An old discovery may be oil's next big thing

You've certainly heard of the Bakken Region in Saskatchewan and British Columbia's Montney shale gas formation. You may also have heard of Alberta's new cardium play or its Duverney shale gas reserves. But where is the next big resource story going to come from?


Canada's next big resource play could very well turn out to be The Grosmont, a bitumen-rich heavy-oil resource in the Grosmont formation of northern Alberta. The formation and its potential has been known to the energy industry since the 1970s, but the technology to develop it was never available. Even today, commercial exploitation remains a challenging proposition, due to the heavy and high viscosity of the bitumen trapped in the reservoir.

But the current environment of stronger oil prices coupled with the latest advancements in drilling, completion and production technologies could add up to what it takes to crack this old nut.

Versant Partners analyst Mark Friesen is among those who believe The Grosmont has a very good chance of being developed, likely within in the next three to five years.

The reason? It's big. Really big. Alberta's carbonate reservoirs -- that is, oil and gas trapped in rock -- are among the most important in Canada, and The Grosmont is an elephant in it's own right, containing 71% of Canada's bitumen carbonates.

If you want to follow this play, Friesen notes Royal Dutch Shell plc and Husky Energy Inc. have substantial land positions in The Grosmont. Private firms Laricina Energy Ltd. and Osum Oil Sands Corp. are also positioned to benefit from development.

Source: Financial Post Magazine

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