ConocoPhillips, Husky Energy, Shell and MGM Energy are set to get exclusive, lifetime drilling rights to an area 2,485 square miles in size in the Canol shale area, located just south of Normal Wells in Canada, situated in the country's Northwest Territory.
Earlier in September, a panel commissioned by the territory's regulator, the Office of the Regulator of Oil and Gas Operation (OROGO), confirmed that a ConocoPhillips well drilled in 2014 had found a "significant discovery" of hydrocarbons. ConocoPhillips can now acquire a discovery license that would permit it to explore the area in perpetuity. Wally Schumann, the minister of Industry, Tourism and Investment would be the official to issue the license.
That same panel determined that due to the immense size of the deposit, other companies with exploration licenses that are located near ConocoPhillips could also apply for "significant discovery" licenses. Usually in exploration cases, companies must wait until they receive their own significant discovery licenses.
ORGO Executive Director James Fulford said that the panel calculated the size of the discovery area based on data provided by the companies.
Doug Matthews, energy analyst and former director of the oil and gas division for the Northwest Territory, called the panel's move hasty. According to Matthews, the decision puts the Canol shale oil play in the hands of four companies at a very early stage of development. Matthews stated "A significant portion of the Central Mackenzie Valley is, for all intents and purposes, closed."
Matthews also expressed concern that once the four companies acquire their exclusive licenses, the land may sit idle. In March of last year, ConocoPhillips said that it was not planning any work for its parcel. "Although a significant discovery declaration and subsequent significant discovery license is a positive indication for a play, it does not indicate commercial viability," said a spokesperson for ConocoPhillips at the time.
Lincoln Brown for Oilprice.com
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