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Tracking Athabasca sands in Saskatchewan Oil sands start-up puts spotlight on untapped deposits across border; CanWest plans 20 wells on 1.4 million acre holding Gary Park Petroleum News Calgary Correspondent
CanWest Petroleum, a fresh arrival on the oil sands scene, is gearing up for a summer lift-off as it chases the “exceptional upside potential of several billion barrels of oil” in Saskatchewan’s untapped oil sands deposits.
Puzzled about the industry’s failure so far to track the Athabasca oil sands formations across the border from Alberta, CanWest is eager to test its belief that the vast bitumen deposit does not stop at the Alberta-Saskatchewan line.
Pending Saskatchewan government approval, it plans to drill 20 wells, through a controlling interest in privately held Oilsands Quest, on a 1.4 million-acre holding.
CanWest Chairman Thornton Donaldson based his hopes on the fact that the Firebag East project is immediately east of four Alberta projects, which have combined reserves of 14 billion barrels and planned output of 500,000 barrels per day.
The list is dominated by Suncor Energy’s own Firebag operation, the Kearl Lake area where Husky Energy has contemplated a possible 100,000 bpd venture, Petro-Canada’s Lewis Creek project which could yield 40,000 bpd and the Northern Lights open pit mining project by Synenco, which is targeting 100,000 bpd by 2009.
The CanWest team includes Todd Montgomery, a former president of Synenco, as project development consultant. Oilsands Quest President Christopher Hopkins was a senior vice president at Synenco during its initial years, while Chief Financial Officer Karim Hirji was employed at Synenco. Three targets to be drilled CanWest said in a statement that it plans to drill-test three “known prospective targets” on its Saskatchewan permits, where previous drill cores and logs have encountered potential pay zones ranging from 58 feet to 150 feet.
Initially, it intends to drill permits that are closest to the proven reserves in Alberta, then fan out in a north-south pattern, followed by wells to test the eastern extent of the resource.
If timing is important, CanWest is on track, coinciding its regulatory applications with the Saskatchewan government’s push to offer tax and royalty changes for enhanced oil recovery, oil sands and oil shale projects, by offering a single regime setting royalties at 1 percent of gross revenue before project payout, rising after that to 20 percent of net operating revenue.
CanWest is working on a second project in Saskatchewan, examining the potential of its 100 percent owned Pasquia Hills oil shale site.
In partnership with Nova Chemicals it will undertake a joint feasibility study of 850,000 acres in central Saskatchewan, including a 50,000-acre mine site, where the oil resource is projected at 4 billion barrels.
An estimated 59 percent of the oil is estimated to contain benzenes, styrenes and naphthenes, all petrochemical feedstocks that give the oil a potential value of US$84 per barrel.
Depending on the outcome of the feasibility work, Nova would have the right to purchase all of the future feedstock production, with CanWest remaining owner of the proposed mine site and primary processing plant.
In addition, CanWest has a deal with Powermax Energy to drill for shallow natural gas in the Pasquia Hills.
Aiming for cash flow of about C$4 million by mid-year, CanWest is also drilling two conventional oil and gas prospects in central Alberta.
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