Evolution of the Spearfish Play, North

Evolution of the Spearfish Play,
North-Central Williston Basin….
“Bakken Strong but the Spearfish holds its own…”
Mark Birchard,
VP, Geosciences
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Why Corinthian Exploration (USA) Corp. is here today………
Recent peak at
>30,000
Bopd
…Corinthian has created a high netback, oil-focused company with significant upside
potential through the successful development of part of the large, unconventional
Spearfish oil resource .
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Presentation Overview
“Evolution of the Spearfish play in the north-central portion of the
Williston Basin”……
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Basic technical information,
Chronological development,
Key exploitation characteristics (using Corinthian Exploration,
Bottineau County experience as an analogue):
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Geological and geophysical ,
Drilling,
Completions,
Regulatory and local support,
Economics
Where do we go from here ?
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Continued trend delineation and exploitation,
Secondary recovery,
Continue to improve !!
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Spearfish Trend Location
More than 1600 horizontal wells have been
drilled in the Spearfish trend in the last 5
years!
Pierson
Canada
Waskada-Goodlands
USA
North Souris
Newburg
“Birdtail-Waskada Zone” deep
seated structural influence/salt
dissolution area
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Stratigraphy
Source: LeFever, 2011
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Spearfish Reservoirs
Newburg
Goodlands/North Souris
Conventional light oil play
Unconventional tight, light oil play
Spearfish
100’
Waskada sands
200’
Basal sands
Paleozoic
Waskada
Pierson
Goodlands-North Souris
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Reservoir Characteristics
Spearfish Waskada / Lower Sandy
Unconventional Reservoir Characteristics
Manitoba and
North Dakota
Average Depth
3000
ft
Thickness
40-70
ft
Average porosity
14.0
%
Permeability
1.5 - 5.0
Water Saturation, Sw
40-70
API
36-38
OOIP per section
8-15
md
%
MMBbls
Lithology consists of dolomitic and anhydritic
interbedded sands, silts and shales
deposited in an environment of arid, shallow
restricted marine conditions.
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Historical Development – 1950’s / rapid growth
 Regional exploration for Mississippian targets largely
focused in Bottineau County, USA,
 Discovery of first Spearfish oil in 1953 at Westhope,
 Rapid growth through development of Newburg
Spearfish-Madison pool (Spearfish and Mississippian
reservoirs in communication).
Westhope
Newburg
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1960’s – flat production
 Continued exploration and development most
evident with delineation of the Newburg and
Westhope pools,
 Newburg unitized in 1966, waterflood commenced
and production growth continued.
 Several vertical completions in Upper Spearfish
sands at NE Landa and Roth.
NE Landa
Roth
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1970’s – declining production
 Limited exploration and development,
 Maintenance drilling at Newburg.
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1980’s – significant growth in Canada
Waskada
Pierson
Goodlands
N Souris
 Completion of uphole zone at Waskada
triggered rapid development of upper
Spearfish sands,
 Water flood initiated at Waskada,
 Numerous recompletions in Bottineau
County area failed to materialize
anything significant in the tighter part
of the play,
 Step out drilling at Pierson, Goodlands
and North Souris.
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1990’s – flat production
Pierson
Goodlands
 Continued development north of the
border with significant extensions
identified at Pierson and Goodlands,
 Early water flood at Pierson,
 Limited activity in Bottineau County.
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2000’s – unconventional era, renewed growth
 Continued pool delineation with
vertical wells,
 Early horizontal drilling (intermediate
casing, open hole completions, large
fracs),
 Further water floods at Waskada,
Goodlands and Pierson,
 Bottineau County in “cross hairs”.
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The last 5 years
 Explosion of horizontal drilling and
multi-stage fracture completions in
Canada with both short and long
laterals.
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Today
Legacy Coulter waterflood pilot
Corinthian N Souris
waterflood pilot
Newburg estimated
RF 30%
Current Spearfish production and field boundaries
Current and proposed Spearfish water flood projects
 > 1.5 billion barrels of oil-in-place resource has been delineated with close to 100 million barrels
produced to date,
 Delineation and exploration drilling continues with lots of room for continued production growth,
 Relatively small areal extent of large oil resource under waterflood.
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Tight oil HZ waterflood analogue?
• Viewfield Bakken (Saskatchewan)
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First injection 2007
Producer to Injector ratio – 1:1
Average inj. rate 200 – 250 bbl/d
Initial production rate 100 – 200 bbl/d / well
Convert to injection after 12 months
production
WF Benefit
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Oil decline arrested with constant well count
Expected EUR under:
• Primary – 10%
• Secondary Waterflood– 20%
Injection commenced early in production history
Some cases of early breakthrough but not common
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Some of the keys to success……
Corinthian Exploration’s recent experience has demonstrated the following:
• Integrated geological and geophysical models important,
• Earlier drilling challenges have been replaced by efficient, low cost
operations,
• Completion techniques continue to improve,
• Regulatory bodies, local authorities, service providers and local residents
have been extremely cooperative and very supportive of area development,
• Strong initial production rates, reserves and exceptional economics for this
shallow oil play in Bottineau County are achievable.
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Keys to success – strong geological model
Geological model described by Barchyn in early
1980’s and recommendations for high grading
areas of Spearfish oil saturation continue to
hold.
