Andora Sawn Lake SAGD pilot getting under way

Production from a steam-assisted gravity drainage oil sands project at Sawn Lake in Alberta’s Peace River area should begin in early 2014, and joint venture partners have elected to participate and are attempting to raise funds, said Pan Orient Energy Corp., Calgary.

The Sawn Lake project is operated by Andora Energy Corp., Pan Orient’s 71.8% owned subsidiary.

Andora holds working interests in 88 continuous sections of undeveloped heavy oil sands leases. The Sawn Lake area has established infrastructure and year-round access.

Andora is operator with 100% interest in the 16-section South block, operator with a 50% interest in the 12-section Central block (and holds an additional 3% gross overriding royalty on a nonowned 40% working interest), operator with a 10% interest in 9 sections in the North block, and holds 10% in 51 nonoperated sections of the North block.

Consulting engineers estimate that using SAGD the Blue Sky zone has a contigent resource of 214 million bbl of bitumen attributable to Andora’s working interests, or 154 million bbl attributed to Pan Orient’s interest in Andora, largely in the South and Central blocks where Andora is operator. That includes 138 million bbl in the Central block, 74 million bbl in the South block, and 2 million bbl in the North block.

The demonstration project is in the Central block. Geological studies of the Blue Sky zone indicate that this location has the thickest pay zones, at greater than 20 m, with high horizontal and vertical permeability. Project goal is to determine the steam-oil ratio and oil production productivity at this location.

The demonstration project at 7-30-91-12w5m will start with a 2013 phase consisting of one SAGD well pair, a facility for steam generation, water handling and oil treating, and water source and disposal facilities with an estimated cost of $24.1 million. The wells will have a 750-m horizontal length at 650 m true vertical depth.

Site preparation is under way, and it is expected that the horizontal well pair will be drilling in the second half of September, steam operations will commence in early December 2013, and oil production will begin in the first quarter of 2014.

Andora is allowing joint venture partners to repurchase the 3% gross overriding royalty on their 40% working interest in the 12 sections of the Central Block for $2.8 million under certain terms and conditions.

The demonstration project will proceed with Andora as operator with a 50% working interest and a 50% working interest held by nonoperators. Additional investment in the demonstration project in 2014 depends on the results of the first SAGD well pair.

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