Southern Pacific Resource Corp STPJF

Getting it Out

[Awarded]

The bitumen is there.  The problem is getting it out. 

I once had a disussion with a senior Encana manager who said that somehow they would figure how to get the birumen out of the ground. What concerns me about that statement is (1) how long it will take to figure it out, (2) how much extra will it cost and (3) what the delay will do to the NPV of the postponed cash flows.

Although everything above ground has been executed very well (essentially the Capex for the project has been on time and on budget), I wonder whether below ground execution has deficiencies.

For example, are the injector and collector well at ideal separations to achieve communication and delivery?

Does anyone have technical information of this issure?

[monzie]

Well we'll be getting the July production numbers next week.  If the AER gave their approval already then they may have started treatments on the second well and then we'll get an idea if the HPSS is working consistently.  Plus at the Senlac project K3 has been up and running now for about 3 weeks so there should be a significant boost in bbl/d.  Their total bbl/d from both

[gcarpen]

I had a very brief discussion with a friend of mine who works for a mid sized hedge fund and recently met with management. He said the issue is the depth of the resources and that because they are deeper than normal they will be very hard to get out. No idea how much, if any, stock to put in that though.

[BayStreetRaider]

What I've heard from analysts is that management got a bit greedy and decided to build out the injector and collector wells further apart so they can increase the size of the payzone. So what's been happening is that its taking longer than expected to heat the well, resulting in a costly delay for the company.

[oilsandsbaby]

I wouldn't use the term greedy at all. Perhaps they stretched the envelope from a technical viewpoint and took a well thought out risk. Sounds like they're on the right track based on the high pressure test and subsequent movement into production. Bigger payzone = larger payout for the same investment, just takes longer to get up to temperature and hence production. You can bet if this