Trilogy is extremely pleased with the results of the construction of its 53 km Presley Pipeline and the expansion of the Kaybob North Sour Gas Plant, which were essentially completed on time notwithstanding a significant number of regulatory, weather and environmental obstacles. Originally budgeted at $40 million, the costs for these projects totaled approximately $46.8 million.
The 12 inch Presley Pipeline has the capacity to flow up to 100 MMcf/d of raw sour natural gas, providing Trilogy with an opportunity to increase production from the Presley area and fully exploit the Montney reservoir which Trilogy believes will result in significant growth in the Company’s production profile. Trilogy is installing additional field compression in the Presley area to bring compression capacity to 80 MMcf/d.
The Plant expansion and related acid gas disposal projects were designed to process approximately 70 MMcf/d of raw sour gas production. Trilogy plans to further expand the Plant in 2011 to handle 100 MMcf/d of sour gas to match the maximum Presley Pipeline capacity. The further Plant expansion will require an additional acid gas disposal well and compressor as well as additional sour gas processing towers, for a total cost of approximately $10 million in 2011. The expansion will coincide with additional drilling and compression in the Presley area.
Based on 50 MMcf/d of production, Trilogy estimates the Pipeline and Plant expansion projects will provide operating savings of approximately $1 million per month through reduced third-party transportation and processing fees and reduced shrinkage of the natural gas stream. Monthly cost savings are expected to rise as Presley gas volumes increase, resulting in more gas being transported and processed at the Trilogy-owned and operated facility. Additional benefits of the project are expected to include: increased reliability in the processing of Trilogy’s natural gas, increased control over gas and liquids production, third-party processing revenues and reduced greenhouse gas emissions.