Kaybob Montney Oil Development
Trilogy has successfully applied horizontal drilling and multi-stage fracturing techniques to exploit a Montney oil pool in the Kaybob area of Alberta. In the fourth quarter of 2010, Trilogy completed drilling operations on a horizontal Montney oil well at 16-1-64-18W5 (the “16-1 Well”), and completed it using a 15 stage fracture stimulation. Following recovery of the completion load fluid, the 16-1 Well flowed crude oil at 1,800 Bbl/d. During the first full month of production, this well produced at average rates of 500 Bbl/d of crude oil and 1 MMcf/d of natural gas.
Trilogy followed up on the success of the 16-1 Well by drilling a confidential horizontal Montney oil well to further delineate the Montney oil pool. The 16-1 Well was assigned proved plus probable reserves of 300 MBbl and 400 MMcf of natural gas (391 MBoe), with a net present value at 10 percent of $14.2 million (InSite Petroleum Consultants). The second well was drilled as a vertical well at 6-16-64-18W5 in order to core the Montney formation; it was subsequently plugged back to a kick off point and drilled horizontally through the Montney to a total depth of 3,120 m, with a bottomhole location at 3-21-64-18W5. The lateral portion of the well was 1,158 m in length and completed with a 15 stage fracture stimulation. Trilogy was able to flow back the well immediately prior to the land sale, recovering all 3,650 barrels of completion fluid and 1,600 barrels of oil in the first 24 hours of production. The final rate during flow back was 1.9 MMcf/d and 3,000 Bbl/d of crude oil (40 degree API) at a flowing pressure of 4,450 kPa (645 psi).
Based on the success of these two horizontal Montney oil wells, Trilogy acquired 28 sections of land along the Montney trend in this area at the February 9, 2011 Alberta Crown land sale at a cost of $32.2 million. With a 100 percent working interest in 41 sections of land along the trend, Trilogy believes it now holds substantially all of the petroleum and natural gas rights associated with this Montney oil pool and will evaluate accelerating the development of this play in the second half of 2011. Trilogy anticipates drilling further delineation wells, and that the pool will require four to eight horizontal wells per section to fully exploit the Montney reservoir. Trilogy also believes that this land may also prove to be prospective in the Duvernay shale play.
The map illustrates Trilogy’s land position on the Montney oil play in the Kaybob area. The prospective lands lie between and within two existing Montney oil pools.
Q1 2011 Update
In the fourth quarter of 2010, Trilogy completed drilling operations on a horizontal Montney oil well at 16-1-64-18W5 (the “16-1 well”), and completed it using a 15 stage fracture stimulation over the 1,504 m horizontal length. Following recovery of the completion load fluid, the 16-1 well flowed crude oil at 1,800 Bbl/d. During the first full month of production, this well produced at average rates of 500 Bbl/d of crude oil and 1 MMcf/d of natural gas. The well has produced approximately 40,000 barrels of crude oil over a four month production period, and is currently producing approximately 250 barrels per day of crude oil. The 16-1 Well was assigned proved plus probable reserves of 300 MBbl and 400 MMcf of natural gas (391 MBoe), with a net present value at 10 percent of $14.2 Million (InSite Petroleum Consultants).
Trilogy followed up on the success of the 16-1 well by drilling a confidential horizontal Montney oil well to further delineate the Montney oil pool. The second well (the “3-21 well”) was drilled as a vertical well at 6-16-64-18W5 in order to core the Montney formation; it was subsequently plugged back to a kick off point and drilled horizontally through the Montney to a total depth of 3,120 m at a bottomhole location of 3-21-64-18W5. The lateral portion of the well was 1,158 m in length and completed with a 15 stage fracture stimulation. Trilogy was able to flow the well immediately prior to the February 9, 2011 Crown land sale, recovering all 3,650 barrels of completion fluid and 1,600 barrels of oil in the first 24 hours of production. The final rate during flow back was 1.9 MMcf/d and 3,000 Bbl/d of crude oil (40 degree API) at a flowing pressure of 4,450 kPa (645 psi). The well recovered 12,450 barrels of fluid, 3,650 barrels of completion fluid and 8,800 barrels of new oil during a three day flow period before being suspended upon reaching its maximum permitted flare volume. The well was placed on production May 3, 2011 and is currently producing through the existing gathering system at restricted rates while the gathering and processing infrastructure is expanded to handle additional production from the new Montney oil wells. In the first 16 days of production (including the test period) the well flowed at restricted rates of approximately 2,000 Bbl/d and 1.1 MMcf/d of natural gas and has produced approximately 31,000 Bbl during this period.
