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Apache applies brakes on Kitimat
Gary Park For Petroleum News
Barely a month after taking a controlling interest in Canada’s first proposed LNG export venture, Apache has cooled expectations for the project.
But the big U.S. independent has given a hefty boost to its 2010 exploration and development spending in British Columbia’s Horn River basin, a key source of gas for Kitimat LNG.
Apache Chairman and Chief Executive Officer Steven Farris told a conference call Feb. 18 that Kitimat is still in the early stages of a front-end engineering and design study.
“We have a long way to go before Kitimat potentially becomes a real export asset,” Farris said.
He described the project as a “very promising concept” that Apache believes “could work.”
When Apache acquired 50 percent ownership of the planned LNG terminal and the facility’s expected capacity of 700 million cubic feet per day, it was seen as a major breakthrough towards the tentative startup in 2014.
But the company is now carefully avoiding setting any timetable to bring the C$3 billion operation into service.
Jim Cru, Apache’s co-chief operating officer and president of North America, said the facility has the potential to export significant volumes from the Horn River shale gas play, seen as a key source of supplies for Kitimat LNG, as well as other Apache properties in North America.
Apache, EnCana joint venture Apache and EnCana are joint venture partners in Horn River, which is scheduled to add 42 to 44 additional producing wells by the end of 2010.
Apache drilled 42 gross wells in the basin last year, although it completed only four, which Crum said are each producing in excess of 4 million cubic feet per day, confirming estimates of reserves per well of more than 10 billion cubic feet.
The company’s exploration and development spending in Canada is expected to rebound sharply this year from $412 million (down $293 million from 2008) to $1 billion.
“There is a little play in the timing, but we continue to experiment with the number and size of (hydraulic fracture stimulations) per well to optimize future development,” Crum said. “Our efficiency continues to improve through the program and we have completed as many as four fractures in a 24-hour period on several occasions.
“As our drilling activity continues, we expect to leave 2010 with more than 30 wells drilled and ready for completion in 2011. We are targeting a 2010 exit rate of more than 100 million cubic feet per day net from Horn River.”
New Brunswick work On Canada’s other coast, Apache has signed on with Corridor Resources in a farmout and option agreement to appraise and potentially develop oil and natural gas resources in the province of New Brunswick.
The program involves seismic, drilling, fracturing, testing and completing or abandoning one or more horizontal or vertical oil, gas and/or shale gas wells over the next 18 months.
When the program is completed no later than June 1, 2011, Apache will earn a 50 percent working interest in 116,000 net acres held by Corridor and have the option to conduct a further program and build a 12-mile pipeline.
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