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MEG to increase Christina Lake enhancement program by 30%

$185 million program to boost production by 30%

MEG Energy Corp (MEG) from Calgary in Alberta, Canada, announced last July to revise upward its Christina Lake oil field production enhancement program called RISER.

Christina Lake is an in situ oil sands field located 150 kilometers south of Fort McMurray in the northeast Alberta.

Christina Lake oil sands field covers 200 square kilometers and is developed to produce 200,000 b/d by 2020 in using Steam Assisted Gravity Drainage (SAGD) techniques.

Since first production in 2008, MEG developed Christina Lake by phases.

Phase 1 was to produce 3,000 b/d in 2008

Phase 2 was making a leap to 22,000b/d in 2009 requiring 39 horizontal wells pairs

Then in 2011, MEG added two infill wells supported by utilities comprisng steam co-generation, water treatment, and other facilities to prepare the next phases of the Christina Lake development.

Phase 2B is due to make a new step with 35,000 b/d additional capacity in 2013.

Representing $1.4 billion capital expenditure, the phase 2B is planned for completion in 2013.

Phase 3 is itself a long term multi-phases projects to add 150,000 b/d in 2020.

MEG advances $105 million to ground Christina Lake 3 

MEG plans to implement the program called RISER in Phases 1 and 2 prior to the start-up of Phase 3A, currently scheduled for 2016.

With RISER, MEG is planning to increase the Christina Lake production from the previous phases 1,2 and 2B from 60,000 b/d to 80,000 b/d in 2015 representing a 30% incremental increase in production.

On the costs side, MEG expects to reduce the production costs per barrel produced with a wider spread of the fixed costs over more volume produced.

Then the RISER enhancement program should provide a double win return to MEG for $185 capital expenditure to be invested in 2012.

RISER is to introduce new technologies to increase the productivity of the existing facilities including:

 – 32 new infill wells

 – 9 additional horizontal SAGD wells pairs

 – Deployment of Non-condensable gas (NCG) injection to maintain reservoir pressure

 – Water treatment facility expansion

 – MEG proprietary processes

The non-condensable gas (NCG) technique is to reduce the volume of steam injected in the wells per barrel produced.

From a well producing 2,300 b/d with a steam/oil ratio of 2.7, the introduction of non-condensable gas process could increase the production to 2,900 b/d with a steam/oil ratio of 1.3.

The consequence is that not only non-condensable gas injection increases the oil sands production, but it leaves a significant portion of the steam produced to develop other wells in the same way.

In addition to the $185 million capital expenditure for the RISER enhancement program, MEG is planning to engage $105 million for an advanced engineering and procurement of long lead items required for Christina Lake phase 3A.

These advanced engineering and long lead items procurement are related to the:

 – Access Pipeline expansion to match with the additional volume of production.

 – Field infrastructures required for the phase 3A

 – 800 persons campground

 After successfully testing new technologies such as the non-condensable gas injection, MEG is able to increase actual production by 30% at same fixed costs.

MEG in brief

Created in 1998 MEG Energy Corp. is focused on sustainable in situ oil sands development and production in the southern Athabasca region of Alberta, Canada.

Based in Calgary, Alberta, MEG is actively developing enhanced oil recovery projects that utilizes Steam Assisted Gravity Drainage (SAGD) processes.

MEG is mostly developing and operating the Christina Lake oil sands project and has working interests in Surmont operated by ConocoPhillips.

MEG‘s common shares are listed on the Toronto Stock Exchange.

 If MEG’s RISER enhancement program is proven to work at actual phases of Christina Lake SAGD oil sands development, the impact of this non-condensable gas injection technique will be leveraged with the deployment of the coming phase 3.

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