By increasing its enhanced oil recovery (EOR) in southeast Saskatchewan, Vermilion Energy Inc.hopes to boost oil production.
Dion Hatcher, Canadian business unit managing director, said the company has been focusing on unlocking the potential in the Oungre and Lougheed units, part of its recently-acquired Spartan Energy Corp. acquisition in southeast Saskatchewan, over the last five months.
There is the potential to add 60 million barrels (bbls) of oil net to Vermilion.
“That was something at the time of the acquisition, we did not assign value to,” said Hatcher during the company’s annual investor day on Nov. 28. “But to put it into perspective at the time of the acquisition, we released about 113 million bbls of reserves with Spartan assets. Pretty material upside.”
Vermilion started with the Oungre unit, which was originally developed with vertical wells. Hatcher said there are some really good analogs with plays that just offset Vermilion. The company expects to improve the recovery factor to 35 per cent, up from 17 per cent. That’s an increase of 15 million bbls of oil.
“We are currently working phase one where we have optimized the water injection and we are looking to drill those horizontal wells next,” said Hatcher. “We see potential outside the unit in the southeast. We have drilled the horizontal wells, and we would have horizontal producer injector pairs and we will convert some of those well injectors in 2019.”
Looking to yield even bigger returns, the company is focusing on the Lougheed pool, which is directly offset by the Midale-Weyburn unit. The company has a seven per cent working interest in Weyburn, which allows the company to capitalize on the technology and expertise extracted out of the development.
“That Weyburn unit is the largest CO2 flood in Canada,” said Hatcher. “If you look at the Vermilion unit offsetting that unit, we estimate we have 280 million barrels of oil-in-place.”
Hatcher said the company hopes to improve the recovery factor to 35 per cent from 12 per cent, bringing the production to a potential of 47 million bbls of oil. The company currently has one demonstration site in the area. The horizontal wells will be converted to injection in early 2019. Two more areas have been identified for waterflood demonstration areas in the second half of 2019.
“Although it is less certain, again we are offsetting the CO2 flood, if we do look at the CO2 flood, and think through the recovery factors that you could get in that kind of development, you could get upwards of 45 per cent [of recovery]. That would add another 33 million barrels of potential.”
The company is excited about the continued success of its Spartan assets, which continues to exceed expectations, said Hatcher.
At the time of the acquisition, the company estimated there were about 1,000 locations. Based on the company’s mid-year assessment there are 1,500 locations.
Vermilion approved a $319-million exploration and production budget, a first full year with Spartan assets for 2019. It is allocating about $17 million of capital spending on those assets because there are so many opportunities, said Hatcher.
In 2019, the company will focus its drilling program on Saskatchewan light oil with plans to drill or participate in 129.0 net light oil wells. The program is comprised of 32.3 net fracked Midale and 64.3 open hole Frobisher wells. In Alberta, a total of 16.7 development wells will be drilled in Lower Mannville/Ellerslie and one net well in the Upper Mannville development. Other drilling projects include 485 net locations in the Viking, Bakken, Torquay, Ratcliffe and Open Hole Midale formations.
In the third quarter of 2018, production averaged 57,397 barrels of oil equivalent per day in Alberta and Saskatchewan.
“We have over 2,300 net locations, which will provide scalable, flexible growth but also profitable growth,” said Hatcher. “We do have the opportunity with commodity prices in Canada … that we can adjust our programs in Canada. We really like positioning and we really like the quality of the assets.”