Canada’s High Level Energy Seeks Financial Partner for Wildcat Exploration in the Northwest Territories
About 125 miles north-northwest of Norman Wells in the N.W.T. lies a prospect named Little Chicago. It was originally developed and extensively researched in the 1960’s by the late Dutch geologist John Lichtenbelt, who provided evidence for tremendous possibilities and said it was the most economically viable and highly prospective area of the whole Northwest Territories. Then along came the Berger Commission in the 1970’s which called for a moratorium on land sales pending settlement of native land claims which effectively shut down research and exploration in the area for decades afterwards.
In 2007 and 2008 the company which controlled the Little Chicago exploration licence at the time – Kodiak Petroleum – spent $10 million on seismic following up on leads from old seismic which had been reprocessed the preceding year. Kodiak shot ten, high fold (3800%) seismic lines, for a total of 118 km, to identify specific drilling locations. In total 13 shallow (Devonian Bear Rock) anomalies, three medium-depth (Basal Cambrian Sand/Top Precambrian) anomalies, and one large deep structure with 1200 feet of closure appear to have been identified on the seismic.
Just when Kodiak had gathered sufficient evidence in support of drilling its prospects, the financial crisis hit, resulting in the decimation of Kodiak’s share price and also the company’s ability to raise the required funds for drilling. Then the exploration licence expired and with it the last chance for Kodiak to test the validity of its seismic anomalies.
Further research into the oil potential in the Peel Plain and Plateau, which includes the Little Chicago prospect, was done in 2010 during the time of Kodiak’s one year extension on the exploration licence. In an open report by geoscientist Leanne J. Pyle she noted that known accumulations occur in proximity to Little Chicago, most notably the Norman Wells oil field to the southeast, but also natural gas and oil in Colville Hills to the east, oil in Eagle Plains to the west, and oil and gas in Mackenzie Delta to the northwest.
High Level Energy describes the regional geology like this: Directly to the west and downdip of Little Chicago is a 12,000 foot thick geosyncline of mainly bituminous shales, an excellent source rock where hundreds of billions of barrels of oil may have been generated. As the oil produced in this geosyncline migrated easterly, it was either trapped stratigraphically or structurally, or it simply continued updip where, in some cases, it outcrops in the form of oil seeps (along the Mackenzie River to the north of Little Chicago) or oil sands (at Colville Lake to the east of Little Chicago.)
In July of 2013 High Level Energy entered into an agreement to purchase all of Kodiak’s proprietary seismic and all their files and other assets to do with Little Chicago in anticipation of bidding on exploration rights. Everything seemed to be in place for success, especially with the devolution of resource management to the N.W.T. government from the Federal government. That devolution agreement was announced on March 10th of 2013 and the very next day the Federal government issued a Call for Nominations for the Central Mackenzie Valley where Little Chicago is situated. The devolution agreement was to take effect on April 1st of 2014, meaning that the N.W.T. government had more than a year to prepare for its assumption of resource management.
So much potential, but as it stands now this prospect sits idle and High Level Energy cannot move forward.
“We believe we have the potential to make an historic oil discovery that will better the economies of many people, communities and companies, as well as governments, especially that of the North West Territories,” says Alain Rostoker, President of High Level Energy. “We want to give small investors from across Canada an opportunity that they would not otherwise have.”
Rostoker expressed frustration at the delays that have happened in proceedings. “I have a Call for Bids map from the GNWT website with a date of Dec. 17, 2014, but the Call for Bids did not actually launch until the end of January. Had the Calls for Bids been launched on that December date it would have been a typical period between the closing of the Call for Nominations and the launch of the Call for Bids.” Given that the devolution agreement was to officially take effect on April 1st of last year and given that the GNWT had more than a year to prepare for it, there was a reasonable expectation that right after April 1st the Call for Nominations would be issued. When it wasn’t, Rostoker fired off an email requesting an estimated date for the start of a Call cycle, only to be told that the expected start date would be “late summer”. The summer of 2014 came and went with no further information as to when a Call for Nominations might be issued.
