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Shell Canada Touts Major Alberta Gas Discovery

Shell Canada Touts Major Alberta Gas Discovery

Shell Canada said last week that it made a major natural gas discovery in Central Alberta. An exploration test well flowed at a restricted rate of about 30 MMcf/d, and Shell Canada estimates there is about 500-800 Bcf of gas reserves in place in the previously untested Leduc reef feature about 19 miles southwest of Rocky Mountain House in Alberta.

"For Shell, this is the biggest since our Caroline discovery that we announced in 1987," said Shell Canada spokeswoman Jan Rowley. "Caroline was estimated at 2 Tcf. Those numbers have held pretty much through the course of our experience with Caroline, which also is in Central Alberta about 30 kilometers away from the Tay discovery although it is further out from the Foothills and more toward the Plains. It's not as deep but definitely sour."

The new Shell Tay River RicinusW well (Shell Canada 75%, Mancal Energy 25%) was drilled a depth of 16,800 feet encountered 460 feet of net pay. The raw gas contains 60% methane and 35% hydrogen sulphide. Additional drilling and production information will be required to confirm the amount of gas in place and recovery factors.

"For us, it is extremely good news," said Rowley. "We've continued our exploration program with pretty good sums of money over the course of the last four or five years and have been able though smaller additions to keep our production more or less flat. We've been working against a natural decline. This obviously will take us in the right direction."

She said this will be only first of several wells and will be tied it to pipelines and processing by mid-year. The well is in close proximity to four processing plants.

Rowley also touted the new technology that was employed to make this find. "The seismic interpretation that was used in this particular case allowed us to see a feature under a structure that was not seen before." She said the company has been using this technology for the last year and has adapted it to the Alberta Foothills.

"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," said Ian Kilgour, senior vice president of exploration and production at Shell Canada. "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."

Further delineation drilling is also planned during 2005. "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," said Shell Canada CEO Clive Mather. "This significant and exciting new discovery could take us beyond that objective and contribute to the future growth of our natural gas business."

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