Trilogy followed up on the success of its first two horizontal Montney oil wells by drilling three additional horizontal Montney wells into the pool. Two new wells were drilled from the surface lease at 16-2-64-18W5, the same surface lease used to drill the original 16-1-64-18W5 horizontal Montney oil well, to bottom hole locations at 9-1-64-18W5 (the “9-1 well”) and 13-2-64-18W5 (the “13-2 well”). The 9-1 well was rig released on March 27, 2011 and the horizontal section was fracture stimulated in 22 separate intervals over the 1,546 meter horizontal section. The well flowed at average rates of 1,300 barrels of crude oil and 2.0 MMcf per day of natural gas at 2,700 kPa (392 psi) over the first 6 days of production. The 13-2 well was rig released on April 20, 2011 and completed on May 13, 2011, in 20 intervals over the 1,381 meter horizontal length. The 13-2 well flowed at average rates of 2,400 barrels of crude oil and 1.1 MMcf per day of natural gas over the first day of production following recovery of load fluid at 2,200 kPa (319 psi). Crude oil from the two new wells is being trucked to central processing facilities until the oil handling facilities are completed in early June, while the natural gas will produce through the existing gas gathering system.
The third new well was drilled from the same surface lease as the 3-21 well, to a bottom hole location at 5-17-64-18W5 (“5-17 well”), and is located on acreage Trilogy acquired at the February 9, 2011 Crown land sale. The well was rig released on April 1, 2011 and is expected to be fracture stimulated in late May when access conditions improve. The well will be fracture stimulated in 22 intervals over the 1,555 meter horizontal well bore length.
Construction is underway to expand two oil satellites and the Trilogy-operated oil battery at 12-10-64-19W5 to handle the additional production volumes from the new oil wells. The Kaybob North Sour Gas Plant is also being expanded to handle the additional sour gas that will be produced with the Montney oil. The battery is expected to be fully operational in early June and the Plant expansion will be completed in early July. Contingency plans are in place to reroute sour gas production from the Kaybob North Sour Gas Plant to Kaybob South Gas Plant No. 3 in order to avoid restricting the sour solution gas that will be produced with the oil.
Trilogy is developing an accelerated drilling program as a result of the early success in its Kaybob Montney oil play. Trilogy is forecasting a capital plan of approximately $138 Million on the asset in 2011 including costs associated with the Crown land sale ($36 Million), four recently drilled wells ($20 million), pipeline and batteries ($12 million) and 14 wells ($70 Million) to be drilled in the second half of the 2011. The additional capital is expected to increase production from this oil property to approximately 5,000 barrels per day of oil and natural gas liquids and 6 MMcf per day of solution gas by the end of the year. The initial production rates from these new wells are expected to decline over the first 6 to 12 months of production. Trilogy has not established long term production trends for these wells and will closely monitor them to better understand the long term deliverability. Individual well results are expected to vary across the pool as it is further delineated, ultimately providing the data required to fully exploit the Montney oil reservoir.
The following table summarizes the well data and initial test rates for Trilogy’s first five horizontal Montney oil wells, after recovery of the completion fluids.
