No properties better exemplify Baytex's future growth potential than the Peace River oil sands of northwest Alberta. Since the beginning of 2000, we have accumulated 306 sections of oil sands leases and grown production from zero to a current rate of approximately 21,000 bbl/d at Q4 2012. During 2012, we drilled 33 cold horizontal production wells, five cyclic steam stimulation ("CSS") wells and 18 stratigraphic test wells in the Peace River area. Through the fourth quarter of 2012, we have drilled 142 oil wells with a 100% success rate.
Our proved plus probable reserves total 110.0 mmbbl, consisting of 63.6 mmbbl of primary (cold) reserves and 46.4 mmboe of bitumen reserves associated with the Cliffdale CSS project. The Contingent Resource Assessment for Peace River, prepared by Sproule Associates Limited, as at December 31, 2012, equaled 458 mmbbl, 551 mmbbl and 781 mmbbl of oil and bitumen per the low, best and high estimates, respectively.
We will continue to focus on development at
The vast resource base, combined with the exceptional capital and production efficiencies Baytex has achieved, offers significant upside potential, making Peace River one of our main areas of development focus going forward.
|Operating Statistics||Reservoir Characteristics|
|Land position||306 sections||Average pay thickness||15 - 20 metres|
|Average working interest||100%||Average porosity||28%|
|Average production rate - Q4 2012||21,000 bbl/d||Permeability||0.5 – 5.0 darcies|
|Proved plus probable reserves (YE 2012)||110 mmboe||Depth||600 - 700 metres|
|Cold horizontal wells drilled to year-end 2012||142||Oil quality||11°API|
|Stratigraphic wells drilled to year-end 2012||57||Oil Saturation||70%|
|Drilling success rate||100%|
The technology we employ at Peace River continues to evolve, leading to greater production rates, increased recovery, and even stronger capital efficiencies. Our initial completion technique involved drilling mile-long single leg horizontal wells at a depth of approximately 600 metres. These wells initially produced at rates of between 150-200 bbl/d. In August 2007, we drilled our first multi-lateral well (dual-leg), and in February 2008, we drilled our first triple-lateral well. The completion technique has continued to evolve and the current well design is eight to ten mile-long laterals, sometimes augmented with several shorter laterals.
While it is still early in our overall development, we remain excited for the long-term prospects the region offers. Importantly, our capital efficiency ratios remain strong with drill, complete and equip capital costs of $6.00 - $9.50 per barrel, and production efficiencies of $5,000 - $9,000 per boe/d.
In addition to our primary development, reservoir analysis of the Peace River properties has indicated that both waterflood and cyclic steam methods have the potential to increase economic oil reserves beyond what is achievable with cold primary recovery.
In 2012, we achieved a significant milestone with the completion of our first 10-well CSS module. Successful operations continued during the fourth quarter of 2012 with seven wells receiving steam and six wells commenced post-steam flowback operations. Production during the fourth quarter from the 10-well module averaged approximately 400 bbl/d and the cumulative steam-oil-ratio for the project is 2.4, consistent with project design parameters. As we move into 2013, regulatory approvals are in place to advance a new 15-well CSS module located immediately adjacent to the current 10-well module. Facility construction is scheduled to commence late in the first quarter of 2013 with drilling operations to start in the third quarter of 2013. Also in 2013, we plan to drill additional stratigraphic test wells to further delineate our lands for future CSS development.
The figure above illustrates how a CSS project would work at Peace River. In CSS, the same well is used for both steam injection and oil production. CSS is a lower cost form of thermally-enhanced oil recovery as compared to SAGD.
|Primary Development*||Thermal Development*|
|Cost per well (drill, complete, tie-in):||Modular development – 15 wells per phase|
|8-10 laterals||$2.6-$3.4 million||Capital requirement per phase||~$55 million|
|Production rate per well (30-day IP)||300-700 bbl/d||Anticipated production rate (peak year)||2,000 bbl/d|
|EUR per well||275-550 mbbl||EUR per 15-well phase||7.5 mmbbl|
|Recovery factor||5% - 7% of OOIP||Recovery factor – approximately 30% based on numerical reservoir simulation.|
|Model based on 50-meter inter-well spacing (approximately 32 wells per section)|
|*Baytex internal estimates|