Progress Energy Resources Corp., Calgary, which plans to close a Montney joint venture with Malaysia’s state Petronas in this year’s third quarter, said it has built industry’s largest Montney position at 900,000 net acres is Northeast British Columbia and Northwest Alberta.
Besides the Montney upstream effort, the joint venture includes a downstream LNG export element (OGJ Online, June 20, 2011). In the upstream portion, Petronas will acquire 50% of Progress’ working interest in the Altares, Lily, and Kahta properties for $1.07 billion (Can.).
Progress’ Montney holding spans 560 km, and its primary focus remains in the Northeast BC foothills, where it holds 700,000 net acres of largely contiguous Montney rights. Progress continues to pursue the goal set in November 2010 of doubling its production base in 5 years by developing multiple 50 MMcfd development pods.
Progress is directing 75% of its $350 million in 2011 capital spending towards the Montney. Drilling plans will focus on Progress’ core development pods the rest of the year, including 17 horizontal and two vertical wells.
At the Town South pod, the company’s most developed pod to date, Progress has 100% working interest and has drilled 16 horizontal wells since the third quarter of 2010.
At Kobes, where Progress has 30%, one nonoperated horizontal well was drilled in the quarter ended June 30 and will be completed in the third quarter. Progress operates the northern part of Kobes, and the well was drilled in the nonoperated southern area. The Kobes pod has proven to have among the strongest initial production rates in the entire Montney fairway.
At the Nig exploration block, Progress 50% interest, more than 25 km east of Town, a nonoperated Montney well was drilled in the June 30 quarter that flowed up tubing at 4.2 MMcfd and is shut-in for pressure build-up. Liquids production is expected to be 25 bbl/MMcf.
Progress said the focus of the capital program the rest of the year will be the continued advancement of the highly economic Montney pod developments at Town South, Town North, Gundy, and Kobes. Activity on the North Montney joint venture lands at Altares, Lily, and Kahta will begin on closing of the Petronas partnership.
North Montney gas is sweet, attracts a $2.1 million/well deep drilling royalty credit, and yields 20 bbl/MMcf of natural gas liquids.