The new field is located within a trend of Devonian and Cretaceous aged gas fields that have produced more than 2.2 trillion cubic feet of gas. The initial discovery well was drilled during the prior winter season in early 2006. Field operations are limited to the winter season in this area of Alberta. This winter, Pioneer drilled three successful development wells and constructed gas processing facilities and gathering pipelines. Within a week, production is expected to reach a sustainable rate of 24 MMcfpd, fully utilizing the initial capacity of the gas processing facilities in place. The facilities can be readily expanded to 40 MMcfpd with additional compression to accommodate future drilling success.
The gas reservoir in the new field is very shallow at only 2,000 feet, and the producing wells are flowing gas at rates that are 5 to 10 times the historical average for the trend. Permeability varies significantly and is unusually high in the producing wells. Horizontal drilling was used for the first time in this area and is also contributing to the high production rates. Two of the three producing wells were drilled as horizontal wells with laterals of approximately 300 feet. The total cost to drill, complete and tie in the producing wells has averaged $1.2 million per well.
Pioneer has acquired a significant land position within this gas field trend of more than 375,000 acres at an average working interest of 98% for a cost of less than $70 per acre. Six look-alike prospects have also been identified on these lands, and two prospect wells have tested gas and are awaiting development. Pioneer plans to test these prospects in future winter operation windows and will be able to produce successful wells through the Pioneer facilities constructed this past winter. Total gas resource potential from these prospects is currently estimated to be 50 to 180 billion cubic feet.
"I am excited to announce this new discovery," stated Scott Sheffield, Pioneer's Chairman and CEO. "Since drilling the discovery last year, our team in Canada has done an outstanding job building our substantial acreage position and constructing facilities to bring this production online. With relatively low well costs and high flow rates, this new play is expected to deliver strong returns and make a significant contribution to Pioneer's projected 2007 production growth in Canada of 30% to 35%."
Pioneer is a large independent oil and gas exploration and production company, headquartered in Dallas, Texas, with operations in the United States, Canada, South Africa and Tunisia.
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