Red Earth cyclic steam stimulation pilot facilities – oil production and sales tanks (with tanker truck hook-ups in foreground)
Most of the major producers have been active in the Alberta oil sands since the industry’s inception, more than 30 years ago. That they are still going strong is testament to their tenacity and the industry’s viability.
However, the industry’s future prosperity depends also on an infusion of new blood. Fortunately, there has been no shortage of enthusiastic newcomers. One such company, North Peace Energy Corporation, is piloting a project on its Red Earth property, where it has a 100 per cent working interest in 86,400 acres of Crown oil sands leases. Discovered petroleum initially-in-place is estimated to be between two and 3.1 billion barrels.
North Peace began acquiring leases in the Peace River area right after its inception in December 2005. Despite its large ambitions, the Calgary-based company started small and has stayed small, with a staff of only 12. This June, the little company made a big score, raising equity financing of $11.6 million.
“Raising that amount is quite an achievement for a small company with little production,” says president and CEO Louis Dufresne. “It shows that we deliver on our promises and that the capital markets recognize that. Right now the future looks good.”
North Peace will use the money to advance front-end engineering work and the regulatory approval process for a 3,000 barrel-per-day pilot expansion, which, according to Dufresne, is more viable in the current economic conditions than the originally planned 10,000 barrel-per-day first-phase commercial project. “The reality is that the capital markets are constrained at the moment. We’re therefore going to move forward in smaller steps than we had originally planned,” says Dufresne.
North Peace intends to submit its application later this year or early next year and expects the project to start up in 2012. The company is advancing resource development using cyclic steam stimulation (CSS) thermal recovery. Two horizontal CSS wells have been drilled and are producing bitumen. If the pilot project is successful and Red Earth proceeds to full commercial production, it will become a 30,000 barrel-per-day facility with a projected 25-year life.