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New oil sands play going commercial
Gary Park For Petroleum News
Alberta oil sands startup Laricina Energy is positioned for a breakthrough in the previously untapped Grosmont formation, aiming to bring on the first phase of its Saleski project in 2015 at 12,500 barrels per day.
The company has earmarked C$520 million to launch commercial development of a resource estimated to hold 466 million barrels of proved plus probable resources and 4.2 billion barrels of contingent resources.
Laricina Chief Executive Officer Glen Schmidt said his company hopes to introduce more phases over time to reach ultimate output of 280,000 bpd.
Laricina is 60 percent operator of Saleski, with Osum Oil Sands holding the balance. Korea Investment Corp. also has an indirect investment because of its financial role with the two companies.
The partnership has been testing a 1,800 bpd cyclic steam-assisted gravity drainage pilot at the site since 2010.
Schmidt said Alberta government approval to embark on the commercial stage “adds to the recognition of the pilot’s demonstrated commercial production.”
Four wells drilled He said four horizontal wells have been drilled in the Grosmont and are “behaving as we expect.”
Schmidt said that as Saleski goes through steam-assisted gravity drainage production cycles, Laricina is continuing to validate the design.
“There obviously will be opportunities to continue to optimize further and we have some work ongoing in the pilot to do that, such as the solvent application,” he said.
The regulatory approval covers 32 wells, 12 more than are needed to support production.
Although Grosmont is a new production area infrastructure such as natural gas and power lines are already in place.
Schmidt said the partnership will need external financing sources and plans to raise money from the markets.
Public offering expected Randy Ollenberger, a BMO Capital Markets analyst, said Laricina will likely issue an initial public offering in 2014.
“Technology will play a key role in unlocking the new barrels at Grosmont and some other producers are also lining up to invest in pilot plants,” he said in a research note.
Those participants include Shell Canada, Husky Energy, Suncor Energy and Cenovus, all of them operating pilot plants.
Shell, which holds 85,000 acres, said in June it has been conducting appraisal and exploration activities, including seismic and drilling, to gain a better understanding of the resource.
Shell also expects to carry out a pilot to test its in-situ upgrading technology and verify hydrocarbon resources.
The primary objective of the pilot is to evaluate different heater well designs to melt the bitumen deposits, directional drilling techniques, deployment methods, drilling rigs and surface support systems for a commercial project, Shell said.
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