Junior partner joins oil sands trailblazer Petrobank to invest in Whitesands

Oil sands newcomer Petrobank Energy and Resources has attracted a junior partner to its groundbreaking venture that it expects will generate initial results from a pilot project later this year.

It has signed an agreement with Richardson Capital acting on behalf of RFG Private Equity Funds to invest C$14 million for a 16 percent stake in the Whitesands project.

RFG will also acquire 3 million common shares of Petrobank for total proceeds of C$23.75 million.

Petrobank will retain 100 percent of all international development opportunities for its patented Toe-to-Heel-Air-Injection or THAI heavy oil recovery technology.

Whitesands will be the first field-scale application of THAI, in which air from an injector well will ignite oil in the reservoir, producing a vertical wall of burning crude that heats the oil and allows it to flow to the surface through a horizontal well.

Developers of the technology believe THAI will convert bitumen into 20 degree API gravity crude within the reservoir.

Petrobank has predicted that potential benefits over other in-situ recovery methods include higher resource recovery, lower production and capital costs, minimal use of natural gas and fresh water, a partially upgraded crude oil product, reduced diluent needs for transportation and lower greenhouse gas emissions.

An independent evaluation of seismic and drilling activity has indicated a potential in-place resource of more than 200 million barrels over the pilot project area and about 1 billion barrels over the entire Whitesands leases. Recovery factors as high as 80 percent are expected.

Construction is under way on the C$30 million pilot, which is designed to produce about 1,900 barrels per day over five years.

Positive results will set in motion plans to design and build a commercial project.

—Gary Park