Blackfeet Tribe signs major oil and gas exploration pact

Dec 06, 2009 01:00 AM

The Blackfeet Tribe signed its third major oil exploration agreement, the largest in the tribe's history, Oil and Gas Manager Grinnell Day Chief said. Darryl Howard, president of Newfield Production, a Houston firm with regional offices in Denver, came to Browning to sign an agreement allowing them to drill test wells in the middle of the reservation, Day Chief said.
"We have a drilling commitment that will require them to drill a number of wells, if successful," he said. "It's the largest agreement we've ever signed."

Day Chief said Newfield will be drilling horizontal wells into the Bakken Formation and other formations that lie below the surface of the middle of the Blackfeet Reservation. Horizontal drilling into the Bakken Formation is very productive in the northeast corner of Montana.
Day Chief declined to reveal a dollar figure for the new contract, but said it was larger than a $ 5 mm agreement previously signed with another company.

In January, Rosetta Resources of Houston announced that it had signed a five-year exploration option with the tribe and the Bureau of Indian Affairs to explore for oil on approximately 200,000 acres of the Alberton Basin on the reservation's eastern plains.
"We've negotiated a better royalty, plus the biggest bonus we've ever signed," Day Chief said at the time. "We're really excited about this because it gives us the potential of much-needed revenue for the Blackfeet Tribe."

Rosetta drilled the first two exploratory wells, seeking oil in the Bakken Formation, which they say is located about 5,600 feet below the surface in that area. It is currently preparing to drill a third well there, said Day Chief.
"They've got to drill to earn their right to continue on every year," Day Chief said. "The two wells they're drilling this year will meet that commitment. Then there's another commitment the following year. If they miss a commitment, the rights to that land revert back to the tribe," he said.

Rosetta officials said the Bakken Formation east of the Over Thrust Belt and west of the Sweet Grass Arch in the Alberton Basin could potentially contain more than 100 mm barrels of oil.
"We are very excited to be working with the Blackfeet Nation to explore for and commercially develop their natural resources," CEO Randy Limbacher wrote in a January news release. "Although there are numerous secondary exploration targets in this hydrocarbon-rich basin, our technical work to date has us intrigued by the potential that the Bakken shale offers."

Meanwhile, Anschutz Exploration of Denver has been analyzing the results of two test wells it drilled a year ago along the edge of the Rocky Mountain Front between Heart Butte and the Canadian border. It's seeking oil below the Bakken Formation.
"And they're moving equipment in today to begin fulfilling their three-well commitment to the tribe," Day Chief said, adding that he expects drilling to begin soon. Finally, Day Chief said John Harper, tribal member with decades of oil field experience, has started his own firm, Roland Oil and Gas, and is drilling several wells south of Cut Bank.

Bakken shale is a porous rock formation trapped between two layers of nonporous shale. It's believed to encompass about 25,000 sq miles, lie as much as 10,000 feet below the surface and contain around 200 mm barrels of recoverable oil, according to the US Geological Survey.
New drilling technology such as horizontal drilling and fraccing (pulverizing the shale with huge explosive forces) made the Bakken Formation in Richland County one of the nation's hottest oil exploration areas in recent years, although the focus has been shifting from north-eastern Montana into north-western North Dakota in the past few years.

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