Canadian-based producers EnCana Corp. and Devon Canada Corp. have agreed to cooperate on developing the natural gas and bitumen resources at EnCana’s Christina Lake thermal recovery project in northeastern Alberta. The competing development plans, in which Devon was producing gas and EnCana wanted to produce bitumen, had been stalled after EnCana protested Devon’s project. The companies were awaiting a hearing by the Alberta Energy and Utilities Board (AEUB). The agreement, reached this week, will allow the companies to pool their resources and money on both projects.

In 1978, the Alberta government began separating entitlement to petroleum and natural gas rights from those for bitumen or oil sands. This method led to conflicts between companies that held rights to separate formations or commodities, such as natural gas and bitumen. Disputes over concurrent production, like the Christina Lake projects, are adjudicated by the AEUB, unless companies can reach agreement.

“We have developed a balanced and commercial solution in pursuit of finding the best technical methods of cooperatively developing Alberta’s hydrocarbon resources in the region,” said EnCana’s Randy Eresman, president of the onshore North America division.

The agreement proposes to implement a joint repressuring scheme that will demonstrate gas cap represssurization in the Wabiskaw-McMurray zone over EnCana’s Christina Lake Phase 1 steam-assisted gravity drainage project. The gas zone pressure at the well there has dropped close to what is considered “abandonment” pressure. Devon will assign the petroleum and gas rights and remaining reserves in the area in the formation to EnCana.

Under the agreement, Devon will continue to produce natural gas there until Sept. 30, 2003, at which time EnCana will use Devon’s equipment and the remaining reserves to fuel the repressuring of the pools overlying EnCana’s future development at the lake. The timing to terminate gas production and initiate repressuring was selected to accommodate bitumen development. It also allows for conservation and production of both the natural gas and bitumen resources. Devon will have the option to take over EnCana’s bitumen delineation wells for gas production from other zones where it holds those rights, according to the agreement.

©Copyright 2002 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.