North Peace Files Cyclic Steam Stimulation Pilot Application with EUB



    TSX-V: NPE

    CALGARY, Oct. 19 /CNW/ - North Peace Energy Corp. ("North Peace" or the
"Company") announces it has formally filed its application with the Alberta
Energy and Utilities Board ("EUB") for a two well, 1,000 bbl/d Cyclic Steam
Stimulation ("CSS") pilot on Block B South of its Red Earth landholdings.
    The principal objective of the CSS pilot is to demonstrate the
feasibility of producing economic quantities of bitumen from the Bluesky
formation in the Red Earth field by thermally decreasing the bitumen
viscosity. The pilot test will be conducted on Sections 26 and 35-88-09 W5M.

    
    High pressure CSS with horizontal wells was chosen for a variety of key
attributes the Red Earth property demonstrates based on results to date.
Namely,
    -   Net Pay typically less than 16 metres,
    -   Viscosities average 227,000 cp,
    -   Thin discontinuous minor clay laminations inhibiting vertical flow
        paths,
    -   The depositional environment is that of a coarsening up sequence with
        degrading permeability and oil quality towards the bottom of the
        reservoir,
    -   Absence of thief zones,
    -   Thick continuous capping shale,
    -   Encouraging numerical modelling results, and
    -   A comparable commercial producing analogue at Canadian Natural's
        Primrose South CSS project.

    The pilot will be used to gather key data such as:
    -   Injection rates,
    -   Injection pressures,
    -   Production rates,
    -   Production temperatures,
    -   Base sediment and water measurements,
    -   Steam to oil ratios,
    -   Produced gas rates and qualities,
    -   Temperature profiles on the horizontal wells,
    -   Temperature profiles on the observation wells, and
    -   Pressure responses on the observation wells.

    The pilot will be used to fine tune several other key operational
assumptions that will affect a commercial development strategy. Namely,
    -   Horizontal inter-well spacing,
    -   Length of horizontal sections,
    -   Design specifications for heat exchange systems,
    -   Design specifications for water recycle systems, and
    -   Gas handling requirements.
    

    Before beginning construction of the pilot project, North Peace will
complete its previously announced Q4-2007/Q1-2008 $10 million capital program
on the Red Earth property. This includes the drilling of three wells in
October/November that will be used to gather more information on the resource
and to position the two horizontal wells for the pilot project. These wells
will also be used as observation wells to gather temperature information from
the pilot to better understand steam chamber development. The Q1-2008 portion
of the capital budget includes the drilling of five delineation wells in the
vicinity of the pilot area to provide resource information for future
commercial development. These wells will be supplemented with two exploration
wells in other areas of Block B South.
    Subject to EUB and Board of Directors approval, the Company plans to
begin construction of the pilot project in the third quarter of 2008, which
would allow steam injection to commence in the fourth quarter of 2008. Prior
to receipt of approvals, the Company is advancing the required engineering
work and is in the process of securing long-lead items including a 50 mmBTU
steam generator. Total costs for the pilot facilities including the two
horizontal wells will be in the range of $15 to $20 million.
    North Peace's President and CEO, Louis Dufresne, commented "Submitting
the pilot application is a major milestone for North Peace. With the
predictable nature of the geological setting, a marine depositional
environment, and the existing well logs through the Company's reservoir,
geological risk is very low. Our next step is to demonstrate that the
technological application of CSS is suitable to our resource. The pilot
project will allow us to do just that. We are moving through well-defined,
prudent strategic steps to unlock the full value of our resource."
    The full application can be found on the Company's website:
(www.northpec.com).

    Forward-Looking Statements: Certain statements contained in this release
including statements relating to future development plans including the
application of CSS, anticipated costs and expenditures, anticipated production
capacity and business strategies, 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. No assurance can be given that these
expectations will prove to be correct and such forward-looking statements
should not be unduly relied upon. Actual results will differ and could differ
materially as a result of changes in North Peace's plans, changes in commodity
prices, regulatory changes including but not limited to changes in royalty
regimes, tax laws and environmental regulations, general economic, market and
business conditions, ability to access sufficient capital in the future,
failure to obtain required regulatory approvals, 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; estimates of the
geologic and other attributes and characteristics of the Company's property;
the effectiveness and economic feasibility of utilizing CSS; lack of
diversification; and overall technical and economic feasibility of the
Company's project. Readers are cautioned that the foregoing list of factors is
not exhaustive. Additional information on these and other factors that could
affect North Peace's operations or financial results are included in reports
on file with applicable securities regulatory authorities and may be accessed
through the SEDAR website (www.sedar.com) or at North Peace's website
(www.northpec.com). 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.

    North Peace Energy is an early stage oil sands company with land and
assets bridging the Athabasca and Peace River oil sands areas of northern
Alberta.

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

    %SEDAR: 00019211E




For further information:

For further information: Louis Dufresne, President and CEO, James
Glessing, Vice President, Finance & CFO, North Peace Energy Corp., 470, 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 K
Mesher, Bryan Mills Iradesso, (403) 503-0144 ext. 216, smesher@bmir.com

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NORTH PEACE ENERGY CORP.

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