Sunshine Oilsands Ltd. has nearly 1,600 sections of land in the Athabasca oil sands and a strategic plan to deliver value. Akin to its name, Sunshine Oilsands Ltd. is an exploration and development company with a bright future ahead of it. Established in February 2007, the Calgary, Alberta-based company already has acquired 1,563.5 total sections of land more than one million acres in the Athabasca oil sands region. It has raised just under $100 million in equity combined with a credit facility of $35 million with four major banks. The company currently is gearing up for a very active winter program, key executives say.
Sunshine Oilsands was founded by Co-Chairmen Mike Hibberd and Songning Shen. "The two of them had seen the potential of the Athabasca oil sands and got together to start a company of their own," Co-CEO John Kowal explains. "Since that time, we have accumulated one of the largest land positions in the Athabasca oil sands region."
He says most of the prime sections in the area are now spoken for. However, with nearly 1,600 sections of land, "it's unrealistic to think we'll develop all 1,600," he notes. "As a result, we'll use some of the land as currency in order to capture the value chain with other companies, because any new players or existing players in the region who want to expand their land position won't be able to acquire it they'll have to go through us or another oil sands company."
In addition to its land position, the company has accumulated one of the most experienced management teams in the industry, he adds. "We have a management team that has extensive experience and a proven track record of executing and adding value."
He adds that with this experience, the company has access to the perfected 10,000-barrel-a-day template in oil sands steam-assisted gravity drainage (SAGD) development. Sunshine was able to complete a 58-core-hole program last winter and receive a petroleum reserve report from GLJ Petroleum Consultants Ltd., an impressive feat given the fact that the company had only been in existence for a few months. This winter, it plans to drill 181 wells and shoot 600 kilometers for 2-D seismic, and just over 10 square kilometers of 3-D seismic.
In for a Busy Winter
With its approximately 1,600 sections of land, Co-CEO and COO Doug Brown says Sunshine Oilsands has a very target-rich environment to work with. "That allows us to create a portfolio of execution opportunities that are very complementary to each other and insulate us from the vagaries of the market," he explains.
Sunshine Oilsands focus areas include the West Ells, Thickwood, Harper, Portage (Pelican Lake) and Muskwa sections of the Athabasca oil sands. "The current GLJ report provides us with confirmation that our SAGD opportunities are commercial and we are proceeding to outline a plan to produce up to 130,000 barrels a day in 50 sections of the West Ells and Thickwood areas,ˆBrown says.
"These 50 sections would be developed in stages over the next 10 to 15 years with the application of capital toward proven SAGD technology. And we have a other emerging bitumen opportunities that we have not even articulated yet."
Its Muskwa play presents some conventional heavy oil production opportunities on the west side of the Athabasca near Pelican Lake.
"We really only have one remaining risk to mitigate this winter; of the principal exploration risks, trap, seal source and reservoir, we've only got reservoir to deal with," Brown says. "The mapping and core work shows reservoir-quality rock. Our objective this winter is to go in and characterize the reservoir fluid and capture adequate data to support an aggressive development. We will be able to develop this property with horizontal wells and create a conventional cold flow production profile that's significant using primary recovery technology. That area would also lend itself to subsequent applications of technology and capital such as water flood, polymers, etc."
The company also has massive carbonate potential, including the Harper area of its portfolio. "We have identified three significant plays up there with only four core holes last winter and plan to execute up to 58 core holes this winter," Brown says. "On top of that, we intend to execute three operations focused on mobilizing the reservoir fluid: cold swabbing and DST's to bring oil to surface, the use of solvents to break down the bitumen viscosities and bring that fluid mix to the surface, and a mini pilot that will inject steam into the reservoir and produce the hot emulsion. There are quite a few elements on the plate for Harper this winter that reflect significant activity and which will progress our resource assessment process."
World Player
Sunshine Oilsands land position and experienced management has enabled the company to grow and it will continue to do so, based on the world's growing dependence on oil, Vice President of Corporate Operations David Sealock says.
"The world is using 1,000 barrels of oil a second and the United States is using 25 percent of that," he remarks. "The forecast for 2025 is that it will increase to 1,500 barrels per second and Athabasca is going to be a key supplier going forward, especially for North America. It will meet these responsibilities of supply and demand. This is a lifelong cycle that can capture oil production from anywhere from 20 to 30 years."
Add this page to your favorite Social Bookmarking websites
