Regions

According to the American Association of Petroleum Geologists (AAPG), the Alberta Basin Bakken, which stretches from northwest Montana into Alberta, is a significant new Bakken Shale oil play.1

While estimates vary, the consensus is that the Alberta Basin Bakken is expected to deliver ~2 to 3 billion barrels (BBO) of recoverable oil.2

The Alberta Basin Bakken is a proven hydrocarbon system,3 with its first wells coming on stream in late 2010.4

Analog to Williston Basin Bakken

According to industry leaders, what makes the Alberta Bakken attractive is the potential and similarities it shares with the Williston Basin.5

The Williston Basin’s prolific Montana-North Dakota Bakken has become one of the most significant onshore oil developments in North America in decades.2

The US Geological Survey’s (USGS) assessment of the Williston Basin region in 2013 concluded it contains an estimated mean of 6.7 trillion cubic feet (TCF) of recoverable natural gas and 7.5 BBO of recoverable oil (a twofold increase over the USGS’s 2008 assessment).6

Since the time of the 2008 USGS assessment, the Williston Basin has produced ~450 million barrels of oil (MMBO).7

Located due west of the Williston Basin is the Alberta Basin Bakken, which the AAPG considers to be an analog to existing Devonian shale oil production.1

While sharing many characteristics with the Williston Basin, the Alberta Basin Bakken features 20-30′ of pay compared to an average of only 10′ in the Williston Basin,8 and lower drilling costs due to shallower burial depths and a different class of rig being required.2

Region Investment & Activity

Industry investment in the Alberta Basin Bakken to date, including investments in land, joint ventures, exploration and drilling, is estimated at ~$500 million,5 with experienced companies largely tying up the region’s lands at different times.9

In June 2014, Anadarko Petroleum (NYSE: APC | Market Cap: $44.85B) took 7 new Alberta Bakken permits and assumed ownership of 3 others in Toole County, Montana, for horizontal wildcats seeking Bakken pay.

Included in the 10 permits is Bill Barret Corp.’s 2012 horizontal well, which found the Bakken at 3,200 feet in Rattlesnake Coulee Field. Anadarko’s well completion plans filed with the state include 22 packers and 19 sleeves.10

DeeThree Exploration (TSX: DTX | $591.62M), meanwhile, has discovered an oil pool in the play running 14 miles long and 4 miles wide; had drilled 28 horizontal wells in the play as of year-end 2013 with reported production of ~4,000 barrels per day of light oil; and planned on drilling 18 more wells in the Alberta Bakken in 2014.11

While minimal news is available on the region’s wells due to most of them being classified as confidential,5 as of 2011, Montana’s most active driller, Newfield Exploration (NYSE:NFX | $4.01B), had drilled 7 vertical wells, completed and placed on production 2 horizontal wells, and announced that all of its Alberta Bakken wells to date had encountered oil.1

Other major players’ activities in the Alberta Basin Bakken have included Murphy Oil (NYSE:MUR | $9.35B) drilling 2 appraisal wells of a 6-well program in 2011, and later announcing it hit oil in the region’s Three Forks zone.5

As of early 2013, Murphy’s initial well in the Three Forks zone had been on production for over 300 days and was still achieving rates near 200 barrels a day.12

As of mid-2012, Shell (NYSE:RDS.A | $228.06B) had licensed 4 new wildcat horizontal wells in the Del Bonita area just north of the Montana border, with 1 well drilled.5

Other exploration plans by companies or their joint venture partners have included ExxonMobil (NYSE:XOM | $405.57B), Occidental (NYSE:OXY | $68.72B), Encana (NYSE:ECA | $13.58B), Rosetta Resources (NASDAQ:ROSE | $2.33B), and Crescent Point Energy (TSX:CPG | $16.38B), who is currently conducting high-impact exploration on its Alberta Basin Bakken properties for both conventional and unconventional oil opportunities.13

Region Estimates & Production

Contributing to the overall consensus that the Alberta Basin Bakken will deliver ~2 to 3 BBO of recoverable oil is the estimate from global energy research firm, Wood Mackenzie, that 2.6 BBO may be recovered from the region.8

According to the AAPG, meanwhile, estimates of the total resource in place vary from 10 to 15 MMBO equivalent per square mile.1

Of the 130+ wells drilled in the Alberta Basin Bakken to test various reservoirs, most have used the modern technique of horizontal drilling,4 while 1 shale well in particular has been producing in northwest Montana for 35+ years.1

Region Exploration Details

While overall industry investment in the Alberta Basin Bakken is estimated at ~$500 million,5 major industry players have invested in excess of $180 million in the region’s southern area,14 close to Black Stallion’s Woodrow Prospect.

In particular, Occidental Petroleum (NYSE:OXY | $68.72B) held a 32.5% interest in a property that directly adjoins Black Stallion’s Woodrow Prospect,15 where a $41-million exploration program for 2011/12 included 3-D seismic, a 7 vertical well program and 3 horizontal well drilling program.4

Region & Geology

The Alberta Basin Bakken stretches for roughly 175 miles north-to-south by 50 miles east-to-west in northern Montana and southern Alberta.3

In Montana, the potential play area includes Glacier, Toole, Pondera and Teton counties. Where it extends across the border into Canada, the Bakken equivalent is known as the Exshaw.1

The region’s dark, organic-rich shale is recognized as an excellent source rock that has produced much of the oil found in conventional reservoirs in Alberta.9

According to BMO Capital Markets, the Alberta Basin Bakken is interpreted as a Deep Basin Light Tight Oil resource play, with characteristics including pervasive petroleum saturation, upper and lower carbonate reservoir units, and proven production and hydrocarbon recoveries.3

The AAPG indicates that, as with the Williston Basin’s Bakken to the east, the Alberta Basin Bakken represents attractive shale oil features, including multiple prospective zones – the Nisku, Bakken-Three Forks and Lodgepole formations – as well as other secondary targets.

The area also represents good pipeline infrastructure, which has served Canadian production and the once prolific Cut Bank oil and gas field.1