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| 2001 Annual Report > Review of Operations > Production and Operations |
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Enerplus drilled 350 net wells in 2001 with a 99% success rate
PRODUCTION AND OPERATIONS
Enerplus owns and operates the largest and most
diverse set of crude oil and natural gas assets of any
conventional oil and gas income fund in Canada.
These are generally mature assets with predictable
production profiles and have above-average reserve
life indices (RLI). The properties are located exclusively
in the Western Canadian Sedimentary Basin where
Enerplus has been active in the oil and gas upstream
sector for over 15 years.
The information contained in the following pages
presents the Fund’s 2001 operational activities on a
combined basis as if Enerplus and EnerMark had been
combined for the entire year. During 2001, Enerplus
produced average daily production volumes of
62,615 BOE/day. This compares favourably with the
combined average daily rate of 46,449 BOE/day for
2000 and represents a 35% increase year over year.
These volumes are comprised of liquids (oil and natural gas liquids) production of 28,660 bbls/day and natural gas
production of 203.7 MMcf/day. Enerplus successfully maintained production volumes throughout the year as a
result of an aggressive development program. The average production rate achieved was slightly below a targeted
production of 64,000 BOE/day primarily as a result of project delays experienced throughout 2001 due to demands
on suppliers and field services across the industry. The timing of property divestments early in the year also impacted
the Fund’s annual production volumes.
The Fund operates approximately 65% of its daily production volumes and owns an interest in over 10,000 wells
producing from over 250 accumulations and fields. On a percentage basis, daily production volumes were
approximately 46% liquids and
54% gas production during 2001. The property and product diversity within the
Fund minimizes the risks associated with any single property, area, or commodity. The table on page ten highlights
the Fund’s major fields organized by regions which represent 55% of the total combined production volumes. The
remaining production volumes are from a variety of other operated and non-operated properties.
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| Major Properties Combined 2001 Average Daily Production |
Crude Oil & NGLs (bbls/day) |
Natural Gas (Mcf/day) |
Total (BOE/day) (6:1) |
Established RLI (years) |
|
1. North
West
Region |
Deep Basin |
519 |
9,501 |
2,103 |
9.1 |
| Progress |
891 |
6,909 |
2,043 |
5.5 |
| Valhalla |
470 |
6,333 |
1,526 |
7.4 |
| |
Cranberry |
83 |
3,560 |
676 |
15.2 |
|
2. Central
Region |
Joarcam |
2,170 |
7,707 |
3,455 |
11.1 |
Pembina 5 Way /
South Buck Lake |
2,350 |
1,506 |
2,601 |
29.0 |
| Pine Creek |
274 |
4,895 |
1,090 |
19.4 |
| |
Kaybob |
419 |
3,884 |
1,066 |
12.4 |
| |
Willesden Green |
121 |
2,871 |
600 |
7.4 |
|
3. East
Central
Region |
Giltedge |
1,546 |
597 |
1,646 |
18.6 |
| Auburndale |
752 |
800 |
885 |
4.5 |
| Hayter |
774 |
2 |
774 |
6.0 |
| |
Kessler |
665 |
117 |
685 |
6.7 |
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Gleneath |
568 |
162 |
595 |
22.8 |
| |
Cadogan |
531 |
- |
531 |
6.5 |
| |
David |
493 |
93 |
509 |
4.4 |
|
4. South
Central
Region |
Hanna / Garden Plains |
1 |
10,898 |
1,817 |
31.3 |
| Benjamin |
11 |
9,988 |
1,676 |
13.7 |
| Sylvan Lake |
712 |
3,231 |
1,251 |
9.8 |
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Bashaw |
66 |
6,708 |
1,184 |
3.8 |
| |
Ferrier |
241 |
3,710 |
859 |
9.6 |
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Harmattan |
250 |
1,780 |
547 |
4.9 |
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5. South
East
Region |
Medicine Hat Region |
6 |
27,026 |
4,510 |
16.7 |
| Medicine Hat Glauc "C" |
704 |
1,025 |
875 |
17.5 |
| Jenner |
400 |
1,465 |
644 |
8.0 |
|
| Other |
|
13,643 |
88,959 |
28,467 |
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| Total |
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28,660 |
203,727 |
62,615 |
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NORTH WEST REGION
Located along the northern border of British Columbia and Alberta, the Northern Region offers exposure to both
light crude oil and liquids rich natural gas through a variety of Triassic to Cretaceous age reservoirs. During 2001,
development activities focused on the natural gas reservoirs and included development drilling and facility upgrades
totalling $15 million. With over 21 million barrels of oil equivalent (MMBOE) of established reserves attributable to
the major properties, further development potential will be pursued in the Deep Basin, Valhalla and Progress
natural gas properties as well as the light oil pools at Valhalla and Progress during 2002.
