Teton County: First in State To Produce Oil, Natural Gas

Cable tool drilling rig on display at the Oil Field Museum in Cut Bank. Sun Times photo by Darryl L. Flowers

Region is now in Glacier County

By Darryl L. Flowers
Published: Monday, August 5, 2013 10:31 PM CDT

Last year, as news of oil companies and their landmen scouring the area for minerals was making the headlines, several attempts to report the history of early oil exploration in Montana appeared.

As the public hubbub has subsided and most of the work in the region has fallen below the radar, the Sun Times has continued to dig into the fascinating hydrocarbon history of the Treasure State.

Early this year we came across one of the best papers on the subject, written by  geologist William Boberg. It is still the best work for those who want to focus only on the Flathead / Alberta and British Columbia regions. Boberg’s work was published in the 1984 Montana Geological Society Northwestern Field Conference.

The Sun Times research showed that the earliest mention of oil in Montana dated to the 1860s, when oil was found at a “seep” near a river and was used by wagon trains to lubricate the axles.

But we were not able to pin down the details, so rather than publish an  incomplete history, we held the story.

But we kept digging, searching.

In late July, we were looking for details reported when the Krone, Steinbach and J.B. Long wells were being drilled in Lewis and Clark County, as well as the famous Morning Gun Well that was drilled in Glacier County. The search led us to the Oil Field Museum, part of the Glacier County Museum in Cut Bank.

While the Oil Field Museum certainly has the best display of old drilling tools… including a real “Cable Tool” drilling rig, for instance… it also has an impressive collection of old oil industry journals and company records.

While looking through old issues of the Montana Oil Journal, we came across the crown jewel of Montana’s early oil history.

The in depth report was published in the July 20, 1963 edition of the Montana Oil Journal, which was based in Great Falls at the time.

The article was titled “Outline History of the Development of Oil and Gas in Montana,” and was written by well respected United States Geological Survey geologist Dr. C.E. Erdmann.

According to an Editor’s Note preceding the report, the work was done at the request of Senator Lee Metcalf, Montana Democrat. The note reads, in part, “Included in this report was an authoritative and entertaining report on the history of oil and gas development in the state, by Dr. Charles E. Erdmann of the U.S.G.S., whose headquarters are in Great Falls. Of particular interest to many will be his account near the start of the article, covering the fruitless effort in the state, from 1889 to 1910, to develop production near oil-gas seeps.”

The report is detailed, a little too detailed for the non-geologist. The Sun Times has edited Dr. Erdmann’s report, removing some of the technical details, such as the geological ages of the formations. We have also added some clarifications of the terms Dr. Erdmann used. Otherwise, the report is original.

Outline History Of Oil And Gas Development in Montana

By Charles E. Erdmann, PhD

Introduction

The classical pattern of petroleum exploration in virgin territory is for the first tests to be made in the vicinity of natural surface indications (seeps) of oil and gas, if any have been found. Unusual combinations of geologic conditions are required for the development of these surface features, and their occurrence is transient and infrequent. Their value, however, is that they provide tangible evidence of the local presence of hydrocarbons, thereby raising hopes that commercial accumulations may be found underground. The analogy with surface discovery of inorganic minerals is obvious: both require bold and enterprising spirits if the usually costly and difficult adventure of development is to be undertaken. Because they are few in number, they are soon exploited, and this first stage of exploration is of short duration; but the often amateurish effort frequently clothes it with many colorful and dramatic incidents. If no significant discoveries result, and they seldom do, drilling on easily recognized geologic features such as anticlines and domes may follow with more or less delay. If drilling depths are shallow, as they are in some of the older fields in Montana, this second stage may mark the heyday of the small independent operator.

By the time the obvious surface structures have been recognized and evaluated, a more mature third stage has appeared in which the search for subsurface structures and porous beds and stratigraphic traps is carried on by the sophisticated techniques of geophysical prospecting and study of formation samples or subsurface stratigraphy. Other later stages may involve deeper drilling, secondary recovery techniques and, finally, abandonment. Initially, each stage may appear in order. No firm line between them exists, however, for if the petroleum industry is to prosper, new discoveries must succeed abandonments. Review of the history of oil and gas development in Montana indicates close adherence to this pattern, which will be the outline for this chapter.

Explorations On Surface Indications, 1889-1910

The exact number of oil and gas seepages in Montana is not known with certainty, but probably there are not more than 15 or 20, and some of them have become inactive since they were discovered. Several of them have been known for many years, and were responsible for the pioneer oil excitement. The first of record was noticed August 10, 1864, by members of an immigrant train crossing the northeast flank of the Pryor Mountains on the Bozeman Trail, as a scum of heavy oil on a stagnant pool of water. In this instance the immediate practical application was for axle grease for the wagons. No drilling development followed, and even the report was not made for many years. Furthermore, no rediscovery seems to have been reported. The exact location, therefore, is not known, other than it was northwest of Beauvais Creek toward the East Fork of Pryor Creek Divide. A likely possibility, however, is that it was on some intermittent upper tributary of Woody Creek in T. 4 S., R. 28 E., Big Horn County, near where that drainage was crossed by the Bozeman Trail.

