Our Operations - Operations - Birchcliff Energy

Our Operations

Birchcliff Pipeline

Drilling

Our 2015 drilling program was focused on our Montney/Doig Natural Gas Resource Play and Charlie Lake Light Oil Resource Play.  We actively employed the evolving technology utilized by the industry regarding horizontal well drilling and the related multi-stage fracture stimulation technology.

We had an active drilling program during 2015 drilling a total of 32 (31.5 net) wells, consisting of 28 (28.0 net) Montney/Doig horizontal natural gas wells in the Pouce Coupe area, 1 (1.0 net) Montney/Doig horizontal natural gas well in the Elmworth area, 1 (1.0 net) Charlie Lake horizontal light oil well in the Progress area, 1.0 (0.5 net) Halfway horizontal light oil well in the Progress area and 1.0 (1.0 net) Belloy vertical well drilled as an acid gas disposal well in the Elmworth area.  All of the horizontal wells drilled in 2015 utilized multi‐stage fracture stimulation technology.

 

Montney/Doig Natural Gas Resource Play

We drilled our first vertical exploration well for the Montney/Doig in February 2005. With the success of this well, we aggressively pursued opportunities to consolidate a significant position on the play. In May 2005, we completed the acquisition of properties for $242.8 million, including a working interest in 11 gas plants and related pipelines and a significant undeveloped land position on the play. 

The technology relating to horizontal drilling and multi-stage fracture stimulation has rapidly expanded in the last 10 to 15 years. The industry’s first Montney/Doig horizontal wells were drilled in 2005 and we drilled our first horizontal well in September 2007. As at December 31, 2015, we have now successfully drilled 188 (187.9 net) horizontal wells on the Montney/Doig Natural Gas Resource Play. The two drilling intervals we have focused on is the Montney D1 where we have drilled 117 wells and the Basal Doig/Upper Montney where we have drilled 63 wells. In July 2014, we drilled our first exploration well in the Montney D4 interval in the Pouce Coupe area. As at December 31, 2015, we have drilled a total of seven 100% working interest wells in the Montney D4 interval.  Five of these wells are in the Pouce Coupe area and two are in the Elmworth area.  During 2014, we drilled our first successful horizontal natural gas well in the Montney C interval.

Drilling activities during 2015 on the Montney/Doig Natural Gas Resource Play consisted of 28 (28.0 net) horizontal natural gas wells drilled in the Pouce Coupe area, 1 (1.0 net) horizontal natural gas well drilled in the Elmworth area and 1 (1.0 net) Belloy vertical well drilled as an acid gas disposal well in the Elmworth area.  All horizontal wells drilled in 2015 utilized multi-stage fracture stimulation technology. 

In 2015, approximately 92% of our natural gas production, 10% of our light oil production and 88% of our NGL production came from the wells drilled on the Montney/Doig Natural Gas Resource Play.  In 2015, production from the Montney/Doig Natural Gas Resource Play averaged 32,890 boe per day and the operating netback for this production was $13.80 per boe.  Average operating costs on the Montney/Doig Natural Gas Resource Play were $3.22 per boe. In 2015, we invested $7.7 million to expand and maintain our land position on the Montney/Doig Natural Gas Resource Play.  

 

Increased Future Drilling Locations

Our land activities during 2015 on the Montney/Doig Natural Gas Resource Play included the acquisition of 20 sections, all at 100% working interest, 9 sections of which were in the heart of our Pouce Coupe area and 11 sections of which were in our Elmworth area.  As at December 31, 2015, we held 333.9 sections of land that have potential for the Montney/Doig Natural Gas Resource Play.  Of these lands, 309.9 (293.7 net) sections have potential for the Basal Doig/Upper Montney interval, 317.4 (308.0 net) sections have potential for the Montney D1 interval and 293.4 (287.0 net) sections have potential for the Montney D4 interval.  As at December 31, 2015, our total land holdings on these three intervals were 920.8 (888.8 net) sections.

