PetroBank to expand oilsands projects, with THAI technology keeping costs low

CALGARY - PetroBank Energy and Resources Ltd. (TSX:PBG), which plans to expand its foothold in Alberta's oilsands next year, will be able to do so at half the cost of other operators thanks to its patented technology, the company's vice president for heavy oil said Monday.
"We're using an in-situ combustion project that eliminated the use of water. We don't use natural gas. And by not having to generate steam to inject in the ground to produce oil, we really cut the capital costs tremendously," Chris Bloomer said in an interview.
"In general we say our capital is going to be half the cost of SAGD (steam assisted gravity drainage) and our operating costs are going to be half because we don't have that big water and steam component that's necessary."
The Calgary-based company began using its toe to heel air injection, or THAI, process at its Whitesands project in March 2006.
In the new year, the company plans to spend about $225 million to build three more wells at that site as well as an adjacent facility at May River, which will ultimately produce 100,000 barrels of oil per day.
The process uses air and the bitumen itself to heat underground reserves, making the tar-like substance thin enough to flow to the surface. The technology has lower capital costs and fewer environmental impacts than the more common SAGD method, the company said.
In addition to May River, PetroBank plans to build two new wells on its Dawson property, which it jointly owns with Duvernay Oil Corp. (TSX:DDV). The two companies inked a deal in November that allows Duvernay to use the THAI technology. In exchange PetroBank received a half-interest in Duvernay's Peace River-area oilsands operations.
"We have the potential for other projects similar to what we're talking about with our Dawson project with other third parties that we hope to progress in the new year," Bloomer said.
PetroBank also aims to grow its operations in Saskatchewan in 2008. It plans on drilling in 135 new locations throughout the Bakken trend, an oil-rich geological formation that stretches from North Dakota and Montana into Southern Saskatchewan. It is currently the largest company involved in that play.
PetroBank also acquired a 9,300-hectare oilsands property in Sutton Creek, Sask., last year. Exploration on that lease is set to begin in late 2008.
Many oil and gas companies have been seeking assets in Saskatchewan because they say a new royalty regime in Alberta has made it more expensive to do business there. But Bloomer said higher royalties in Alberta were not the main reason PetroBank decided to expand its assets in Saskatchewan.
PetroBank likes investing in Saskatchewan because that province's regulatory framework is easier to navigate than Alberta's, Bloomer said.
"Saskatchewan has an attitude of getting things done," he said.
"We look at that as being an opportunity both in terms of advancing projects faster than Alberta and I think there's a resource base that we can exploit using our technology."
PetroBank shares were up by about two per cent to $57.40 on the Toronto Stock Exchange Monday, a shortened trading day. The company's rolling 52-week high is $58.42 and it's low is $14.77 a share.
Source: ap.google.com