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First oil shale leases sold in Crown petroleum rights land sale

For many years, it has been known that Saskatchewan has oil shale resources, but they have never been developed.
Nordic Oil and Gas
Nordic Oil and Gas Ltd. had drilled a well northeast of Sturgis nearly a decade ago. While the company said it had discovered oil, nothing of further significance was developed from it. Now Nordic Minerals Ltd. has purchased a “special exploratory permit” in the area. File photo

For many years, it has been known that Saskatchewan has oil shale resources, but they have never been developed.

In Tuesday’s Crown petroleum and natural gas public offering, six oil shale leases were sold for a total of $150,000, which the Ministry of Energy and Resources noted was the “first oil shale leases to be issued through a public offering.”

These oil shale leases are a relatively new concept which was launched in 2016. Instead of the three years to develop a lease, or five years to develop an exploratory permit, which is more typical in developing new wildcat areas, these oil shale leases have a 15-year term, according to the ministry. A total of 6,086.5 hectares were posted and sold as leases. The bonus bid came in at $24.64 per hectare.

The area is 12-30 kilometres southwest of Hudson Bay. These leases were acquired by Burgess Canadian Resources Inc. for $25,000 each or $150,000 in total. The new area is adjacent to, but not the same land that had been permitted by Saturn Oil and Gas. Saturn had drilled a few wells in the area several years ago, but nothing came of them, and those permits have since expired.

The sale was also highlighted by renewed interest in the Preeceville-Sturgis area, with one petroleum and natural gas special exploratory permit included in this offering and awarded to Nordic Minerals Ltd., with a work commitment bid of $43,239. This permit is situated near the towns of Preeceville and Sturgis. Notably, it is the first “special exploratory permit” issued since 2016.

As a special exploratory permit, that money does not actually go to the province. Rather, the company has committed to spend that $43,239 on exploration within the next two years. They will have to pay 25 cents per hectare per year rent, however.

If that name sounds familiar, it is because Nordic Oil and Gas Ltd. spent several years in the first half of the last decade trying to develop oil properties near Preeceville and Sturgis. In2012, Nordic Oil and Gas said it has discovered oil at 4-11-35-W2, about eight kilometres northeast of Sturgis, but nothing came of it. Nordic Minerals has the same CEO, Donald P. Benson, as Nordic Oil and Gas. Nordic Minerals had also leased two sections northeast of Sturgis in June 2020.

Wildcat wells have been drilled in the Preeceville area off and on since the 1950s without any further development. The most recent series were drilled around 2009 to 2012. PanTerra Resources drilled a well on the outskirts of Preeceville in 2009, looking for shale gas at the time.

Other areas

With regards to the bulk of the land sale held the December, the total sale generated $912,899 in revenue for the province. This is the fifth of six oil and gas public offerings for the 2020-21 fiscal year and brings cumulative earnings to $6,230,542.

The Estevan area saw the most interest, raising $889,374 from 15 parcels totalling 6,669 hectares.

The highest bonus bid received in this offering was $304,103 for a lease, in the Estevan area, totalling 64.75 hectares. This was also the highest bid on a dollar per hectare basis at $4,696 per hectare. This lease was awarded to Midale Petroleums Ltd. and is prospective for oil in the Midale beds and Frobisher beds of the Madison Group.

In the Lloydminster area, just one lease sold. Caltex Resources Ltd. was successful in picking up the 129.5-hectare parcel for $3,181, or $24.56 per hectare. This lease is located within the Westhazel Mannville oil pool, 14 kilometres west of Turtleford, and is prospective for heavy oil in the Mannville Group.

In the Kindersley-Kerrobert area, one 16.2-hectare parcel was leased for $20,344, or $1,257 per hectare. The lease is located 11 kilometres north of Smiley and adjacent to the Prairiedale Viking oil pool and the Prairiedale East Viking oil pool.

There were no dispositions posted in the Swift Current area in this land sale.

The next Crown petroleum and natural gas public offering is scheduled for Feb. 2, 2021.