As the first operator to successfully drill a horizontal well in the southeast Saskatchewan Bakken, Lightstream Resources has a simple business model: get into plays early, accumulate dominate land position and grow production.
The next level of growth for the technology leader is in its enhanced oil recovery, EOR, programs. The company has begun to see positive results with its natural gas flooding technique, and sees it as a solid part of the company’s future.
“The Bakken has turned into a cash cow for us, becoming very sustainable,” Wright said. “Primary recovery will leave a bunch of oil under the ground, but it’s not a good rock for water flooding. We’re using natural gas as injection and we’ve seen production gains - a very significant boost.”
The company plans to drill 35 wells and invest in its EOR programs in 2014, spending approximately $45 million on optimizations and workovers to continue to mitigate its decline rates.
“We have 100 places we can do this, but it won’t all happen (in 2014),” said CEO John Wright. “We do plan to do a lot more natural gas flooding. … We could do it for 30 to 50 years.”
Expanding the EOR side of the business
Based on the initial success of its gas injection EOR project, Lightstream Resources intends to expand the scope of the project in 2014 by placing one additional well on injection and drilling two further injection wells.
EOR is not a new concept in oil and gas development, but applying it to tight oil reservoirs is a challenge. Lightstream Resources found through laboratory analysis that natural gas is a more effective flooding agent, and it has been able to utilize its own produced gas for the process.
“Our simulation work suggests reserve recovery factors could improve from approximately 15 percent under primary methods to over 25 percent with natural gas as a flooding agent. Initially, natural gas used in our planned EOR projects will come from our production facilities and is expected to be recovered and sold at a later date, further enhancing the full cycle economics of EOR,” the company said.
Lightstream Resources has historically focused on increasing the efficiency of its oil production, whether that means growing production or lowering expenses, and in some instances, both. The company’s technological advancements are what allow it to increase recovery at a lower cost.
The company targets light oil opportunities and has drilled and operated more than 1,000 wells using horizontal multistage fracture technology. It has developed a drilling and extraction strategy that provides greater exposure to the low permeability of the Bakken reservoir.
“We’ve taken our knowledge and gone to bilateral with two horizontal wells from each vertical well,” said CEO John Wright. “So we double the wells underground from a single pump jack. Four bilateral wells will fully develop a section in the Bakken, while eight single laterals are required to achieve the same well density.”
Evolving with new technology
Lightstream Resources was the first company to apply a fracturing technology called Cleantech, a completion fluid used in the Bakken to better control the fracturing process within the desired zone and reduce water cuts. It led to higher initial production rates and greater economic returns. The company has also modified its fluids and proppants, injection rates, and pressure environment to create multistage fracturing to unlock more oil and gas with greater efficiency.
The company has moved through a few stages as it looks to optimize production. The first stage, called Bakken 1.0, applied eight fracture stimulations to shorter horizontal wells, effectively doubling the fracture density in the reservoir.
Bakken 2.0 completed long horizontal wells with 15 to 20 stage fractures, eliminating the need for two vertical well bores and two surface locations. Finally, Bakken 3.0 brought bilateral horizontal wells with 15 fractures per leg. This continues to be Lightstream Resources’ standard drilling and completions method for the majority of its Bakken wells.
“Our approach has yielded positive results over the years and our latest efforts continue to motivate us to invest in our technology portfolio,” the company said. “Innovation has become an essential part of the oil and gas industry and Lightstream Resources plans to continue to be at the forefront of the practical application of the innovation curve.”
Other targets for the light oil-focused explorer
Lightstream plans to leverage its Bakken experience to evaluate other opportunities in its Cardium and Swan Hills formations. The two plays, in central and north-central Alberta respectively, present the prospect of benefitting from the use of horizontal wells with multistage fracture completions. In the Cardium play, the company uses slickwater fracturing, an innovation it has termed Cardium 1.0, as it believes there is room for improvement.
The Swan Hills area is positioned to become a critical piece for Lightstream Resources. In the past, the development of the Swan Hills was limited to conventional reservoirs. Now, multistage fracturing has untapped its potential and Lightstream has secured a key land position in the heart of the play through land sales, farm-ins and acquisitions. It has access to 92 net sections in the play with approximately 220 potential drilling locations and the possibility of future enhanced oil recovery projects.
“While we are still in the early development stage in the Swan Hills play, initial results have been encouraging with attractive economic returns,” the company said.
Overall, Lightstream Resources has accumulated 120,000 net acres of land in Alberta and maintained a significant land position in northeast British Columbia within the Monias and Horn River plays.
“Our portfolio has grown to include significant holdings in four major light oil plays, a strong reserve base and a large undeveloped land inventory, positioning us for long-term growth,” the company stated in its March corporate presentation.
Along with a moderate drill program scheduled for 2014, Lightstream Resources plans to focus on commercializing its EOR projects in the Bakken using what the company describes as “an extensive network of facilities that allow us to be a low cost operator.”
The company’s 1,200 Bakken wells averaged 22,414 of barrels of oil equivalent per day in 2013. In addition to the 35 wells slated for 2014 in the Bakken, Lightstream Resources plans to drill 42 wells in the Cardium and 14 wells in other emerging plays. Production results from Swan Hills wells already produced 17,000 barrels of oil above the company’s original forecast.
Formerly known as PetroBakken Energy, Lightstream Resources changed its name in May 2013. It is headquartered in Calgary, Canada.
