Canadian Oil Sands: Opportunities and Challenges November 3, 2010.
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Transcript of Canadian Oil Sands · PDF fileR14 R13 R12 R11 R10 R8W4 ... access intra-Alberta markets (via...
Forward-Looking Statements
Grizzly Oil Sands 2
Certain statements, estimates and financial information contained in this presentation ("Estimates") constitute forward-looking statements or information. Such forward-looking statements or information involve known and unknown risksand uncertainties that could cause actual events or results to differ materially from the Estimates or results implied orexpressed in such forward-looking statements. While presented with numerical specificity, the Estimates are based (i)on certain assumptions that are inherently subject to significant business, economic, regulatory, environmental,seasonal, and competitive uncertainties, contingencies and risks including, without limitation, assumptions of resource,ability to obtain debt and equity financing, capital costs, construction costs, well production performances, operatingcosts, commodity pricing, differentials, royalty structures, regulatory approvals, and other known and unknown risks, allof which are difficult to predict and many of which are beyond the control of Grizzly Oil Sands ULC ("Grizzly"); and (ii)upon assumptions with respect to future business decisions that are subject to change.
There can be no assurance that the Estimates or the underlying assumptions will be realized and that actual results ofoperations or future events will not be materially different from the Estimates. Under no circumstances should theinclusion of the Estimates be regarded as a representation, undertaking, warranty or prediction by Grizzly, or any otherperson with respect to the accuracy thereof or the accuracy of the underlying assumptions, or that Grizzly will achieveor is likely to achieve any particular results. The Estimates are made as of the date of this presentation and Grizzlydisclaims any intent or obligation to update publicly or to revise any of the Estimates, whether as a result of newinformation, future events or otherwise. Recipients are cautioned that forward-looking statements or information are notguarantees of future performance and, accordingly, recipients are expressly cautioned not to put undue reliance onforward-looking statements or information due to the inherent uncertainty therein.
There are significant differences in the criteria associated with the classification of reserves, prospective resources andcontingent resources. Contingent resources and prospective resources estimates involve additional risks, specificallythe risk of not achieving commerciality and exploration risk, respectively, not applicable to reserves estimates. Noadjustments for these risks have been made in the groupings of reserves and recoverable resources.
All reference to dollars in this presentation should be assumed to refer to Canadian dollars, unless otherwise noted. Allreferences to reserves and or resources represent Grizzly’s interest in reserves and resources prior to the deduction ofCrown royalties, unless otherwise noted.
• > 800,000 net acres in the Athabasca and Peace River oil sands regions (100% operated, nearly 100% WI) focused on SAGD development
• ~ 3.1 billion bbls of 2P+Contingent Resources(1) across more than 30 project areas• Privately owned by Wexford Capital and Gulfport Energy Corporation
• Steam injection at Algar Lake Phase 1 commenced in February, 2014• Current production is ~1,000bbls/d• First crude oil shipped from Windell to the U.S. Gulf Coast in June, 2014
• Windell truck-to-rail terminal at Conklin, Alberta is operational to ship Algar Lake and 3rd party oil and receive diluent
• 350 rail car fleet leased to handle Algar production
• Potential to have > 20 projects ready for SAGD development in the next 5 years, with bitumen production capability of ~170,000 bbls/d
• Grizzly’s “ARMS” development model enables repeatable and scalable project development, reducing execution and financing risk
One of the Largest Oil Sands Land
Positions in Alberta
Algar Lake Current Operations
