Chevron Canada encouraged by results of Fort Liard gas development drilling

Gary Park

Petroleum News Calgary correspondent

Success at a Fort Liard development gas well in the lower Northwest Territories has prompted operator Chevron Canada Resources to schedule two development wells on the property in the first half of 2004.

Purcell Energy, a 24 percent partner, said the Fort Liard 2K-29 well drilled in the first quarter of this year continues to produce at a constrained rate of 25 million cubic feet per day of raw gas.

Chevron expects to spud 3K-29 in January and 2M-25 in May, one each from the producing K-29 and M-25 well sites. The wells, costing about C$10 million each, will be directionally drilled and tied into existing facilities.

Another C$8-$10 million is earmarked for facilities expansion, which Purcell believes can be recovered within eight months of increased production at current gas prices.

The junior E&P company reported success from a workover and re-completion of the M-25 well, allowing gas production to resume at 15 million cubic feet per day, although it has since been constrained to 10 million.

Purcell said Chevron may sidetrack M-25 early next year to avoid the main fracture, where an influx of water has occurred, and add significant production by mid-2004.

Raw output from the four Fort Liard wells is expected to average 75 million cubic feet per day in the current quarter, giving Purcell a net share of 14 million cubic feet per day.

Overall, Purcell is counting on drilling about 25 wells by spring, giving it 7,000 barrels of oil equivalent per day compared with 5,700 boe per day in the fourth quarter.

Capital spending in the final three months is forecast at C$7.5 million, including six exploratory wells and five development wells at an average working interest of about 50 percent.

Among its other activities, Purcell is producing up to 6 million cubic feet per day from its Tenaka property in British Columbia, which is alongside the Adsett field where reserves are estimated at more than 130 billion cubic feet.