CENTRAL REGION
The area surrounding the city of Edmonton provides a variety of production bases, predominantly weighted to
light quality sweet oil and liquids rich natural gas. The Fund’s largest producing light oil properties are included
in this region and were a significant part of the 2001 development program. Approximately $36 million was spent
on the drilling of development wells and facilities during 2001, including additional working interests acquired in
the areas of Joarcam, Kaybob and Pembina Five Way. 2002 capital expenditures of approximately $30 million will
be focused on increasing light oil production from the major properties where there are over 55 MMBOE of
established reserves.
EAST CENTRAL REGION
Located in the heavy oil belt along the Alberta/Saskatchewan border, the East Central Region reservoirs are primarily
a compilation of light, medium and heavy oils with approximately 26 MMBOE of established reserves attributed to
the major properties. The 2001 capital program in this region was focused on facility improvements in the heavy oil
properties and development drilling in the light oil properties. Additional working interests were acquired at
Gleneath, Kessler and other smaller properties where operational synergies and development potential were apparent
to the Fund. Capital expenditures in the amount of $15 million are planned in this region for 2002 and will be
directed primarily to development drilling.
ENERPLUS RESOURCES FUND SOUTH CENTRAL REGION
Located just north of Calgary, ownership in this region has increased significantly as a result of acquisitions completed
in 2000. Subsequent development activities have not only increased production volumes from the Second White
Specks and Deep Foothills natural gas reservoirs, but has resulted in current established reserves of over
52 MMBOE
attributable to the major properties. Approximately $34 million of capital was invested in this region in 2001,
primarily on development drilling in the
Hanna/Garden Plains and Benjamin properties. With further low risk
development opportunities available, capital investment in the amount of $18 million is planned for 2002.
SOUTH EAST REGION
The south east region is primarily comprised of shallow natural gas production from the Cretaceous formations but
also includes heavy oil from the Glauconite reservoir. The region has been actively developed in 2001 with over 200
natural gas wells drilled in various properties. Production from the region has increased dramatically as a result of
this drilling and will continue to grow as a significant number of development opportunities remain in inventory.
Capital spending in the amount of $33 million is planned in this region during 2002, targeted primarily on shallow
gas development drilling and the optimization of production at the Medicine Hat Glauconite "C" property.
DEVELOPMENT
In 2001, Enerplus focused on developing its inventory of projects stemming from the active acquisitions program
completed in 2000. On a combined basis, Enerplus spent approximately $148 million on capital projects and
workovers to bring on
10,000 BOE/day in incremental production at an average cost of $14,800 per daily barrel.
This record capital expenditure also created significant value for the Fund by converting proven undeveloped
reserves into proven developed producing reserves and also resulted in an increase of approximately 14 MMBOE in
new reserves or positive reserve revisions. These additions and revisions offset approximately 61% of the Fund’s
combined daily production for the year and limited reserve declines to under 3%.
2001 marked the Fund’s most active drilling year in its history. Enerplus participated in the successful drilling of
598 gross wells (349.6 net), 8 major waterflood project installations or expansions, 16 compression installation
projects to increase natural gas production, numerous facility enhancement and expansion projects and numerous
capital workover programs.
