Petrobank Proceeds with Pilot Plant Testing for Whitesands Oil Sands Project

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Petrobank Energy and Resources, Limited (OTC:PBEGF)(Calgary, Canada) is proceeding with the construction of a pilot plant at its 84 percent-owned Whitesands oil sands project located just south of Conklin, Alberta. When complete in the first quarter of 2006, the $30 million pilot plant will produce approximately 3,200 barrels per day of bitumen utilizing a new in-situ technology called THAI (Toe-to-Heal-Air-Injection). THAI technology integrates existing proven technologies that pairs up a single horizontal production well with a single vertical air injection well. Once in place, an underground combustion front is created where a portion of the resource is burned to generate high temperature heat, which in turn reduces the viscosity of the oil from the toe to the heal of the horizontal production well.

If proven, the new technology offers several advantages over existing in-situ technologies such as SAGD. The recovery rate could be as high as 70 to 80 percent of the original oil in place compared to the 50 percent in some SAGD projects. Lower production and capital costs will be incurred due to a single horizontal well and minimal water treating and handling facilities. THAI also requires minimal usage of natural gas and fresh water and the produced product could go from an API rating of 12 in the ground to an API rating of 18 to 22 when brought to the surface. This will reduce diluent costs during shipping. If the pilot plant proves a success, then all of these theorized advantages can be assessed during the second and third quarters of 2006 and a production decision can be reached regarding the construction of a commercial scale project on the same lease.

If a decision is made to proceed to a commercial scale production facility at Whitesands, the capital cost for the first 40,000 to 50,000 barrels per day of production could range above $300 million and will involve multiple phases of construction. The ultimate production from the Whitesands project will depend on the success of the technology and how much of the 1.2 to 1.3 billion barrels of reserves located on the lease can be extracted using that technology. All things considered, construction on the commercial scale project could begin as early as late 2007, with completion some time in 2010.

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