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Manitoba Sees Oil Boom

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1 Manitoba Sees Oil Boom on Sun Mar 20, 2011 4:15 pm

EdWin

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Manitoba sees oil boom


Field's capacity greater than predicted: Chomiak



By: Geoff Kirbyson

Posted: 03/19/2011 1:00 AM

TIM SMITH / BRANDON SUN ARCHIVES Enlarge Image
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.


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.
Texas tea time in Manitoba


-- 30,000 barrels of oil are produced in the province every day. By comparison, Saskatchewan churns out 80,000 barrels daily while Alberta pumps out two million barrels a day.
-- Tundra Oil & Gas, the largest player in the province's southwest, plans to drill 200 wells this year, up from 180 in 2010.
-- Historically, between 50 and 100 wells were drilled annually. This year, it will be well in excess of 500.
-- $62 million was paid out in royalties to oil-rich landowners in the province last year and another $15 million was handed over in exchange for putting pumps on private land.
Giving back
While much of the investment in the southwest part of the province doesn't have an appreciable impact on the quality of life of people in the region, Virden Mayor Jeff McConnell said one firm, Calgary-based Trinidad Drilling, showed its appreciation to Virden's 3,000 residents recently by donating $200,000 to the town's recreational facility.
"They acknowledged that they're earning money in our community and they turned around and are giving it back," he said.


"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."
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
Source: http://www.winnipegfreepress.com/business/manitoba-sees-oil-boom-118288664.html

2 Re: Manitoba Sees Oil Boom on Sun Mar 20, 2011 6:53 pm

wpg_idiot

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They're doing seismic testing out at my dad's farm. Finger's crossed for a good outcome, and twittled thumbs for a fair offer.

3 Re: Manitoba Sees Oil Boom on Sun Mar 20, 2011 7:33 pm

EdWin

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Where is your dad's farm?

4 Re: Manitoba Sees Oil Boom on Sun Mar 20, 2011 10:02 pm

wpg_idiot

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2 hours north of Brandon

5 Re: Manitoba Sees Oil Boom on Sun Mar 20, 2011 11:54 pm

EdWin

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So then he owns property in Riding Mountain National Park? Wink
LOL. Sorry, I'm just pushing you for a town name that the farm is close to, giving me perspective on where this is at.

6 Re: Manitoba Sees Oil Boom on Mon Mar 21, 2011 6:27 am

Outsider

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wpg_idiot wrote:2 hours north of Brandon
Sounds pretty close to Dauphin?

7 Re: Manitoba Sees Oil Boom on Mon Mar 21, 2011 8:44 am

Guest

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Depends if you're walking, driving or flying I reckon.

8 Re: Manitoba Sees Oil Boom on Mon Mar 21, 2011 4:21 pm

sputnik

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Not really that great for Manitoba.

The problem is that in Manitoba the landowner owns the mineral rights so the province only gets the benefits of local support companies being taxed and gets no royalties from the oil being extracted.

9 Re: Manitoba Sees Oil Boom on Mon Mar 21, 2011 4:29 pm

grumpy old man

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Better change that then eh? Or find another way to "extract" revenue from the black gold...


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10 Re: Manitoba Sees Oil Boom on Mon Mar 21, 2011 4:30 pm

Deank

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easy peasy GOM.

new tax of 50% on all oil extraction revenue.


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11 Re: Manitoba Sees Oil Boom on Mon Mar 21, 2011 4:44 pm

AGEsAces

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sputnik wrote:Not really that great for Manitoba.

The problem is that in Manitoba the landowner owns the mineral rights so the province only gets the benefits of local support companies being taxed and gets no royalties from the oil being extracted.

ummm...do you have a link to this?

I had a meeting about this where it was said you own the land, but you don't own the minerals.

So if someone buys the rights to a mineral that's on your property...they have the right to go get it, provided they put your land back to it's original size/state once completed (some other provisions applied).

I know in the US when you buy property, you own everything below the surface, and up to the "heavens"...but that rule (I was told) does not apply in Canada.

http://www.photage.ca

12 Re: Manitoba Sees Oil Boom on Mon Mar 21, 2011 4:50 pm

Deank

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http://www.winnipegfreepress.com/local/oil-wells-a-boon-for-manitoba-families-84437487.html

"Up to 80 per cent of the mineral rights in Manitoba's oil patch are
privately held, while the Crown owns the rest, according to the Manitoba
Petroleum Branch."


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13 Re: Manitoba Sees Oil Boom on Mon Mar 21, 2011 7:52 pm

EdWin

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Yeah, that is the crap part of the situation. Most of this money goes into the pockets of families, while the provinces gets very little in return. I would say that there needs to be a change in the way royalties are distrubuted. How does Saskatchewan landowners fair in this situation? Anyone know?

