Winnipeg Free Press - PRINT EDITION
Posted: 04/25/2014 1:00 AM | Comments: 0
MANSON -- Jake Sanheim never gave any thought his mixed grain and cattle farm had oil under it.
That was for landholders to the south around Virden and in Manitoba's southwest corner.
Then, three years, ago a company called Fort Calgary Resources Ltd. came calling. He gave it permission to drill a vertical test hole on his property and up came a gusher: 250 barrels of oil a day.
To put that into context, a very good oil well produces 100 barrels a day; even a brand-new hole drilled farther north is producing just 20 barrels a day.
Manitoba had a hot new oil play.
That kind of event has been heard before in western Manitoba but not where it's happening now, north of the Trans-Canada Highway, stretching almost all the way to Russell.
The new oilfield that started on Sanheim's farm, northwest of Virden off Highway 41, had never seen oil exploration before. It's called the Manson Field, named after the humblest, tiniest of hamlets nearby, comprising half a dozen houses, a community hall and two plaques: one where the former school used to be, and one where the former United church used to be.
The Manson Field discovery came just over a year after the development of another oilfield 30 kilometres north, the Birdtail Field, situated between St. Lazare and Birtle.
It's not like oilfields come along every day. Birdtail and Manson are just the fifth and sixth oilfields discovered in Manitoba. The last oilfield discovery was the Sinclair Field in 2004, and that was the first new one in a quarter-century. The Sinclair Field in southwestern Manitoba has turned into the largest oil development in Manitoba, exceeding even the Virden Field, where Manitoba's oil production started in 1951.
"We're not really sure where the boundaries of producible oil are anymore," conceded Keith Lowdon, Manitoba Petroleum Branch director.
Much of the new oil development is technology-driven. Some of that is fracking -- hydraulic fracturing of rock to allow oil to seep out -- but the Manson and Birdtail oilfields are mostly on more permeable rock that doesn't require fracking. Horizontal drilling -- where a vertical hole is drilled until it strikes oil, then bends in a horizontal direction for up to 1.6 kilometres along the oil deposit -- is the main reason. "That's been huge," said Lowdon. The price of oil has also been a catalyst to explore for new oil sources.
The newest oilfields aren't large producers yet. The Manson has 103 wells, the Birdtail nearly 80. The Sinclair Field has 2,100. "I don't think there will ever be another Sinclair in Manitoba," said Lowdon.
But much more activity is coming north of the Trans-Canada if oil prices stay high. One of three companies in the field has told employees it's drilling 30 holes this year. "That's going to be an area of interest just for the fact there are a lot of areas that haven't been drilled before, so there's exploration to be done," said Lowdon.
Of Manson's 103 wells, 17 of them are on Sanheim's property.
Sanheim doesn't own the mineral rights -- the province does -- so he hasn't become rich. At the standard 18 per cent royalty on oil, the province is making $5 million per year from royalties on his land alone, he said.
But Sanheim, 81, does receive surface-rights payments. He received a one-time payment of around $8,000 per drilled hole -- around $135,000 total -- then another $3,500 per year on most of his active wells -- about $55,000 per year. He also has a battery on his property -- a gathering place for oil to be piped from surrounding wells and where water is separated from the oil. A price for that is being negotiated.
"I'm by no means a millionaire," he said, but the unexpected income is nice.
Others are waiting for the oil industry to knock on their doors. Sanheim's nephew, Ron Sanheim, shares mineral rights on a quarter-section of land down the road with his mother and brother.
"It's all good to get the oil. It's like honey," said Ron. "It looks like 10w30 coming out of the hole. And there's no smell to it. It's not the black, heavy oil." Light crude fetches a higher price than the black stuff for the oil companies.
Some people prefer not to talk about it. One man in the Birdtail Field, who local people say makes up to $45,000 per month from his mineral rights on land pumping oil, declined comment.
For the Manson area, the oil exploration has directly created six new jobs, including three well checkers, well-paying positions where the individuals drive around each day just to make sure the wells are operating properly.
The biggest holdup to the Manson Field is the oil can't be transported away fast enough. There is a bottleneck at the Enbridge pumping station in Cromer. A hoped-for solution is a pipeline in the works from Cromer to a former gas pipeline near McAuley that will be used to cart oil to Eastern Canada.
Republished from the Winnipeg Free Press print edition April 25, 2014 A12
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