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North East British Columbia
At year end 2006, the Trust produced 7.9 mmcf/day of sweet, dry gas at Desan in the Greater Sierra Area, 120 kilometers northeast of Fort Nelson, British Columbia. Production is derived from the Jean Marie formation at a depth of approximately 1,300 meters (4,250 ft.), from horizontal wells which are drilled using underbalanced drilling fluid technologies. These wells provide very good initial production followed by a period of slow, predictable decline ideally suited to a long term stable enterprise.
The Jean Marie carbonate/shale gas play has been and is being exploited by various competitors including some of the largest oil and gas companies in Canada. Success requires a geophysical and geological understanding of the play, coupled with effective program execution. While it is extensive and broad in nature, finding the productive portions of the Jean Marie reservoir starts with skilled geophysical interpretation. Horizontal wells are then located to access prospective reservoir rock which contains sufficient permeability to effectively drain the hydrocarbons.
The drilling season in North East B.C. is short as most areas are accessible only during frozen winter conditions. Acquiring services and planning logistics begins in early summer in careful preparation for the intense level of activity in the months to come. An added level of complexity to the drilling operation is the need to keep fluids from invading the reservoir during the drilling process. To accomplish this, underbalanced techniques are employed which require additional services and personnel. The Trust employs a team fully capable of bringing this opportunity to fruition.
In the process of testing the Jean Marie play, the Trust drilled one well and completed a 3D seismic program on our offsetting acreage. We are planning to drill two additional wells during the summer months of 2007 using the new seismic survey to position these holes for optimum results. A significantly larger program is planned for the winter drilling season of 2007/2008. This stepped approach to development of the area is typical of the systematic methodology our team will use to successfully manage risk and develop long life assets for the Trust.