A new natural gas field in northern Alberta is producing at a gross rate of 18 MMcf/d from three wells, and within the next week, output is expected to reach a sustainable rate of 24 MMcf/d, according to leaseholder Pioneer Natural Resources Co.

The new field is located within a trend of Devonian- and Cretaceous-aged gas fields, which has produced more than 2.2 Tcf. Pioneer, a Dallas-based independent, said the initial discovery well was drilled in early 2006; field operations are limited to Alberta's winter season. Pioneer so far has completed three development wells and constructed gas processing facilities and gathering pipelines. The midstream facilities may be expanded to 40 MMcf/d with additional compression to accommodate future drilling.

"Since drilling the discovery last year, our team in Canada has done an outstanding job building our substantial acreage position and constructing facilities to bring this production online," said CEO Scott Sheffield. "With relatively low well costs and high flow rates, this new play is expected to deliver strong returns and make a significant contribution to Pioneer's projected 2007 production growth in Canada of 30-35%."

The shallow gas reservoir is about 2,000 feet deep, and the producing wells are flowing gas at rates that are five to 10 times the historical average for the trend, according to Pioneer. Two of the three producing wells are horizontal wells with 300-foot laterals. So far, six look-alike prospects have been identified, and two prospect wells have tested gas and are expected to be developed in future winter operations. Total gas resource potential from these prospects is currently estimated to be 50-80 Bcf.

Pioneer holds more than 375,000 acres in the trend at an average working interest of 98% for a cost of less than $70 per acre. The total cost to drill, complete and tie in the producing wells has averaged $1.2 million per well. Pioneer holds a 100% working interest and 75% net revenue interest in the new field, assuming a 25% sliding-scale Canadian royalty interest.

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