Late Devonian, early Mississippian deposition in the Western Canadian Sedimentary Basin (WCSB) and Williston Basin was dominated by regionally extensive, organic rich black shales, silts and carbonates. In the Williston Basin of Saskatchewan, Manitoba, southeast Alberta, northeast Montana and North Dakota, these organic shales are termed the Bakken formation. The lateral equivalents of the shales in Alberta and northwest Montana have been known as the Alberta Bakken, or more precisely, the Exshaw formation.

The Exshaw formation has long been recognized as a key source rock in the WCSB. Though the formation has been penetrated in numerous wells targeting deeper intervals, only a small number of wells have targeted the Exshaw itself, either through coring or drill-stem testing. While these direct tests are sparse, they have yielded tantalizing suggestions that the formation could be a prolific oil producer under the right circumstances, like its lateral equivalent to the east.

Geology

Like the Bakken, the Exshaw can be subdivided into three members: an upper black shale member, a middle (clastic) siltstone member and a lower black shale member. The shales are characterized by total organic carbon content of up to 14%, low porosity in the 2% to 8% range, and permeability from 0.25 to 30 millidarcies. The interval ranges in thickness from 15 to 65 feet and is found at a depth of 4,500 to 7,800 feet.

The Exshaw rests unconformably above the carbonates of the Big Valley formation (the Three Forks equivalent in the Williston) and is overlain by shales and carbonates of the Banff formation (the Lodgepole equivalent). Generally speaking, the bounding formations are laterally extensive, impermeable layers that isolate the Exshaw, limiting oil migration out of the unit and setting up the potential for overpressured conditions. In most areas of the basin, the Exshaw is encountered at depths placing it in the oil generative window. As the Front Range of the Rockies is approached, however, the increased burial depth could push the Exshaw into the gas window.

Potential

Currently, the area in southern Alberta and northwest Montana of greatest interest for Exshaw potential is bounded by the Overthrust Belt to the west, the Sweet Grass Arch and the Kevin Sunburst Dome to the east, and the Vulcan Low to the north, with a southern extent somewhat in question. The conditions for overpressure exist in this fairway and have been encountered in some well penetrations. Overpressure and liquid-generative potential can result in natural micro-fracturing of the reservoir rocks. Regional structural influence may come from compressional deformation related to the fold-belt, as well as extensional faulting related to relaxation following the mountain-building event. This element of fracturing is key to the Exshaw's potential producibility, especially when combined with new completion and horizontal-drilling technology.

The Exshaw has all the ingredients to be a self-sourcing reservoir, subject to conditions of overpressure and natural fracturing, while its lateral continuity with the Williston Basin Bakken gives hope for its potential productivity. The sparse test control and vast geographic area of the Exshaw increase exploratory risk, but there is enough existing well control to identify local isopach thicknesses. The question is, will these equate to localized sweet spots?

Players

On both sides of the Canada and U.S. border, a number of companies have entered the play and are beginning to actively pursue the Exshaw. Some of these early entrants are experienced Williston Basin Bakken players that believe their expertise may be directly applied to unlocking the Exshaw's potential. Approximately 41 wells have been permitted on the Canadian side, with 29 permitted on the U.S. side. Currently, E&Ps are drilling both vertical delineation wells and horizontal wells to test the reservoir's commerciality. Few test results have been disclosed, and no meaningful production picture will emerge until more horizontal wells have been drilled and fraced.

In Canada, Crescent Point Energy Corp. has an interest in nearly 1 million net prospective acres in southern Alberta within the Exshaw trend. The company has drilled five wells in the play, with two more licensed. Murphy Oil Corp. announced a farm-in arrangement with the Blood Tribe late in 2010 and now has interest in over 150,000 net acres that are prospective. Bowood Energy Inc. was one of the early movers in the trend and has approximately 100,000 net acres on the Canadian side. It has since formed a joint venture with Legacy Oil & Gas Inc. And, several other large southern Alberta Basin interest holders have positions in the Exshaw trend, including Shell Canada.

In the U.S., Newfield Exploration Co. holds approximately 280,000 net acres in the region and has drilled (or permitted) several wells of interest. Rosetta Resources Inc. has interest in approximately 300,000 net acres and has drilled six exploratory wells in the area with plans to continue its drilling program in 2011.

The Rosetta wells have confirmed significant oil hydrocarbons in place and the overpressured nature of the reservoir. Both areas are located on Blackfeet Nation Territory and have multiple targets, including the Lodgepole, Exshaw, Three Forks and Nisku formations. Other players in the trend include Quicksilver Resources Inc., Abraxas Petroleum Corp. and Anschutz Exploration Corp.

—Tim Pish and Boris Markhasin,
Scotia Waterous, and Patrick Bryden,
Scotia Capital (713-222-0546)
For details on assets on the market, see A-Dcenter.com.