Ivanhoe announced that a recently completed evaluation by independent engineers has estimated that Ivanhoe Energy's Tamarack Project, in the Athabasca region of Western Canada, contains best-estimate contingent resources of 441 million barrels of bitumen. This represents an increase of 81% over the best estimate announced in conjunction with the purchase of this asset in mid-2008. The new estimate would support a project with an estimated capacity of approximately 50,000 barrels per day for more than 30 years.
Lease 10 was purchased from Talisman Energy Canada (Talisman) in mid 2008 and has been renamed the Tamarack Project. It is the proposed home for Ivanhoe Energy's first integrated HTL heavy-oil project in Canada. Tamarack is a 6,880-acre contiguous block located approximately 10 miles (16 km) northeast of Fort McMurray, immediately south of Suncor's operating Steepbank and Millennium projects. The block adjoins leases held by ExxonMobil, Laricina Energy and E-T Energy. Ivanhoe Energy holds a 100% working interest in Tamarack and Talisman has back-in rights of up to 20% in Tamarack for a period ending in mid-2011.
At the time of the purchase, Ivanhoe Energy reported in its July 11, 2008, news release that independent reservoir engineers engaged by Talisman had estimated that Lease 10 contained best-estimate contingent resources of approximately 244 million barrels of bitumen, with low and high estimates of approximately 188 million and 313 million barrels, respectively.
The new Tamarack evaluation was conducted by GLJ Petroleum Consultants Ltd. (GLJ), independent reservoir engineers. This GLJ report follows significant analysis carried out by Ivanhoe Energy since the mid-2008 acquisition, including a) a detailed core description completed by Norwest Corporation, b) a petro-physical model developed and matched to the core data, and c) a facies analysis carried out and compared with analogue field performance data.
The new evaluation of Tamarack by GLJ estimates that Tamarack contains best-estimate contingent resources of approximately 441 million barrels of bitumen, with low and high estimates of approximately 320 million and 558 million barrels respectively, out of approximately 1.1 billion barrels of discovered petroleum initially-in-place.
Tamarack Reservoir Quality
The additional analysis carried out over recent months has provided Ivanhoe Energy with additional confidence of the high-quality nature of the Tamarack resource. Ivanhoe Energy believes Tamarack's reservoir characteristics are similar to those of Petro-Canada's nearby MacKay River project, situated across the Athabasca River from Tamarack. MacKay River is acknowledged to be one of the most successful and longest-running SAGD projects in the Athabasca oil sands.
These studies are ongoing, but progress to date suggests that an integrated HTL Tamarack Phase 1 could be developed in a low-oil-price/low-capital-cost environment that could provide after-tax, mid-teen percentage rates of return. These potential economics are enabled by the expected benefits of field-located, HTL integration. A project with reasonable economics anchored in a low-oil-price/low-capital-cost environment would benefit strongly from any recovery in oil prices in the future.
Tamarack & Environmental Advantages of HTL
Financing plans for Tamarack include alliances or other arrangements with entities with the resources to support the Company's major projects. These discussions are focused primarily on national oil companies and other sovereign or government entities from Asian and Middle Eastern countries that have approached the Company and expressed interest in participating in Tamarack and/or the Company's other heavy-oil project in Ecuador, or other projects that the Company has identified around the world.
Discussions and/or due diligence with potential strategic partners for Tamarack are under way. These strategic-partnership initiatives would complement traditional financing, such as project financing, debt and mezzanine financing, or the sale of equity securities.
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