Calgary-based Crescent Point Energy was a pioneer in opening up Saskatchewan’s Bakken and Lower Shaunavon formations, and is an established driving force in Canada’s resource oil plays, counting on waterflood programs and cemented liner completions to achieve its dual-track growth strategy.
It has never shown the slightest hint of going on cruise control.
Having joined the top 10 on the Toronto Stock Exchange’s Energy Index and added the New York Stock Exchange to its trading platforms in January, Crescent Point is constantly restless, but patient enough to allocate the time needed to evolve new technologies.
Independent recognition
The most notable symbolic milestone in 2013 occurred when its “improved recovery” reserves gained independent recognition in the early stages of the Viewfield Bakken waterflood program in Saskatchewan.
Neil Smith, chief operating officer, said the addition to reserves showed waterflooding is “commercial, it works, government recognizes it, independent (evaluators) recognize it and you’re seeing great production numbers from us.”
He declared that Crescent Point now has the “evidence that our waterflood works, without question.”
The addition of 3 million barrels to the company’s core Viewfield Bakken area are reserves that Crescent Point will not have to spend C$60 million of capital to find, Smith said.
What the independent engineers have established is just the first step on a journey that will generate a “little bit more every year,” he said.
Smith noted that when Crescent Point started to develop its Viewfield Bakken core in 2007, the estimated ultimate recoveries, EUR, per well were 115,000 barrels. Now that the company is applying its new technological advances the EUR has climbed to 250,000-350,000 barrels per well, he said.
Shipments beyond North America
On another front, Crescent Point is on the verge of by-passing barriers within the U.S. administration by using rail to access Brent crude prices by shipping crude from U.S. ports to markets beyond North America.
Because those exports involve Canadian crude they are not affected by a four-decade-old ban on exporting U.S. crude and they sidestep the reviews by the Department of State and need for a Presidential Permit to cross the Canada-U.S. border. Instead the approvals come from the Department of Commerce and the Bureau of Industry and Security.
“We know there is already some Canadian crude that is being exported through the U.S., so it is very doable,” said Trent Stangl, Crescent Point’s vice president of marketing in a March call with analysts. “We have a lot of irons in the fire ... and we’re working hard to get something in place by the end of the year.”
Lowering water consumption
While it probes that option, Crescent Point is surging ahead with its water injection techniques and the latest generation of its cemented liner completions.
Chief Executive Officer Scott Saxberg said that “while U.S. companies use high volumes of water, sand and fluid (in their resource operations), we’re going in the opposite direction,” adding that the company is now “working on patents in and around waterfloods” that are lowering water consumption by up to 45 percent in the Viewfield Bakken.
Saxberg said independent evaluators completed initial studies of the play and determined there is a potential recovery factor of greater than 30 percent, which is more than a 50 percent increase above the primary recovery factor.
The company said the evaluators increased EURs by about 25 percent per well on average due to the application of cemented liner, which “provides more efficient fracture stimulation results, more controlled access to the reservoir and lower decline rates.”
It said that in general the EUR increases have raised the value of its Bakken inner core area by about 35 percent.
In addition, the evaluators raised the recovery factor in Crescent Point’s waterflood patterns by 3 percent from previous primary recoverable reserve levels, which equates to a 16 percent rise in EURs, representing the first time that “improved recovery” reserves have been independently recognized.
Bullish on waterflood results
Crescent Point executives also offered a bullish assessment of ongoing results from their waterfloods, which are being implemented in the company’s major unconventional oil fields in Western Canada.
In the Viewfield Bakken alone, volumes positively affected by waterfloods have grown by more than 15,000 barrels per day and are expected to double in the next two years.
In 2013, regulators approved the first waterflood unit in the Lower Shaunavon area and gave technical approval to the first Viewfield Bakken waterflood unit.
“This year we plan to pursue approvals for subsequent units in both plays to implement waterfloods across larger areas,” Saxberg said.
“Based on solid results so far from our 25-stage cemented liner completion technique, we’ll continue to refine this technology” which is being used on “every well we drill in those areas (and yields) improved production and first-year decline rates that are about 10 percent lower than the previous generation.”
Crescent Point’s plans for 2014 include the conversion of 30 producing wells to water injection wells, with the objective of lowering production declines and improving rates of return on adjacent producing wells.
The company is also pursuing waterflood unitization this year based on the success of its Manitoba Bakken play and is planning to build a battery to accommodate increased production.
Flat Lake drilling
On the emerging front, Crescent Point drilled 30 net wells last year at southern Saskatchewan’s Flat Lake, which it said “gives exposure to the North Dakota basin,” but being on the Canadian side of the border it is “able to capitalize on lower service costs.”
Current production at Flat Lake is 5,500 barrels of oil equivalent per day, with the play targeted for 48 net wells in 2014.
The first full year of operations in the Uinta Basin posted a production increase of 30 percent to 10,000 boe per day, reserve additions and field operation cost reductions in a play that has an estimated 5.2 billion barrels of original-oil-in-place with only 0.4 percent recovered to date.
Crescent Point has listed the upside reserves potential at the Utah play of 75 million barrels on primary recovery, with a drilling inventory of 1,051 wells (in a corporate total of 7,139 wells) and risked finding and development costs of C$15.26 per boe, compared with a corporate average of C$21.08, including C$22.92 in the Bakken/Three Forks formation.
New completion techniques
Various new completion techniques are being tested in the Uinta with the goal of improving fracture stimulation efficiency, production rates and ultimate recoveries.
Based on results so far, Crescent Point said the resource play “has significant potential long-term upside.”
The company is also seeking permits for a 3-D seismic program covering a large portion of the operated lands in Uinta’s Randlett area and expects to start acquiring data in the third quarter.
As well, Utah state regulatory approval has been received for down-spaced drilling and a waterflood injection pilot in 2,560 acres of the Randlett area, where Smith said “multiple initiatives are under way,” with water injection scheduled for early 2015.
Rail operations in Utah have allowed Crescent Point to broaden the market for Uinta crude beyond the Salt Lake City refining market. A permanent rail loading facility is fully operational, with capacity of 10,000 bpd and the ability to increase volumes.
Overall, Crescent Point boosted its production for 2013 by 22 percent to 127,641 boe per day (115,971 bpd of crude and liquids and 70 million cubic feet per day of gas), its proved plus probable reserves by 9 percent in 2013 to 663.8 million boe, weighted 91 percent to light and medium crude and liquids, while finding and development costs for the year averaged C$18.42 per proved plus probable boe.
