Ivanhoe Energy’s Tamarack Project marks major advance toward production with submission of regulatory application
Initial output of 20,000 barrels per day projected in 2013
Officer of Ivanhoe Energy Inc. (TSX: IE, NASDAQ: IVAN) announced today
that the company has completed a major milestone towards commercial
production at its Tamarack Project with the submission of its
regulatory application to the Government of
for the development of an integrated in-situ heavy oil project to be
built in two phases, each 20,000 barrels per day, with ultimate
production capacity of approximately 40,000 barrels per day (bitumen
basis).
“Filing this application marks the culmination of over three years of
detailed environmental, engineering and geological work as well as
extensive socio-economic analysis,” Mr. Dyck said. “Our team has worked
diligently to prepare and complete this application, and its submission
to the regulatory authorities is the next critical step in our
development schedule which targets first oil in 2013.”
The application contains a full description of the detailed project
development plan and a comprehensive Environmental Impact Assessment.
In support of the application, Basic Engineering and Design and Front
End Engineering and Design were completed to generate a Class III
(+25/-20%) capital cost estimate. Ivanhoe Energy’s top-tier
contractors, AMEC in
worked closely with Ivanhoe Energy’s technical team throughout this
process.
As part of the application process, Ivanhoe Energy conducted extensive
public consultation, including over 800 meetings and direct
communications, to seek ideas and feedback from aboriginal groups, area
residents, government and other key stakeholders.
An integrated SAGD/HTL project
Tamarack is a 6,880-acre contiguous block located approximately 10 miles
(16 km) northeast of
working interest in the Project, subject only to a 20% back-in right
held by Talisman Energy, which expires in mid-2011.
Ivanhoe Energy’s independent reserve evaluator, GLJ Petroleum
Consultants Ltd. (GLJ), has assigned best-estimate contingent resources
of 441 million barrels of bitumen to the Tamarack Project. With the
submission of this regulatory application, Ivanhoe Energy expects to
update its resource estimates coincident with the company’s year-end
reporting and transition a portion of its contingent resources to the
probable and possible reserve category.Â
Upstream operations – SAGD
Ivanhoe Energy plans to develop the resources at Tamarack utilizing
state-of-the-art steam-assisted gravity drainage (SAGD). SAGD is a
thermal production method for heavy oil that utilizes pairs of stacked
horizontal wells. Steam is injected into the reservoir through the
upper well. As the steam rises and expands, it heats up the heavy oil,
reducing its viscosity. Gravity forces the oil and condensed steam to
drain into the lower well where it is produced.
The company expects that 12 well pads and approximately 160 SAGD well
pairs will be required to fully develop and produce the targeted
resource base. The engineering for the upstream portion of the project
has been carried out by AMEC-BDR,
facility engineering and construction management firm specializing in
complete engineering, procurement, construction management project
delivery.Â
Downstream operations – HTL
Ivanhoe Energy’s proprietary, HTL upgrading process converts heavy,
viscous crude oil in the field to a lighter, transportable synthetic
crude oil which commands a higher price in the marketplace, and does
not require light oil as a blending agent for transport. In addition,
natural gas for steam generation is not required because upgrading
by-products are converted onsite into steam or power that can be used
in field operations. HTL also allows Ivanhoe Energy to capture the
majority of the value differential between light and heavy oil
resulting in enhanced profitability and reduced earnings volatility.
Significant environmental benefits
The Tamarack Project has been designed to meet or exceed all applicable
regulatory requirements including no freshwater use, a water recycle
rate of over 95 percent and state-of-the-art air emission controls. In
addition, the integration of HTL (heavy-to-light) upgrading provides
several environmental advantages over traditional upgraders, including
a significantly smaller carbon footprint, the avoidance of large
accumulations of coke by-products and virtually eliminating natural gas
consumption.
Economic benefits generated for the province
Once fully operational, the Tamarack Project is expected to create
approximately 13,500 person years of direct and indirect employment.
The Project will also contribute several billion dollars of both direct
and indirect economic benefit, largely to the
economies, through engineering and construction activities and the
significant taxes and royalties payable to the Province of
associated economic and employment benefits related to the integration
of an HTL upgrading facility in the field will also be retained by the
province.
First oil in 2013
Subject to the receipt of regulatory approvals from the Alberta Energy
Resources Conservation Board and Alberta Environment construction of
the Tamarack Project could commence in mid-2012, with first bitumen
production expected towards the end of 2013. The regulatory process is
expected to require approximately 18 to 24 months.
