Calgary Herald STP Article STP article with positive tone regading todays update.
CALGARY — Oilsands junior Southern Pacific Resource Corp. says it has found a possible high-pressure solution to disappointing initial production at its STP-McKay thermal project.
In an update Thursday after markets closed, the company said a steam stimulation test that employed pressures higher than allowed in its licence appears to have broken through a logjam on one of its 12 well-pairs at the northern Alberta project.
The test, for which it needed special permission from the Alberta Energy Resources Conservation Board, was performed in late May and the wells were then depressurized and allowed to cool before being brought on production in early June.
Southern Pacific said the well-pair has been operating in steady mode for the first time since then and output has been steadily improving to a current fluid rate of about 750 barrels per day, 25 per cent oil.
“It’s early but it completely turned that well-pair around and that’s what we’re pleased about,” said president and chief executive Byron Lutes.
Southern Pacific shares closed down five per cent Thursday at 48.5 cents. The delayed ramp-up of its project has been linked to its stock hitting a 52-week low of 34 cents in mid-May after reaching a high of $1.59 last August.
Lutes said the stimulation cost almost nothing because the slight increase in pressure was done with existing equipment. He added the extra pressure posed no risk to people or the environment and will likely not need to be repeated.
“We tested it very carefully, we measured no discernible change in temperature around the well-pair that we were doing the test on and we think we basically can do the same thing on the five other well pairs on that pad,” he said.
The company employs steam-assisted gravity drainage, where steam is injected into a horizontal well to mobilize the sticky bitumen and allow it to drip into a parallel producer well.
Ramp-up of the STP-McKay project has been slower than expected because of delays in establishing communication in well-pairs, Lutes said, in part due to a decision to go with a wider separation between the heels of the wells in the pair to capture a large bitumen pool.
Lutes said he thinks the company will still be able to reach its 12,000-barrel-per-day capacity target on the original 18-month schedule, sometime in the second quarter of 2014.
Production averaged 1,024 bpd in May despite two well pairs being shut-in for most of the month to prepare for the high pressure test.
Lutes said high-pressure stimulation has been employed by other companies with thermal oilsands projects.
dhealing@calgaryherald.com