Basel Belly River Shale Revival Fuels New Oil Drilling Wave in Canada

Oil drilling is gaining traction in Canada's Basel Belly River formation, a long-dormant gas reservoir that has seen new life breathed into it. Companies such as Obsidian Energy Ltd. and Yangarra Resources Corp. are now targeting oil instead of natural gas.

According to Alberta Energy Regulator data, 15 drilling licenses were granted in the first half of this year, targeting or ending at the Basel Belly River formation, which is more than any other period in the past 14 years.

The revival of interest in the area can be attributed to the shift towards liquid-rich shale formations such as Montney and Duvernay in Western Canada. Companies are now focusing on areas with higher oil content due to depressed gas prices.

Obsidian Energy Ltd., which acquired 35 sections of land in the field from Highwood Asset Management Ltd. for C$105 million (about $75 million), plans a six-well development program next year to boost production to the equivalent of 3,000 bpd. Each well can be developed for about C$5 million.