Land sales continue at red-hot pace
Tom McMillan
The Leader-Post
Friday, August 17, 2007
With Saskatchewan's oil and gas sector in full boom, Crown land sales are moving at a record pace.
In August, the province's sale of petroleum and natural gas rights continued its torrid pace, generating $38.2 million in revenue, Saskatchewan Industry and Resources said Thursday. The demand is being attributed to high oil prices and the first-ever public offering of oilsands rights.
"These results are the latest indicator that the oil and gas industry's confidence in Saskatchewan is growing," Government Relations Minister Harry Van Mulligen said on behalf of Industry and Resources Minister Maynard Sonntag. "This could be the beginning of substantial oilsands development."
Oil companies purchase the Crown land for the right to explore and capitalize on reserves located underneath. To date, more than $151 million in revenue has been generated in 2007, making it already the fourth-best year on record. There are two more offerings still to go this year.
The sales also continue the torrid pace set in 2006, when the province generated $176.5 million in bonus-bid revenues -- the second-highest total in Saskatchewan history.
August's sale included 12 exploration licenses sold for $14.5 million and 257 lease parcels that brought in $20.4 million. The highest price paid for a single parcel was $5.1 million by McCrank Steward Johnson, which purchased a 36-section exploration license 58 kilometres south of Weyburn.
"These sales are an excellent indication that oil companies are considering our province a good place to invest," Van Mulligen said.
This interest is being fuelled by the continued pursuit of new oil reserves and the increasing viability of targeting Saskatchewan oil.
The province's oil and gas reserves are often deeper than Alberta's, but oil prices well over $70 a barrel now make the extraction costs acceptable.
"The oil is now more financially viable for these companies to target and that seems to be spurring most of the growth," Mulligen said.
The Weyburn-Estevan area saw the most activity, with $27.7 million in bonus bids suggesting continued interest in deeper-oil targets. High interest in oilsands produced $5.3 million in the Lloydminster area, followed by the Swift Current area at $3.8 million.
Saskatchewan's oilsands have traditionally been slow to develop because the reserves are located roughly 300 feet below the surface, compared with 30 feet in Alberta.
Sales of the new oilsands dispositions included six exploration licenses that attracted $3.3 million in bonus bids.
"As supplies of oil dwindle, there will be increasing interest in this," Van Mulligen said.
"The technology is being worked on to utilize these reserves."
The most unusual aspect of the August land sale was the first public offering of oil shale exploration permits in the Hudson Bay area.
One permit went to Noble Hydrocarbons Alta Ltd., which committed to spend over $1 million, and Cavalier Land Ltd., which committed to spend $300,000 exploring the area.
The next sale of Crown petroleum and natural gas rights is Oct. 1.
© The Leader-Post (Regina) 2007
