Connacher reactivates Algar oil sands project

Guntis Moritis
OGJ Production Editor

HOUSTON, June 17 -- After selling $200 million of first-lien senior secured notes, Connacher Oil & Gas Ltd., Calgary, announced it would reactivate its plan to construct the Algar project, a project similar in size to its first steam-assisted gravity drainage (SAGD) project, Great Divide Pod-1, in northeastern Alberta.

Algar is about 8 km east of Pod 1 and covers 8 sections about 80 km south of Fort McMurray.

Alberta's Energy Resources Conservation Board approved the project on Nov. 13, 2008.

As with Pod 1, Connacher has designed Algar to produce 10,000 b/d of bitumen.

The company expects the project to cost a total of $359 million (Can.), including deferral costs of $14 million.

To date, it has completed an 8-km road, site work on the well pads and plant site, and has constructed and stored major component parts for the plant facility offsite. It estimates that completion of the project requires and additional $200 million (Can.).

The company says following completion of a brief prestart-up organizational period, the work at Algar, including drilling of 15 SAGD well pairs, will last about 275 days from commencement of field activities.

Following this, the company expects that it will need 30 days to commission the plant and 90 days to steam the SAGD wells before bitumen production starts.

Contact Guntis Moritis at guntism@ogjonline.com.

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