Connacher Oil receives approval for Algar developm
Connacher Oil receives approval for Algar development
2008-11-06 09:32 ET - News Release
Shares issued 211,181,815
CLL Close 2008-11-05 C$ 1.86
Mr. Richard Gusella reports
CONNACHER OIL AND GAS LIMITED RECEIVES ORDER IN COUNCIL FOR GREAT DIVIDE ALGAR PROJECT
Connacher Oil and Gas Ltd. has been advised that the lieutenant governor in council, by order in council No. 525/2008, dated Nov. 5, 2008, has authorized the Energy Resources Conservation Board (ERCB) to grant approval No. 11253 to Connacher Oil and Gas, approving Connacher's application No. 1515981 to proceed with development of its Algar 10,000-barrel-per-day steam-assisted gravity drainage (SAGD) oil sands project in northeastern Alberta.
This order in council represents the last formal requirement enabling the ERCB to issue the approval for Connacher to proceed. During the construction and prestart-up phases, Connacher will obviously remain in close contact with, and work with, the relevant regulatory authorities to secure all necessary permits and to meet the requirements as will be set forth in the approval.
The approval marks the culmination of approximately 17 months of review of the project by the ERCB, stakeholders and other governmental departments, including Alberta Environment (AENV) and Alberta Sustainable Resource Development (ASRD).
Accordingly, upon receipt of the approval from the ERCB, Connacher intends to proceed immediately with the construction of a road into the proposed plant site, preparation of the plant site and construction of three planned well pads. This will be followed by the drilling of the first 15 SAGD well pairs for steam injection and bitumen production. Assuming no unusual delays caused by weather or other factors, Connacher anticipates startup of the completed plant and facilities, and the commencement of steam injection before the end of 2009, with first regular production of bitumen anticipated during the second quarter of 2010. The ramp-up to the anticipated output of 10,000 barrels per day of bitumen is expected to occur throughout 2010.
To date, Connacher has already spent or committed approximately $120-million for long lead items and for construction of key plant components for the Algar project. Accordingly, based on recent budgeting and excluding contingencies, which have been budgeted at $30-million, approximately $225-million remains to be invested to complete Algar. Connacher has already secured the necessary financing to complete the project.
As reflected in expenditures and commitments to date, substantial progress has already been made on engineering and design work, shop construction of major equipment, mechanical and civil design work, electrical design and drafting, and processing and instrument design and equipment ordering, drawing on key learnings and the company's experience at Great Divide Pod One.
Connacher anticipates using the services of substantially most of the same key suppliers and construction personnel that successfully built the Pod One plant on schedule throughout the winter of 2006-2007.