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OK--so I know squat about oil and gas production, etc, so can anyone tell me what the future holds for this industry here?

Province's oil, gas production expected to grow by 40%

Sat May 14 2005

By Martin Cash

OIL and gas production is expected to increase by as much as 40 per cent in Manitoba this year and the province's petroleum branch could see its revenues rise similarly, possibly topping $10 million.
The province announced its largest ever public sale of Crown oil and gas rights yesterday, netting $2.6 million at its auction earlier this week. The petroleum branch holds four auctions a year and so far this year it has raised a total of $3.3 million. The record total is $6 million raised in 1997.

Jim Rondeau, Manitoba's minister of industry, economic development and mines, said the growth in the province's oil patch is good news in several quarters.

"This has huge economic spinoffs," Rondeau said yesterday. "It will mean additional revenue for the province, more jobs and increased economic activity in southwestern Manitoba, not to mention additional revenue for land owners in the area, many of whom are cattle ranchers."

Yesterday, the province also officially designated its largest new oil field since the 1950s. The Sinclair Field, located about 35 kilometres southwest of Virden, covers more than 18,000 acres.

Most officials acknowledged that the dramatic increase in oil exploration and production in the province is largely a result of the current spike in oil prices, which closed yesterday up 13 cents to $48.67 US a barrel. Dan Barchyn, a long-time geologist with Manitoba's Tundra Oil and Gas, is launching his own oil and gas exploration company called Lodgepole Energy Corp., named after Manitoba's most productive oil field.

He said because the Manitoba industry is so small, the rising oil prices attract additional interest.

"The reserves in Manitoba might be considered marginal to develop when prices are low," Barchyn said. "But with new technological advances in production and in the process of exploration, when new plays become apparent, more players want to figure out how to get involved."

Exploration companies make it known to the petroleum branch which parcels of Crown land they are interested in making a bid on. (The Crown owns about 20 per cent of the land parcels identified for oil and gas exploration and the remaining is privately owned.) The auctions are for lease rights that last for five years.

The total acreage leased so far this year is already more than any other prior year. Exploration companies pay a "bonus" upon getting the five-year lease and then they pay royalties on production. Oil that is produced from wells on private property is taxed by the province.

Land leased so far this year covers a record 103,502 acres and was leased at an average price of $60.06 per acre. John Fox, director of the province's petroleum branch, said the increased prices mean increased production rates and the attraction of new exploration firms which might be more inclined to use more expensive production techniques.

Last year, the province produced about four million barrels of oil, or about 12,000 barrels per day. This year, Fox said those totals could get up to 17,000 per day, an increase of more than 40 per cent.

Rondeau said the number of new wells drilled this year is expected to increase by close to 70 per cent to 200. The increased activity is expected to have a positive impact on the labour market in the area.

Ken Baley, the owner of Brandon-based Lennon Trilogy land surveyors, said his firm employs close to 20 people now and is looking to hire four or five more people.

"There's no question, we're busy," Baley said.

Sat, May 14, 2005

Black gold in province

Gov't to sell oil, gas rights


We're not exactly Alberta, but there is some black gold out there in the flatlands of Manitoba.

The provincial government yesterday announced its largest public sale of Crown oil and gas rights. The $2.6-million deal covers 103,500 acres of land in southwestern Manitoba -- where most of the province's oil and gas is located.

Officials are predicting the deal could boost the province's oil production by 40-50% by year's end.

"This is a huge field and it's got huge potential," said Industry Minister Jim Rondeau.


In 2004, 119 wells were drilled in Manitoba, producing almost four million barrels of oil. More than 200 wells are expected to be drilled this year.

Daniel Barchyn, president of Manitoba-based Lodgepole Energy Corp., said the oil companies are starting to take notice of Manitoba.

"Manitoba has always been on the fringe," he said. "The fact you have a lot of activity here now is getting people to pay attention.

"Some of them are going to realize there is some potential here."

As part of yesterday's announcement, Rondeau designated the province's "most significant oil field in a generation." Sinclair Field, located about 100 kilometres southwest of Brandon, covers 18,000 acres.

Some 71 wells have been drilled in the field during the past 18 months.

Rondeau said a combination of modest oil resources and plenty of water and wind to produce electricity could make Manitoba a major energy producer.

"I think we might be the next energy producing region in North America," Rondeau said. "We'll have multiple areas that could be doing well. We won't put all our eggs in one market."

The province makes public offerings of Crown oil and gas land throughout the year. Bidders apply under sealed tender to win exclusive right to explore for oil and gas within the lease area.

The province also collects royalties on any gas or oil that's found.

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There would be nothing like a mini oil boom to make 'Winnie's skyline sing. Be great for Manitoba which is forever the "stable" province. A little 'boom' action would do Manitoba some good as it should be populated more than it is.
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