Second aboriginal deal in oil sands inked

Another aboriginal community is taking an active role in the development of its oil sands holdings.

The Bigstone Cree Nation has entered a deal with start-up heavy oil company Bronco Energy which has five years to drill 11 test wells (seven of them in the first year) on a 16,000-acre lease.

If it meets those conditions, Bronco will qualify for an extension and an option to lease additional Bigstone lands.

A joint venture agreement was signed in April by Bronco and Indian Oil and Gas Canada, a company owned by the Bigstone, which has almost 6,000 members.

Bronco management estimates that the Upper Grand Rapids formation holds 556 million barrels of original oil in place, although the so-called “contingent resource” will likely need steam-assisted gravity drainage technology to exploit.

If the technical data gathered from the test wells supports that view, Bronco believes the economics of a commercial operation will be “positive.”

The Fort McKay First Nation reached a landmark agreement earlier this year with Shell Canada to become owner-operator of a possible C$1 billion project on an undeveloped Shell Canada oil sands property.

Those properties cover 8,200 acres and have a resource estimated at 500 million barrels.

If commercial production is deemed feasible, bitumen from the lease could be fed to Shell Canada’s Athabasca project by 2012.

—Gary Park