June 20, 2012

BlackPearl Resources seeks regulatory approval

BlackPearl Resources Inc. is seeking regulatory approval for the construction of the proposed Blackrod Steam Assisted Gravity Drainage (SAGD) Commercial Project near Wandering River, Alberta.

The proposed Project is located on Crown land on the east side of the Athabasca River, about 50 kilometres northwest of the Hamlet of Wandering River, Alberta.

It will be developed in three phases over an estimated 30-year period.

The first 20,000-bpd phase is expected to cost $700 to $800 million and is scheduled to come on stream in four years, which includes 18 to 24 months for approvals

The proposed development will have a central processing facility (CPF) and is expected to have up to 69 well pads over the life of the project.

The second and third phases will produce 30,000 barrels per day each, for a total production capacity of 80,000 barrels per day.

The CPF for the 80,000 bbl/d project is comprised of five integrated process units: steam generation unit with up to 16 boilers; oil treatment unit; de-oiling unit; water treatment unit and utilities.

Capital expenditures during the first quarter of 2012 were $43.5 million, with about $9 million spent at Blackrod to complete the drilling of 10 delineation wells.

In 2012, BlackPearl expects to invest between $125-$135 million, which includes the start of detailed engineering work on the first phase of commercial SAGD development at Blackrod.

It also involves drilling 10 additional delineation wells required for the commercial application, as well as adding a second horizontal well pair to the existing SAGD pilot.

Steam and water handling facilities will also be expanded.

During 2011, capital spending increased to $192.6 million from $95.8 million spent in 2010, which included the completion of the SAGD pilot facilities at Blackrod.

Operations at the pilot project began in June 2011.

It includes a single horizontal well pair and associated steam and water handling facilities. The pilot is being undertaken to provide operating data to design the commercial development of the Blackrod lands.

BlackPearl received approval from the Energy Resources Conservation Board for the construction and operation of the SAGD pilot in October 2010.

JOC NEWS SERVICE

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