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Athabasca Oil Corporation green-lights $536M Hangingstone SAGD oil sands project

28 November 2012

The Board of Directors of Canada-based Athabasca Oil Corporation has given the go-ahead to the company’s $536-million Hangingstone 1 SAGD (steam-assisted gravity drainage) Project; the company also reaffirmed that its Light Oil Division is on track to meet its year-end production target of 10,000 to 11,000 barrels of oil.

Athabasca has a resource base suitable for the extraction of thermal crude oil (bitumen) and light oil. It aspires to produce more than 200,000 boe/d by 2020, comprising a 50/50 weighting of thermal and light oil.

The 12,000 barrels per day (bbl/d) Hangingstone Project 1 comprises a central processing facility and twenty SAGD well pairs on four well pads (five well pairs per pad). The Board of Directors also sanctioned $27 million for the construction of supporting infrastructure.

Athabasca expects to develop this 12,000 bbl/d thermal oil project at a cost of $44,700 per barrel, exclusive of the $27 million of supporting infrastructure.

The drilling of SAGD well pairs is planned to commence in mid-2013, with the facility commissioning and start-up scheduled for Q4 2014. First steam is anticipated before year-end 2014, followed by first production in early 2015. Athabasca plans to follow up the Hangingstone Project 1 with two consecutive SAGD projects, bringing the area’s potential production to more than 80,000 bbl/d.

Athabasca also continues to advance its Montney and Duvernay development, in Alberta’s liquids-rich Deep Basin. Montney well results continue to meet or exceed expectations. Athabasca’s Duvernay fairway consists of more than 300 high-graded net sections with significant potential.

The Light Oil Division is currently producing approximately 4,000 boe/d. Commissioning of the Kaybob East and Saxon facilities, by mid-December, should enable Athabasca to achieve its year-end exit rate guidance of 10,000 to 11,000 boe/d.

The company also reported that an evolution in hydraulic fracturing methodology has yielded enhanced results in its third Duvernay well, 02-34-62-20W5M, at Kaybob West. The 02-34 well flowed at a final test rate (after 109 hrs) of > 6 million cubic feet (mmcf/d) plus 900 bbl/d of >50° API condensate, at a steady flowing pressure of 3,000 pounds per square inch gauge (psig).

Athabasca’s second Duvernay well, 06-10-62-23W5M, has been fractured and flow tested on two separate occasions. Following its initial completion, the well sat for a 40-day ‘soak’ period, enabling absorption of the load fluid by the under-saturated formation and enhancing production performance. The second and most recent flow test yielded a final test rate (after 44 hrs) of 5 mmcf/d plus 450 bbl/d of >50° API condensate, at a flowing pressure > 2,500 psig. The 06-10 well will be placed on production in mid-December when the Saxon facility is commissioned.

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Comments

Canada plans to produce 6+ million barrels/day by 2025, i.e. about 3X current local requirements.

New pipelines: 1. South of the Border... all the way to Texas, 2. Across the Rockies to the Pacific Coast Ports for export to Asia and 3. East for Eastern Canada and Eastern USA markets will be built in the next five years or so.

By 2050 or so, some of the current tar sands area will be much warmer and could be converted in productive farm land if enough to soil can be found and if tailing ponds can be cleaned and replaced with fresh water lakes.

A tall order for our grand children?

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