Roscoe seep. The first oil seep to be drilled in Montana was the occurrence of heavy black oil or asphalt near the southeast corner NE1/4SE1/4 sec. 32, T. 6 S., R. 18 E., Carbon County, about 5.5 miles south of the old Roscoe post office. Date of discovery and name of the original locator are not known. In the late 1880’s, however, the area was acquired by Thomas Cruse, who had found the famous Drumlummon lode near Marysville in 1876. The location of the first test, Thomas Cruse well No. 1, was about 650 feet northwest of the seep, and was completed and abandoned in 1889 as a dry hole in the Judith River formation at a, total depth of 1,100 feet. Insofar as known, this was the first organized attempt to discover oil by drilling in Montana. Undeterred by failure, Cruse continued operations in the vicinity of the seep during 1890 and drilled eight more dry holes that ranged in depth from 600 to 800 feet before giving up; and even then he retained ownership of the tract. Others continued to be intrigued by the possibilities, and additional tests were made in 1909, 1931, and even as late as 1947, but without success.

Kintla Lake area. Impressive amounts of pale-yellow, high-gravity (44° API) oil issue from surface deposits at the Sage Creek seeps in southeastern British Columbia, about 8 miles north of the international boundary at the northwest corner of Glacier National Park. The controlling structural feature appears to be a normal fault of great magnitude that can be projected into Montana where it is called the Roosevelt Fault. In 1892 active seepages of oil and gas were discovered in Montana near the northeast end of Lower Kintla Lake, not far east of where the lake crosses the trace of the fault. An organization called the Butte Oil Co. posted a location notice on August 10, 1900. Drilling began late in October 1901, the well location being NW1/4NW1/4NW1/4 sec. 18, T. 37 N., R. 20 W., Flathead County. Late in 1902 work was suspended temporarily, with the hole at a depth of 1,450 feet in very hard “black limestone and iron.” A significant incident was the discovery of gas at a depth of 720 feet, which is said to have burned with a 4-foot flame. As will appear later however this was not the first discovery of gas in Montana by drilling.

In late June 1902 the Kintla Lake Oil Co. of Kalispell commenced operations at their No. 1 well, approximately in the center of NE1/4 sec. 12, T. 36 N., R. 22 W.; and in 1903 a second test is said to have been located toward the center of the section. Both are situated on Tertiary “lake beds” on the left bank of the North Fork of Flathead River. The No. 1 well was drilled to 1,290 feet at least, and the No. 2 to about 1,000 feet. Traces of oil and gas were reported from each, but both were abandoned as dry holes. The circumstances that led to these tests are not known, but they may have been drilled on seeps in the “lake beds” that emerged along faults.

Another old venture, for which there is good authority but no log or operational information, is the Southwest Kootenai Land Oil Co. test on Kintla Creek about 3 miles above Upper Kintla Lake. This locality is approximately in the north center of sec. 8, T. 37 N., R. 19 W., Flathead County, in a deep glaciated valley about 1.5 miles west of the Continental Divide. Drilling is reported to have commenced March 8, 1906, and continued to a depth of at least 600 feet.  In all probability the location was made on the basis of seeps or iridescent films of oil whose origin is more or less identical with those on Cameron Brook at Oil City, Alberta, a short distance northeast across the divide, where petroleum exploration had been going on since 1901.

Swiftcurrent Creek. Sustained efforts to develop oil by drilling on or near obscure surface indications of petroleum and natural gas in Swiftcurrent Creek Valley throughout the nine year period before the district became incorporated into Glacier National Park in 1910 resulted in seven tests that give it the nominal distinction of being the first oil and gas field in Montana and the only locality in the State where drilling on seepages proved successful. Credit for the recognition of these showings appears to be divided between two men: Frank M. Stevenson identified certain exposures of Upper Cretaceous marine shale as “oil shale” in the summer of 1901; and Samuel D. Somes prospecting near where Sherburne Dam is located, observed small pools of oil in irregularities on freshly broken shale and limestone on the floor of his adit in late February or early March 1902.

Within a short time, 52 oil claims were located under the placer mining law. Companies were organized and consolidated as claims were exchanged for shares, the ultimate operator being the Swift Current Oil, Land & Power Co. The first derrick was erected in November 1902, approximately at the center of SW1/4 NE1/4 sec. 4, T. 36 N., R. 15 W., unsurveyed, on the Lakeside placer claim which had been located by Stevenson. Drilling began in 1903, when the hole was taken to a depth of 430 feet, with a showing of oil; but was abandoned because of inability to shut off water. The rig was then skidded 30 feet west, and work begun on location 1-A, which was completed as an oil well at a total depth of about 550 feet during the summer of 1905. Oil from this well was displayed at the State fair at Helena in the fall of 1905, where the company was awarded a diploma for “the first producing oil well in the State of Montana.” Operations were terminated through lack of finances in 1907, and the properties turned over to Stevenson. In the meantime, however, one other oil well, with an initial capacity of about 20 barrels per day, by bailing, and 2 dry holes had been completed.

