Oil sands junior has eye on giant prize in NE Alberta

Gary Park

Deer Creek Energy, having started public trading in July, is ready to take the big leap from the smallest pure oil sands producer to an operator on a grand scale — although the full transition will take another 16 years. After six years of testing the potential of its 7 billion barrel lease in northeastern Alberta, the Calgary-based company has started producing 600 barrels per day from what it describes as its Phase I demonstration project and has its sights set on big league numbers of 200,000 bpd by 2020.

“Deer Creek is at a major project milestone,” said Mark Montemurro, vice president of thermal operations.

With the initial phase moving ahead, Deer Creek is now clearing a facility site and has ordered major equipment for its Phase II expansion to 10,000 bpd by mid-2006.

Since 1998, the company has gathered data from 560 core hole wells and 410 miles of geophysical surveys.

As a result, it is convinced the Joslyn lease has the potential for both surface mining and steam-assisted gravity drainage production.

Because the thermal steam-assisted gravity drainage extraction generates a faster payout than mining, Deer Creek plans to operate three phases of steam-assisted gravity drainage initially, then embark on four mining expansions in 2011. As well as building quicker cash flow, steam-assisted gravity drainage also poses fewer complications in gaining regulatory and investor approval.