It’s never enough. Whenever government-run geological surveys release estimates on the potential of the oil-bearing rocks underneath the plains of North Dakota and southern Saskatchewan, operators cry foul.
The potential of the Williston Basin, which contains the prolific Bakken formation, has been re-assessed multiple times by the U.S. Geological Survey over the years. Each time, oil and gas explorers have called the revised estimates of technically recoverable oil in place “conservative.”
“To put it in context, this play has the potential to be the equivalent size of our Viewfield Bakken play.”In its 2008 assessment, the USGS revised its previously announced figure of 151 million barrels of technically recoverable crude to 3.65 billion barrels, which represented a 2,317 per cent increase from its 1997 estimates. Despite the new numbers being 25 times higher than before, geologists and executives at production companies said the estimates were cautious. They said the same thing in 2013, when the USGS revised its figures again and released an estimate showing that the Williston Basin now contained 7.38 billion barrels of technically recoverable oil. Oklahoma City-based Continental Resources CEO Harold Hamm, for example, has publicly said that a conservative estimate of recoverable oil-in-place in the Williston Basin would measure 24 billion barrels.
Nevertheless, the USGS’s 2013 revision contained estimates for the first time on the potential of the Three Forks formation, which underlies the Bakken and is at least the same size as the Bakken. According to the USGS, there are 3.73 billion barrels of undiscovered oil in place in the Three Forks formation – or the Torquay, as it’s called in Canada. The potential of this formation has led Canadian energy producers already active in the Bakken to spend hundreds of millions of dollars to acquire prospective Torquay/Three Forks acreage in Saskatchewan and North Dakota, where new discoveries could rewrite the production potential of Williston Basin once again.
Just two years ago, the Canadian Association of Petroleum Producers predicted in its annual crude oil forecast that oil production in Saskatchewan would peak this decade and then eventually decline. CAPP’s 2014 crude oil forecast revised that prediction, saying that oil production in the country’s second-largest oil producing province would grow from 486,000 barrels per day to 607,000 bpd by 2030. Now, CAPP’s vice-president of oil sands and markets Greg Stringham says that “with this new [Torquay] discovery, we’re seeing the emergence of early signs of oil viability coming out of the area.” Asked whether the emergence of Torquay as a commercial resource play will affect CAPP’s crude oil forecasts for Saskatchewan, Stringham says “it’s a bit too early in our forecasts to say that it’s going to make a substantial change.”
“We’ve tried to be deliberately conservative in our forecasts in that we don’t want to overblow where it’s going.”Producers drilling in the Torquay have released more bullish predictions on the play’s development and potential. President and CEO of Crescent Point Energy Corp. Scott Saxberg has said that the Torquay “has the potential to be the equivalent size of our Viewfield Bakken play,” which produces 70,000 barrels of oil equivalent per day – or roughly 14 per cent of Saskatchewan’s daily total. On April 14, 2014, the company announced it had drilled 36 wells targeting the Torquay and that its production from the play had gone from zero to 5,100 boe/d in under 12 months. Crescent Point is so bullish on the potential of the play that a week later, on April 23, 2014, the company spent $750 million to acquire privately held CanEra Energy Corp. and thereby added 680 square kilometers of Torquay acreage to its portfolio in Saskatchewan. Through the rest of this year, the company plans to spend $200 million of its $1.75-billion capital expenditure budget developing the play.
At least two other producers, which have also spent hundreds of millions of dollars acquiring companies with prospective acreage in the play, are watching Crescent Point’s results with keen interest. The first of those companies is Vermilion Energy Corp., which spent $427 million in March to acquire Elkhorn Resources Inc. Dean Morrison, Vermilion’s director of investor relations, says that “while we do have meaningful exposure in the Torquay, we have elected to allow industry to progress the play further at this time.” In other words, Vermilion is focused on the Midale and Bakken formations and waiting to see how other operators produce from the deeper-lying Torquay before it spends money to develop its own prospective acreage.
In addition to Crescent Point, Vermilion executives will be watching Continental Resources’ progress in North Dakota closely. Continental has been drilling down past the Bakken in the U.S. for years and is now drilling exploration wells in the deepest Three Forks pay zones. Like the Bakken, the Three Forks/Torquay is a multi-zone play with oil formations stacked atop one another. Though the name implies three pay-zones, there are actually four stacked oil-bearing formations in the play which are cumulatively 250 feet thick. Along with Continental, EOG Resources Inc. and ConocoPhillips Co. are already producing oil from the two upper formations in the play. In 2013, however, Continental drilled 20 exploratory wells in the deeper-lying formations, and the company will drill another two dozen in those same deepest formations in 2014 to prove
up its potential.
Source: Alberta Oil (