Goodlands
North Souris
CEC operated Spearfish Hz
Some factors include:
1. Proximity to subcropping porous
Mississippian cycles,
2. Effect of Paleozoic topography on
Spearfish deposition,
3. A thin, or absent, anhydrite cap at the top
of the Paleozoic that allows Mississippian
oil to move upward into the Spearfish
reservoir,
4. Proximity to structural features associated
with Devonian salt solution and collapse.
Modified from Barchyn, 1982
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Keys to success – good seismic support
Waskada
Top Spearfish
3D
Top Paleozoic
Newburg
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105 sq. mi 3D coverage
•
Excellent resolution of
salt-related structures
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Able to better identify subcrop edges,
paleotopography and isopach variations
thereby more accurately steering
laterals into higher permeability facies.
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Keys to success – drilling / completions
Spearfish
Paleozoic
Charles anhydrites
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Older vertical Mississippian producers had dual zone completions and larger tonnage fracs
which created communication with underlying Mississippian aquifers especially where
capping anhydrites are thin,
Horizontal inter-well spacing > 400’, frac stages 100-120’ apart and frac sizes ~5-10T
(10,000-20,000lbs per stage) best to avoid interference effects,
Corinthian 3D seismic able to identify areas with increased risk of fracture communication
with underlying wet Mississippian and therefore plan lateral placement and completion
programs accordingly.
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Keys to success – drilling/completions
VERTICAL
Drilling / Completion
• Cemented monobore well design
• Fresh water mud system
• 2400ft lateral length with 15-20 stage coil conveyed fracks.
• Abrasive jet or inline burst port perforations
• Cross linked water fracks with, ~8800lbs 20/40 sand pumped
at 4-5bbl/min per stage
• 2 7/8” production tubing
• Beam pump or hydraulic pump for artificial lift
Production casing: 5 ½’ casing cemented to TD
Spearfish Hz TD
-1375’ ss (~3000’ TVD & 6000’ MD)
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Keys to success – drilling/completions
$2,000,000
25
20
$1,500,000
15
Capex
$1,000,000
10
Drilling Days
$1,250,000
5
$0
0
Q4 2011
Q1 2014
Since Q4 2011 Corinthian has been able to realize:
• a reduction in average drilling days per well from 12 to 7,
• a 50% decrease in drilling costs from close to $1.2MM to $600k on pad drills,
• a 30% decrease in completion costs from $550k to $400k.
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Keys to success – license to operate
Regulatory:
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NDIC spacing approvals in place for up to 12 wells / 320 acres,
Approval received for 18 month horizontal waterflood injection pilot, to commence Q3, 2014,
Low GORs – and minimizing flaring through gas powered pumpjacks, generating power onsite, treater
fuel.
Our neighbours:
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Strong relationships with local authorities, land and mineral owners,
Involvement in local charitable donations and event support,
Open house held to educate and inform local residents.
Service Providers:
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Work with local contractors where possible,
Value long term relationships to minimize turnover and gain efficiencies.
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Spearfish well performance and type curve
Horizontal Type Curve
Netbacks
Type Curve Parameters and Economics
DCE&T
$1.1MM
NPV10 BT
IP30
140 bbl/d
Rate of Return
IP90
120 bbl/d
Profit : Investment Ratio
Reserves
70 mbbl
Payout
$1.4MM
>100%
1.3x
8.5 months
$95/bbl WTI
82% Net Revenue Interest
Reduced oil extraction tax credit in place (reduction of 4.5% on 1 st 18 months or 75 mbbls)
* based on IP 365
Capital Efficiency*
$15,800/bbl/d
Cost of Reserves
$15.71/bbl
Netback
$55.36/bbl
Recycle Ratio
B
3.5x
Comparable short lateral horizontals in
Canada have up to 50% higher NPV thru
royalty incentives.
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Where do we go from here….
1. Continue to infill drill, extend limits of known fields and explore for new Spearfish and Mississippian
pools,
2. Near term drill and case capital initiatives:
• 4.5” cased monobore vs 5.5” with 2 7/8” slim hole tubing,
• Proposing a pilot project for land spraying of fresh water mud and drill cuttings vs. disposal in
drilling pits on lease,
• Use of refined water base frack fluid systems for completions with potentially less damaging
chemicals and accelerated load fluid recovery.
3. Evaluate horizontal Spearfish waterflood pilot for development of full field secondary recovery,
4. Work towards centralizing field facilities,
5. Always room to improve approvals processes for drilling, spacing, etc
6. Although Spearfish economics are strong in North Dakota, Canadian royalty programs provide greater
incentives for drilling Spearfish wells north of the border. So, we will continue to encourage the NDIC to
consider additional royalty and drilling incentives that will support the development of more marginally
economic areas - staying within the context of “preventing waste, maximizing recovery and protecting
correlative rights”,
7. Stay committed to conducting all of our activities in a manner that will protect the health and safety of
our employees, contractors, the public and the environment.
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Contact info
Corinthian Exploration Corp.
Suite 230, 323 - 10th Avenue SW
Calgary, AB
T2R 0A5
Colin W. G. Davies, P.Eng.
Chad Kalmakoff, CA
President & CEO
VP Finance & CFO
Direct
Cell
Email
Direct
Cell
Email
(403) 930-4202
(403) 651-2435
cdavies@corinthianex.ca
(403) 930-4215
(403) 614-8142
ckalmakoff@corinthianex.ca
www.corinthianex.ca
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