|
|
W.I. (%)
|
Measured Depth (m)
|
Horizontal Length (m)
|
Frac stages in well bore
|
Oil Test Rate (Bbl/d)
|
Test Rate (MMcf/d)
|
Flowing Pressure (kPa)
|
|
16-1
|
100
|
3,507
|
1,504
|
15
|
1,800
|
2.3
|
4,050
|
|
3-21
|
100
|
3,120
|
1,158
|
15
|
3,000
|
1.9
|
4,450
|
|
9-1
|
100
|
3,763
|
1,546
|
22
|
1,500
|
1.8
|
3,000
|
|
13-2
|
100
|
3,501
|
1,381
|
20
|
2,400
|
1.1
|
2,200
|
|
5-17
|
100
|
3,720
|
1,555
|
22
|
To be completed
|
Q2 2011 Update
The first horizontal Montney oil well drilled into the Kaybob Montney B Pool was drilled in the fourth quarter of 2010, at 16-1-64-18W5 (the “16-1 well”), and was completed using a 15-stage fracture stimulation over the 1,504 m horizontal length of the wellbore. Following recovery of the completion load fluid, the 16-1 well flowed crude oil at 1,800 Bbl/d. During the first full month of production, this well produced at average rates of 500 Bbl/d of crude oil and 1 MMcf/d of natural gas. The well has produced approximately 30,700 barrels of crude oil over the initial seven month production period; it only produced for a total of 93 days due to facility construction and pipeline limitations. The 16-1 well was placed back on production on July 23, 2011 and is pumping at rates of approximately 200 Bbl/d of crude oil with a 25 percent water cut. In Trilogy’s 2010 year end reserve report, the 16-1 well was assigned proved plus probable reserves of 300 MBbl of oil and 400 MMcf of natural gas (391 MBoe), with a net present value at 10 percent of $14.2 million (InSite Petroleum Consultants Ltd.).
Trilogy followed up on the success of the 16-1 well by drilling two additional wells that were rig released in the first quarter to further delineate the Montney oil pool. The second Montney oil well (the “3-21 well”) was drilled as a vertical well at 6-16-64-18W5 in order to core the Montney formation; it was subsequently plugged back to a kick off point and drilled horizontally through the Montney to a total depth of 3,120 m at a bottomhole location of 3-21-64-18W5. The lateral portion of the well was 1,158 m in length and was completed with a 15-stage fracture stimulation. Trilogy was able to flow the well immediately prior to the February 9, 2011 Crown land sale, recovering all 3,650 barrels of completion fluid and 1,600 barrels of oil in the first 24 hours of production. The final rate during flow back was 1.9 MMcf/d and 3,000 Bbl/d of crude oil (40 degree API) at a flowing pressure of 4,450 kPa (645 psi). The well recovered 12,450 barrels of fluid, 3,650 barrels of completion fluid and 8,800 barrels of new oil during a three day flow period before being suspended upon reaching its maximum permitted flare volume. The well was placed on production May 3, 2011, through an existing oil and gas gathering system at restricted rates while additional gathering and processing infrastructure was constructed to handle additional production from the new Montney oil wells. The 3-21 well has produced a total of 83,700 barrels of oil in the first 61 days of production (including the test period). The well is currently flowing at approximately 900 Bbl/d of oil with a 19 percent water cut.
The 16-2-64-18W5 surface lease used to drill the original 16-1 horizontal Montney oil well was used to drill the third Montney oil well to a bottom hole location at 9-1-64-18W5 (the “9-1 well”). The 9-1 well was rig released on March 27, 2011 and the horizontal section was fracture stimulated in 22 separate intervals over the 1,546 meter horizontal section. The well flowed at average rates of 1,300 barrels of crude oil and 2.0 MMcf/d of natural gas at 2,700 kPa (392 psi) over the first 6 days of production. Until Trilogy’s new oil handling facilities were completed in July 2011, crude oil was trucked to central processing facilities and solution gas was produced through the existing gas gathering system. The 9-1 well has produced a total of 14,100 barrels of oil in 19 producing days, and is flowing at approximately 500 Bbl/d of oil with a 24 percent water cut.