M. D. Cassidy, locator of a neighboring claim to the east, became aroused by this activity and organized the Cassidy-Swiftcurrent Oil Co., date of incorporation being July 15, 1905. Approximate location of the first test by this company, which may have been near a gas seep recognized by Cassidy, was in the extreme northeast corner of NW1/4 NW1/4 NE1/4 sec. 3, T. 35 N., R. 15 W., unsurveyed, near the center of St. Louis Placer No. 1. Drilling began in 1907, and continued at intervals into 1909 to a total depth of about 2,800 feet, where the tools were lost. Natural gas was reported from depths of 430, 1,900, and 2,800 feet, the initial shut-in pressure being about 250 p.s.i.

No measurement of volume seems to have been taken, but, upon being ignited, the gas flow from a I-inch pipe is said to have burned to a height between 15 and 20 feet. Cassidy piped the gas into his house, where it was used for heating and lighting until 1914 when the flow ceased, due to caving in the hole. The Cassidy-Swiftcurrent well No. 1, therefore, has the distinction of being the first producing gas well in Montana, even though it had only one customer.

Boulder Creek. Following Somes’ discovery of oil in his adit on Swiftcurrent Creek in 1902, other prospects in the Marias River formation were examined for traces of oil. Favorable indications were reported in an abandoned working on Boulder Creek, probably somewhere near the center NW1/4 sec. 27, T. 35 N., R. 15 W., unsurveyed, Glacier (formerly Teton) County. Recognition of this seep may have contributed to the organization of the Swift Current-Boulder Oil Co., which soon acquired substantial acreage south of Swiftcurrent Creek. Drilling commenced in July 1904, the approximate site being south of the center SE1/4 SE1/4, sec. 11, T. 35 N., R. 15 W., on the left bank of Boulder Creek. A show of gas was reported in shale at a depth of about 1,750 feet, and a show of oil “of a superior quality” was found in the top of a sandstone at a depth of 2,010 feet on July 8, 1905. Operations were abandoned at this depth in the spring of 1906.

This persistent run of failure naturally resulted in loss of interest, and by the close of 1907 such random drilling had come to an end. The Congress passed the act establishing Glacier National Park on May 11, 1910, thereby precluding new ventures. In the meantime, the Lakeside and New Era placer claims in the Swiftcurrent District had been patented, and the patent for the St. Louis No. 1 was pending but held in abeyance as Sherburne Lake project of the Bureau of Reclamation approached realization. More or less ineffectual efforts to recondition the two small oil wells and the gas well persisted for several years, but terminated in the summer of 1919 when the locations were flooded by water rising behind the Sherburne Lake Dam.

No other drilling on surface indications (seeps) has been recorded in Montana.

Exploration Of Surface Structures, 1890-1950

Many anticlines and domes are expressed in rocks at the surface on the Montana Plains. The precise number is unknown, but more than 475 areas, fields, and structures have been named. Approximately 185 fields and structures have been named on the latest edition of the “Structure Contour Map of the Montana Plains” (U.S. Geological Survey, 1955); but only about 100 areas have been proved to contain oil or gas in commercial quantities, and not all are anticlines. The producing fields are shown on figure 7, and their names are keyed by number to the list (available at http://www.mbmg.mtech.edu/sp28/table1.htm).  This chart, it should be noted, is not a complete list of Montana oilfields, nor does it include the major gas fields.

The surface structures exhibit wide variation in size, shape, and amount of structural relief. Bowdoin dome in Phillips and Valley Counties, and Kevin-Sunburst dome in northern Toole County occupy hundreds of square miles, and are so broad And have such comparatively low relief that the domical structures cannot be visualized on the ground. The Cedar Creek anticline in the southeastern part of the State is more than 100 miles in length, but the narrow Pierre shale inlier along the crest is only a few miles in width. Flat Coulee dome north of the Sweet Grass Hills, on the other hand, is contained within a single square mile. Elk Basin anticline, which straddles the Montana-Wyoming boundary, or Milk River anticline in the Disturbed Belt on the Blackfeet Indian Reservation, are nearly perfect folds in which both flanks can be observed from a single viewpoint.

Not too many years had elapsed since the pronouncement of the anticlinal theory of oil and gas accumulation and, in the absence of an oil seep, a sharp or closely folded anticline seemed the next best feature on which to drill. Recognition of a completely exposed fold in rock requires so little imagination or interpretative skill that when they were observed they were reported, often by sheepherders, and the more evident small folds were described as “sheepherder structures.” Insofar us known, the first test in Montana to be located on an anticline, presumably in accordance with the anticlinal or structural theory, was the R. O. Morse well No. 1, NE1/4 sec. 4, T. 6 S., R. 18 E., Carbon County, on the northeast flank of Roscoe dome, a “sheepherder structure” toward the west end of the Nye-Bowler lineament. It may be, however, that Morse had been attracted to the area by Cruse’s exploration around the Roscoe seep a few miles south, which was then in progress. Drilling equipment in 1890 was very inadequate for a complete test of the structure and the operation was abandoned as a dry hole in the upper part of the Colorado Group at a total depth of 1,100 feet. Subsequent drilling has proved the structure to be dry into the upper part of the Cambrian series at a total depth of 5,928 feet. Chance plays an important part in exploration for oil and gas, and the first discovery of natural gas by drilling on the Montana Plains came unexpectedly in 1893 a few miles southwest of Havre at Fort Assiniboine in a water well in the upper sandstone unit of the Eagle sandstone. Although not of commercial volume, the find directed attention to the possibility of gas development out on the plains, but this did not follow for nearly 20 years.

