North Peace Commences Bitumen Production at its CSS Pilot Project



    TSX-V: NPE

    CALGARY, May 11 /CNW/ - North Peace Energy Corp. ("North Peace" or the
"Company") is pleased to announce that the first horizontal well (L1) of its
Red Earth Cyclic Steam Stimulation ("CSS") pilot project has been switched
over to production operations and is now producing bitumen.

    
    Louis Dufresne, President of North Peace, commented "Demonstrating first
    oil is an important and exciting milestone for the Company. In a short
    period of time we have gone from a Company with a significant land base
    and resource to a Company with a producing thermal pilot project. North
    Peace is truly differentiating itself by becoming one of the only
    emerging oil sands companies producing bitumen from its resource."
    

    The L1 well is currently flowing without pumping and as pressure
decreases, conventional pumping equipment will be installed. As expected,
initial production is characterized by high water cuts which are anticipated
to subsequently decrease. In addition, the bitumen rates are expected to
increase throughout the first months of production and reach a peak production
rate during the summer. Once the peak rate is achieved, the bitumen production
will decline over a period of several months. After production has ceased, the
second steam injection period will commence. Performance of the well is being
monitored and after the well has passed its peak production rate, North Peace
will be in a position to properly model the decline rate and estimate full
first cycle production information and steam-oil ratios of the L1 well.
    This is the first steam/production cycle on the Company's first
horizontal well and while the operational data garnered from this first cycle
will be important to gaining a better understanding of the Company's resource,
additional data will need to be collected over additional cycles on both pilot
wells to properly make a commercial development decision.
    Steam injection continues on the second horizontal well (L2) and similar
to the first well, injection pressures indicate fracturing is occurring in the
zone of interest and steam chamber containment is being achieved.

    About North Peace

    North Peace has an early stage in-situ oil sands play in northern Alberta
with an estimated 2 to 3.1 billion barrels of Discovered Petroleum
Initially-In-Place. The Company has a 100% working interest in 86,400 acres of
Crown oil sands leases in the Peace River area. The lands have the benefit of
over 300 legacy logs and are surrounded by accessible oil and gas production
infrastructure. The target Bluesky zone is a regional sand, deposited in a
near shore marine environment at approximately 400 metres in depth. The
initial focus area has approximately 22 sections with 10 to 16 metres of oil
bearing thickness, technically sufficient to advance a 30,000 bbl/d commercial
project. North Peace is currently advancing the development of its resource
using a robust and proven in-situ thermal recovery process, Cyclic Steam
Stimulation. The Company is currently operating a two well CSS pilot on its
lands.
    For more information about the Company, North Peace's corporate
presentation is available on our website:
    http://www.northpec.com/investor/event_presentations.html

    Discovered Petroleum Initially-In-Place

    Discovered Petroleum Initially-In-Place (equivalent to Discovered
Resources) is that quantity of petroleum that is estimated, as of a given
date, to be contained in known accumulations prior to production. The
recoverable portion of Discovered Petroleum Initially-In-Place includes
production, reserves, and contingent resources. There is no certainty that the
Discovered Petroleum Initially-In-Place will ever be produced.

    Forward-Looking Statements: Certain statements contained in this news
release constitute forward-looking statements that involve known and unknown
risks, uncertainties and other factors that may cause actual results or events
to differ materially from those anticipated in such forward-looking
statements.
    In particular, this news release contains forward-looking statements
pertaining, directly or indirectly, to the following: business and operations
strategies including the completion of North Peace's pilot project and
potential commencement of a subsequent commercial project.
    The forward-looking statements contained in this news release are based
on a number of expectations and assumptions that may prove to be incorrect. In
addition to other assumptions identified in this news release, assumptions
have been made regarding, among other things, the following: that North Peace
will continue to conduct its operations in a manner consistent with past
operations; the continuance of existing (and in certain circumstances,
proposed) tax and royalty regimes; the general continuance of current industry
conditions; the accuracy of the estimates of North Peace's resource volumes;
the ability of North Peace to obtain equipment, services and supplies in a
timely manner and within budget to carry out its activities; the timely
receipt of required regulatory approvals; the ability of North Peace to obtain
financing on acceptable terms; improvements in the current state of the
capital markets; improvements in project economics which include, among other
items, future oil prices, gas costs and capital and operating cost
assumptions.
    No assurance can be given that these expectations will prove to be
correct and such forward-looking statements included in this release should
not be unduly relied upon. Actual results could differ materially as a result
of changes in North Peace's plans, changes in commodity prices, regulatory
changes, general economic, market and business conditions as well as
production, development and operating performance and other risks associated
with oil and gas operations including anticipated success of resource
prospects and the expected characteristics of resource prospects; anticipated
capital requirements, project rates of return and estimated project life;
estimates of original discovered resource; estimates of recovery factors; lack
of diversification; and overall technical and economic feasibility of the
Company's project. These statements speak only as of the date of this release
or as of the date specified in the documents accompanying this release, as the
case may be.
    The Company undertakes no obligation to publicly update or revise any
forward-looking statements except as expressly required by applicable
securities laws.

    
    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this news release.
    





For further information:

For further information: Louis Dufresne, President and CEO, James
Glessing, Vice President, Finance & CFO, North Peace Energy Corp., 630, 505 -
3rd Street SW, Calgary, Alberta, T2P 3E6, Telephone (403) 262-6024, Facsimile:
(403) 262-6072, E-mail:info@northpec.com, www.northpec.com; Or: Stephanie
Mesher, Bryan Mills Iradesso, (403) 503-0144 ext. 216, smesher@bmir.com

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NORTH PEACE ENERGY CORP.

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