How good is the Canol. It is always interesting to gain some perspective by comparing plays. The techical aspects of the Alaska play look good with Great Bear Petroleum having drilled two wells with cores. They say that the cores look "very, very good". The shale they are going after is the source of the giant Prudhoe field. They are going to be testing the wells soon.
I think the Canol looks better technically than the Alaska play. By technically I mean the amount of oil that the shale contains looks bigger per acre than Alaska.
However, the amount of oil is not the only thing that determines how the Canol compares. The economics also play a large part. To my surprise, the fiscal regime in the NWT is much, much better:
Royalties Taxes on Profits
NWT 1 to 5% 49%
Alaska 18 2/3% 78%
- The taxes on profits include Federal, State or Territorial tax, and the Alaska Petroleum Profits Tax which is about 35% when oil is at $90/bbl.
- The royalties are 1% for the first 18 months, increasing by 1% every 18 months to a max of 5%.
I think this is why none of the large companies are involved in the Alaska shale play and they are involved in the NWT play in a very big way. In Alaska it is Great Bear Petroleum and Royale Energy. Conoco recently picked up some acreage in Alaska but the amount paid is small by Alberta or NWT standards. The entire land sale for Alaska - which includes Conoco - only picked up $15 million. Compare this with the $620 million committed to the Canol.
If we follow the big money, the Canol seems to have it all over Alaska, but only time will tell.
If you want to get excited about the potential for the Canol, check out the following graph. The increase in oil production in Texas and North Dakota is due to Shale oil. Over the last four year, there has been almost 1.4 million BOPD brought on stream between the Bakken and Eagle Ford. The Canol should be capable of doing this as well. This is why the big boys are all over this play like sharks with blood in the water.
NWT