Update from DWOG yesterdayDWOG released an update regarding the SAGD project yesterday.
SAGD Project – Phase 1 Highlights
• Application for the SAGD project submitted to the Energy Resources Conversation
Board (now known as the Alberta Energy Regulator “AER”) to conduct a thermal
recovery project on our joint lands in Sawn Lake, Alberta where we have a 25% working
interest (post farmout agreement).
• Regulatory approval for the first phase of the SAGD project was obtained from the AER
under the Oil Sands Conservation Act along with approval from the Government of
Alberta under the Environmental Protection and Enhancement Act.
• The Farmee has paid all required cash calls relating to the authority of expenditures
(“AFEs”) for the first phase of the SAGD project as required by the farmout agreement.
Under this farmout agreement the Farmee agreed to provide up to USD $40 million in
funding for the various first phases of the SAGD project, in return for a net 25 per cent
working interest in 12 sections of where Deep Well has working interests of 50 per cent.
The Farmee will also provide monthly funding to cover operating expenses of Deep Well.
• Drilling and completion of one SAGD well pair is completed. These horizontal wells
were drilled to a vertical depth of approximately 650 meters and have horizontal legs of
780 meters.
• Expansion and construction of the pre-existing well site pad is completed.
• Procurement and transportation of equipment, which included the purchase and delivery
of a steam generator and water treatment plant to the SAGD surface pad site is
completed.
• Installation of a water source and disposal facilities, along with connecting pipelines to
tie-in the water source and disposal wells to the SAGD steam facility is completed.
• Installation of a fuel source tie-in pipeline to the SAGD steam facility is completed.
• Construction of assembling and testing of the SAGD steam facility for steam generation
and water handling is nearing completion.
• First steam is anticipated around the end of April 2014.
• First oil sands production is anticipated around the end of July 2014.
SAGD Project – Phase 2 Outlook
After the initial Phase 1 production tests and depending on the results using SAGD technology,
the operator of the SAGD project will proceed with Phase 2 of the project. This second phase is
anticipated to include the drilling of two additional SAGD well pairs and the associated
expansion of the current SAGD steam facility.