Manitoba sees oil boom

Field's capacity greater than predicted: Chomiak

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There's (black) gold in them thar fields.

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Hey there, time traveller!
This article was published 19/03/2011 (4274 days ago), so information in it may no longer be current.

There’s (black) gold in them thar fields.

The hunt for oil and gas in Manitoba will reach a fevered pitch this year with a record $1 billion expected to be spent, the vast majority on drilling new wells, in the southwest corner of the province.

“We’ve got a mini-boom going on,” said Dave Chomiak, minister of innovation, energy and mines. “If you look at a picture from out there, you’d figure you’re in Alberta because there are miles and miles of oil pumps.”

Tim Smith / Brandon Sun archives A pump-jack churns relentlessly west of Virden, Man. The area has seen more than 2,000 new wells drilled in the last five years.

Last year, more than $800 million was spent drilling 516 wells and producing 11 million barrels of oil. Thus far in 2011, 155 wells have already been drilled, 38 per cent more than the 112 that were drilled in the first 10 weeks of 2010. Each well requires between $1.2 million and $1.5 million of investment. Over the last five years, the oil industry has spent $2.5 billion and drilled more than 2,000 wells.

“They’re producing 30,000 barrels a day,” Chomiak said. “We’ve doubled our production in the past 10 years. We have enough reserves to continue this for at least the next five years. That’s a very conservative estimate.”

The driving force behind the flurry of activity is rising oil prices, which make the latest in expensive drilling technology more economical than it was just a couple of years ago. Historically, oil exploration depended on traditional vertical wells, but more recently, horizontal drilling — where water, sand or carbon dioxide is injected into a reservoir, pushing the oil to the vertical wells — has increased productivity significantly.

“It’s a renaissance,” said Dan MacLean, president and CEO of Winnipeg-based Tundra Oil & Gas, the largest player in the Manitoba oilfields.

Before horizontal drilling was introduced, he said oil companies could expect to recover about eight to 10 per cent of the oil in a reservoir. Now the recovery is expected to be double or triple that amount.

“We want to try to get more of that oil out of the ground. You make the higher investment and you end up with a higher productivity well,” he said.

MacLean said with all of the drilling activity, total production in the area will jump in the next few years and it’s hiring 20 to 25 people a year to help handle the load. Tundra has about 185 employees.

Manitoba produces a light oil, which requires little refining compared to the heavier, thicker oil found in northern Alberta. It is typically converted to gasoline and diesel.

To be sure, neither Virden nor Waskada, where the bulk of drilling is taking place, will ever be confused with Fort McMurray, Alta. But the Bakken oilfield, which covers Manitoba, Saskatchewan, Montana and North Dakota, was singled out in a recent U.S. geological survey as having the potential to produce more than 500 billion barrels of oil.

“The capacity is way beyond what had ever been anticipated in the 1950s and ’60s (when Manitoba’s oil and gas industry was in its infancy),” Chomiak said.

No economic boom is without its challenges, however. For example, Waskada has a work camp where 150 people live and eat while they work in the oilfields because there simply aren’t enough hotel rooms or bed and breakfasts in the area to handle the demand. Jeff McConnell, mayor of Virden, said temporary housing is being set up in previously closed buildings to create a youth-hostel-type of environment for workers there.

geoff.kirbyson@freepress.mb.ca

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