The Audet Lands, (leases 418 and 271) which cover 23,040 acres of undeveloped lands in the Athabasca Oil Sands Area, are owned 100% by SilverWillow and are located 110 kilometres northeast of Fort McMurray, and are approximately 30 kilometres north and north-east of Cenovus’ proposed Telephone Lake project and Suncor’s Firebag project, respectively.
Building on the success of the SilverWillow’s predecessor company’s 2011 exploration program uncovering high quality oil sands, a second winter field program was undertaken during the first quarter of 2012. This program comprised further resource delineation drilling, additional caprock evaluation, including mini-frac tests, hydrogeological evaluation, and a 2D seismic acquisition program. This field program was designed to address technical considerations to determine the development potential of the leases. All components of the program were successfully completed.
During 2012, SilverWillow also engaged geo-mechanical engineering and reservoir engineering consultants to assist the Corporation in the assessment of the Audet Lands for the production of bitumen by SAGD methods. The results of the technical work by the consultants indicate that the reservoir and caprock properties will allow production by SAGD methods at appropriate pressures without compromising the integrity of the caprock.
During the third quarter of 2012 SilverWillow initiated planning of a supplementary winter field program on its Audet Lands. The program scope included the drilling of approximately nine core holes for caprock characterization, exploration and delineation purposes. Construction of winter access to the Audet Lands site commenced in mid- December 2012 with drilling of the first core hole in early February 2013.
The above noted drilling program was completed by the end of March 2013. SilverWillow acquired additional caprock data during the 2013 exploration program. This data was used for a comprehensive geomechanical modelling program to ensure caprock integrity during SAGD operations. The following map provides further details of the results from the Audet resource drilling programs.
SilverWillow formally announced and disclosed its intentions to develop the Audet SAGD Project to Federal and Provincial Regulatory agencies and regional and local stakeholders in the first half of 2013. The regulatory process was formally initiated in February of 2013 with the determination of the application requirements by Alberta Environment and Sustainable Resource Development and the Canadian Environmental Assessment Agency. A project disclosure brochure was provided to local and regional stakeholders to initiate the consultation process for the project. Public open houses were also held in Fort Chipewyan and Fort McMurray.
Environmental baseline studies were initiated on the project site in the spring and summer to provide the information required to conduct an environmental assessment of the project. Preliminary engineering was also conducted in parallel. The facilities that were designed included:
- a central processing facility which will house the steam generation, oil treatment, produced gas treatment, water treatment and recycle processes
- four well pads and 23 associated well pairs
- access roads
- aboveground pipelines
- source water well and underground water line
- other infrastructure to support the Project
All of the above activities supported preparation of a regulatory application for the first phase of the Audet SAGD Project. On December 19, 2013, SilverWillow submitted an integrated application with the AER and Alberta Environment and Sustainable Resource Development for approval of the Corporation’s proposed 12,000 barrel per day SAGD project on its Audet Lands.
Subsequently in January 2014, SilverWillow was informed by the AER that it was formally deferring any decisions with respect to shallow SAGD project applications, including the Audet SAGD Project application, until a technical review of the factors that affect reservoir containment of shallow SAGD projects is completed and formal regulatory requirements are established, which is expected in 2014. SilverWillow expects that the effect of this deferral on its Audet project application is to delay the potential approval and project construction. Assuming a one year delay to typical timelines for regulatory approval and facilities construction, commercial production would commence in 2018.