The first commercial show of natural gas in eastern Montana was found in Gas City dome at the north end of the Cedar Creek anticline in 1913. Drilling was initiated by the Mid-West Oil Co., in November 1912, at their No. 1 well, W 1/2 NE 1/4 NE 1/4 sec. 20, T. 14 N., R. 55 E., Dawson County; but with change of ownership the hole was completed by the Eastern Montana Oil & Gas Co., which developed the field. Drilling continued to a total depth of 2,710 feet, which was reached in April 1914. In the meantime a flow of 500,000 cubic feet of gas per day with a shut-in pressure of 220 pounds per square inch, and some water had been found between depths of 730 and 745 feet in a sand assigned arbitrarily to the Judith River formation. Beginning in 1915 gas for domestic use was supplied to the city of Glendive 10 miles north on Yellowstone River. Peak of production was reached in the fall of 1917, when the combined flow of eight wells amounted to about 10,600,000 cubic feet of gas per month. The field was abandoned in 1925; but other gas production followed along the anticline to the south.

The year 1915 also was notable for the discovery of oil in the Elk Basin anticline in Carbon County, Montana, and Park County, Wyoming, a structure which had first been noticed some 10 years previously by the U.S. Geological Survey. The discovery well, which produced from the Torchlight sand in the Frontier formation at depths of 1,335 to 1,402 feet, was in Wyoming; and about 87 percent of the productive acreage fell in that State. The remaining northern portion of about 120 acres became Montana’s first producing oilfield. The beginning, therefore, was rather small. Four oil wells were drilled in 1915, but were not brought into production until shipping facilities became available the following summer. Two more oil wells and one dry hole were drilled in 1916, and production for the last 6 months of the year totaled 44,917 barrels, with a value of $44,019.

Excellent examples of the possible rewards of deeper drilling are furnished by the development of the Elk Basin field. Natural gas was found in the Cloverly formation, about 1,150 feet below the Torchlight, in 1922, but is now largely exhausted. The major discovery, however, did not come until December 1943 when oil was found in the Tensleep sandstone at a depth of about 4,500 feet. This reservoir proved to have about 215 feet of saturation, the thickest producing section of any field in the State. About 1,375 acres, or 27.5 percent, of this Tensleep pool are in Montana. Finally, in 1946 oil was found in the underlying Madison limestone of Mississippian age.

The immediate effect of the original Elk Basin discovery was to direct attention to the Montana extension of the Bighorn Basin and the country to the north where interest still centered on sharp-dip structures; but prospecting resulted only in dry holes. One of the more prophetic of these efforts was the first test on the large, Woman’s Pocket anticline, which was spudded May 6, 1916, by the Foster Oil Co., in C SW1/4 NE1/4 sec. 15, T. 8 N., R. 20 E., Golden Valley County, and completed in June 1918 by the Tri City Oil Co., at a total depth of 2,215 feet. The trace of oil from 1,550 to 1,565 feet, and two other minor shows at greater depth, were the first evidence in Montana of the occurrence of petroleum in the Kootenai formation, and provided the incentive for further exploration of that unit. Although still far short of commercial production, more tangible encouragement soon came from the Devil’s Basin anticline to the northeast where the Van Duzen Oil Co. well No. 1 spudded in the Kootenai formation in NE1/4 SW1/4 NW1/4 sec. 24, T. 11 N., R. 24 E., Musselshell County, on August 10, 1919. Drilling continued to a total depth of 2,031 feet on November 6, 1919. In the meantime, 10 or 12 barrels of oil had been found in a 6-foot limestone at a depth of 1,167 feet in what was then called the Quadrant formation later it was shown the producing horizon was the Heath Formation. The trend of exploration continued toward the northeast, and the next structure to be drilled was Mosby dome on the elongate Cat Creek anticline. Here the Franz Oil Corp. well No. 1 (now Continental Oil Co., Charles 1-A) was started December 18, 1919, and was completed at a total depth of 1,014 feet as a 30-barrel oil well on February 20, 1920. Production was obtained from the second Cat Creek sand of the Kootenai formation between the depths of 998 to 1,014 feet. This famous discovery well, which in itself never produced more than 700 barrels of oil, resulted in the development of the Cat Creek field, the first important field in the State and, for its size, still one of the most productive and most profitable that has been found. Exploitation was rapid. A peak production of 2,080,826 barrels per year was reached at the close of 1923; and cumulative production to the close of 1961 has amounted to nearly 20 million barrels of oil.