Using Rail to Consistently
Access Premium Markets
1. Source: GLJ Petroleum Consultants Ltd., as at December 31, 2014
Investment Highlights
Grizzly Oil Sands 3
Repeatable & Scalable
Development Model
• “First Oil” was achieved in May 2014• Current bitumen production is ~1,000 bbls/d• Anticipate peak production of ~6,000 bbls/d by late 2015
• Filed a 12,000 bbl/d regulatory development application in Q4 2013. First round of Supplemental Information Requests (SIRs) have been received and responded to
• Completed an 83 km 2D seismic program in Q1 2014 to support a future full field delineation drilling program
• Developed delineation drilling and seismic programs and regulatory work plans on this 345 mmbl Contingent Resource(1) Peace River play
• Completed construction and commenced operations at the Windell truck-to-rail terminal
• Shipped >500 rail cars of crude oil to the U.S. Gulf Coast• Exited Louisiana rail to barge terminal project
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Algar Lake
May River
Rail Strategy
Cadotte
1. Source: GLJ Petroleum Consultants Ltd., as at December 31, 2014
Accomplishments Since Last Conference
Grizzly Oil Sands
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Grizzly Oil Sands LeaseOther Oil Sands LeaseAlberta Oil Sands AreasProducing ProjectUnder Construction Thermal Project
City of Peace River
City of Fort McMurray
800,000+ Net Acres of AlbertaOil Sands Leases
Exposure to All Play Types in Athabasca & Peace River
• Grizzly has a high quality resource based on Steam Assisted Gravity Drainage (“SAGD”) with additional upside using other reservoir recovery processes• 3.1 billion bbls of 2P + Contingent Resources(1)
• Resources primarily located in low risk clastic reservoirs, with some exposure to the carbonates
• Two thirds of current lease position remains unexplored, which provides upside potential
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1. Source: GLJ Petroleum Consultants Ltd. as at December 31, 2014; All Contingent Resources herein refer to “Best Estimate”.
Clastics (Existing Technologies) (1) Proved
Reserves (mmbbls)
2P Reserves (mmbbls)
Contingent Resources (mmbbls)
2P Reserves + Contingent Resources (mmbbls)
Potential(1)
Plateau Production
(bbls/d)Operating
Algar Lake 67 103 46 149 21,000Near-Term Development Projects
May River 0 157 681 838 122,000Cadotte 0 0 345 345 34,000Thickwood 0 0 109 109 18,000
Other ProjectsAdditional Growth Properties 0 0 1,608 1,608 205,000
Total 67 260 2,789 3,049 400,000
Grizzly Oil Sands
Grizzly Assets
Grizzly Development Portfolio
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LAND CAPTURE
RESOURCE DELINEATION
DEVELOPMENT APPLICATION
FILED
PROJECT DEVELOPMENT
APPLICATION RECEIVED
CONSTRUCTION 1ST OIL PROJECTPERFORMANCE DEMONSTRATED
HARVEST
TIME TO PRODUCTION
DE‐RISKING OF ASSETS
Value$ / BOE
2 billion barrels of resources on ~30+
properties
CadotteThickwood
Algar Lake
Phase 2
Algar Lake
Phase 1
Windell Rail
Terminal
May River
Phase 1
Creating Value by Advancing Project Development
May River Full Field
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Property # ARMS Plants
Production Potential (bbls/d)(1)
2P Reserves + Contingent
Resources(2)
(mmbbls) Status
Algar Lake Phase 1 1 6,000 50 Producing
Algar Lake Phase 2 1 6,000 50 Regulatory Approval Received
May River Phase 1 2 12,000 157 Regulatory Application (filed Dec 2013) and 1st round of SIRs have been received and responded to
May River Full Field 12 90,000 681 Delineation program planned
Cadotte 7 50,000 345 Delineation program planned
Thickwood 1 5,000 109 Regulatory Application filed December 2012
Total 24 170,000 1,392
1. Management Estimates; 2. Source: GLJ Petroleum Consultants Ltd., as at December 31, 2014
Grizzly Project Development Portfolio
Attractive Scalable Development Portfolio
• Built and commissioned Grizzly’s 1st
ARMS Plant at Algar Lake
• Demonstrated that ARMS plant works
• Benefits of the ARMS development model include:
• Scalable and manageable growth to match reservoir development requirements
• Improved redundancy and operability
• Lower cost
• Lower project execution and financing risk
9Grizzly Oil Sands
Grizzly’s ARMS Development Model