14 Re: Manitoba Sees Oil Boom on Mon Mar 21, 2011 9:34 pm

Outsider

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EdWin wrote:Yeah, that is the crap part of the situation. Most of this money goes into the pockets of families, while the provinces gets very little in return. I would say that there needs to be a change in the way royalties are distrubuted. How does Saskatchewan landowners fair in this situation? Anyone know?
I don't think its fair to change these royalty laws in mid-stream.
For example suppose some of this oil was found in the Interlake region. These farmers have been flooded out several years in a row.
If oil was found there, it would actually get the farmers out of debt.

15 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 11:25 am

AGEsAces

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Deank wrote:http://www.winnipegfreepress.com/local/oil-wells-a-boon-for-manitoba-families-84437487.html

"Up to 80 per cent of the mineral rights in Manitoba's oil patch are
privately held, while the Crown owns the rest, according to the Manitoba
Petroleum Branch."

All that would mean is that someone has bought the mineral rights for a given piece of property, not that it's necessarily the property owner.

That was one concern I had when I was shopping for property outside the city, was that someone else might own the mineral rights under my land.

And, when buying mineral rights, you can't just say "i want to buy rights to ALL minerals", you have to be specific as to which ones. (according to an agent I talked to).

http://www.photage.ca

16 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 11:31 am

Deank

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who the frick cares if its the landowner or some other private person.. the question was about the fact that THE GOVERNMENT does not own it. and the question was answered.


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17 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 11:34 am

sputnik

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Outsider wrote:
EdWin wrote:Yeah, that is the crap part of the situation. Most of this money goes into the pockets of families, while the provinces gets very little in return. I would say that there needs to be a change in the way royalties are distrubuted. How does Saskatchewan landowners fair in this situation? Anyone know?
I don't think its fair to change these royalty laws in mid-stream.

You can. However what usually happens is that you can't sell the land along with the mineral rights. However you retain the rights as long as you own the land yourself.

18 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 11:45 am

AGEsAces

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Deank wrote:who the frick cares if its the landowner or some other private person.. the question was about the fact that THE GOVERNMENT does not own it. and the question was answered.

And that's a good thing, that the government doesn't own it.

If the person who owns the mineral rights decides to actually mine the minerals, or sell them, then the government will get its "cut" in the form of whatever taxes they can steal.

Otherwise, the government needs to stay out of the private investments of individuals.

http://www.photage.ca

19 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 11:46 am

Deank

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do you even read what you post yourself?


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20 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 12:25 pm

sputnik

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AGEsAces wrote:
Deank wrote:who the frick cares if its the landowner or some other private person.. the question was about the fact that THE GOVERNMENT does not own it. and the question was answered.

And that's a good thing, that the government doesn't own it.

If the person who owns the mineral rights decides to actually mine the minerals, or sell them, then the government will get its "cut" in the form of whatever taxes they can steal.

Otherwise, the government needs to stay out of the private investments of individuals.

You WANT the government to own the mineral rights. That way oil royalties go to the government instead of some Chinese, Russian or Alberta company.

The reason Alberta is so successful is that the government gets paid directly every time a barrel of oil or GJ of natural gas is pulled out of the ground.

When the mineral rights aren't owned by the government the money goes to private holders.

Trying to get taxes from that money is essentially looking for a TINY fraction of the potential.

21 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 1:04 pm

EdWin

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I would much rather see the government end up with the bigger piece of the royalty's pie than just watch a bunch of farmers get rich and contribute essentially nothing in return.

22 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 1:14 pm

Deank

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yeah those damn rich farmers not contributing anything after busting their asses for the last 3 generations to make sure there is food on everyone's tables.

damn them to hell.


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23 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 1:22 pm

grumpy old man

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Everybody getting their fair share is the way to go...

I'd like to see Manitoba take a competitive position with Saskatchewan and Alberta.

Let's get off welfare!


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24 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 1:26 pm

EdWin

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Deank wrote:yeah those damn rich farmers not contributing anything after busting their asses for the last 3 generations to make sure there is food on everyone's tables.

damn them to hell.

So are you saying that farmers work harder than myself or anyone else and because of this should benefit more from what should be a provincially-owned resource? I don't see it that way at all. This kind of economic benefit should be felt at a provincial level, not just for a few people.

25 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 1:29 pm

EdWin

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grumpy old man wrote:Let's get off welfare!

Larger provincial royalties from the oil and gas sector would definitely help put a dent in reducing Manitoba's equalization payments. This would be the biggest single benefit, IMO.

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