On full development of four horizontal wells per section per drilling interval, we have 3,555.2 net existing horizontal wells and potential net future horizontal drilling locations in respect of the Basal Doig/Upper Montney, Montney D1 and Montney D4 intervals as at December 31, 2015.  With 188 (187.9 net) horizontal locations successfully drilled at the end of 2015, there remains 3,367.3 potential net future horizontal drilling locations as at December 31, 2015, up from 3,346.3 net at year end 2014.  This does not include any potential net future horizontal drilling locations for the other three prospective Montney intervals, the Montney C, the Montney D2 and the Montney D3.

Elmworth Area

In the fourth quarter of 2014, Birchcliff drilled its first successful Montney/Doig horizontal exploration well in the Montney D4 interval in the Elmworth area.    Birchcliff subsequently drilled its second successful horizontal exploration well in the Elmworth area in the Montney D4 interval in the first quarter of 2015, which was brought on production in June 2015.   The success of these two Montney D4 wells in the Elmworth area has added significant potential future drilling locations to Birchcliff’s inventory and is expected to result in follow‐up drilling by Birchcliff and future additions to its reserves volumes. 

As part of Birchcliff’s future growth plans for its Montney/Doig Natural Gas Resource Play, it is continuing to prove up the play in the Elmworth area and in the next few years it intends to construct and operate a 100% owned natural gas plant in the Elmworth area (the “Elmworth Gas Plant”).   Birchcliff has commenced the preliminary planning for this plant and a critical requirement is a nearby acid gas disposal well which Birchcliff drilled in the first quarter of 2015.    In the second and third quarters of 2015, Birchcliff conducted successful injectivity tests on the well and is preparing the required regulatory application for an acid gas disposal scheme.

 

PC Gas Plant Phase IV Expansion Complete

The Phase IV expansion of the PC Gas Plant was completed in September, 2014 and as a result processing capacity has increased to 180 MMcf per day from 150 MMcf per day. The estimated cost of the Phase IV expansion was approximately $11.6 million. The project was completed on schedule and on budget.

Future Expansion of the PC Gas Plant

Engineering, procurement and fabrication work is underway for the Phase V expansion of the PC Gas Plant which will increase processing capacity to 260 MMcf per day.

Charlie Lake Light Oil Resource Play - Worsley

Due to low oil prices during 2015, we did not conduct any drilling activities on our Worsley Charlie Lake Light Oil Resource Play. We did, however, spend significant time and effort optimizing the existing wells, existing waterflood and infrastructure to improve production profiles and reduce decline rates. In 2015, 4% of our natural gas production, 73% of our light oil production and 7% of our NGL production came from the wells drilled on the Worsley Charlie Lake Light Oil Resource Play, with production primarily from the oil rich Charlie Lake formation. In 2015, production from the Worsley Charlie Lake Light Oil Resource Play averaged 4,236 boe per day and the operating netback for this production was $21.15 per boe.

Charlie Lake Light Oil Resource Play – Progress

In the fourth quarter of 2014, we drilled our first successful 100% working interest Charlie Lake horizontal exploration well in the Progress area, which was brought on production in December 2014. This well produced at an average rate of 300 bbls per day of light oil and 1.8 MMcf per day of natural gas for a total of 600 boe per day for the first 30 days of production. 

In the second quarter of 2015, we drilled our second successful 100% working interest Charlie Lake horizontal light oil well in our Progress area, which was brought on production in August 2015. This well produced at an average rate of 85 bbls per day of light oil and 2.2 MMcf per day of natural gas for a total of 450 boe per day for the first 30 days of production. 

As at December 31, 2015, we held 28 (27.5 net) sections of land in the Progress area on the Charlie Lake Light Oil Resource Play, compared to 26.5 (25.75 net) sections as at December 31, 2014. In the first quarter of 2015, we acquired a new 3‐D seismic program in the Progress area to help delineate our Charlie Lake Light Oil Resource Play exploration success. The results of this seismic program are very encouraging and support our management’s belief that a significant amount of our lands have potential for this play.

We are currently developing a full scale development plan for our Progress Charlie Lake Light Oil Resource Play.

Halfway Light Oil Play

During 2015, Birchcliff drilled 1 (0.5 net) Halfway horizontal light oil well, which was completed utilizing multi-stage fracture stimulation technology.