• Documented learnings from the first plant to apply to the next project
• Commenced reservoir steam injection at Algar Lake Phase 1 in February, 2014
• Converted all 10 well pairs to “SAGD” production mode by September 2014
• Experiencing higher fine sand production than anticipated
• Current production is ~1,000 bbls/d
• Full production ramp up expected by Q4/2015
• GLJ has assigned 103 mmbbls of 2P Reserves and 46 mmbbls of Contingent Resources
• Algar Lake Phase 2 regulatory approval is in hand
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T88
T87
T86
T85
T84
T83
T82
T81
R8W4R10R11R12R13R14
Grizzly Oil Sands
Algar Lake Property ~ 12,000 bbls/d
18m
Devonian
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Algar Lake Reference Well AB-16-10-85-12W4
Single Clean Channel Sand
• Up to 22 metres thick bitumen pay
• No bottom water or top gas
• 18+ metre thick bitumen pay outside of the initial development area
Wabiska
Wabiskaw‐D
McMurray
Devonian
Gamma Ray Logs Over Horizontal Production Well Trajectories
12Excellent Reservoir Quality over Entire Well Length
Algar Lake Reservoir Quality
13
• ~50,000 acres of 100% W.I. oil sands leases
• 12,000 bbls/d development application filed and 1st round of SIRs have been received
• Adjacent to industry leading SAGD projects including Statoil KKD project and close to Jackfish, Christina Lake and CNRL Kirby projects
• Located ~10 km away from Grizzly’s Windell truck-to-rail terminal
• 96 km 2D full field seismic
• 59 km 3D full field seismic
• GLJ has assigned 157 mmbbls of 2P reserves and 681 mmbbls of Contingent Resources
Grizzly Oil Sands
May River Property ~ 100,000 bbls/d
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GLJ Best Estimate Net Continuous Bitumen Pay
08-18-077-08 40 metres Net Continuous Pay
• Multiple stacked channel system
• Analogous to nearby Cenovus, Devon, MEG and Statoil projects
• Up to 40 metres thick bitumen pay with continuous cap rock
• High permeability sands should deliver bitumen at steam-oil ratios in the 2.2 to 2.8 range
Grizzly Oil Sands
838 MM Barrels of High Quality Recoverable Bitumen
15
• 100% W.I. in ~50,000 acres • GLJ has assigned 345 mmbbls of Contingent
Resources• Up to 18 metres clean, homogeneous net
continuous pay in Belloy formation
Grizzly Oil Sands
Cadotte Property ~ 50,000 bbls/d
Bluesky
Belloy
• Rail provides consistent and flexible access to coastal markets offering Brent-based pricing
• Diluent requirements are 50% lower on rail (railbit) than pipeline
• Condensate back-haul opportunities from the U.S.Gulf Coast are available to resource diluent requirements at lower cost
• Low fixed costs provide optionality to access intra-Alberta markets (via truck) when local differentials are attractive.
16
Potential markets for bitumen transport via rail
Potential Rail Transportation Routes
Grizzly Oil Sands
Rail Transportation Strategy
17
Windell Terminal Site – Conklin, AB
• Windell Rail Terminal - Operational
• First crude oil shipped to the U.S. Gulf Coast in June, 2014
• Located on CN line adjacent to our May River site, and in close proximity to 160,000 bbls/d of existing and 1.5 MMbbls/d of planned industry bitumen production
• Capacity can be expanded to unit train facility of railbitloading and condensate receiving
• Short pipeline opportunities to access local bitumen production
• Exited Louisiana rail to barge terminal project. Maintain flexibility by accessing available 3rd party USGC terminal capacity
• 350 rail car fleet leased for 10 years
• Grizzly is pursuing 3rd party transloading volumes
Grizzly Oil Sands
Grizzly’s Rail Transportation Strategy
• Demonstrate Algar Lake reservoir performance by executing a successful production ramp
• Reduce cost structure by 15%
• Advance the 12,000 bbls/d May River development application
• Resolve shallow SAGD regulatory development application issue
• Continue to establish market for Algar production in USGC and optimize Brent crude pricing.
• Attract third party business for Windell rail terminal
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Algar Lake
May River
Thickwood
Rail Strategy
Grizzly Oil Sands
2015 Business Plan Highlights