Oil in the Kindersley area: a key part of the Resources Story

June 21, 2012 Dr. Gary Delaney, Chief Geologist Saskatchewan Geological Survey Saskatchewan Ministry of the Economy

www.er.gov.sk.ca Ministry of the Economy

Rich and Diverse Endowment of Minerals, Petroleum and Natural Gas

REE Uranium A major global producer of uranium and potash. ’s 2nd largest producer of oil and 3rd largest producer of natural gas Athabasca Basin Gold & Oil Sands base metals Precambrian Shield

Diamonds

Oil Western Canada Sedimentary Basin 651,036 km2 Natural Gas Potash Oil

Clay Coal Saskatchewan's Petroleum Sector

• Natural gas and crude oil have been produced in Saskatchewan since the 1930s. • Currently, Saskatchewan is: - Canada’s 2nd largest producer of oil - Canada’s 3rd largest producer of natural gas

Ministry of the Economy Importance of the Petroleum Sector

• $12.8 billion (B) in oil and gas sales in 2011 • $4.5 B invested by industry in 2011 • 33,200 direct and indirect jobs in the upstream oil and gas industry • Approximately $1.7 B in oil and gas revenue to the Provincial Government in 2011/12 • Approx. 17% of total government revenues

Ministry of the Economy Oil and Gas Companies •Approximately 300 companies operate in Saskatchewan •Large and mid-sized companies still account for most of the production and drilling activity. •Top 20 oil companies account for over 80% of total oil production. •Top 20 gas companies account for over 90% of total gas production.

Ministry of the Economy Saskatchewan Oil and Gas Well Drilling 4500

Total Oil and Gas Wells Drilled

4000 3528 3500

3000

2500 End of April

- 2000 Well Count 1500 1024

1000

500

0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year vs Saskatchewan Conventional 70 Crude Oil Production Alberta (Includes Saskatchewan Recovered Crude Oil and Saskatchewan 60 Alberta Skim Oil ) ) s e r t e 50 m c i b u c 157.8 million barrels n o i

l 40 l i m ( n o t c 30 u d o r P l i O

e 20 d u r C

10

0 1 9 0 7 8 5 6 3 4 1 2 9 0 7 8 6 5 4 3 2 1 0 9 8 7 6 5 4 3 2 1 0 1 0 0 0 0 0 0 0 0 9 0 9 9 9 9 9 9 9 9 9 8 8 8 8 8 8 8 8 0 0 0 0 0 0 0 0 0 0 0 9 0 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 2 2 2 2 2 2 2 2 2 2 2 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Year Insight: Barrel of Oil

158.987 litres (42 US gallons; 34.97 imp gallons)

Ministry of the Economy Location of the Western Canada Sedimentary Basin HUDSON

BAY

ALBERTA BASIN

ALBERTA

MANITOBA

EDMONTON SASKATCHEWAN

PRINCE ALBERT

SASKATOON

CALGARY

REGINA WINNIPEG

BRANDON

MONTANA WILLISTON BASIN

HELENA

BISMARCK NORTH DAKOTA

PIERRE

Ministry of the SOUTH DAKOTA Economy WYOMING Insight: Oil and gas generation

Ministry of the Economy http://www.science.uwaterloo.ca/earth/waton/s0010.html Insight: Oil migration and trapping

Ministry of the Economy http://www.science.uwaterloo.ca/earth/waton/s0010.html Winnipegosis Insight: Oil types found in Saskatchewan

Gravity Density Crude Type (API) (kg/m3)

<25 >903 Heavy Oil

25 to 30.5 870 to 903 Medium Oil

>30.5 <870 Light Oil Photo from: www.rbnenergy.com

Ministry of the Economy Heavy Light

Medium

Light to Medium

Image modified from Geoscape Southern Saskatchewan Birdbear Viking Oil

Shaunavon

Bakken

Image modified from Geoscape Southern Saskatchewan Ministry of the Economy Hot Plays…. Viking Mannville

Bakken Birdbear

Major producing Formations underlying

Ministry of the Economy the Kindersley area Viking Wells Oil Density: 840 KG/m3 (API ~ 36 ) – Light Oil Viking Oil 01/05-33-30-22W3M Production since 1950’s: Oil recovery factors 694.7m are low (5-15%), but has a large oil-in-place potential (2.3 billion barrels)

Production Since 2008 : ~ 760 horizontal wells with, multi-stage hydraulic fracturing drilled in areas of the reservoir where it was thought to have been depleted through vertical wells

Recovery average: ~22 bbl/day

Image modified from Ministry of the Geoscape Southern Economy Saskatchewan Viking Formation - Production in the Kindersley area 9,000,000 9,000

First Production Year: 1952 8,000,000 Total Oil Production: 209 million barrels 8,000 Oil Production in 2007: 8 x103 barrels/day Oil Production in 2011: 17 x 103 barrels/day 7,000,000 Production Well: 10513 7,000

6,000,000 6,000

5,000,000 5,000

Barrels 4,000,000 4,000 Well Count Well Count Count Well

3,000,000 3,000

2,000,000 2,000

1,000,000 1,000

0 0

1952 1959 1966 1973 1980 1987 1994 2001 2008

Oil Produced Well Count

Ministry of the Economy Saskatchewan Viking Horizontal Well Oil Production and Well Count 500,000 800

