Petrobank Energy and Resources is buying out its partners in two joint
ventures that are to use its innovative fireflood heavy oil recovery
a news release Tuesday, the oil and gas company that has been
championing the toe-to-heel air injection or THAI recovery method said
it is buying out partners Shell Canada and Baytex Energy Ltd. for a net
$15 million in cash.
Neither Shell nor Baytex was the original
partner in the THAI development deals, in which Petrobank provided the
technology in return for land and resources.
Duvernay Oil signed
on as 50 per cent partner on the Dawson project near Peace River, Alta.,
before it was sold to Shell and True Energy Trust was the first partner
in the Kerrobert, Sask., project before the asset was sold in a package
“These acquisitions effectively consolidate and
increase our Canadian heavy oil lands and add a combined additional 41
million barrels of conventional heavy exploitable oil-in-place at Dawson
and Kerrobert as estimated by McDaniel & Associates Consultants
Ltd. at Dec. 31, 2009,” Petrobank said in the release.
“We have now established full development discretion on all our domestic projects.”
Petrobank shares fell 41 cents to $39.59 on the Toronto Stock Exchange on Tuesday.
a separate release, Baytex confirmed the sale of its 50 per cent
interest in the project at Kerrobert but said it will receive $18
million cash and a gross overriding royalty on its interest in the
lands, the latter to begin one year after first production.
disposed assets include approximately 1,300 net acres (520 hectares) of
land as well as Baytex’s interest in the two-well pilot project that
utilizes Petrobank’s THAI technology,” it stated.
No representatives of any of the three companies was immediately available to comment.
said it plans to spud its first expansion well at Kerrobert before
month’s end. The expansion, approved in August, includes a further 10
THAI well pairs and surface facilities.
The startup preheat ignition cycle is targeted for early in 2011 and production in the second quarter.
THAI process encourages underground combustion of petroleum through the
injection of air into a vertical well. An intersecting horizontal well
then siphons off the resulting heated and softened oil.
Petrobank also has an owned THAI in situ oilsands pilot project south of Fort McMurray called Whitesands.
said it will also proceed with a two-well project at Dawson as soon as
regulatory approval is in hand and is targeting a minimum of 10
additional well-pairs as part of a near term expansion of the Dawson
Petrobank chief executive John Wright has complained in
the past that the regulatory process in Alberta takes too long compared
Analyst Al Knowles of Haywood Securities said he views the news as a positive for Petrobank.
acquired their partners’ interest in these two THAI projects ... they
like to have high working interests on most of the things they do,” he
He said the Kerrobert pilot developed good results over the summer and bodes well for production from the expansion.
10 wells and each well is expected to do 600 barrels per day,” Knowles
said. “So 100 per cent of 12 wells including the pilot .. is a pretty
good start for them.”