The discovery of the Cat Creek field definitely carried the struggling Montana petroleum industry beyond the nascent stage; but national significance was not achieved until the oil discovery on the Kevin-Sunburst dome in Toole County 2 years later. Actually, there were two oil discoveries; and the short interval between them compounded the excitement they raised. Oil was found first on April 14, 1922, when the Gordon Campbell, Kevin Syndicate-A. Goeddertz well No. 1, NE1/4 NE1/4 NE1/4 sec. 16, T. 35 N., R. 3 W., was completed as a 20-barrel producer between depths of 1,770 to 1,790 feet in the basal sandstone unit of the Sawtooth formation and the eroded, weathered upper surface of the Mission Canyon formation of the Madison group. In the second, oil was found June 5, 1922, when the Ohio-Sunburst Oil Company’s R. Davey well No. 1, SE1/4 SE1/4 SW1/4 sec. 24, T. 36 N., R. 2 W., was completed as a 150-barrel producer between depths of 1,535 to 1,564 feet in a sand at the base of the Kootenai formation, which later was named the Sunburst sand. These discoveries, together with the great size of the dome, first production from rocks of Paleozoic age in the Rocky Mountain region, shallow drilling, and demonstrated production from a low-dip structure, attracted immediate attention from major oil companies and numerous small operators. The result was remarkable and, by the close of 1922, out of a total of 42 completed tests the field could show 22 producing oil wells, 4 wells producing both oil and gas, 3 Sunburst sand gas wells, 3 dry holes with shows of oil and gas, and 8 dry holes, with 11 tests drilling. Peak oil production of 6,457,217 barrels of oil was reached rapidly in 1926, since when it has been declining; and cumulative production to the close of 1961 has amounted to 66,189,439 barrels, which is not far from its estimated ultimate production of 70 million barrels of oil. Peak production of natural gas of 4,950 million cubic feet was reached in 1928, with cumulative production of about 78 billion cubic feet through 1961. With the development of the Kevin-Sunburst field the petroleum industry became firmly established.

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Norstra Stock Suspended By SEC; Plans Continue For Well Near Augusta

One of several oil analysis reports conducted on the J.B. Long well near Haystack Butte. From the Board of Oil and Gas Conservation database
By Darryl L. Flowers

On June 20, Norstra Energy’s Glen Landry sat down with the Sun Times to answer questions about the company’s South Sun River Prospect, a speculative oil play south of Augusta.

In the midst of putting together the story, the Securities and Exchange Commission put a 10 day suspension on the trade of Norstra shares. A press release issued by the SEC reads, in part, “The Commission temporarily suspended trading in Norstra because of questions regarding the adequacy and accuracy of information about Norstra, including, among other things, its business operations. Norstra’s ticker symbol is NORX.

The Commission cautions brokers, dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by Norstra.”

Contacted by the Sun Times as a follow-up to these developments, Glen Landry said he was aware of the SEC action and was in touch with his attorney on the matter. “My first reaction was to call the SEC and try to get more details, but the attorney advised against that.”

After the SEC action, the Sun Times received an e-mail from Yolanda Holtzee, a semi-retired Seattle “mining industry type” who invests in large cap mining stocks. Holtzee expressed concerns about Norstra’s claims. Asked if she would be willing to speak on the record, Holtzee called the Sun Times.

According to Holtzee, the problem can arise when “seed” investors try to orchestrate a “pump and dump” with a stock. An investor will find a penny stock and pick up millions of shares. The seed stockholder will then promote the stock, often making questionable claims about the company. As the stock prices climb on false hopes, these investors dump the stock and walk away with a healthy profit.

“We see this all the time with these penny stocks,” said Holtzee. “Where Norstra may have hurt itself was in not reacting immediately to those false claims and issuing press releases distancing themselves from these promotions.”

Holtzee sent samples of these promotional flyers pushing Norstra stock to the Sun Times.

To the trained eye, these flyers are pure junk mail. But to the casual observer, they might represent easy money. However, in reading the fine print at the bottom of the promotional pieces, it seems that the flyers may not have originated with Glen Landry or Norstra. “I don’t see anything, so far, that would convince me that Mr. Landry was directly responsible for the materials.”

An area oil and gas investor brought a similar flyer by the Sun Times’ offices. The 20 page slick magazine style promotional piece is titled “The Luckiest Place on Earth” and is filled with graphics of cash…. dollars flowing from water faucets and $100 bills rolled up like round hay bales in a field. But the devil is in the details, and buried in the pages is the small print that begins, “DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND IN THIS REPORT.”

Just before wrapping up the story, we received a package in the mail postmarked with a California zip code. The package included a multi-page printout. The source of the information could not be determined. Although the report laid out an interesting history of Norstra, there were no reports of run-ins with regulators, other that the recent SEC action. The origin of the report could not be determined.

