Regulatory uncertainty in Alberta’s resource industry, strong conservative leadership by Saskatchewan premier Brad Wall and increased demand for low-cost conventional operations are sending oil and gas investors over provincial lines into Saskatchewan. Here red tape is less restrictive, the political environment inspires confidence in oil and gas operations, and the predominance of easier to produce light crude is attracting companies such as Teine energy, Raging River and Crescent Point. The majority of well operations have been conducted by these three companies in NW and NE Saskatchewan. But a relatively new company, Saturn Minerals, has struck cheap light oil (production cost of $25/BBL) 300 km Northeast of Regina; the middle of nowhere in terms of where rigs are typically located in Saskatchewan. Tapping into the Northern Williston Basin, Saturn Minerals is poised to change the E&P landscape in Saskatchewan. The company exudes social leadership by proactively engaging with First Nations, and is a prime example of a company finding success in tough times.
Boasting an incredible 24 billion in potential recoverable reserves, core samples out of the Williston Basin have painted an in-depth picture beneath the surface of the Dakota’s, Montana, Saskatchewan and Manitoba. The rock on which much of the oil sits slopes downwards towards the North, creating migratory flows which fill traps underground; much how rivers form lakes on the surface.
Laying on top of two of these flows sits over 370 000 acres of oil and gas rights owned by Saturn Minerals. The land rights are divided into two segments, Bannock Creek and Little Swan.
In the above image, a 2D seismographic analysis of a portion of the Bannock Creek region showcases two structures holding a potential of 108 million barrels. Saturn Minerals started vertical drilling in May 2015, with technical complications delaying drilling into February 2016, when oil was discovered. On March 29th, Saturn completed another exploratory well, ensuring the confidentiality of their findings under Saskatchewan’s tight-hole laws. Brian Zinchuk, editor of Pipeline News, highlighted that a new oilfield hadn’t been discovered in Saskatchewan for 60 odd years, leading discovery of oil here to be “one of the most significant developments in the Saskatchewan oil-patch in our lifetime.” Companies with oil and gas rights in the near area such as Husky, Cenovus Energy, Tourmaline, and Canshale will undoubtedly have their eyes on the core sample data once they become unclassified. Companies without oil and gas rights may have trouble securing new leases, as much of the surrounding land is classified as reserve land.
Saturn’s oil and gas rights are no exception, they extend into First Nations territory. The impetus for a positive relationship with the local First Nations is clear. Since 2009, Saturn has worked with the Saulteaux and the Cree First Nations, forming a private jointly owned exploration and development corporation called Inowending E & D Corp. Such a arrangement ensures that the First Nations have a place at the executive table, and benefit from the profits of oil production.
Williston basin rig count data
As rig counts in the Williston basin continue to decline in the wake of low crude prices, Saturn Minerals is continuing to drill, having doubled their activity with plans for more in 2016. In a May 24th press release, the company highlighted its confidence moving forward, having designated themselves within an oil triangle in a new oilfield with ‘tremendous’ potential.
And as the Canadian oil industry twists and contracts in response to systemically low crude prices, many junior players are going bankrupt. Yet Saturn Minerals, junior as it is, not is only surviving, but is poised to help change the landscape of Saskatchewan oil production. Basing their strategy on tried and true research on the Williston basin, the company posted up on migratory flows carrying conventional oil out of the field into the Northern Williston basin. After discovering cheap to produce light oil on February 9th, Saturn has dramatically increased its activity in the region and is confidant of its production potential. Their strategic partnerships with the local First Nations communities highlights their social consciousness and accountability to the land. In an era where many small oil companies are being driven out of business, one may find it refreshing that a little guy is finding real success.