SINCLAIR, Mba. (CP) -- This was an impoverished farm community a year ago, a dusty pocket of cattle country dying a little every day because of both the BSE crisis and the despairingly low grain prices.
Then, last fall, an extraordinary thing happened, something that seems more like a fairy tale. A company drilling exploration holes in the area announced it had struck oil.
It didn't just strike oil, it struck a gusher. It discovered the first major oil field in Manitoba in a quarter century, called the Sinclair Field.
And just as with Manitoba's last oil discovery near Waskada in 1980, some farmers here will become millionaires.
''It's a wonderful story,'' said Karen Caldwell, reeve of the rural municipality of Pipestone, in which the Sinclair Field is located.
Sinclair is a tiny hamlet in southwestern Manitoba, almost at the Saskatchewan border, and about 300 kilometres southwest of Winnipeg. It has a population of about 30 ''if you don't count the cats and dogs,'' a table of residents joked at the local Borderline Cafe.
In fact, the town is so small the cafe is only open Mondays, Wednesdays, and Fridays. There didn't use to be much news in town, but that's changed dramatically.
Helen Dittmer, 68, is one of the area residents who stand to reap a windfall from the oil find. She should make more than $1 million this year in royalties, and probably triple or quadruple that next year, from wells on her 800-acre property.
Dittmer said her late husband, August Dittmer, told her before he died that she should hold onto the mineral rights for their land.
''(August) always told me there was oil under our fields and I didn't believe him,'' said Helen. '''How do you know that?' I said. He said he just had a feeling.''
Unlike the rest of Western Canada, many farmers in Manitoba, or their off-farm descendants, own mineral rights to the land. That's because much of southwestern Manitoba was homesteaded before 1890, when the Government of Canada took over mineral rights in Western Canada, which it later transferred to the provinces.
Farmers in the province also get a straight fee for surface rights to compensate for the nuisance factor with having oil wells in fields. Payment is $6,500 to drill a hole on a farm field, and $2,300 a year after that.
One farmer near Sinclair already has 21 wells, which works out to a lump sum payment of $135,000 for surface rights, with about $50,000 a year after that so long as the wells keep producing. Unfortunately, this particular farmer doesn't also own the mineral rights.
About 80 per cent of the mineral rights in Manitoba's oil patch are privately held, while the Crown owns 20 per cent, said John Fox, head of the province's petroleum branch. Mineral rights allow the owner to get 15 per cent of the value of oil extracted from that property.
Tundra Oil and Gas, privately owned by Winnipeg's Richardson family, is the main player of four companies drilling around Sinclair.
''There are a lot of mineral rights holders in Sinclair. They will do quite well,'' said Bill Roberts of Rideau Petroleum, a small player that has five wells in Sinclair and could drill up to 20 more this year.
Many of the wells are producing 50 barrels of crude oil a day, at an average price of $55 a barrel during the first quarter of 2005. That would work out to about $1 million a hole this year.
A 15 per cent royalty from $1 million is $150,000 (minus a special tax of roughly 10 per cent on private royalties imposed by the province in 1954).
Production from the new wells typically drops to the 10-20 barrels-a-day level after a couple years.
No one knows how long oil wells continue producing. Experts estimate average life spans range from 10 to 25 years. However, the very first oil well ever drilled in Manitoba near Virden in 1951 is still producing oil today.
No one around here is counting on the wells to last that long. That includes Ken Martin, who already has 11 oil wells on his farm. More wells are scheduled to be drilled, as well as on other pieces of land where he owns mineral rights.
''(The wells) will make it awkward working in the fields, but it pays better than farming,'' he said.