Norstra is incorporated in Nevada and has a space in an office complex in Texas. “We have an accountant working in the office, but that’s all for now,” said Landry. Asked why there was no landline phone in the office, he said there was no need at this time to spend the money for a phone, “When I need to speak with the accountant, I just use the cell phone.” Regarding Norstra choosing Nevada as the state of incorporation, Landry explained it was a tax matter. “It makes sense to incorporate in Nevada for tax purposes, just as many corporations choose Delaware, which has no corporate income taxes.”

According to Landry, he recently had another encounter with the SEC. The regulatory agency asked him for the records in his possession related to UnionTown Energy, a Calgary based oil “junior” that was drilling at New Miami Colony.

“I complied with the SEC requests, but I had no stock position with UnionTown, it was a straight-up deal where I was paid to be the operator.” Asked to define operator, Landry explained that he was responsible for the drilling and completion. “Me, my family and my employees… none of us were compensated with any stock by UnionTown.

There are 15 wells currently listed on the Montana Board of Oil and Gas Conservation database operated by Landry’s Longshot Oil, LLC. Of those wells, one is currently in production. The New Miami 21-20 produced 556 barrels in April. Longshot also has a well in Texas, according to Landry.

Longshot Oil was holding mineral leases in Teton County, near Power, the Sun Times discovered last year. Asked if he was still holding those leases, Landry replied that he had sold those, known as the “Muddy Creek” play, to Hillcrest.

The leases in the South Sun River Prospect are a combination of private minerals and state minerals.

When visiting with the Sun Times, Landry addressed the perceived difficulty of drilling on state school land leases. “At Milford Colony, there are several state parcels mixed in with the private minerals. The general opinion is that it is all but impossible to drill on those lands.” Landry continued, “I want to change that perception. The stipulations put on those lands can be addressed and still enable drilling on those lands.” Landry said he had recently met with the state office that administers oil leases on state school lands. “They are eager to work with the oil exploration firms to make these leases profitable for the state as well as the oil companies.”

Landry is also pursuing a “reef” play in North Dakota, near Dickinson. The Longshot 10-23 1, operated by Landry’s Core 54 Oil & Gas, LLC, was approved as a “tight hole” in November 2010. A tight hole designation is common in areas experiencing new exploration. Information on a tight hole is withheld from the public for a period of time, allowing a firm to secure a position in a new play before other companies can review the well data.

While Landry was coy about answering questions about the status of the Stark County well, the Sun Times used mapping software designed for the oil and gas industry to map the location and view a satellite image that showed a pit and what appears to be equipment trailers on the location. Landry did confirm that the well would tap into the Lodgepole Formation. In the same section are wells operated by Denbury Onshore. The Denbury wells are reported to be in production.

Several times the Sun Times has contacted Landry with questions regarding company press releases. One Norstra press release had some questionable numbers that appeared to be typos. In a press release dated June 10, this sentence had an obvious error: “Norstra also has the right to purchase this land position for 10,000,000 million common shares from treasury.” The Sun Times sent an email to Landry and Tyler Troup asking for clarification of the number. Troup, based in Windsor, Ontario, is Managing Director of Circadian Group, which describes itself as an “ultra-full-service boutique Investor Relations, Public Relations, and Capital Formation Firm, specifically focused on two industries: Natural Resources and Clean-Tech.”

Troup and Landry responded with the corrected numbers. However, according to Landry, Norstra should have handled the error differently. “We sent out a corrected release. We should have sent out a new release immediately taking responsibility for the mistake, not just an updated release.” Indeed, the release with the confusing numbers stayed on internet financial sites, such as Yahoo, until the next press release cycle which occurred late in the afternoon. Many who just gave the new press release a cursory look would have not noticed the change.

Geology

The location of Norstra’s first proposed well is in an area of interest to geologists. Two wells were drilled close to the proposed site. In 1937, the Durnin & Procktor 1 well was drilled. According to the one page drilling record, the well was drilled to 3,300 feet, into the Two Medicine Formation.

In 1955, the Milford Colony 1 was drilled, reaching the Sun River Dolomite at a depth of 6,788 feet. The well was drilled by Crescent Oil of LaCrosse, Wisconsin. Working the well was respected Great Falls geologist Virgil Chamberlin.

Both wells were recorded as dry holes. But there may be shallow gas deposits in the area. A member of the Milford Colony described a water well drilled on the property. “The driller went to 500 feet and something went wrong, so the well could not be completed. But you can go to the spot where the hole was and drop a match and the gas will ignite.”

Surrounding the Norstra well location are three newer wells that were drilled to map the formations in the area… and all three wells are of keen interest to petroleum geologists.

The Krone 31-32, drilled in 1962 by Shell Oil Company, encountered the Bakken Formation at 6,910 feet. The well continued to 7,240 feet, passing through another formation and ending at the Nisku Formation. It is interesting to note that this well, like many other deep wells drilled during the 70s and 80s, goes beyond the Bakken. At the time, according to an experienced petroleum geologist contacted by the Sun Times, the Bakken was considered useless. Before hydraulic fracturing and horizontal wells, the Bakken was just another layer of tight rock that refused to give up its oil and gas.

