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MGM ‘very excited’ by NWT results
Gary Park For Petroleum News
The chances of commercializing the Canol shale resource oil play in the Northwest Territories got another nudge forward with word from junior explorer MGM Energy that a well drilled this year has identified the presence of hydrocarbons in the primary formation.
MGM President Henry Sykes said in a statement his company was “very excited with the early results” which were consistent with expectations.
But he said one or more horizontal wells will be needed “to establish ultimate flow rates” that could not be measured with the vertical well and small fracs that were undertaken.
MGM said the Canol shale target was found between 5,093 feet and 5,757 feet, with a secondary Bluefish formation target found between 6,350 feet and 6,419 feet.
It said the Canol formation was fractured in three stages with the well returning about 140 barrels of fluid over four days, including light, sweet crude and natural gas.
Also on the upside, MGM said the operations in a remote area and in harsh weather conditions were conducted with no material environmental or safety incidents.
MGM was operator of the East MacKay I-78 well on Exploration License 466B and Shell Canada covered the undisclosed cost as part of a farm-in deal.
Pipeline not big enough The Canol play has stirred dreams of a possible commercial operation in Canada’s North within three to five years, fueled by spending commitments of C$536 million at an auction last summer.
Sykes said MGM now plans to work with regulators and local communities in the Central Mackenzie Valley of the NWT to ensure the “benefits of responsible development of the Canol shale are well understood.”
John Hogg, vice president of exploration and development at MGM, told a conference earlier this year that if commercial development of the play is deemed viable it could be three to five years away.
The existing 39,500 bpd Enbridge pipeline from Imperial Oil’s Norman Wells oil field is currently transporting about 13,000 bpd, but is “nowhere near big enough” to handle Canol production if the “play takes off,” he said. The conventional field has produced 300 million barrels over several decades.
Hogg predicted that if Enbridge or TransCanada builds a new oil or natural gas pipeline from the Central Mackenzie Valley to northern Alberta the size “is going to be significant.”
Husky Energy accounted for C$376 million of last year’s successful bids and had two wells scheduled for this year after two last year, while ConocoPhillips spudded the Loon Creek O-06 exploration well Jan. 26, with approval for two more to the northwest. MGM, Imperial Oil, Shell and ConocoPhillips shared the remaining bidding commitments to spend C$160 million over an initial five years.
All of the companies have formed an explorers’ group to cooperate and share information on a number of issues, including possibly how to drill year-round.
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