The simple, clean, continuous single-channel McMurray sand deposit at Algar Lake makes this a suitable first project for Grizzly. This is also where Grizzly is demonstrating that “small can be profitable” in the oil sands. Grizzly holds a 100 percent working interest over this property’s 56,960 contiguous acres. The asset has been extensively explored with 65 cored delineation wells and a further 16 appraisal wells, plus 2D and 3D seismic.
The reservoir lies at a depth of approximately 225 metres, with up to 20 metres of net pay along a continuous channel. It has few complexities such as mud/clay intervals within the sands or bottom water, and has a continuous cap rock. Drilling cores show sand from top to bottom. This is conducive to reliable, predictable future reservoir performance. Algar Lake is also relatively close to infrastructure, requiring only 11 km of new road. It adjoins a competitor’s producing SAGD project, and lies approximately 60 km southwest of Fort McMurray.
Algar Lake was independently evaluated by GLJ Petroleum Consultants Ltd. at December 31, 2013. GLJ assigned proved plus probable reserves of 114 million barrels plus 35 million barrels of contingent resources.
Algar Lake’s resource base is well-suited to a smaller producing scale of up to three ARMS cores, with SAGD production designed to peak at approximately 18,000 barrels per day.
The regulatory application for the first two phases of development at Algar Lake was filed in March 2010 and was approved in December 2011. The initial 10 horizontal well-pairs for phase 1 were drilled and completed from a single pad in mid-2012.
Shop construction of the first ARMS facility began in 2011 and field assembly of the first plant core concluded in summer 2013. Initiation of steam injection commenced in January 2014. During the second quarter of 2014, first bitumen production was achieved at Algar Lake Phase 1. The first phase should reach its peak production of more than 6,000 barrels per day in mid 2015. Construction of phase 2 will be evaluated when Grizzly obtains its next round of equity financing.