Southern Pacific Completes Engineering Study and Commences Formal Consultation for Its First SAGD Project
November 17 2008 - 9:08AM
Marketwired
Southern Pacific Resource Corp. (TSX VENTURE: STP) is pleased to
announce that it has completed an engineering Design Basis
Memorandum (DBM) and cost estimate for its first in-situ steam
assisted gravity drainage (SAGD) project. The DBM defines the
important project design conditions, production forecasts, facility
specifications and process flow. Also included within the DBM is a
project execution plan including contracting strategy, schedule and
cost estimates. Completion of the DBM keeps Southern Pacific on
track to apply for its SAGD project by April 30, 2009. The
application will allow the Corporation to have its contingent
resources reclassified as Probable Reserves.
The SAGD project, which has been named the STP-McKay Project,
has undergone an intense amount of planning and design since last
winter, when Southern Pacific successfully delineated the initial
six-section core project area with an average of 3.2 wells per
section. Highlights of the DBM and cost estimate are as
follows:
- Maximum bitumen throughput of 12,000 barrels per day (bbl/d)
and a maximum water throughput of 30,000 bbl/d.
- Design is based on a 95% water recycle rate within the process
with no tailings ponds or discharge into the surrounding
environment.
- Initial Phase I of 18 SAGD well pairs sited on three pads have
been planned which will supply the project with 12,000 bbl/d of
bitumen for five years. Remaining phases will include an additional
nine pads, which will fill the plant for up to 30 years.
- A total initial start up cost estimate of $414.6 million
($331.7 million net to Southern Pacific) has been estimated, which
includes all costs required to become fully operational.
- A capital spending timeline has also been developed, which
demonstrates that over 95% of the capital requirements will not be
required until 2010 under an aggressive spend profile.
Southern Pacific is also pleased to announce that it has
commenced its formal consultation process around the STP-McKay
Project. One aspect of this process is a public disclosure
document, which is now available on Southern Pacific's website,
www.shpacific.com, under the Community tab. As part of the
consultation process, Southern Pacific has prepared an Aboriginal
Consultation Plan, which has already been approved by Alberta
Environment (AENV). This plan, in concert with Southern Pacific's
other stakeholder consultation plans, will form the groundwork for
consultation on the project. Several open house meetings in the
Fort McMurray area will be held with Southern Pacific staff and
stakeholders over the next several months.
Southern Pacific's winter program for the STP-McKay Project is
now set. The program is designed to complete the requirements
necessary to submit a project application to the Energy Resources
Conservation Board (ERCB) and AENV. This program includes 19
additional coreholes, water source wells and testing, some
additional caprock testing and ongoing environmental data
collection. The total cost of the program is estimated at $11.6
million net to Southern Pacific, which will be funded through
working capital. At September 30, 2008, the Corporation had an
estimated working capital of $17.5 million.
Once the winter program is completed, Southern Pacific expects
to have met all the requirements to submit a comprehensive
application to the ERCB and AENV in April. If there are no
significant outstanding deficiencies, Southern Pacific expects to
qualify for the designation of Probable Reserves within the
STP-McKay Project. Provided the application is approved, which is
estimated to occur within 12 months of submission, the reserves
classification should be upgraded again to Proven Reserves.
Although project financing remains a challenge in today's
financial environment, Southern Pacific does not expect to require
additional financing until at least 2010. The Corporation believes
it has sufficient working capital to advance the project
application through to approval. The STP-McKay Project is a
complete project that is expected to have a strong team, booked
reserves and an attractive economic return. Southern Pacific
believes these features will encourage attractive financing
options.
For a detailed review of the STP-McKay project, Southern Pacific
encourages interested parties to visit its website at
www.shpacific.com where an updated corporate presentation and its
STP-McKay public disclosure document are available for review.
Safe Harbour
Statements in this press release may contain forward-looking
information including expectations of future operations, operating
costs, commodity prices, administrative costs, commodity price risk
management activity, acquisitions and dispositions, capital
spending, access to credit facilities, income and oil taxes,
regulatory changes, and other components of cash flow and earnings.
The reader is cautioned that assumptions used in the preparation of
such information may prove to be incorrect. Events or circumstances
may cause actual results to differ materially from those predicted,
a result of numerous known and unknown risks, uncertainties, and
other factors, many of which are beyond the control of the company.
These risks include, but are not limited to, the risks associated
with the oil and gas industry, commodity prices and exchange rate
changes. Industry related risks could include, but are not limited
to, operational risks in exploration, development and production,
delays or changes in plans, risks associated to the uncertainty of
reserve estimates, health and safety risks and the uncertainty of
estimates and projections of production, costs and expenses. The
reader is cautioned not to place undue reliance on this
forward-looking information.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.
Contacts: Southern Pacific Resource Corp. Dave Antony CEO (403)
269-5219 Email: dantony@shpacific.com Southern Pacific Resource
Corp. Byron Lutes President (403) 269-1529 Email:
blutes@shpacific.com Website: www.shpacific.com
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