Today, I am going to share with you an extract just published by PetroBank Energy (PBG.TO). The reason is that this company who is pioneering THAI production has just decided to really reach in terms of their expansion. Obviously they are very happy with results to the present and production bottlenecks have been eliminated.
The most important thing that this all tells us is that they can go to 100,000 barrels per day very easily. This means that the step to 1 million barrels per day is just as easy and the next several million barrels per day is very feasible. This implies that Canada' s two trillion barrels of heavy oil reserves will soon become measured reserves.
More importantly, the oil resource requires a negligible amount of input energy unlike the mined surface deposits. In fact the technique will likely find its way into conventional oil fields because of its ability to reform oil in place and thus mobilize it. I am still a little amazed that this is possible.
There are huge amounts of conventional oil in place that was unrecoverable equal to all the oil ever recovered. This may access a lot of it.
So while we are surely sweating the developing production shortfall faced globally, this is a true light at the end of the tunnel for the long interim we need to bring alternative sources on line.
Heavy Oil Business Unit
Recent operations at the Whitesands site have focused on the installation of the new sand-handling system which became operational for all three wells late in December 2007. This system has increased on-stream time and enhanced our ability to manage produced sand and ultimately flow the wells to their target capacity. In conjunction with the new sand-handling system, upgrade modifications to other plant operations were made to facilitate the addition of the planned three well expansion. Another key upgrade was further enhancement to our H2S treating facilities, which are installed and ready to operate, however regulatory approval to operate this system has been delayed and is now not expected until early February. This delay has limited our ability to increase air injection and therefore increase production levels in the short term.
As previously discussed, our three well expansion project is also waiting on regulatory approval which is delaying the drilling of the next three THAI(TM)/CAPRI(TM) wells. Because of this, we have decided to drill at least one additional well on the current plant footprint which will be our first THAI(TM)/CAPRI(TM) well. As this well is located on the existing plant footprint, the regulatory process is more streamlined. This will also enable us to advance the testing of our CAPRI(TM) completion design and our revised slotted liner designed for improved downhole sand control. In addition, we can start producing from this well sooner, using the existing combustion zone, which should allow us to avoid the pre-ignition-heating cycle. Advancing this well provides an opportunity for continued optimization of our project design and reduction of execution times for future projects.
In December 2007, we also completed a 4D-seismic survey over the current project site, which we believe will provide valuable information on the morphology of the combustion zone. We have also completed five additional stratigraphic evaluation wells, the results of which will be included in the updated resource evaluation being conducted by our independent reserve auditors. We plan to drill up to an additional 23 oil sands exploration wells during our 2008 drilling program.
Our earlier plan at the Whitesands site was to have filed a 10,000 barrel per day project application by the end of 2007. This plan has been modified as we have enhanced our process design to allow for a larger central facility with ultimate capacity for 100,000 barrels per day, as well as other facilities improvements based on data from our current operations. This new project will be known as May River. The central facility design will lower the overall environmental footprint of the project and requires a different surface location than previously planned. We now expect to file the first phase application for the initial ten to fifteen thousand barrel per day stage of the project by mid-2008, which will include pre-development for the larger overall development. This approval will require additional environmental fieldwork to accommodate the larger initial scope of May River.
To facilitate the application process for the overall project design, we have released our public disclosure document ("PDD") for the May River project describing our 100,000 barrel per day THAI(TM) development plans for the Whitesands leases. The PDD is the first step in the public consultation process and is a key aspect of the overall project approval process. The PDD will allow us to consult on our full development plan, thereby potentially shortening the overall approval process, rather than undertaking a detailed public consultation for each separate phase. The rationale for initiating this full-scale development plan with a ten to fifteen thousand barrel per day initial stage, is that while the overall project will require a comprehensive environmental impact assessment ("EIA"), the first phase will only require a localized environmental assessment that we can commence immediately. We will also initiate the full scale EIA in the first quarter of 2008.