Crew Energy is targeting a 40 per cent increase in Montney production this year with a $200 million capital budget focusing on drilling, completions and facilities in the Septimus area.
The company’s Montney production averaged 18,592 boe/d in the third quarter of 2016 and is expected to increase to over 26,000 boe/d by the end of 2017.
Total corporate production is expected to over 30,000 boe/d, up from 23,211 boe/d in the third quarter of 2016.
“Crew's 2017 capital budget is predominantly focused on drilling and completions at Greater Septimus and the expansion of the West Septimus facility, while taking advantage of key service costs that Crew has negotiated through the end of 2017,” the company says.
“Crew anticipates having three drilling rigs running through the first half of 2017 in order to complete our 28 well Montney program. The company also plans to complete and tie-in eleven net wells which were previously drilled in 2016 and will further contribute to production volume growth.”
West Septimus spending of about $128 million represents 64 percent of the total projected 2017 capital spend. This includes drilling of 23 wells and completing five wells that were drilled in the fourth quarter of 2016.
“The drilling program will include approximately ten development and delineation wells situated in the ultra liquids-rich window which, if comparable to the first two wells drilled and completed in the area, would be on target to generate over 100 percent rates of return in the current capital cost and commodity price environment,” the company says.
In addition, Crew plans to expand processing capacity at the West Septimus gas plant to 120 mmcf per day, which is expected to come on-stream in the fourth quarter of 2017.
“In concert, we have budgeted approximately $20 million of additional capital to start construction of a pipeline that will tie Crew's West Septimus infrastructure into the TCPL Saturn meter station, which is expected to be in service by early 2018. The pipeline route will also intersect the proposed site of Crew's planned Groundbirch facility expected to be in service by late 2018 as part of the Company's three year growth plan.”
Crew’s planned budget of about $24 million at Septimus represents 12 percent of total 2017 capital.
The company plans to bring five wells on production during 2017, including four wells that were previously drilled during 2016 and carried forward into 2017 and one new well to be drilled and completed this year.
Crew also plans to allocate approximately $10 million for a pipeline expansion to accommodate production volumes from the West Septimus plant expansion and debottlenecking projects at Septimus.
About 15 percent, or $30 million of Crew’s 2017 capital budget will be spent at Tower, including completing two remaining wells from its 2014 drilling program during the first quarter, completing in-field facilities projects and drilling four new wells to maintain production levels at the Tower facility.
Crew is also spending outside its Montney core areas, at the Lloydminster heavy oil property it has up for sale.
“The sales process of our heavy oil asset at Lloydminster is ongoing and as a result Crew has included a nominal amount of capital for Lloydminster in the budget, which is planned to be directed to drilling six wells and continuing with well optimizations and work-overs. At current commodity prices the company is planning to maintain heavy oil production at approximately 2,000 boe per day.”