Due to its sizeable Ladyfern natural gas discovery in northeast British Columbia, Alberta Energy Company Ltd. (AEC) said on Tuesday that it is increasing its 2001 gas sales forecast by an average of 75 MMcf/d for the entire year. AEC expects Ladyfern to begin flowing to market within weeks. Daily production from Ladyfern is expected to average from 100 to 150 MMcf/d during the last half of 2001.

“This is one of the most prolific gas discoveries in Western Canada in the past 15 years. We are now in the final stages of preparing to ship new volumes to energy-hungry markets in Canada and the United States,” said Randy Eresman, president of AEC Oil & Gas. “This is a remarkable achievement by our exploration and development teams. Starting from scratch this winter, we drilled nine deep wells in a remote location, testing four high-deliverability gas wells. We also constructed a pipeline together with a processing and gathering system capable of delivering 170 MMcf/d. AEC holds a 100% interest in its productive wells and facilities.”

As a result, the company’s new gas sales forecast for 2001 is between 1.4 and 1.5 Bcf/d. AEC said if it achieves even the middle of this range, it would result in a 35% rise over 2000 gas sales. AEC also announced a gas sales target for 2002 of between 1.55 and 1.65 Bcf/d, representing a two-year average growth rate of 22%.

With Ladyfern online, AEC said its daily production in British Columbia will rise to more than 350 MMcf/d, the largest in the province. AEC holds 3 million net acres of petroleum lands in British Columbia, which includes 2.6 million net undeveloped acres, making it the province’s largest holder of oil and gas property.

AEC also announced that it has now completed the drilling of all of its wells planned for the Ladyfern area this season, and tied in four of the most prolific wells. The company also constructed a National Energy Board-regulated pipeline to transport gas to the Alberta pipeline network. Field dehydration and production facilities are expected to be complete by early June, the producer said. Currently, AEC’s investment in Ladyfern totals approximately $60 million, which includes $19 million for wells, $10 million for seismic and $31 million for facilities.

AEC said its Ladyfern discovery well (C-6-H 94-H-1) encountered an intensely dolomitized Slave Point carbonate reef at a depth of 9,235 feet below the surface. It is capable of delivering about 60 MMcf/d. Three additional wells encountered similar quality reservoir. Two are capable of initial production exceeding 50 MMcf/d, while the third can deliver 25 MMcf/d. The company said an additional fifth well encountered lower-quality dolomite reservoir that’s capable of initial production rates of between 5 and 10 MMcf/d. Other wells encountered non-commercial reservoir, or ‘off-reef,’ non-productive formation. Due to the reservoir variability, AEC said it is not able to provide a reserve estimate until several months of production have occurred.

To date, AEC said gas produced from the Ladyfern Slave Point reef has been lean and dry with a low hydrogen sulfide content, ranging from 30 to 60 parts per million. Due to the high flow rates of these wells, the company said operating costs are expected to be low, approximately $0.25/Mcf.

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