Southern Pacific Submits Stp-Mckay Phase 2 Expansion Application To Increase Total Project Production Capacity To 36,000 Bbl/D

abarrelfullabarrelfull wrote on 15 Nov 2011 08:45
Tags: canada oil-sands southern-pacific upstream

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Southern Pacific Resource Corp. (“Southern Pacific” or the “Company”) (TSX:STP) is pleased to announce that it submitted an application on November 10, 2011 to the Alberta Energy Resources Conservation Board (ERCB) and Alberta Environment and Water (AENV) to expand its STP-McKay Phase 1 project area. Approval would allow the Company to construct a second-steam assisted gravity drainage (SAGD) facility within the project area capable of producing an additional 24,000 barrels per day (bbl/d) of bitumen.

STP-McKay Phase 2 would increase Southern Pacific’s operations in the area from the approved Phase 1 capacity of 12,000 bbl/d to a total design capacity of 36,000 bbl/d of bitumen. Significantly, upon the filing of the application, Southern Pacific expects to receive a revised Proved plus Probable (2P) reserve classification based on a total project production capacity of 36,000 bbl/d versus the previously eligible capacity of 12,000 bbl/d. This should allow the 2P forecast to be accelerated and also recognize additional contingent resources from within the project area to be assigned as 2P. The resulting increase in net present value should be reflected in a December 31, 2011 reserves and resource update that Southern Pacific has retained its independent engineers, GLJ and Associates Ltd., to complete.

Technical details of the expansion are available in the application, which is posted on Southern Pacific’s website at Highlights of the expansion include:

  • Adds 24,000 bbl/d of oil treating capacity
  • Allows for financial and operational flexibility and efficiencies during construction and operation by designing the central process facilities as two 12,000 bbl/d integrated components
  • Provides access to a high quality resource, as demonstrated through 43 delineation coreholes within the Phase 2 project area (~8 wells/section), with no top gas, bottom water, lean zones or shale barriers within the average 19 metres of bitumen pay
  • The facility is designed to generate 84,000 bbl/d of steam (equivalent to a daily steam-oil ratio of 3.5), which the Company expects will provide ample steam over the project life
  • Supplies all electrical requirements for Phase 2 through integrated co-generation facilities

Southern Pacific has engaged AMEC-BDR to complete the engineering for this project. AMEC-BDR also completed the engineering for STP-McKay Phase 1. Initially, they prepared a scoping study at STP-McKay Phase 2 to meet the engineering requirements for the application submission. Now they are working on the Design Basis Memorandum (DBM), a more detailed level of engineering on the entire Phase 2 project. The DBM is expected to
be completed in March 2012, at which time a detailed cost estimate on the project will be available.

STP-McKay Phase 2 will have the benefit of all the information obtained from the construction and preliminary operations at STP-McKay Phase 1, a 12,000 bbl/d project under construction and scheduled for first steam in the second quarter of 2012. The Company is budgeting 18 months for regulatory approval of Phase 2, based on the 15
months required for approval of Phase 1.

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