in the future of its Bakken oil play, which extends northward from Montana and North Dakota.

In a deal valued at about C$2.24 billion, Petrobank Energy and Resources plans a cash-and-shares takeover of TriStar Oil & Gas prior to spinning out a new publicly traded, pure-play company called PetroBakken to exploit the unconventional Bakken resource, which has an estimated 400 billion barrels of light sweet crude in place on both sides of the 49th parallel, up to 25 percent in Saskatchewan.

Provided the offer (which includes a 29 percent premium to TriStar’s average trading price over 10 days before the announcement) gets shareholder approval and is completed on Oct. 1, Petro-Bakken will exit 2009 with production of 37,000 barrels of oil equivalent per day from proved and probable reserves of 127 million boe.

Of the Bakken players in Saskatchewan, only Crescent Point Energy Trust will be larger, at 39,000 barrels per day.

“It really is a unique once-in-a-lifetime opportunity,” said Petrobank Chief Executive Officer John Wright.

“We really both believe firmly that the application of technology is going to be the path of future growth in the oil and gas industry.

“There is a lot of hidden value in each one of our business units,” he told analysts.

Montney, Horn River holdings

In addition to Bakken, the new entity will also have a major foothold in British Columbia’s unconventional gas plays, with a 100 percent working interest in 11,000 acres of Montney and 62,000 gross acres of Horn River.

The Montney holdings have an estimated 510 billion to 850 billion cubic feet of original gas in place, of which 25-35 percent is deemed recoverable, and 2.5 trillion to 25 trillion cubic feet of OGIP in Horn River, with expected recoveries of 20-30 percent.

“There are places in the world where you can explore and there are places where there are unexploited reserves,” Wright said. “Frankly, most of the stuff that’s left in Canada is pretty tough to get out of the ground.

“We’ve been focusing our (Petrobank and TriStar) technical teams on finding newer and better ways to get oil out of very tough rock,” he said.

Advanced fracturing

Gregg Smith, chief operating officer of Petrobank’s Canadian assets, said technology has allowed Bakken to produce “high-quality oil” from what was viewed for 50 years as a marginal reservoir that pumped 25 barrels per day, per well.

The use of advanced fracturing technology, which is now moving from eight “fracs” per horizontal well to 20, cutting costs, raising productivity and allowing re-entries to existing wells, is the key.

At Petrobank the philosophy is that “We’re allowed to make mistakes. We just don’t repeat them,” Smith said. “People know they won’t be punished for making a mistake or trying something different. That encourages experimentation and produces the breakthroughs we’ve seen,” he said.

Smith has demonstrated that spirit over many years, as a member of Canada’s canoe racing teams through most of the 1970s (including two Olympic selections) and most recently being named Saskatchewan’s 2009 Oilman of the Year.

He said Petrobank made the major leap in Bakken when it bought a fracturing system from Packers Plus, using a combination of hydraulic fracturing and horizontal wells.

Clarus Securities analyst Kirk Wilson said Petrobank, while not alone in taking an innovative approach to the Bakken formation, has always been more of a technology company than an oil and gas producer.

He said creating PetroBakken is strong evidence that heavy oil technology is on the verge of going big time.

—Gary Park






Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] --- http://www.petroleumnews.com ---
S U B S C R I B E

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©2013 All rights reserved. The content of this article and web site may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.