August 31, 2007

Saskatchewan Gets On Board the Oil Sands Train

The Canadian province of Saskatchewan, the eastern neighbor of Alberta, the locus of the oil sands boom in Canada, held its first public offering of oil sands rights at its 16 Aug sale. Saskatchewan holds oil and gas sales six times a year.

The auction raised about C$38 million in total. Sales of the new oil sands dispositions included six oil sands exploration licenses that attracted C$3.3 million in bonus bids.

The highest price paid for an oil sands parcel came from Petroland Services Ltd., with a bid of more than $1 million or $108 per hectare for a 36-section oil sands exploration licence located north of the Clearwater River in northwest Saskatchewan.

This historic sale also heralds the beginning of a potential new oil sands industry in Saskatchewan.

—Government Relations Minister Harry Van Mulligen

Another provincial first in the August sale was the awarding of oil shale exploration permits under the competitive work commitment process. Two permits were issued, both in the Hudson Bay area. One was issued to Noble Hydrocarbons Alta Ltd. with a commitment to spend over $1 million on 38,000 hectares. The other was awarded to Cavalier Land Ltd. on the basis of a commitment to spend over $300,000 in exploration on 34,000 hectares.

Alberta’s three primary oil sands deposits. Click to enlarge.

Saskatchewan’s oil sands deposit is contained within the Mannville Group of the Western Canadian Sedimentary Basin which was deposited across B.C., Alberta, Saskatchewan, Manitoba and the US. However, to date, Alberta contains the only three major known economic oil sand deposits: Peace River, Athabasca and Cold Lake, with Athabasca being the largest. (See chart at right.)

While there was some oil sands exploration and activity in Saskatchewan in the 1970s, it was limited. Drilling identified a resource, but exploitation of the oil sands was deemed uneconomic due to technological limitations.