During the second quarter, Trilogy rig released two wells to further evaluate the pool. The first such well was spud from the surface lease used to drill the 3-21 well and drilled horizontally to a bottom hole location at 5-17-64-18W5 (“5-17 well”), to evaluate Montney petroleum and natural gas rights Trilogy acquired at the February 9, 2011 Crown land sale. The well was rig released on April 1, 2011; however, extremely wet weather through the spring delayed completion operations. The 5-17 well was fracture stimulated on July 29 and 30, 2011. The well was competed with 22-stage fracture stimulations over the 1,555 meter horizontal wellbore length. Preliminary flow back information is very encouraging and supports the interpretation of the pool extension to the west of the 3-21 well. After 2.4 days of production, the well flowed at an average rate of 3,700 Bbl/d, which includes 5,100 barrels of completion fluid and 3,780 barrels of new crude oil. Approximately 2 MMcf/d of solution gas is currently being conserved through the newly constructed gas and oil gathering system.
The second well in the second quarter was drilled from the same surface lease used to drill the 16-1 and 9-1 horizontal Montney oil wells, to a bottom hole location at 13-2-64-18W5 (the “13-2 well”). The 13-2 well was rig released on April 20, 2011 and completed on May 13, 2011, in 20 intervals over the 1,381 meter horizontal length. The 13-2 well flowed at average rates of 2,400 Bbl/d of crude oil and 1.1 MMcf/d of natural gas in the first day of production following recovery of load fluid at 2,200 kPa (319 psi). Until Trilogy’s new oil handling facilities were completed in July 2011, crude oil from the 13-2 well was trucked to central processing facilities and solution gas was produced through the existing gas gathering system. The 13-2 well has produced approximately 25,600 barrels of oil in 25 days of production, and is currently flowing 900 Bbl/d of oil with a 5 percent water cut.
During the second quarter, Trilogy completed the expansion of two oil satellites at 10-2-64-18W5 and 10-4-64-18W5 to handle the separation and compression of solution gas in the field. The Trilogy-operated central oil processing battery at 12-10-64-19W5 was also expanded from 2,000 to 10,000 Bbl/d of fluid by adding a larger treater at the site. Expansion of the field satellites and central battery was required to handle new volumes from the wells drilled earlier in the year as well as the volumes expected to be produced from Trilogy’s 14 well drilling program planned for the second half of 2011. Trilogy also intends to expand the Kaybob North Sour Gas Plant to handle the additional sour solution gas volumes that will be produced with the Montney oil and the Presley Montney gas. The battery is expected to be fully operational in the third quarter of 2011 to coincide with incremental production from the drilling program.
As noted, Trilogy has planned a 14 well horizontal drilling program to follow up on the success of the horizontal wells drilled into the Kaybob Montney oil play to date. This drilling program will commence in early August following the end of spring breakup and an extended rainy period at the start of the third quarter. Four drilling rigs will be moved into the area to execute the program, the first well in the program spud in late July with the remaining three rigs expecting to spud the next three wells in the first week of August. Trilogy is forecasting capital spending of approximately $138 million on its Montney oil pool assets in 2011, including costs associated with its related Crown land sale acquisitions ($36 million), four wells drilled to date ($20 million), pipeline and batteries ($12 million) and 14 wells ($70 million) to be drilled in the second half of the year. The additional capital is expected to increase production from this oil property to over 5,000 Bbl/d of oil and 6 MMcf/d of solution gas by the end of the year. Initial production rates from these new wells are expected to decline over the first 6 to 12 months of production. Trilogy has not established long term production trends for these wells and will closely monitor them to better understand their long term deliverability. Individual well results are expected to vary across the pool as it is further delineated, ultimately providing the data required to fully exploit the Montney oil reservoir.
The following table summarizes the well and production data for Trilogy’s first five horizontal Montney oil wells, after recovery of the completion fluids.
|
|
W.I. (%)
|
Horizontal Length (m)
|
Frac stages in well bore
|
Current production Rate (Bbl/d)
|
Cumulative Production (MBbls)
|
Producing Days
|
|
16-1
|
100
|
1,504
|
15
|
~200
|
33,589
|
105
|
|
3-21
|
100
|
1,158
|
15
|
~900
|
93,267
|
70
|
|
9-1
|
100
|
1,546
|
22
|
~500
|
17,034
|
29
|
|
13-2
|
100
|
1,381
|
20
|
~900
|
39,372
|
40
|
|
5-17
|
100
|
1,555
|
22
|
~3,700
|
3,800
|
1
|
