Murphy Oil Takes Wraps Off Large New Production
While public attention centers on the Arctic, a dramatic
demonstration is under way of the ability of Canada's near north to
deliver new natural gas supplies on a large scale.
Murphy Oil Co., lifting a veil of secrecy that has hung over a
hot drilling play for a year, told the National Energy Board it
expects to achieve production of up to 310 MMcf/d in northeastern
British Columbia this year.
The Calgary subsidiary of its namesake in Arkansas disclosed
that its best find in the area to date, Ladyfern is just part of
an aggressive development campaign in a prolific area within easy
reach of markets. Even if the program only turns out to be an
average or "mean-case" performer, Murphy projects production of 172
MMcf/d this year.
The Ladyfern discovery well - a site titled a-097-H about 80
miles north of Fort St. John, is capable of sustained production at
a rate of about 100 MMcf/d, Murphy told the NEB. The output is
being held down to about three-fifths of potential by limited
equipment and an associated production restriction enforced by the
B.C. Oil and Gas Commission. The company said it will install
better equipment and apply for an increase in the "allowable" or
permitted flows. Unlike prospects in Alaska and the Mackenzie
Delta-Beaufort Sea region, the Ladyfern play is within immediate
reach as a discovery on a technical rather than a geographical
The discovery is a new pool found in complex geology in a
well-established production area, using advanced methods such as 3D
seismic. The region is a long day's drive northwest of Calgary, and
is within reach of both the Westcoast and TransCanada-Nova pipeline
systems in B.C. and Alberta. Ladyfern appears to rank among the
best wells ever drilled by the Canadian industry, as potentially a
match for the stellar discovery that a group led by Chevron Canada
Resources put into production last year at Fort Liard in the
southwestern Northwest Territories.
Plans that Murphy outlined to the NEB call for 17 wells,
including eight at Ladyfern and nine in a nearby location called
Foxglove-Chinchaga. Five wells in the program are "step-out
exploration" probes into the same geological feature as the
Ladyfern discovery well.
Murphy disclosed its drilling results and plans --- after
keeping them secret for a year in order to secure more property in
the area without attracting rivals --- to support an application to
the NEB for permission to build a new pipeline. The proposal
highlights the immediate value of the northern B.C. discovery
compared to arctic and offshore targets that have become
fashionable over the past year of rising gas prices and projections
that markets will stay tight.
Murphy's plan calls for connecting its discovery area to an
established, under-employed processing plant called Hamburg
operated by a drilling partner, Apache Canada Ltd. The project
involves laying 11 miles of pipeline for C$4.2 million (US$3
million). The NEB has been drawn into the case, with hearings
scheduled to start Feb. 15 in Calgary, because the line crosses the
While Murphy and Apache have recorded the most spectacular
results to date, they are not the only companies in on the northern
B.C. drilling play. Others active in the area include Alberta
Energy Co. and Ricks Nova Scotia Co., a Canadian arm of
Oklahoma-based Ricks Exploration Inc. The NEB in late December
gave Ricks approval to build a pipeline from its target zone in the
Ladyfern area into Alberta, provided the company does as well as
expected with a drilling program this winter. Murphy, meanwhile,
cleared a hurdle on the eve of hearings on its proposal.
Gordon Jaremko, Calgary
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