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CALGARY, Oct. 8 /CNW/ - Alberta Oilsands Inc. (the "Company" or "AOS") is pleased to announce that it has increased the designed production capacity and accelerated the project timeline of its Clearwater West oil sands pilot project. The designed production capacity has increased to approximately 5,000 barrels per day (bpd) from 2,000 bpd. AOS expects to submit its pilot application to the ERCB within the next few weeks. The Company anticipates the submission will be a significant step towards a reserve classification milestone for AOS. First production from the project is scheduled for the first quarter of 2011.
Significant Clearwater West Project Highlights:
- 183 million barrels (MMB) of bitumen in the contingent (recoverable)
- Low pressure SAGD with expanding solvent SAGD (LP SAGD and ES SAGD)
- Stacked SAGD well pair configuration
- Predicted operating parameters from industry leading CMG STARS
- Production rate in excess of 4,500 bpd (3 year average)
- Average operating steam to oil ratio (SOR) 1.5 to 2.0 over project
- Recovery factor between 50% to 55%
- Commercial designed project production of 10,000 bpd
- Scheduled commissioning of pilot and initial bitumen production by
first quarter 2011.
- Commercial 10,000 bpd project net present value (NPV10) estimate of
- Alliance agreement with Schlumberger Canada to supply technical and
- Electromagnetic induction heating enhancement technology utilization
With the coring results from the first quarter of 2009, Ryder Scott Company Canada ("Ryder Scott") completed an evaluation, effective June 1, 2009, of the Clearwater West property, which assigned 183 million barrels (MMB) of bitumen in the best estimate contingent (recoverable) resource category.
The pilot surface location is on the south edge of section 22 Twp 88 R08W4M, just north of Highway 69, which is the east-west highway that connects on to the main Highway 63 from Edmonton to Fort McMurray. Access to the pilot area is readily available from Highway 69 with modest civil work.
The pilot project will utilize low pressure and expanding solvent steam assisted gravity drainage (ES SAGD) as the basic in situ recovery technique. The pilot will comprise six well pairs in a stacked configuration with well bores oriented in an east-west direction. Three parallel well pairs will be located near the base of the bitumen formation and a second set of three parallel well pairs set shallower in the bitumen pay; thus forming the stacked configuration. This configuration is feasible only in thick, continuous bitumen reservoir such as found in the Clearwater West project.
The stacked well pair production is predicted to more than double the peak production rate to 5,000 bpd from the 2,000 bpd, which was expected from the previous single layer configuration. The stacked configuration is expected to distribute heat more quickly and evenly into the thick bitumen reservoir and drain the mobile bitumen more effectively. The result is an acceleration of the bitumen production rate compared with the single layer configuration.
The stacked configuration has been modeled by industry leading CMG STARS reservoir simulation. The reservoir geological model was generated using industry leading Petrel (a Schlumberger product). The model results yielded a peak production rate of up to 5,000 bpd and an average steam to oil ratio (SOR) in the range of 1.5 to 2.0 over the project life. The lower average SOR reflects lower water and heating fuel requirements compared to the conventional SAGD operation. The combined effect translates into a higher expected net present value for the project.
The table below presents net present values (NPV) of indicative bitumen project sizes: a 5,000 bpd bitumen pilot project, as well as expanded bitumen projects at the 10,000 bpd and the 15,000 bpd production levels at Clearwater West using the stacked SAGD well pair configuration. The NPV calculations were performed by Ryder Scott. These indicative results are for low pressure, expanding solvent enhanced SAGD recovery only.
NET PRESENT VALUE
Net Present Value of Future Net Revenue*
Calculations by Ryder Scott Canada
Based on Constant Commodity Prices
Before Deducting Income Taxes (BFIT)
BFIT NPV at Discount Factors
Production Bitumen Bitumen Price 8% 10% 12%
Rate (bpd) Volume (MMB) ($/bbl) ($MM) ($MM) ($MM)
---------- ------------ ------- ----- ----- -----
5,000 56 $63.00 320 254 153
10,000 110 $63.00 540 415 324
15,000 160 $63.00 759 572 437
* Notes: Economic calculations performed by Ryder Scott, effective
October 1, 2009. Major assumptions: Bitumen price of C$63.00/bbl is
derived from an assumed US$77.00/bbl WTI including foreign exchange,
differentials, diluent and transportation costs assumptions. Bitumen
Volume is raw bitumen production for project life. Capital costs
assumptions: C$80MM for the 5,000 bpd case, C$215 million for the
10,000 bpd case and C$325MM for the 15,000 bpd case. Operating costs is
$30/bbl for all cases. All assumptions were provided by AOS. NPVs include
a 2% GORR. The estimated NPVs presented do not represent fair market
Alberta Oilsands Inc. (AOS) announces today it has entered into an alliance agreement with Schlumberger Canada Ltd. whereby the companies will jointly evaluate one or more potential projects. The focus of the agreement is on, but not limited to, heavy oil or bitumen reservoirs. AOS will be the operator of record in all evaluated projects. Schlumberger will not take any equity interest in the production or reserves.
