press releaseConnacher Oil and Gas Limited
TSX – CLL
August 2, 2007
Connacher to Commission Great Divide Pod One SAGD Oil Sands Processing Plant
Calgary, Alberta - On Friday, August 10th, 2007, Connacher Oil and Gas Limited will celebrate the completion of construction at “Pod One”, a 10,000 barrel-a-day oil sands processing plant at its Great Divide project, located approximately 80 kilometers south of Fort McMurray on Highway 63.
Joining company executives and its Board of Directors at the official on-site commissioning will be representatives from government, the investment community, service providers and company employees.
“It’s a Plant Commissioning Celebration,” says President and Chief Executive Officer, Richard Gusella. “Any time a small Canadian-owned company can complete a $290 million dollar project that’s going to produce 10,000 barrels-a-day for 25 years with about 100 million barrels coming out of the ground, it’s cause for celebration.”
Unique Oil Sands Positioning
Connacher’s oil sands plan began in 2004 with its purchase of oil sands leases just south of Fort McMurray . The plant commissioning represents more than a typical oil sands startup.
Despite Connacher’s significant growth as a company from under $1 million to over $1 billion in enterprise value in the past six years, “We’re ‘a little guy’ in the oil sands,” Gusella explains. “You don’t have to be a giant resource company to be a successful player here. If a smaller company has a focused business plan, dedicated, talented employees and an exciting vision, it can play in the big boys’ game and target an excellent return for its shareholders.”
From a 2001 start with only 50 bbl/d of foreign production, Connacher now owns broadly-based and diversified assets, including its extensive and considerable oil sands reserves, resources and undeveloped leases, a 2,500 boe/d conventional production base in western Canada, a valuable $250 million equity stake in Petrolifera Petroleum (active in South America) and an operating 9,500 barrel-a-day refinery in Great Falls, Montana. These assets are all important elements of Connacher’s integrated approach to managing the operating and financial risks associated with the oil sands.
SAGD Operation
The Great Divide Pod One plant constitutes a significant part of the $290 million invested to date in the company’s initial Steam Assisted Gravity Drainage (SAGD) operation. The facility is designed to generate the steam to be injected into the nearby reservoir to free up the bitumen.
The original water supply for the steam is from the subsurface and is non-potable. Connacher will treat this water, make steam and inject it into the subsurface. A mixture of hot oil and hot water will then flow to the surface. Inside the plant, the two components are separated. Oil is prepared for blending and transport. The recovered water is purified and recycled for repeated use in the plant’s steam generators. The water recycle rate is targeted at 98%.
Pod One Just the Beginning
“We’re not here just to build one oil sands plant,” Gusella says. “We anticipate expanding our oil sands operation in the longer term.” The company has already begun the application process for regulatory approval to proceed with its second 10,000 barrel-a-day project, to be located ten kilometers east of Pod One at Algar. “It’s also our intention to build a $100 million pipeline to take our oil from our area down to the nearest connections,” Gusella says. “It’ll eventually handle about 50,000 barrels a day, our stated objective over the next five to seven years, as well as approximately 20,000 barrels-a-day of diluent in a parallel line. Lockstep, we are also planning to expand our refining capacity. This would be consistent with the company’s integrated approach to oil sands development and its emphasis on reliability, expandability, repeatability, sustainability and the efficiencies of smaller scale modular operations.”
Connacher Oil and Gas Limited is a Calgary-based Canadian oil and natural gas exploration, development and production company. The company’s principal assets are its significant bitumen reserves and resources and its 100 percent interest in approximately 95,000 acres of oil sands leases in the Great Divide region near Fort McMurray , Alberta . It also owns conventional production and reserves at Marten Creek and Three Hills , Alberta and at Battrum , Saskatchewan . Connacher’s 26 percent equity stake in Petrolifera Petroleum Limited (PDP – TSX) has a current market value exceeding $250 million. Petrolifera has interests in Argentina , Peru and Colombia . Connacher also owns a profitable 9,500 bbl/d oil refinery in Great Falls , Montana , acquired as part of the company’s integrated oil sands strategy.