The Company is redeveloping and expanding a light oil production play from Devonian carbonate reefs and developing these horizons in north west Alberta. The assets are located in Rainbow and Virgo and consist of mineral leases, production facilities, pipeline infrastructure and wells.
Approximately 50 wells are currently in production and a number of further existing wells have the potential to be returned to production through intervention and work over operations.
Incremental production growth in 2018 is planned through the drilling of side tracks and new wells into previously produced reefs where oil recovery to date has been low. Technical work on the project is focused on mapping the key reservoir horizons across the Company’s northern Virgo area with a view to understanding and then developing the potential across the acreage.
The Company has established a strategic position in north west Alberta along with a strong operations team, both in the field and in the Calgary office.
In January 2016, the Company acquired the Rainbow Assets which at the time were producing approximately 150 boepd. The acquisition included wells, pipeline infrastructure, two production facilities with a direct tie-in to the national pipeline network and 28,000 acres of mineral leases, which contained over 70 mmboe of stock tank oil originally in place.
Since acquisition, multiple work programmes have been focused on returning previously shut in wells back to production. As a result, production during 2017 increased to more than 950 boepd after the work programmes, and averaged 400 boepd for the year.
Towards the end of 2018, the annual independent reserves report was produced by McDaniel and Associates Consultants Ltd. taking into consideration the results of the years’ work programmes. As of 30 September 2018, total Proven and Probable reserves had increased from 2.9 mmboe at the end of 2017 to 3.6 mmboe (2016: 1.9 mmboe).
Cabot originally entered the Canadian market through the crown land sales process in 2013, acquiring approximately 30,000 acres of mineral leases in the Virgo area of north west Alberta over a two year period. The Company recognised that the potential to improve recovery from mature fields was high, particularly as the focus for the larger companies in Alberta had moved on to resource plays such as the Duvernay and Montney formations. The Company’s land position comprises acreage with more than 100 mmboe stock tank oil originally in place, with an existing average recovery factor of less than 20 per cent. to date, giving plenty of opportunity for additional recovery.
After the land acquisition, the Company conducted appraisal and development work in 2014 to evaluate the potential of the Keg River play. A total of six new wells were drilled with one existing well restarted. The work confirmed the concept that recovery factors of approximately 25 per cent. should be achievable from the Keg River play with primary recovery, and an upside of over 40 per cent. may be possible using enhanced oil recovery techniques.
Four of the seven wells were brought on production with the oil and water produced trucked to local facilities for processing and onward transportation. Production levels reached a peak greater than 500 boped, however the operations were high cost, and when the oil price dropped to a third of the previous value in early 2015, the wells were shut in pending a review of how to economically produce the oil.
The Company acquisition of the Rainbow assets has enabled a different production and processing method to be developed for the existing Virgo wells. During 2017 and 2018, some of the wells will be dual completed so that the water that is produced with the oil can be re-injected into the same well at a different depth. This provides some enhanced recovery of oil through pressure support and allows that only the oil from the well is trucked for processing and sale. This can then be trucked to the Rainbow facilities ensuring that the Company does not pay unnecessary processing fees.
A large mapping project is now underway to establish the optimum areas to progress the development in the Virgo area. In 2019, the Company intends to conduct a new horizontal well drilling and workover programme.
Estimated in place
Recovery to date