All of this meant huge delays that postponed planning and thus the entire operation and it left Rostoker in a bit of a pinch.
High Level Energy (HLE) plans on drilling (vertically, not horizontally) at least the two medium-depth seismic anomalies that Kodiak would have drilled had it not been for the financial recession of 2008-2009, and possibly one or two of the shallow anomalies.
HLE had some investors tentatively lined up but couldn’t ask them to actually put money up until they knew that the Call for Bids had really launched and that it included the Little Chicago prospect lands. By the time that happened, the investors had faded into the background due primarily to frustration over the delays by the N.W.T. government. According to the CBC, David Ramsay, N.W.T. minister of Industry, Tourism and Investment, said that “the rules for N.W.T.’s first oil and gas exploration licence auction are the same as when the process was run by the federal department of Aboriginal Affairs and Northern Development” so it begs the question by HLE: why did it take so long to get the Call cycle underway?
These delays have made it practically impossible for HLE to get its wells drilled until the winter of 2016/2017 and puts into doubt whether private investors will be willing to put up the $2 million needed and whether the IPO investors will be willing to wait for up to 16 months before they know the drilling results. In the oil industry $2 million is peanuts but to High Level Energy it’s everything.
Rostoker just shakes his head. “There is so much potential and we’ve done everything to be ready to make it happen. Only time is working against us.” The N.W.T. could again be a hotspot, with past successes in a number of areas such as Amauligak and Norman Wells, and the creativity of a new and focused company such as HLE to explore where others fear to tread. But things seem to be ‘frozen’ in the great white north right now, despite the potential.
High Level Energy has some exciting plans to augment the drilling project with a TV mini-series to echo successful shows like Licence to Drill,Yukon Gold, Bering Sea Gold, Ice Road Truckers, Black Gold, and (the latest) Backyard Oil. The show is intended to be educational in nature, with a focus primarily on the geology, geophysics, operations and the business of frontier energy exploration, always with a view for environmental sensitivity.
The company also plans to hire Canadian Petroleum Engineering under contract due to their extensive knowledge and experience in N.W.T. operations. They were the operator on behalf of Devlan Exploration in the drilling of three wells on both sides of Little Chicago.
“Canadian Petroleum Engineering knows more about everything to do with drilling our particular prospect than anyone else in the industry,” Rostoker pointed out.
High Level Energy is offering shares to qualified private investors in the jurisdictions of BC, Alberta, Saskatchewan, Ontario and the US, and hopes to either win the bid for the prospect or sell the seismic to whoever is the winning bidder. Considering the cost for conducting a new seismic program, HLE’s seismic could be purchased at a heavily discounted price.
But the much preferable route is for the company to continue executing its well conceived plans. “We have structured the deal as a shareholder loan with a whole lotta shares so investors get their money back first (most important!) and after that – if all goes according to plan – they will make about double their investment even if we drill dusters the first go around,” Rostoker said. “Of course, if we drill a discovery then it’s a whole new ball game.”
Even if HLE makes a discovery it will take years for its shares to be fully valued which will probably be when first production is sold and delivered. The current best method of bringing possible Little Chicago oil production to market is by building a relatively short (but still relatively expensive) pipeline to Norman Wells where it would connect to the pipeline that goes to Zama and which has plenty of capacity to handle new production.
Says Rostoker: “This prospect begs to be drilled. It would be a shame if it were to remain undrilled for the sake of a measly two million dollars. My biggest fear (as much as the likelihood of losing lots of money) is that if this prospect isn’t drilled now, it may never be drilled. Another fear is the possibility that the inability of HLE to advance this prospect now will have an even greater chilling effect on Northwest Territories exploration and development in the future. That would be a lost opportunity to better a lot of people’s lives. “Maybe we won’t make a discovery but at least the evidence looks good…and you can’t possibly win without a ticket.”