Shell Makes Major Natural Gas Discovery in Central Alberta

Shell Canada has made a major natural gas discovery on a previously untested structure located 30 kilometers southwest of Rocky Mountain House in central Alberta.

An exploration well, Shell Tay River RicinusW 2-6-37-10-W5 (Shell Canada Limited 75 per cent, Mancal Energy Inc. 25 per cent), was drilled on a previously untested Leduc reef feature analogous to the nearby Ricinus West field. The well was drilled to a depth of 5100 meters and encountered approximately 140 meters of net pay. Test data indicates that the well will be capable of a restricted flow rate of 30 million cubic feet per day through existing 3.5 inch tubing. Based on seismic evaluation, pressure and well data, Shell estimates that this new feature could contain in the range of 500 to 800 billion cubic feet of original raw gas in place. The raw gas contains approximately 60 per cent methane and 35 per cent hydrogen sulphide. Additional drilling and production information will be required to confirm the amount of gas in place and recovery factors.

Ian Kilgour, Senior Vice President of Exploration and Production, Shell Canada said, "Our Foothills exploration team used sophisticated technology and know-how to map, successfully drill and test a new and significant structure in a basin that is generally considered mature. This is one of the largest gas discoveries in Western Canada in recent years and related economic benefits will be important to both Shell and the Province of Alberta."

The discovery well is in the vicinity of existing sour gas processing facilities with capacity to handle incremental volumes, and is expected to be tied-in and producing by mid-2005. Further delineation drilling is also planned during 2005.

Clive Mather, Shell Canada's President and CEO, said, "The objective of our ongoing exploration effort in the Alberta Foothills has been to find and develop additional gas to maintain production from existing fields, and we've had good success with that program over the years. This significant and exciting new discovery could take us beyond that objective and contribute to the future growth of our natural gas business."