Connacher Oil & Gas Ltd., Calgary, will target capital spending of $95 million (Can.) next year on its two steam-assisted gravity drainage developments in the Great Divide oil sands area of Alberta after selling its Montana refinery and conventional oil and gas business (OGJ Online, Oct. 2, 2012).
“Connacher will continue to consider any opportunities which may arise, including discussions with third parties regarding participation in the Company’s future growth and expansion plans,” it said.
The company said sales of the refinery and conventional oil and gas properties enabled it to pay debt and retain cash of $118 million.
“Connacher is now a single-purpose company active solely in the development, production, and sale of bitumen,” it said.
The 2013 budget includes $27 million sustaining capital and $68 million for new development projects, including:
• Drilling of four well-pairs on Drilling Pad 104 on Pod One, one of Connacher’s two Great Divide projects. The oil zone under Pad 104 has some of the thickest pay in Pod One. A gas cap overlying the pad is being repressured. Connacher plans to put the new wells on gas lift and install electric submersible pumps as needed.
• Drilling of two to four infill wells at Pod One to produce heated bitumen that can’t be drained by existing production wells.
• Redrilling of one well pair at Algar, Connacher’s other Great Divide project. The wells will offset an original edge well pair that has performed below expectations.
Connacher also will invest in additional well testing of its proprietary method of injecting solvent with steam. It expects to make a commercial decision about the method in the second quarter of 2013. During the year, it will complete construction of a diluent-recovery unit.
Also next year, it will further develop a strategy it calls “dilbit by rail,” delivering more than 60% of its production as diluted bitumen in rail cars.
“This strategy allows the company to maximize pricing of diluted bitumen to refineries not currently accessible by pipeline due in part to volatility in pricing differentials across various North American crude oil markets,” it said.