Petrobank Energy and Resources Ltd.

Petrobank Energy and Resources Ltd.

November 29, 2010 07:00 ET

Petrobank Receives Final Regulatory Approval for Dawson

CALGARY, ALBERTA--(Marketwire - Nov. 29, 2010) - Petrobank Energy and Resources Ltd. ("Petrobank") (TSX:PBG) is pleased to announce that we have received the final Alberta Environment ("AENV") approval for our initial two well-pair THAI® Dawson project on November 23, 2010. We received Energy Resources Conservation Board ("ERCB") approval on October 28, 2010.

The regulatory process for the two well Dawson project took 19 months and began with the filing of the joint ERCB-AENV application in April, 2009. We received draft AENV approval on June 26, 2009, which was only conditional on receiving the ERCB approval. We did not receive any statements of concerns nor were there any technical aspects of the application that delayed the approval process.

The initial Dawson project will be virtually identical to the initial two well Kerrobert project, consisting of two THAI® well-pairs plus associated surface facilities. The current surface facilities at Kerrobert will be transferred to Dawson once we have incorporated the first two Kerrobert wells into the new expansion facilities. We anticipate work on this initial project at Dawson to begin during the second quarter of 2011 and the pre-ignition heating cycle to commence during the third quarter.

The Dawson project will demonstrate the THAI® process in a third reservoir type. The Bluesky bitumen reservoir at Dawson is similar to the McMurray reservoir at Conklin, Alberta, except that it can be cold produced. Conventional production in the Bluesky reservoir generally results in very low recovery factors, similar to the conventional heavy oil recovery factors at Kerrobert, Saskatchewan. We expect to have THAI® production from these three key heavy oil and bitumen reservoir types by the end of 2011.

Based on an initial McDaniel & Associates Consultants Ltd. ("McDaniel") evaluation of the resource, the Dawson property was estimated to contain 100 million barrels of conventional heavy Total Petroleum Initially-In-Place ("PIIP")1, with a corresponding Exploitable Oil-in-Place2 of 44 million barrels, that is highly suited to THAI® development. Immediately after our acquisition of the remaining 50 percent of this property from Shell Canada Ltd. in October 2010, McDaniel has had an opportunity to reassess the resource potential at Dawson. Based on new 3D seismic data, McDaniel is now assigning 203 million barrels of PIIP to the Dawson property. Our full field development plans, based on this increase in the Dawson PIIP resource, could ultimately support a 25,000 bopd project. 

Petrobank's best estimate exploitable bitumen and heavy oil in place(3) for its Conklin, Dawson and Kerrobert projects total more than 1.7 billion barrels.  At Conklin, McDaniel assigned Proved and Probable reserves and best estimate contingent resources(4) of 669.1 million barrels with a before tax eight percent net present value of $3.3 billion as of December 31, 2009. Our three project areas have the potential to develop over 125,000 barrels per day of production.

Forward-Looking Statements. Certain information provided in this press release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast" and similar expressions are intended to identify such forward-looking statements. Specifically, this press release contains forward-looking statements relating to timing and scope of the Dawson project. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to, the outlook for commodity markets and capital markets, success of future evaluation and development activities, the successful application of technology, prevailing commodity prices, the performance of producing wells and reservoirs, well development and operating performance, general economic and business conditions, weather, the regulatory and legal environment and other risks associated with oil and gas operations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. You can find a discussion of those risks and uncertainties in our Canadian securities filings. Such factors include, but are not limited to: general economic, market and business conditions; fluctuations in oil prices; the results of exploration and development drilling, risks associated with the development and application of technology, recompletions and related activities; timing and rig availability, outcome of exploration contract negotiations; fluctuation in foreign currency exchange rates; the uncertainty of reserve estimates; changes in environmental and other regulations; risks associated with oil and gas operations; and other factors, many of which are beyond the control of the Company. There is no representation by Petrobank that actual results achieved during the forecast period will be the same in whole or in part as those forecast. Except as may be required by applicable securities laws, Petrobank assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

Petrobank Energy and Resources Ltd. is a Calgary-based oil and natural gas exploration and production company with operations in western Canada and Latin America. The Company operates high-impact projects through three business units and a technology subsidiary. The Canadian Business Unit, operated by Petrobank's 59% owned TSX-listed subsidiary, PetroBakken Energy Ltd. (TSX:PBN), is a premier light oil production company combining, high growth, long-life Bakken reserves and production with legacy conventional light oil assets, delivering industry leading operating netbacks, strong cash flows and production growth. PetroBakken is applying leading edge technology to a multi-year inventory of Bakken and Cardium light oil development locations, along with a significant inventory of opportunities in the Horn River and Montney gas resource plays in northeast BC. PetroBakken's strategy is to deliver accretive production and reserves growth, along with an attractive dividend yield. The Latin American Business Unit, operated by Petrominerales Ltd. (TSX:PMG), is a Latin America-based exploration and production company producing oil in Colombia with 17 exploration blocks covering a total of 2.1 million acres in the Llanos and Putumayo Basins and five exploration blocks in Peru covering a total of 9.4 million gross (5.4 million net acres in the Ucayali and Titicaca Basins. Whitesands Insitu Partnership, a partnership between Petrobank and its wholly-owned subsidiary Whitesands Insitu Inc., owns 104 net sections of oil sands leases in Alberta, 36 sections of oil sands licenses in Saskatchewan and 4 net sections of petroleum and natural gas rights in Kerrobert, Saskatchewan, and operates the Whitesands project which is field-demonstrating Petrobank's patented THAI® heavy oil recovery process. THAI® is an evolutionary in-situ combustion technology for the recovery of bitumen and heavy oil that integrates existing proven technologies and provides the opportunity to create a step change in the development of heavy oil resources globally. THAI® and CAPRI® are registered trademarks of Archon Technologies Ltd., a wholly-owned subsidiary of Petrobank.

  1. Total Petroleum Initially-In-Place (PIIP) is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered.
  2. Exploitable Oil-In-Place is the estimated volume of oil, before any production has been removed, which is contained in a subsurface stratigraphic interval that meets or exceeds certain reservoir characteristics considered necessary for the application of known recovery technologies. Examples of such reservoir characteristics include continuous net pay, porosity, and mass bitumen content.
  3. Best estimate exploitable bitumen and heavy oil in place is the P50 estimate of the definition above for Exploitable Oil-in-Place.
  4. Best estimate contingent resource is considered to be the best estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used, this term is a measure of the central tendency of the uncertainty distribution (most likely/mode, P50/median, or arithmetic average/mean).

Contact Information

  • Petrobank Energy and Resources Ltd.
    John D. Wright
    President and Chief Executive Officer
    (403) 750-4400
    Petrobank Energy and Resources Ltd.
    Chris J. Bloomer
    Senior Vice President and Chief Operating Officer, Heavy Oil
    (403) 750-4400
    Petrobank Energy and Resources Ltd.
    Peter Cheung
    Vice President Finance and Chief Financial Officer
    (403) 750-4400