Calgary-based Strata Oil & Gas Inc. (OTC BB: SOIGF), as a result of the recent findings in its resource evaluation of the Cadotte West property released in May 2013, is investigating the potential for primary heavy oil production from its 100% owned Peace River lease block.
Cold heavy oil production with sand or CHOPS is a technique for extracting heavy crude oil (similar to that found in Strata's Cadotte oil project) where sand is allowed into the wellbore with the oil, and thereby effectively encouraged and managed, in order to enhance well productivity and even boost production for older wells. This method is ideal for 5-20m zones, which would be consistent with Strata's Cadotte West property, where the net thickness of the Bluesky/Gething ore zone appears to range from about 10 meters to 20 meters. This is a non-thermal means of oil extraction that is commonly used in thousands of oil wells in Canada (where the technology was pioneered), Venezuela, and China. Due to its low operating costs and significant efficiencies, it has been shown to enhance the economics of select heavy oil projects. Strata's technical team will be further researching the potential for production by this means from the Bluesky/Gething Formation at Cadotte West.
Major oil producers in the Peace River region, such as Shell, Husky, and Baytex, are currently producing oil by cold production methods on their properties. Shell's Cliffdale battery facility uses cold production, and approximately 80 percent of Husky's heavy oil is extracted using primary cold production or CHOPS. Baytex also predominantly uses cold primary production in their heavy oil projects in the Cold Lake and Peace River regions. In addition, Baytex is further developing its thermal recovery technique CSS (Cyclic Steam Stimulation) to extract bitumen from the Bluesky formation found within their Peace River project. This is a recovery method wherein steam and condensed water heat the oil in the reservoir, allowing the heated bitumen to flow into the well bore and be pumped to the surface. The use of this process could increase recovery of oil in place to 30% from 5-7% predicted for cold-flow production, dramatically enhancing project economics.
Strata Oil & Gas is a U.S.-publicly traded company focused on the exploration and development of heavy oil from carbonates. The company currently holds a 100% interest in 52,480 acres of oil sands leases in the Peace River region of Alberta's Carbonate Triangle. Strata's Cadotte project has been independently evaluated, with a resource base of 3.44 billion barrels in-place. Strata's existing world-class Cadotte Central project of 56,000 barrels-per-day over 20 years is valued at NPV $1.3 billion.