Petrobank receives regulatory approval for Dawson THAI

By OGJ editors
HOUSTON, Nov. 30 -- Petrobank Energy & Resources Ltd. received final Alberta Environment approval for its initial two well pair toe-to-heel air injection (THAI) Dawson project in northwest Alberta. The company had received Alberta's Energy Resources Conservation Board approval in October.

Petrobank said its initial Dawson project will be virtually identical to the initial Kerrobert, Sask., project, consisting of two THAI well-pairs plus associated surface facilities (OGJ, Dec. 1, 2008, Newsletter).

It plans to transfer the current surface facilities at Kerrobert to Dawson once it has incorporated the first two Kerrobert wells into new expansion facilities. The 7,200 b/d Kerrobert Phase 1 expansion involves 10 new well pairs with initial air injection targeted for end of first-quarter 2011.

The company expects work on the initial Dawson project to being in second-quarter 2011 with the pre-ignition heating cycle to start during the third quarter. It said the Dawson project will demonstrate the THAI process in a third reservoir type.

The Bluesky bitumen reservoir at Dawson is similar to the McMurray reservoir at Conklin, Alta. (Whitesands project) except that it can be cold produced, the company said. It added that conventional production in the Bluesky reservoir generally results in very low recovery factors, similar to conventional heavy oil recovery factors at Kerrobert.

The company expects to have THAI production from three heavy oil and bitumen reservoir types by yearend 2011.

An initial McDaniel & Associates Consultants Ltd. evaluation of the resource estimated that the Dawson property contains 100 million bbl of conventional heavy petroleum initially in place of which 44 million bbl are exploitable with the THAI process.

Since Petrobank acquired the remaining 50% of this property from Shell Canada Ltd. in October 2010 and based on new 3D seismic data, a McDaniel reassessment now estimates that the Dawson property contains 203 million bbl of petroleum in place. Petrobank said that it based the full-field development on this higher estimate that could ultimately support a 25,000 b/d project.

Petrobank now estimates that exploitable bitumen and heavy oil in place for its Conklin, Dawson, and Kerrobert projects is more than 1.7 billion barrels.

At Conklin, McDaniel assigned proved and probable reserves and best estimate contingent resources of 669.1 million bbl with a before tax 8% net present value of $3.3 billion as of Dec. 31, 2009.

Petrobank said the three project areas have the potential to produced more than 125,000 b/d.

Whitesands Insitu Partnership, a partnership between Petrobank and its wholly-owned subsidiary Whitesands Insitu Inc., owns 104 net sections of oil sands leases in Alberta, 36 sections of oil sands licenses in Saskatchewan, and 4 net sections of petroleum and natural gas rights in Kerrobert, Sask. It also operates the Whitesands project, which since 2006 has demonstrated the potential of Petrobank's patented THAI heavy oil in situ combustion process that combines a horizontal producing well with a vertical air-injection well placed at the toe.