Petroleum Investment Opportunities In Manitoba-A Geological, Engineering And Economic Perspective

Abstract

Abstract Southwestern Manitoba' occupies part of the northeastern) flank of the Williston Basin. Paleozoic, Mesozoic and Cenozoicrocks form a basinward thickening-wedge of sedimentary strata j that reach a total thickness of 2,300 m in the southwest-comer of the province. To date, oil production in Manitoba is restricted to the sand-stones of the Jurassic Melita and Amaranth formations, the Mississippian-Bakken Formation and the carbonates of the Mississippian Lodgepole and Mission Canyon formations. The; deeper Ordovician, Silurian and Devonian formations-the Winnipeg, Red River, Stony Mountain, Interlake, Winnipegosis, Dawson Bay, Souris River, Duperow arid Birdbear (Nisku)- offer oil and gas potential but remain largely undrilled. Manitoba enjoyed a resurgence in petroleum activity, in 1993 and 1994. In total, 184 wells were licensed over the last twoyears, compared to an annual average of 61 wells licensed over the previous five years. Over 70%; of the Crown land currently disposition has been leased at land sales during the past two years. Low Crown land price is one competitive advantage enjoyed by Manitoba producers. Other advantages include: low drilling and completion costs, low drilling density, a competitive andstable fiscal regime, drilling and exploration incentives, and unrestricted access to markets. This paper presents a brief description of the geology and reservoir characteristics, of Manitoba's producing horizons. Recent activity in Manitoba and exploration' and developmentprospects are reviewed. Sample economics are included to illustrate the attractiveness of vertical and horizontal drilling opportunities in Manitoba. Introduction Oil was discovered in Manitoba in 1951. At year-end 1994 there were 1,568 producing wells in 125 designated oil pools in Manitoba. Manitoba enjoyed a resurgence in oil activity in 1993 and 1994; 154 wells were drilled including 28 horizontal wells. Production in December 1994 was 1,905 m3/d, the highest since October 1991. At Manitoba's Crown land sales in 1993 and 1994, a total of 42,918 ha were disposed under leases and exploration reservations. Not since 1980 - 81, has this much land been disposed in a two-year period. Manitoba Energy and Mines has undertaken a number of initiatives to ensure the province maintains a competitive investment climate. The province's petroleum legislation has been consolidated and simplified under the new Oil and Gas Act. The Manitoba Drilling Incentive Program provides a Crown royalty and freehold production tax free holiday oil volume for new wells. The Major Workover Incentive Program provides a Crown royalty and freehold production tax free holiday oil volume for re-entries, deepenings, recompletions and casing repairs on marginal wells. The Manitoba Mineral Exploration Incentive Program has been replaced by the Petroleum Exploration Assistance Program which provides assistance, to a maximum of 20%, for eligible exploration costs. A project to digitize the province's oil and gas well geological and engineering data is underway. Historical production data and general well data is now available in digital form. These initiatives, and an increased awareness of Manitoba's petroleum potential, resulted in 20 companies, new to Manitoba, acquiring or drilling wells in the province during the last two years.