Advantage to test resource potential at Glacier

Dec. 8, 2009
Advantage Oil & Gas Ltd., Calgary, plans to drill a horizontal well to test the resource potential of the Jurassic Nikanassin formation in 2010 on its land block at Glacier, Alta., east of Dawson Creek, BC.

By OGJ editors
HOUSTON, Dec. 8
-- Advantage Oil & Gas Ltd., Calgary, plans to drill a horizontal well to test the resource potential of the Jurassic Nikanassin formation in 2010 on its land block at Glacier, Alta., east of Dawson Creek, BC.

Advantage, which has already licensed the well, holds a 93% average working interest in 71 gross (66 net) sections of land in the Nikanassin formation at Glacier. It plans to use multiple fracs in the horizontal section.

Nikanassin, above the Montney formation, has been identified over the entire Glacier land block through geological mapping with gross formation thicknesses of up to 50 m present in the target interval.

Productivity in the Nikanassin has been demonstrated by several vertical wells at Glacier that have been on production since 2003. One of Advantage’s 100% working interest vertical Nikanassin wells demonstrated an initial production rate of 1.4 MMcfd and has produced 500 MMcf since 2004. It continues to produce and compares favorably to some of the better vertical Montney wells on company acreage.

Advantage expects higher production and reserves with horizontal wells and better development economics because infrastructure being installed for Montney gas can be used to accommodate production from both formations.

Meanwhile, Advantage brought a horizontal Upper Montney well on production at Glacier at a sustained 12 MMcfd at 1,300 psig flowing pressure after 12 frac stages.

Existing facilities and gathering systems at Glacier are at capacity, but facilities and gathering system expansions that include a new 100% owned 50 MMcfd gas plant are under construction and targeted for completion in the 2010 second quarter.

The last six horizontal wells drilled at Glacier were production tested at an average of more than 6.5 MMcfd/well at 900 psi average flowing pressure. This is a 63% improvement on the average test rates in Advantage’s first eight Upper Montney wells and ranks in the top quartile of well test results in the Montney trend.

The improvement is attributed to improved geological understanding of the Montney and enhanced completion techniques. Cost efficiencies have greatly increased with average reductions of 43%/m in drilling costs and 57% in completion costs per frac.

Two of Advantage’s last six Upper Montney horizontal wells were drilled on the eastern part of the Glacier block and averaged 8.1 MMcfd at 812 psi flowing pressure. The wells prove up a large undrilled area 8 miles from some of the company’s recently tested wells.

Four horizontal wells targeting Lower Montney have been drilled since July, and completion and test results are expected in early 2010.

Meanwhile, eight of the 22 horizontal wells drilled since July 2009 have been completed and tested at combined rates of more than 44 MMcfd, and the production target is 50 MMcfd by the second quarter of 2010. The 50 MMcfd gas plant will eliminate third party processing fees and is expected to cut operating costs at Glacier 67% to $2.75/boe, Advantage said.