Drilling & Completions | Drilling Program

Painted Pony Completes First Parallel Pair Montney Well

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   |    Monday,June 29,2015

Painted Pony Petroleum Ltd. has announced that it has signed a definitive agreement to provide the Corporation with long-term natural gas transportation to serve its growing British Columbia production base.

This contract represents a critical step in Painted Pony's plan to develop and deliver 240 million cubic feet equivalent per day (MMcfe/d) of natural gas and gas liquids volumes by the end of 2016.

Highlights of the new transportation agreement include:

A contract with Spectra Energy Transmission for 220 MMcf/d of firm capacity on the T-North pipeline, expected to commence on November 1, 2016. The contract carries a term of 25 years on 200 MMcf/d and a term of 18 years, 8 months on 20 MMcf/d.

The expected commencement of the Spectra Energy contracted service has been timed to coincide with the start-up of the planned AltaGas Townsend area gas processing plant, which is scheduled to be operational by mid-year 2016. Following commissioning and start-up of this new facility, Painted Pony's sales volumes are forecast to reach a total of 240 MMcfe/d by the end of 2016, which includes a minimum 150 MMcf/d of incremental volumes from the AltaGas Townsend Facility.

The Spectra Energy contract provides Painted Pony with the option to deliver up to 220 MMcf/d to one of two receipt points - either Station '2' or Sunset Creek. Deliveries at Station '2' provide the ability to supply proposed LNG export facilities and traditional Pacific northwest markets in Canada and the United States.

Deliveries at Sunset Creek provide a potential future connection into the Alberta natural gas pipeline network, servicing the AECO hub and eastern markets.
The execution of this firm transportation agreement provides Painted Pony with certainty around pipeline egress for growing production in addition to strengthening the Corporation's marketing position and underpinning the opportunity to pursue a wide range of gas sales opportunities with customers at multiple sales points. The Corporation remains confident that a strong demand for Liquefied Natural Gas (LNG) exports will develop for British Columbia gas producers and this contract provides a mechanism for transportation into LNG export schemes, including the proposed AltaGas-Idemitsu Douglas Channel project at Kitimat, expected to come on-stream in 2018.

Mr. Patrick Ward, President and CEO said: "This contract guarantees transportation take-away capacity for the Corporation's planned volume growth, while providing necessary marketing flexibility and the opportunity to maximize value."

Operations Update

Painted Pony recently completed two (2.0 net) horizontal lower Montney wells, representing the first application of the Corporation's parallel-pair completion technology in the Townsend area. On initial clean-up and flow-back these wells tested at an average combined rate of 8.3 MMcf/d of raw gas plus liquids and 1,914 psi average flowing casing pressure over approximately 3.4 days (83 hours).

Both wells were continuing to clean up at the end of the flow test period; during the last six hours of testing the combined average flow rate was 18.4 MMcf/d of raw gas plus liquids at an average flowing casing pressure of 2,083 psi. The associated liquids production rates for these wells, once processed at the planned AltaGas Townsend Facility, are anticipated to be in line with prior Townsend area liquids production rates, averaging approximately 60 bbls/MMcf of propane, butane and condensate (C3+). Painted Pony is very pleased with these preliminary flowback rates, as they appear to validate the application of the parallel-pair technology at Townsend. The wells have subsequently been shut-in as they reached the end of the flare volume permit. The wells will resume flow testing in-line during the third quarter of 2015, following the installation of wellhead equipment.

Painted Pony has commenced its pre-drill program for the new AltaGas Townsend gas processing facility. To date, four (4.0 net) wells have completed drilling operations. Over the next 14 months, the Corporation expects to drill and complete an additional 18 (18.0 net) wells under its Townsend pre-drill program.