In 1984, Atlantic Richfield drilled the Steinbach 1. The Steinbach “readings”: porosity, TOC (total organic content) and vitrinite reflectance are odd, to say the least, for an area that many like to claim has no oil. In fact, if the numbers are correct, the well taps into a spot that is comparable to Williston area wells. But, at the time the Steinbach was drilled, the readings coming out of the test well would have discouraged Atlantic Richfield. With modern oilfield techniques, though, the well may have potential.

The third well, drilled in 1982 by Sun Exploration and Production Company, is the J.B. Long, located near Haystack Butte. Drilled to a depth of 12,100 feet, the well finds the middle member of the Bakken, the Sappington, at 10,894 feet. The J.B. Long was a bugger to drill. Located on a spot that has the classic overthrust profile, the drill bit encountered a fault and had to be withdrawn from over 5,000 feet down back up to a depth of about 2,000 feet. From this point the drillbit was “sidetracked” to avoid the fault.

While the public record of the well records the J.B. Long as a dry hole, at least three samples of crude oil from the well were sent to a lab for analysis. Sun went so far as to order distillation tests on the samples.

The Eastern Slope has a long history of study by geologists sent by Washington to find the region’s potential. One of the most respected geologists… and mapmakers, was Mel Mudge, with the US Geological Survey. In 1978, Mudge developed a report titled “Mineral Resources of the Bob Marshall Wilderness and Study Area, Lewis and Clark, Teton, Pondera, Flathead, Lake, Missoula and Powell Counties, Montana.” The US Bureau of Mines contributed to the detailed report.

In a map contained in the study, Mudge indicated the potential for various minerals in the area of study.  According to the map, the Eastern Slope, from the southern tip of Glacier Park south showed an “area of high hydrocarbon potential.” The region to the west was an area of “moderate hydrocarbon potential.” Of particular interest to Mudge was the “Saypo” area, west of Choteau.

Farther to the north, still in the Thrust Belt zone, is another area of interest to scientists.

In June, 2011, the newsletter of the American Association of Petroleum Geologists (AAPG), featured a profile of Doug Strickland. Strickland had died in May at age 58. According to the story, Stickland was working on developing some wells in NW Montana, tapping the Bakken Shale. Even though the Bakken is thinner in this region than in the Williston Basin, the wells would be cheaper to drill because the layer is not as deep.

But, the report reads, the Bakken was not what had Strickland excited. “I’ve been working in this part of Montana for 25 years. One of the largest prospects I believe I’ve ever mapped is in the western portion of the Blackfeet Reservation, ” he said.

He described a trend that started in Canada and extended south into the Glacier mountain front.

“Across the border, there are three major fields within six miles of the United States, ” he said. “There’s a swath in there that looks very prospective.”

Glen Landry is encouraged by what he sees to our north, too. While Anschutz, Rosetta and Newfield seem to have either left the area, or at least scaled down their exploration, the Canadians are punching holes just over the border.

One of the most aggressive drillers is DeeThree. The company appears to have broken the code, getting  respectable production out of the Bakken. The secret to DeeThree’s success seems to be a technique just now being adopted in eastern Montana – drilling into the Upper Bakken.

The upper layer of the Bakken, thought by some to be the source rock of Bakken oil, is a soft carbon rich shale. The challenge for drillers was to drill laterally through the layer without the soft rock collapsing onto the bit. One upper Bakken well was recently completed on the edge of the Williston Basin successfully. The well, being on the basin edge, is at a point where the typical target, the Middle Bakken, is “pinched out,” or disappears.

Landry hired Dr. David Lopez, a Petroleum Geologist, to prepare a report on the reserves in the South Sun River Prospect. Lopez received his PhD from the Colorado School of Mines and spent 16 years as a senior research geologist at the Montana Bureau of Mines and Geology. Lopez also spent almost 8 years with the USGS conducting geologic field research in east-central Idaho, southwest Montana and in south central New Mexico.

According to Dr. Lopez, the Steinbach well, used as a reference, showed a reservoir of over 9,000,000 barrels of Original Oil In Place (OOIP) per section. The actual report, available on the SEC website, does contain an obvious error. The column with the number of barrels in reserve has the header “OOIP (MMBO) per Section,” but the numbers in the column appear to be the actual numbers, not in “Millions of Barrels.” MMBO is shorthand for “Millions of Barrels;” MBO would represent “Thousands of Barrels.”

Not revealed in Dr. Lopez’ report is the estimate of how much of the oil is recoverable. That amount depends on many factors, but oilfield geologists have told the Sun Times that a 25 percent recovery would be the norm. Currently there are three methods of recovery used to produce oil. The first is overpressure, where the pressure pushing the oil out of the formation exceeds the static pressure in the atmosphere. Bakken wells in Eastern Montana and North Dakota can have thousands of pounds of pressure pushing the oil to the wellhead.

Installation of the familiar pumpjack is the second method of recovery. The pump draws the oil out of the hole as it seeps from the formation.

The third recovery method is injection, where carbon dioxide (CO2), or water is injected into the formation around a wellbore. The pressure of the injection forces the oil toward the wellbore where it is pumped out.

