Petrobank sets wide-ranging plans for ’08

Petrobank Energy and Resources, a Calgary-based company which is promoting a new heavy oil recovery technology on a global scale and has posted the most successful stock-market year of any Canadian energy company, is accelerating the pace of its Canadian oil sands ventures.

Over the last year, Petrobank has climbed upwards on the Toronto Stock Exchange, with only minor blips along the way, trading from a low of C$14.77 to a high of C$58.42 and has a market value of about C$4.3 billion.

Having established its ability to operate the proprietary THAI (toe-to-heel-air-injection) method under a variety of conditions, and produce 2,000 barrels per day, it is now designing the first commercial phase of its Whitesands project, with the goal of achieving 15,000 bpd and eventually growing to 100,000 bpd at its adjacent May River project, where delineation wells boosted gross discovered resources of bitumen-in-place on the company’s leases to 2.6 billion barrels.

As well, Petrobank is designing and building its Dawson project in the Peace River area of northwestern Alberta at a cost of C$225 million in 2008; preparing for initial exploration and delineation at its Sutton Creek acreage in Saskatchewan; and acquiring additional heavy oil resources globally.

Dawson Creek, which involves a license agreement and property acquisition from Duvernay Oil, covers 2,880 acres which are estimated to hold 100 million barrels of original-oil-in-place.

The 23,000-acre Sutton Creek license is planned for initial resource delineation in late 2008.

The THAI process involves injecting air into a controlled underground fire to melt bitumen, allowing it to flow, thus achieving higher oil recovery rates while reducing greenhouse gas emissions and water consumption in the process.

Calgary-based brokerage Tristone Capital estimates THAI developments will cost about C$28,000 per barrel of productive capacity, a fraction of the operating budgets for either open-pit mining or steam-assisted gravity drainage projects.

Tristone analyst Chris Feltin said that although it is too soon to be sure the benefits will achieve Petrobank’s predictions, the company has the potential to be a “step change” for the industry.

To round out its prospects, Petrobank expects to be the most active driller next year in the Bakken formation in southeastern Saskatchewan, where it holds 155,000 net acres of undeveloped land and more than 600 gross drilling locations, and also expects to be one of the most active explorers in Colombia.

—Gary Park