450,000 Oil Production (Barrels)

700

400,000 Hz Producing Well Count 600 350,000

500 300,000

250,000 400 Well Count

Oil Production (Barrels) Production Oil 200,000 300

150,000 200 100,000

100 50,000

0 0

07 08 09 10 11 07 08 09 10 11 07 08 09 10 11 07 08 09 10 11 ------Jul Jul Jul Jul Jul Oct Oct Oct Oct Oct Apr Apr Apr Apr Apr Jan Jan Jan Jan Jan

Ministry of the Economy Insight: Innovation and technology to improve oil recovery: horizontal drilling and fracking

Ministry of the Economy Insight: Innovation and technology to improve oil recovery: horizontal drilling and fracking

Ministry of the Economy Viking Mannville

Bakken Birdbear

Major producing Formations underlying

Ministry of the Economy the Kindersley area Viking Wells

Mannville Wells Kindersley Mannville Production RGAC 38-30-Cole B-11-20 11-30-31-23W3M Depth:784.M m • Total Mannville Oil Production: 114.5 million barrels • Total Production Well: 1826 • Average per-well production: 62799 barrels • Total Mannville Gas Production: 287.5 million MCF • All heavy oil

Ministry of the Economy Insight: Steam assisted gravity drainage (SAGD)

Ministry of the Economy Viking Mannville

Bakken Birdbear

Major producing Formations underlying

Ministry of the Economy the Kindersley area Viking Wells Mannville Wells Bakken Wells PCI Salt Lake 14-14-39-25W3M Kindersley Bakken Depth = 778.0 m

• Very fine grained sandstone, siltstones and mudstones middle member • Sandwiched by black organic rich shales of the Lower and Upper members • Middle member is the oil bearing unit • Oreo cookie effect….but the filling is a gooey heavy oil saturated sandstone (~ 13-15 API)

Ministry of the Economy Bakken Formation (West-Central Saskatchewan) 16,000,000 2,200

First Production Year: 1951 2,000 14,000,000 Cumulative Oil Production: 269.2 million barrels Avg. Single Well Oil Production: 88 x 103 barrels Avg. Daily Oil Production in 1998: 41.5 x 103 barrels 1,800 12,000,000 1,600

10,000,000 1,400

1,200 Barrels 8,000,000 1,000 Well Count Well

6,000,000 800

600 4,000,000 400 2,000,000 200

0 0

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Oil Produced Well Count

Ministry of the Economy Birdbear Wells Well: 14-2-32-23W3 3mm field of view

• inter-particle porosity • enhanced porosity by dissolution

•Porosity ranges from 11-27%, average 19% • K90 Permeability as high as 1730 mD • Cumm. Production 17,600 bbl, of API 9.6 oil

Birdbear Formation (West-Central Sask)

1,400,000 120 First Production Year: 1968 Cumulative Oil Production: 2.3 million barrels 1,200,000 Total Production Well: 116 100

1,000,000 Oil Produced

80 Well Count

800,000 Barrels 60

600,000 Count Well

40 400,000

20 200,000

0 0

1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 Year

Ministry of the Economy Crude Oil Production to the end of 2011

30,000,000

Light oil 25,000,000 35% Heavy oil 65% 20,000,000 barrels

- 15,000,000 Production Production

10,000,000

5,000,000 Heavy Oil Light Oil

0 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 • Total Oil production: 597.6 million barrels Ministry of the Economy • Heavy Oil Production: 389.4 million barrels • Light Oil Production: 208.9 million barrels

Oil and Gas Production to the end of 2011 Total cum production

KINDERSLEY AREA Horizontal Well Oil Production • Total Oil production: 597.6 Vertical 11% Well Oil million barrels Production • Total Horizontal Well Oil 89% Production: 67.9 million barrels • 2011 Oil production: 3.1

million barrels 2011 production • 2011 Horizontal Well Oil Horizontal

Production: 2.4 million barrels Well Oil Production • Total Gas Production: 1.6 Vertical 23% Well Oil billion MCF Production • Horizontal well Gas 77% production: 53.2 million MCF

Ministry of the Economy Production Wells Total OIL PRODUCTION Well

Hz prod well KINDERSLEY AREA 5%

• Total Production Wells: 16096 Vertical prod well • Total Oil Wells: 14072 95% • Total Horizontal Production Wells: 857

• Total Production Wells Total OIL PRODUCTION Well Started in 2011 started in 2011: 460, Vertical prod well among them 445 are Horz 3% well

Hz prod well 97%

Ministry of the Economy Crown land, complete Crown land, partial Freehold

Leased Land Rights

Data derived from GeoScout, June 2102 Leased Land Rights from January 1 2009 to date

Data derived from GeoScout, June 2102 Insight: Oil Prices

• The price of oil you hear in the news is one a group of global references that are defined on three parameters: 1. Geographic location it is produced 2. API gravity (measure of density) 3. Sulphur content (sweet/sour) Examples: • West Texas Intermediate • Brent Blend • Dubai Oman • Midway sunset

Ministry of the Economy Insight: Oil Prices in the Kindersely area

• The following are recent average for prices of the two main types of oil recovered in the Kindersely – Rosetown – areas: • Light: $81.70 • Heavy: $59.46

Ministry of the Economy Summary: Oil in the Kindersley area

Ministry of the Economy Thank you!

www.er.gov.sk.ca