Haywood Senior Oil and Gas Analyst Alan Knowles is positive on Petrobank and its new Thai/Capri oil recovery processes:
The Petrobank oil recovery technologies (Thai/Capri) is actually cheaper; for instance, the estimates are that this will cost $20,000 per producing barrel to put a project together, and it likely will be less, whereas your average SAGD (steam assisted gravity drainage) project is $60,000 per producing barrel. So, it’s a third, and if you add an upgrader, you can get into the $80–$100,000 per producing barrel. And so you’re comparing $20,000 versus those higher numbers, depending on the project.
Petrobank’s deal has been to retain a 50% working interest in, and a 10% override on, the other company’s project. The benefit of that, of course—it adds to the company’s growth. The other benefit is that it also recovers 70% of the oil in place in the reservoir, and a competing or just a standard expectation is somewhere between 25% and 40%, depending on the project. So they get almost twice as much oil out of the ground from their well than a competing project would get from their well.
The oil is upgraded in situ in this process, so instead of producing 9- or 10-degree oil, it produces 20- to 21-degree oil—a significant advantage; and capital costs are a third to a quarter of competing projects. This is a new technology and it is getting a lot of attention now, especially in the lower oil price environment
Bakken still works at these prices. Crescent Point, Petrobank, TriStar, and Petrominerales can really do something with $65 oil because of their low royalty, low operating costs. Crescent Point and TriStar are involved in the same play here in Canada, called the Bakken play, and that’s light oil, so it receives quality pricing. The first year’s royalty on those wells is only 2.5%, and the operating costs are in the $8 to $9 range, generally. Even in a $45 oil environment, they have a decent net back but the rate of return on a well at $65 versus $45 is significantly better; so, they wouldn’t stop drilling but rather slow it down in a $40-45 oil environment.
THAI Process Benefits
• Minimal natural gas and water use
• Higher recovery rates – 70-80% of oil in place
• Improved economics
• Lower capital cost – 1 horizontal well, no steam & water handling facilities
• Lower operating cost – negligible natural gas & minimal water handling
• Higher netbacks for partially upgraded product
• Faster project execution time
• Lower environmental impact
• 50% less greenhouse gas emissions
• Net useable water production
• Partial upgraded oil requires less refining
• Smaller surface footprint
• THAI /CAPRI – step change heavy oil technologies
• Up to 804 mmbbls recoverable (based on SAGD) in Petrobanks Whitesand block