AOS has been working with Siemens AG ("Siemens"), a German technology company, to apply its leading edge electromagnetic ("EM") induction heating technology. The Company is considering the application of this technology at the Clearwater pilot. AOS shall supply access to the bitumen reservoir for implementation of the EM technology.
The technology employs a high-tech electromagnetic resonance induction coil, placed at reservoir depth, which surrounds the perimeter of a low pressure SAGD well pair. Electrical power to the coil generates an electromagnetic field which is expected to distribute evenly throughout the bitumen reservoir and heat the bitumen content more evenly. Siemens has already completed alpha (laboratory) and beta (controlled field environment) tests on the technology in Europe.
EM heating is expected to augment the low pressure SAGD process. It is anticipated to increase overall heating efficiency (distribution), reduce heating time and lower the overall energy cost and greenhouse gas or carbon footprint per unit of production. Reservoir modelling of the EM effect on the SAGD model results will be carried out by Siemens.
Alberta Oilsands Inc. is a technically driven high growth energy company focused on the development and conversion of the company's oil sands resources to reserves and the creation of long term sustainable value by increasing production and cash flow on relevant conventional oil and natural gas assets.
Disclosure of Resources: There is no certainty that it will be commercially viable for the Company to produce any portion of the bitumen resources detailed in this news release. The high level of uncertainty associated with the Company's possible recovery of any of these resources is the result of various risks and uncertainties including: current uncertainties around the specific scope and timing of the development of the Company's Fort-McMurray properties; the ability of the Company to finance any potential oil sands projects at its Fort-McMurray properties; proposed reliance on technologies that have not yet been demonstrated to be commercially applicable in oil sands applications; lack of regulatory approvals; the uncertainty regarding marketing plans for production from the subject areas; and improved estimation of project costs. There are a number of inherent risks and contingencies associated with such development, including commodity price fluctuations, project costs and the ability to finance such costs given the current market conditions and those other risks and contingencies discussed in more detail in the sections entitled "Business Risks and Uncertainties" and "Forward-looking Statements and Information" in the Company's management discussion and analysis for the periods ended December 31, 2008 and June 30, 2009. "Contingent Resources" are defined as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercial recoverable due to one or more contingencies. The contingencies which currently prevent the classification of the contingent resource described above as a reserve are specific capital costs required to render production economic, applicable regulatory considerations, pricing, specific supply costs and other relevant factors described above.
Resources, including contingent resources, do not constitute, and should
not be confused with, reserves. No bitumen reserves have been recovered
within any of the Company's project areas, except those contained within
core samples, and there is no assurance that any commercial oil sands
projects will be developed.
Forward-Looking Statements and Information: This press release contains certain forward-looking statements and information ("forward-looking statements") within the meaning of such statements under applicable securities law including management's assessment of the Company's properties, production and prospects. Forward-looking statements are frequently characterized by words such as "plan", "expect", "indicative", "project", "intend", "believe", "design", "anticipate", "estimate", "may", "will", "potential", "predict", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, this news release contains forward-looking statements and certain forward-looking financial information with respect to: (i) possible SAGD development (including the timing of such development and any future values associated therewith) on the Company's oil sands properties, including in respect of pilot projects and further development in respect of its Fort-McMurray properties; (ii) the possibility that certain of the Company's resources may be classified as "reserves" in the future; (iii) the results of the Company's oil sands development; (iii) the results achieved from implementing new technologies; and (iv) the Company's ability to fund its future developments. These statements are only predictions. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the inherent risks involved in the exploration and development of oil sands properties, the uncertainties involved in interpreting drilling results and other geological data and in utilizing unproven technologies, the possibility that royalties and other government levies could be increased, fluctuating oil prices, the possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future and other factors including unforeseen delays. As an oil sands focussed enterprise, the Company faces risks, including those associated with exploration, development, approvals and the ability to access sufficient capital from external sources. Anticipated exploration and development plans relating to the Company's properties are subject to change. For a detailed description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's annual financial statements, management discussion and analysis and annual information form for the year ended December 31, 2008 as well as the Company's management discussion and analysis for the period ended June 30, 2009, all of which are available at www.sedar.com.The Company undertakes no obligation to update such forward-looking statements or information if circumstances or management's estimates or opinions should change, unless required by law. Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE ALBERTA OILSANDS INC.
For further information: For further information: Alberta Oilsands Inc., Suite 2800, 350 - 7th Avenue S.W., Calgary, Alberta, T2P 3N9, Shabir Premji, Executive Chairman, T: (403) 232-3341, F: (403) 263-6702, firstname.lastname@example.org; or Chad Dust, Executive Vice President Finance and Business Development, T: (403) 538-3191, F: (403) 263-6702, email@example.com; Company website: www.aboilsands.ca