Northern Explorations ("Norex") has noted that the Company and field operator are preparing to tie-in the initial gas well in its Southern Alberta Gas Project. The well has two commercially viable and productive zones of natural gas currently shut in with gas behind pipe.
The completed gas well was drilled in 2004 and produced exceptional well tests performed by Well Test Specialists of Calgary, Alberta. Norex and the operator, following a short 2 mile connection and tie-in to the gas plant, anticipate plant start up and production over the next 60 days.
The Company believes that it will commence commercial production before the second quarter of 2009 and begin generating revenue shortly thereafter, of which Norex holds a 49% working interest with an option to acquire the additional 51%. All gas reservoirs have good permeability and porosity and could produce 3.2 million cubic feet (Mmcf) per day to the gas plant. At today's gas prices when the project is fully developed, 3.2 Mmcf would equate to production valued at approximately $4.9 million on an annualized basis.
The gas will be processed at the plant facilities with an overall throughput capacity of 15 Mmcf per day. The plant processes sour gas by a non regenerative solution, with sweet gas compression, metering and water storage capabilities. The Company's 6 inch pipeline connects with Encana's trunk (sales) line and also extends towards the aforementioned well tie-in.
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