Tamarack HTL(TM) and upstream engineering preparations on track
CALGARY, Feb. 17 /CNW/ - David Dyck, President and Chief Executive Officer of Ivanhoe Energy Canada Inc. today announced that Ivanhoe Energy has completed over 50% of its 30-well delineation drilling program at the Tamarack project in the Athabasca region of northern Alberta, and expects to complete drilling by mid-March. In addition, engineering tasks related to the Tamarack Heavy-to-Light (HTL) upgrading facility and the upstream facilities are firmly on schedule.
Ivanhoe Energy has three drilling rigs on-site, drilling 24 hours per day. Drilling operations are focused on the centre of the Tamarack lease, the area Ivanhoe Energy has targeted for Phase I development. This area contains top quality, thick, clean oil sands with net pay in the 30 to 45 meter range. The well logs that have been obtained are consistent with data from earlier delineation drilling which indicated that the lease contains clean, very thick oil sands with high oil saturation.
Delineation drilling consists of drilling core-holes in sufficient density to accurately map the characteristics of the reservoir. This program will complete all drilling requirements for Phase I before steam assisted gravity drainage (SAGD) well drilling takes place.
"This delineation drilling program is an important milestone for us," said David Dyck. "Once this program is completed, we will have fulfilled a key requirement to file our regulatory application in mid-2010 for the development of the Tamarack integrated heavy oil project."
Submitting the regulatory application is a key stage-gate, under new US SEC reporting guidelines, to allow Ivanhoe Energy to sequentially migrate portions of its Tamarack asset base in 2010 from the current 441 million barrels of "best estimate contingent resource" category to categories of reserve recognition, such as probable and possible reserves.
The results from this drilling program will be utilized by Ivanhoe Energy's independent evaluator, GLJ Petroleum Consultants, to generate an updated resource report. Based on current resource estimates, Tamarack could ultimately be capable of supporting production of up to 50,000 barrels per day from an integrated HTL facility for approximately 30 years.
Tamarack - Integrated HTL Production
Tamarack is an integrated heavy oil project using SAGD production operations, combined with Ivanhoe's proprietary HTL upgrading process. The field-integration of HTL upgrading eliminates or virtually eliminates the need for natural gas for thermal operations and diluent for transport, and removes the risk of volatile heavy-light price differentials.
"HTL provides Ivanhoe Energy with a distinct competitive advantage in producing resources like Tamarack", added Mr. Dyck. "This includes the ability to construct small-scale, partial-upgrading facilities in the field at a fraction of the cost of traditional upgraders, with higher rates of return, higher net asset values, higher-quality earnings and elimination of risk associated with natural gas and diluents costs and supply."
HTL & Upstream Engineering Status
Engineering tasks related to the Tamarack HTL facility, the upstream facilities (production, drilling and surface facilities), and infrastructure (power and access) are on schedule. Significant engineering has already been completed by AMEC and AMEC-BDR for the upstream facilities and Phase 1 of the 20,000 barrel per day facility at Tamarack, including completion of Basic Engineering and Design (BED) for the HTL and upstream facilities as well as sufficient Front End Engineering and Design (FEED) for the HTL facility to be able to execute a Class III capital cost estimate.
The next engineering step for the upstream and the HTL facility is the generation of Class III cost estimates and supporting the regulatory application. It is anticipated that AMEC and AMEC-BDR will complete this work in the second quarter, in time for submission of the Tamarack regulatory application.
Ivanhoe Energy Inc. is an independent, international heavy oil development and production company focused on pursuing long-term growth in its reserves and production using advanced technologies, including its proprietary, patented heavy to light upgrading process (HTL(TM)). Core operations are in Canada, Ecuador, China and Mongolia, with business development opportunities worldwide. Ivanhoe's shares trade on the NASDAQ Capital Market with the ticker symbol IVAN and on the Toronto Stock Exchange under the symbol IE.
For more information about Ivanhoe Energy Inc. please visit our web site at www.ivanhoeenergy.com.
FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements concerning Ivanhoe Energy's plan to establish an integrated HTL heavy-oil project at Tamarack, the anticipated production capacity of the proposed HTL plant, the anticipated quantities of recoverable barrels of bitumen from Tamarack, barrels of oil initially-in-place, the potential greenhouse gas reductions through the use of HTL field upgrading, the potential for developing a Phase 1 project in a low oil price/low capital cost environment with any expected rate of return, and other statements which are not historical facts. When used in this document, the words such as "could", "plan", "estimate", "anticipate", "intend", "may", "potential", "should", and similar expressions relating to matters that are not historical facts are forward-looking statements. Although Ivanhoe Energy believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the possibility that the company will be unable to raise financing in the future for any of its projects, the potential that the company's projects will experience technological and mechanical problems, new product development will not proceed as planned, the HTL technology to upgrade bitumen and heavy oil may not be commercially viable, samples from the Athabasca bitumen test may not have the product qualities anticipate, market acceptance of the HTL technology may not be as anticipated, Ivanhoe Energy's lack of history in developing commercial HTL opportunities, geological conditions in reservoirs may not result in commercial levels of oil and gas production, the availability of drilling rigs and other support services, uncertainties about the estimates of the reserves, the risk associated with doing business in foreign countries, environmental risks, changes in product prices, our availability to generate cash flow and raise capital as and when required, competition and other risks disclosed in Ivanhoe Energy's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on EDGAR and the Canadian Securities Commissions on SEDAR.
SOURCE Ivanhoe Energy Inc.
For further information: For further information: David Dyck: (403) 817-1138; Ian Barnett: (416) 792-3308; Dorreen Miller: (403) 817-1108, firstname.lastname@example.org