Oil, gas leases net Blood Tribe $50 million

Agreements allowing two oil and gas companies access to land on the Blood First Nation have netted the southern band at least $50 million.

“It’s money up front when the final lease is executed,” said David Shade, general manager with Kainaiwa Resources, responsible for negotiating leases for the band. The money will be placed into the band’s capital account in Ottawa by Indian and Northern Affairs Canada.

In March, the Blood First Nation started negotiations with “several players,” said Shade, with Kainaiwa Resources seriously considering offers by seven oil and gas companies. In the end, negotiations were successful with Murphy Oil and Bowood Energy.

Both companies have signed five-year leases giving them access to approximately half the reserve land.

Murphy Oil’s exploration will take place in the southern part of the Blood First Nation on 129,280 acres, with the company required to drill a minimum of 16 wells during the five-year lease.

“The Blood First Nation’s lands add further to our growing position in the Exshaw/Bakken play of Southern Alberta where we are targeting its oil potential,” said David Wood, Murphy Oil Corporation President and Chief Executive Officer, in a news release.

Bowood Energy has access to portions of the northern part of the reserve. In a news release issued by Bowood, the company says access was gained to 60,640 acres of contiguous land at an upfront cost of $14,128,000.

Further Bowood will be paying $122,000 per year to rent the land.

It’s difficult at this point, said Shade, to anticipate whether further money will be coming in from either exploration company.

“It’s hard to know if additional revenue will be generated. It’s hard to know until they actually drill holes in the ground and know if they will have oil or gas,” said Shade.
Bowood’s news release states, “The lands being acquired are strategically located in the emerging southern Alberta Bakken play and the company believes the lands are on trend and highly prospective for Devonian-Mississippian (Bakken equivalent) oil potential and other prospective formations.”

The agreement with both companies guarantees Blood First Nation members and companies first right of refusal for employment. Members must be qualified for the jobs and Blood companies must provide competitive bids. If a job which can hire a large number of people finds no one on the First Nation qualified, then the company will set up a training program.