Unlocking Manitoba's Oil And Gas Potential

Abstract

Abstract In the early 1990s oil and gas exploration and development in Manitoba decreased dramatically. Between 1989 - 1991, only six geophysical programs were run. By the end of 1991 the amount of Crown land under disposition had dropped to 25,800 ha, a 12 year low. In 1992, only 28 wells were drilled in the province. In 1993 Manitoba Energy and Mines recognized that simply providing a stable and competitive fiscal regime was not enough to attract new companies and new investment to Manitoba. A more aggressive approach was need to encourageExploration activity, in particular targeting under-explored pre-Mississippian formationsThe application of new technologies, i.e., horizontal drilling and 3D seismicRecompletions and workovers of existing wells and optimization of existing waterflood projects The culmination of our efforts was the introduction of the Petroleum Exploration Assistance Program (PEAP) in November 1995. PEAP provides assistance to companies exploring for oil and gas in Manitoba. The program provides funding of up to 20% of eligible expenditures to a maximum of $200,000 per company in any fiscal year. PEAP funding has been approved at $1 million a year for three years. PEAP in combination with Manitoba's Drilling Incentive Program (MDIP) and other competitive advantages has resulted in a tremendous increase in oil and gas activity in the province. Crown land under disposition has more than quadrupled to 113,566 ha. Over 1,900 km of seismic was run in 1996, more than in the previous seven years combined. A total of 57 wells were drilled last year of which 28 or 49% were exploratory including 15 pre-Mississippian tests. This paper outlines the initiatives of Manitoba Energy and Mines to attract oil and gas investment to Manitoba and the competitive advantages enjoyed by operators in the province. A brief overview of Manitoba's geology provides a framework for a summary of oil and gas activity in the province. Included is a description of PEAP and MDIP. A comparison of Crown royalty, production tax and petroleum incentives between Manitoba and Saskatchewan is provided to illustrate the attractiveness of investment in Manitoba. Introduction The mission of Manitoba Energy and Mines, Petroleum and Energy Branch is to foster investment in the sustainable development of Manitoba's petroleum resources. The Branch believes there is the potential for substantial ongoing exploration in Manitoba. The Branch also recognizes that there is tremendous competition for capital investment and, to quote David Tuer, President and CEO of PanCanadian Petroleum, "capital knows no borders"(1). The Branch has a four-prong strategy to provide the best business climate in Canada for oil and gas investment:Develop easy to understand workable regulations, policies and proceduresDevelop and disseminate resource informationEnsure Manitoba's petroleum fiscal regime is effective and CompetitiveWork to achieve a high level of awareness of our competitive Advantages The first step in development of workable regulations was completed in 1994 when Manitoba's new Oil and Gas Act was proclaimed.