Seemingly washed up after water- and CO2-flood schemes played out a few years ago, Canada's Cardium formation has new life today as an unconventional oil target.

Southwest of Edmonton, Alberta, Mobil Oil discovered Pembina Field in 1953, one of Canada's largest onshore fields. Today the recently sleepy Late Cretaceous Cardium in the Pembina area displays enormous resource potential, with original oil in place estimated at some 7.8 billion barrels of light, sweet, 36-41 gravity crude. That estimate could also climb dramatically due to recent advances in horizontal drilling and multistage fracturing techniques, imported from the nearby North Dakota and Saskatchewan Bakken play

According to a 2010 analysis by Wellington West Capital Markets Inc., Cardium horizontal wells have Bakken-like characteristics in terms of per-well expected rates of return and reserve potential, and in ultimate potential for resource development in and around existing fields. Between its discovery and 2008, the formation has produced about 1.39 billion barrels of crude oil and 1.09 trillion cubic feet of gas.

Gas is produced from Cardium in the Athabasca River area and the foothills in western Alberta, and oil is produced in central Alberta's Pembina Field. The formation consists of thinly interbedded sands, shales and silts that exhibit good to moderate porosities and low permeabilities. The Cardium is generally found at depths between 4,000-4,600 feet. It is relatively water-free and has good storage properties: the overlying Wapiabi and Muskiki shales ensure stratigraphic traps, and the dark underlying shales act as source rocks.

A December 2009 report released by Macquarie Capital Markets Canada said that Cardium activity "is expected to explode in 2010" with an estimated 200-plus horizontal multistage-frac wells, up from an estimated 35 wells in 2009. Macquarie noted that companies with 2010 Cardium oil programs include Penn West Energy Trust (expected to drill about 30 wells); ARC Energy Trust (32 wells with approximately half completed with multistage fracs); NAL Oil & Gas Trust, (20 to 25 wells); Bonterra Oil & Gas Ltd. (approximately 25 wells planned); Bonavista Energy Trust (approximately 20 wells); Daylight Resources Trust (15 to 20); West Energy Ltd. (24 wells); Bellatrix Exploration Ltd. (5 to 10 wells); Enterra Energy Trust (10 to 16 wells); Angle Energy Inc. (up to eight); Vermilion Energy Trust (six); and Baytex Energy Trust (five).

Since the report's release, there have been several reported discoveries. In April 2010, Great Plains Exploration Inc.'s #13-7-50-5 W5 flowed at an average rate of 610 barrels 36-degree API oil per day after a 68-hour swab period. After the first swab, the completion flowed 417 barrels of 38-degree API oil with 110,000 cubic feet of gas per day and no formation water.

In March, PetroGlobe Inc. put its first horizontal Cardium oil well at Pembina on production and spudded a second horizontal well in the area. The unnamed producer was drilled with an 1,186-meter openhole horizontal leg and was completed with an 11-stage fracture stimulation. Cumulative flow during the first 43 hours was 3,548 barrels of load oil. The well was then shut in, and later flowed a combination of formation oil and remaining load oil at an average gross rate of 165 barrels per day during a six-day test period. The company’s second Cardium horizontal well, if successful, is expected to be on production in the first half of 2010.

Meanwhile, a Kallisto Energy Corp.Cardium horizontal oil well, #13-33-047-3 W5M, was completed and tied in to production. Additional completion and production will not be released by the company until stable rates have been achieved, but results to date seem encouraging. In December 2009, a Sifton Energy Inc.-operated Pembina Cardium horizontal well, #15-21-50-12 W5M, was fracture treated and tested flowing 1,250 barrels of oil per day after a three-day test period.

Several companies have made recent land acquisitions or plans for Cardium development and spending. Enterra Energy Trust has accumulated almost 4,000 net acres. Daylight Resources Trust plans to spend $300 million on its 2010 capital program to drill approximately 60 to 80 locations, of which 50% will be directed to its Cardium light oil program. Zapata Energy has 10.5 net sections (2,719 hectares) of Cardium rights in east Pembina. Zapata has a total of 58 gross (47 net) Cardium sections in the greater Cardium fairway.

In addition, the A&D market has been hot for Cardium players: PetroBakken acquired Berens Energy, Result Energy and Rondo Petroleum; Daylight Resources Trust acquired Highpine Energy and merged with West Energy and PennWest (with a large land base); Paramount Resources acquired Profound Energy and Crescent Point Energy acquired TriAxon Resources.

Comments