Research on a fourth method of recovery is reportedly underway in the Elm Coulee field in Eastern Montana.

How much oil?

Getting back to the SEC trading halt on Norstra stock, there have been allegations that Norstra claimed it was sitting on “8.5 billion barrels of oil.” While the Sun Times has not been able to find that claim in company presentations, it was contained in one of the “pump and dump” mailers.

Norstra’s official reports of oil reserves may seem on the high side, but they appearto be in agreement a US Geological Survey Report.

The report, by Dr. Leigh Price, was obtained by the Sun Times in late 2011. The 300 page report was written in 1999/2000 by the USGS geophysicist. After Dr. Price completed the report, he passed away. The USGS claimed that since Dr. Price died before the paper could be peer reviewed, the agency could not make the report public.

But David Bardin, a former attorney with the Federal Energy Regulatory Commission (FERC) provided a copy of the report to the University of North Dakota Energy and Environmental Research Center. Shortly after obtaining the report, the Sun Times spoke to Bardin to confirm the report’s authenticity. Asked why he had make the report available, Bardin told the Sun Times, “The taxpayers paid for this research and have the right to know the extent of the resources available to this nation.”

According to Bardin, Price was sent to North Dakota to find out what was going on with “this Bakken thing.” Price chose North Dakota for his research because the state had a better database of well information than Montana. Price researched the Bakken for four years, even developing a program for a successful Bakken well.

But it was Price’s estimates of Bakken Reserves that stand out. In his paper Price lays out the math behind his calculations. In his example, Price assumes a Bakken thickness of 52 feet. Based on this, and other assumptions that may not apply to our area of Montana, Price estimates there are 1.55 billion barrels of oil per township, or 36 sections. And that is, according to Price, a “conservative” estimate.

Augusta

Still, in Augusta, you can find men that worked the rigs when the area was a hotbed of oil drilling. Pat Troy, who has done “wildcatting” from oil to Uranium, was a driller on the J.B. Long well. “We pulled a strand of core that was just oozzzin’ greasy crude,” said Troy. Troy, who can tell some good stories from the Eastern Slope oil patch, is hoping to see the rigs return.

At the Buckhorn Bar, local naturalist and wildlife photographer Gus Wolfe holds court with a cold beer in hand. “I use oil, just like everyone else… in plastic, fuel… everyday things, even though I consider myself a low consumer of oil. I want to see our area protected, but these people have a job to do and I respect them for putting their money where their mouth is to find the oil.”

Asked, as a naturalist, his thoughts on environmentalists who try to block oil development, Wolfe replies, “Let me tell you, when they were drilling up here I would go out to where the rigs were drilling to check on the wild birds I was watching. I had a nesting pair near a rig. I would be close to the rig with my binoculars, checking on the pair and the rig’s tool pusher came over and asked what I was looking at.”

Wolfe said he wouldn’t tell the oilman about the birds at first, but as he got to know the tool pusher, Bill Froman, he eventually pointed out the nest.

“After that, every time I would see Froman or his hands, they would tell me what the young eagles were up to… ‘the young bird was stretching its wings’,” Wolfe quoted Froman as saying in one of the reports.

“That’s a real environmentalist,” said Wolfe. “I knew that crew had a job to do, but I went out there and got to know them. I showed them the beauty of the nature surrounding them and made environmentalists out of them. Real environmentalists.”

Plastered on the frosty glass door of the beer cooler across the bar from Wolfe is the decades-old evidence of the Augusta oil boom from the 80’s, stickers from Halliburton, Froman Drilling, Pioneer Drilling, WASCO Rathole Drilling… most of the stickers covering the two glass doors seem to be from oilmen, or from the armed services.

Anne Gannon, of Sun River, told the Sun Times her family supports oil and gas development in the area. “We should support our own industries, taking care of our country. We should end our dependence on others for our energy supplies.” Gannon added, “People who don’t understand the science… they just say ‘no,’ when they should really take the time to become educated and informed about the issues before jumping on the naysayer bandwagon.”

At the wellsite, which is across the road from the Milford Colony, colony resident Peter Wipf, greets us as Landry is explaining the layout of the drilling pad. Wipf asks when Landry will start drilling. “As soon as we get the permits we hope to get the surface casing set.” Landry talks about the well pad construction with Wipf. The pad will be located on a flat piece of ground a stone’s throw from Highway 287. According to Wipf, the colony is fully behind the project and is anxious to get things underway.

Before heading back to Fairfield, I ask Landry what the formations under the site look like. “What’s the lay of the land a few thousand feet below us?”

Using  his finger to write in the dust on his black truck, Landry draws a pattern… like an ocean wave with two crests. “Here is the Krone well,” he saws as he makes a vertical mark on the left apex. “And here we are.” He makes a similar mark on the right apex.

“Is that an anticline?”

“We don’t know,” Landry answers. “We can’t see how far this structure goes.”

But Landry is sure that he has found an intact area of the Bakken. “The records show a lot of thrusting in the area, but from the seismic data what we seem to have here is a resource play.”