Tuktu’s Southern Alberta Opportunity
Through three asset transactions, Tuktu has gathered a large block of developed and undeveloped land harboring at least three light oil targets, an extensive highly fractured sweet gas reservoir, and a proven fractured light oil reservoir at the edge of the foothills belt.
Figure 4. Mississippian reservoir production and associated regional fault sets.
Deep Basin Light Oil
The southern Alberta Deep Basin presents numerous near-term light oil exploitation opportunities. These reservoirs have been impacted by regional-scale deformation that has resulted in northwest-trending fault sets which developed though regional compression and wrench tectonics. Due to repeated crustal movement, a significant number of natural fractures have been imposed on associated reservoirs. As such, the production to date of certain wells appears to reflect fracture abundance (Figure 4). These reservoirs, like the deformed foothills reservoirs, can be exploited through the team’s multidecadal geosteering experience in complex foothills structures. By intersecting many of these natural fractures, horizontal well performance can improve significantly, often without fracture stimulation. To this end, Tuktu believes that there are nearly 100 unbooked light oil drilling locations on its existing land base. Tuktu’s initial capital deployment on its first well recompletion and some workovers have shown that the area is very prospective for future development drilling. Indeed, initial recompletion results of out deep basin recompletion indicate that fractures may be an important part of initial well capability.
Figure 3. Location of Tuktu plays in the Foothills and Deep Basin.
Foothills Light Oil
Through one of its earlier acquisitions, Tuktu acquired minor light oil production over a frontal foothills structure south of Pincher Creek (Figure 3, 5). The field has a long history of sour gas production from the Turner Valley Formation (Mississippian), where approximately 0.5 Tcf has been produced. The deeper field has been depleted, and Tuktu is focused on the shallower Cretaceous and Jurassic units, which are sweet oil-bearing and have been carried by the same faults as the deeper sour gas-bearing units (Figure 5). Oil-bearing units (Cadomin and Brown) are within a fold complex above the Turner Valley Formation. In many ways, the structural configuration is much like that which occurs at Stolberg, described on this website. At Pincher Creek, like Stolberg, the folded competent sandstones are anticipated to be highly fractured, and as a result, horizontal wells into these reservoirs could yield high initial rates without fracture stimulation. The structure is approximately 22 km in length and could provide significant resource and production for the company, once drilling commences.
Figure 5. Pincher Creek structure. Light sweet crude is currently free flowing from a single vertical well. This reservoir is very similar to the Cardium at Stolberg, though deeper and significantly higher initial reservoir pressure. Blue colour represents Mississippian sour-gas-bearing carbonate formation which is now depleted.
Foothills Sweet Gas
Through one of it acquisitions, Tuktu purchased a 100% owned an operated sweet gas plant. Gas from 2 deviated wells in highly fractured Cretaceous reservoirs is processed at this gas plant. Like the Pincher Creek structure, sweet gas zones are carried above sour gas bearing Mississippian reservoirs, and the extent of prospective reservoir is nearly two townships. In a favourable gas pricing environment, this area could add significant revenue to the company. The cost to drill and equip deviated, unstimulated wellbores in this area are expected to be inexpensive relative to the anticipated reserves for such wells. Currently, the deviated wells under production may produce between 10 and 12 Bcf each. In addition, the unit OPEX to produce this gas is less than $3/boe ($0.50/Mcf), allowing profitability in a very low-price environment.