The application will be available on Ivanhoe Energy’s web site at www.ivanhoeenergy.com in the near future.
Ivanhoe Energy Inc.
Ivanhoe Energy Inc. is an independent, international heavy oil
development and production company focused on pursuing long-term growth
in its reserves and production using advanced technologies, including
its proprietary, patented heavy to light upgrading process (HTL(TM)). Core
operations are in
development opportunities worldwide. Ivanhoe’s shares trade on the
NASDAQ Capital Market with the ticker symbol IVAN and on the
Stock Exchange under the symbol IE.
STATEMENTS CONCERNING RESOURCES. Cautionary Note to U.S. Investors: The Securities and Exchange
Commission (SEC) permits oil and gas companies, in their filings with
the SEC, to disclose only proved reserves that a company has
demonstrated by actual production or conclusive formation tests to be
economically and legally producible under existing economic and
operating conditions. We use certain terms in this news release, such
as contingent bitumen resources which the SEC’s guidelines strictly
prohibit us from including in filings with the SEC. Investors are urged
to also consider closely the disclosure in our Form 10-K for the fiscal
year ended
obtain this Form from the SEC website at www.sec.gov.
The determination of oil and gas resources involves the preparation of
estimates that have an inherent degree of associated risk and
uncertainty. The estimation and classification of resources requires
the application of professional judgment combined with geological and
engineering knowledge to assess whether specific classification
criteria have been satisfied. Statements in this news release
concerning “resources” are deemed to be forward-looking statements, as
they involve the implied assessment, based on certain estimates and
assumptions, of the ability to produce in the future the resources
described. Actual resources and, if commenced, future production will
differ from the estimates provided herein, and the difference may be
significant.
All bitumen resource volumes referred to in this news release have been
classified as “contingent resources” within the meaning of the Canadian
Oil & Gas Evaluation Handbook (COGE Handbook). The term “contingent
resources” is defined in the COGE Handbook as those quantities of
petroleum estimated, as of a given date, to be potentially recoverable
from known accumulations using established technology or technology
under development, but which are not currently considered to be
commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal,
environmental, political, and regulatory matters, or a lack of markets.
It is appropriate to classify as contingent resources the estimated
discovered recoverable quantities associated with a project in the
early evaluation stage. Contingent resources are further classified in
accordance with the level of uncertainty associated with the estimates
and may be subclassified based on project maturity and/or characterized
by their economic status.
The “best estimate” is considered to be the best estimate of the
quantity of bitumen resources that will actually be recovered. It is
equally likely that the actual remaining quantities recovered will be
greater or less than the best estimate. The contingencies that
currently prevent the contingent resources referred to herein from
being classified as reserves are a lack of regulatory approval, the
absence of a firm development plan, and the uncertainty of funding
approval for development. There is no certainty that it will be
commercially viable to produce any portion of the contingent resources
referred to in this press release.
FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements, including
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include, but
are not limited to statements that the Tamarack project would have an
estimated capacity of approximately 40,000 barrels per day over 30
years and other statements which are not historical facts. When used in
this document, the words such as “could”, “plan”, “estimate”,
“anticipate”, “intend”, “may”, “potential”, “should”, and similar
expressions relating to matters that are not historical facts are
forward-looking statements. Although Ivanhoe Energy believes that its
expectations reflected in these forward-looking statements are
reasonable, such statements involve risks and uncertainties and no
assurance can be given that actual results will be consistent with
these forward-looking statements. Important factors that could cause
actual results to differ from these forward-looking statements include
the possibility that the company will be unable to raise financing in
the future for any of its projects or to repay acquisition financing
interest or principal, the potential that the company’s projects will
experience technological and mechanical problems, new product
development will not proceed as planned, the HTL technology to upgrade
bitumen and heavy oil may not be commercially viable, samples from the
market acceptance of the HTL technology may not be as anticipated,
Ivanhoe Energy’s lack of history in developing commercial HTL
opportunities, geological conditions in reservoirs may not result in
commercial levels of oil and gas production, the availability of
drilling rigs and other support services, uncertainties about the
estimates of the reserves, the risk associated with doing business in
foreign countries, environmental risks, changes in product prices, our
availability to generate cash flow and raise capital as and when
required, competition and other risks disclosed in Ivanhoe Energy’s
Annual Report on Form 10-K filed with the U.S. Securities and Exchange
Commission on EDGAR and the Canadian Securities Commissions on SEDAR.
SOURCE Ivanhoe Energy Inc.