Manitoba 2011-12 Oil Activity

Review

Bismarck, ND

May 22, 2012

20th Williston Basin Petroleum Conference

• Manitoba 2011-12 Oil Activity

• Bakken – Three Forks Play

• Lower Amaranth (Spearfish) Play

• Public Concerns

Record Breaking Year

Manitoba Drilling Activity

0

20

40

60

80

100

0

100

200

300

400

500

600

05 06 07 08 09 10 11

% of Total Completions

Wells Completed

Bakken-3 Forks L. Amaranth % of Total Completions

Manitoba Completion Activity

MANITOBA OIL FIELD MAP

  >6 wells drilled per Township     0 wells drilled per Township

    1-5 wells drilled per Township Oil Field Boundaries

Producing oil wells (colour corresponds to Period in Strat. column)

Oil shows (colour corresponds to Period in Strat. column)

(Where Devonian oil show occurs in Devonian producing area, show is deeper than surrounding producing wells).

Manitoba’s Top Drillers – 2011

578 wells drilled by 28 different companies

Manitoba Daily Oil Production

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,0001

99

5

20

00

20

05

20

10

BB

L

Year

Annual Production

Bakken

Mississipian

Triassic

Initial Oil Production (Oil per Hour (m3))

Data presented in NAD 83 Zone 14 co-ordinates.

Bakken TVD(m)

Subcrop edge of the Bakken Formation

BAKKEN -THREE FORKS PRODUCERS

400

600

800

1000

1200

1300

BAKKEN -THREE FORKS PRODUCERS

LegendBakken Producing WellsOil Field Boundaries

Subcrop edge of the Bakken Formation

Bakken TVD(m)

• Daily Production

17,325 BOPD Avg

• Waterflood Projects

12

Daly Sinclair FieldBakken- Three Forks

Completions

LOWER AMARANTH DEVELOPMENT

Triassic Lower Amaranth WellsLower Amaranth / Mississippian WellsMississippian Mission Canyon WellsPool BoundariesField Boundary

Waskada Field

Pierson Field

WASKADA FIELD DEVELOPMENT

Triassic Lower Amaranth WellsMississippian Mission Canyon WellsPool BoundariesField Boundary

Plotted on the Dominion Land Survey System Grid

Common Public Concerns about Fracing

• Fracing can contaminate groundwater• Fracing uses a lot of water• Frac fluids are not properly managed • Fracing causes earthquakes• Frac fluid additives are toxic

Fracing in Manitoba

• Fracing in Manitoba is regulated under

The Oil & Gas Act• Fracing has been used to increase oil production from

Manitoba wells for over 60 years • There is currently no shale gas development in

Manitoba• Manitoba has shale gas potential• Natural gas prices and other economic factors make

near-term shale gas development in Manitoba unlikely

Protection of Groundwater

• There has never been a known case where fracing has resulted in groundwater contamination in Manitoba.

• In Manitoba, oil reservoirs are located 400 – 1000 metres below groundwater aquifers.

• This separation distance coupled with the regulatory requirements for the drilling, construction and operation of oil wells minimizes the risk of groundwater contamination from fracing.

Frac Fluid Management

• Frac fluids in Manitoba are managed from cradle to grave

• Frac fluids are stored in tankage before being injected into a well

• Frac fluids produced back from a well are disposed of into an approved underground disposal zone using a disposal well permitted for that purpose

• Closed loop approach minimizes potential adverse environment impacts associated with fracing

Fracing - Water Use

• Oil industry water use in Manitoba is regulated • Fracing operations in Manitoba use significantly less

water than shale gas fracing in other jurisdictions. • Average frac job in Manitoba uses 400 -700 cubic

metres of water• The average family of 4 uses 500 cubic metres of water

a year

Fracing - Earthquakes• Seismic activity potentially resulting from fracturing measures less

than 3.5 on the Richter scale

Richter Scale (worldwide):

2 or less 8,000 / day Not felt

2 – 2.9 1,000 / day Not felt, recorded

3 – 3.9 49,000 / year Often felt, rarely causes damageNote: Each level on scale is 10 x stronger than the previous level

• Damaging earthquakes reported in the news have 10,000 times more energy than earthquakes linked to fracing

Fracing – What’s Next• Oil industry has been proactive in adopting new policies and

procedures for fracing to address public concerns • Petroleum Branch is reviewing adoption of new guidelines and

regulations in Manitoba to ensure that fracing remains safe and public concerns are addressed

• Initiatives under review– Enhanced submissions requirements– Disclosure of frac fuid contents– Baseline water well testing – Collection of water source and usage date