Thermal highway is born

By Geoff Lee

June 15, 2017 12:00 AM

Highway 26 from Edam to St. Walburg is becoming a valuable thermal heavy oil exploration and production corridor for Saskatchewan.
A total of three lease parcels northeast of Lloydminster accounted for half of the $22.8 million total from the June 8 provincial sale of petroleum and natural gas rights. Two of the lease parcels, prospective for thermal oil in the St. Walburg area, generated more than $9.7 million.
That helped the Lloydminster area lead the province with more than $12 million in sales revenue.
The two leases in question were purchased for a client by Ranger Land Services Ltd.
The June sales revenue was the largest from a single public offering since August, 2014 with the St. Walburg area leases to produce heavy oil leading the way.
One of the lease parcels received the highest dollar-per-hectare at $8,115.76. The two parcels totalling 1, 295 hectares are prospective for heavy oil in the Mannville Group formation, with well logs showing significant potential for the application of thermal recovery methods.
The Mannville Group in this area has seen increased usage of thermal Enhanced Oil Recovery (EOR) technology.
“Given that well logs in the vicinity of these parcels show between 15 to 20 metres of pay within the upper Mannville, the potential for another successful EOR project in Saskatchewan is encouraging,” said a Ministry of Economy spokesperson.
Thermal projects targeting the Mannville within a 60 kilometre radius of these parcels include Husky Energy’s Paradise Hill North, Bolney, Sandall, Celtic, Pikes Peak, and BlackPearl Resources’ Onion Lake North project.
Husky also has a new suite of planned and producing thermal projects along the Hwy. 26 corridor, including Vawn, Edam East and West, and Spruce Lake North and Central.
Heavy oil is produced in the region using thermal technologies such as Steam-assisted Gravity Drainage or SAGD.
Conventional production methods are ineffective when it comes to recovering heavy oil with high viscosities. 
Growth in production from thermal projects in Lloydminster is part of a steady and quickly increasing trend; from 15 per cent in 2010 to 60 per cent of total heavy oil production in 2017.
The June land sale boosted the 2017 fiscal year-to-date total to $24 million after two sales. The fiscal year’s current average price per hectare for Saskatchewan parcels is $828.81, almost double Alberta’s average of $470.71 for conventional oil and gas parcels, and comes in the wake of recent upward trends in provincial drilling activity.
In southeast Sask., Millennium Land Ltd. bid $4,002,780 to acquire a 1,327-hectare exploration licence located southwest of Midale. 
The parcel is prospective for multiple targets, particularly the light oil Bakken formation and the Three Forks Group/Torquay formation.

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