Expectations for 2002 are to continue the development programs started in 2001 with a Board approved capital
budget of $130 million. Enerplus will monitor commodity prices and project results throughout the year and will
adjust its capital spending accordingly.
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| 2001 Combined Drilling Activity |
Crude Oil |
Natural Gas |
Dry & Abandoned |
Total |
| Gross |
Net |
Gross |
Net |
Gross |
Net |
Gross |
Net |
|
| Alberta |
75 |
34.7 |
422 |
285.0 |
9 |
2.3 |
506 |
322.0 |
| Saskatchewan |
69 |
17.6 |
10 |
6.5 |
3 |
1.7 |
82 |
25.8 |
| British Columbia |
- |
- |
9 |
1.3 |
1 |
0.5 |
10 |
1.8 |
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| Total |
144 |
52.3 |
441 |
292.8 |
13 |
4.5 |
598 |
349.6 |
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| Success Rate: 99% |
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HANNA/GARDEN PLAINS, ALBERTA,
OPERATED, WI 80%
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Interests in the Hanna/Garden Plains property were
acquired in early 2000. The property has become one
of our most active areas within the Fund realizing
established reserve additions of 61 Bcf net and
production growth of 6.4 MMcf/day net during
the year.
The property is comprised of over 250 sections of land,
of which approximately 40 sections were acquired in
2001 through Crown Land Sales and various swap
arrangements with partners. Upon becoming operator
of the property in 2000, the Fund commenced
aggressive development of the Second White Specks
natural gas zone with a program that continued
throughout 2001.
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Enerplus drilled and tied-in 94 wells in 2001 and
tied-in 11 additional wells from 2000 which were
awaiting expansion of the gathering system before
being placed on production. As a result of our
successful development efforts, current net
production from this low decline, sweet natural gas
property is 13.4 MMcf/day making it the Fund’s second
largest natural gas property. Hanna/Garden Plains has
a 31 year reserve life index. Continued development
is planned during 2002 with up to 75 additional wells
scheduled for drilling in the latter half of 2002. These
activities are expected to further increase production
from this pool.
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PEMBINA FIVE WAY, ALBERTA, OPERATED, WI 100%
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Production optimization of the Pembina Five Way
property continued throughout 2001 resulting in
approximately
700 bbls/day of incremental
production and 2.0 MMbbls of established reserve
additions. An 18 well infill drilling program was
completed in the second and third quarters of 2001
to increase light oil production from the Cardium
formation. The waterflood facilities were expanded
in the fourth quarter to optimize production from
both the newly drilled wells and existing wells.
Production potential from the area was also increased
by refracture stimulating the Cardium formation in
11 wells. Production volumes are currently 2,200 BOE/
day net to the Fund. Pembina Five Way has a 29 year
reserve life index.
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Enerplus is evaluating the results of its 2001 capital
initiatives in this area and will continue to seek projects
which will increase production from existing wells
and take advantage of available processing capacity
resulting from the 2001 facility expansion program.
Additional drilling will be considered in the latter
half of 2002 as part of the ongoing reservoir
optimization program.
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GLENEATH, SASKATCHEWAN,
OPERATED, WI 81%
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In early 2001, Enerplus recognized Gleneath had
significant upside development potential and pursued
an aggressive acquisition and development program
that added over 500 bbls/day net and paved the way
for significant follow up opportunities in 2002.
The Gleneath property is a large, mature waterflood
unit that produces light crude oil from the Viking
formation with a 23 year reserve life index. In early
2001, Enerplus realized additional production
potential in this property and undertook a proactive
approach to acquire additional working interests.
These activities resulted in the successful acquisition
of three separate blocks totaling a
34.3% working
interest producing
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280 bbls/day. With these
acquisitions completed, Enerplus initiated its
development program in the third quarter of 2001
and a total of 13 wells were drilled in the Unit along
with one non-Unit well. In addition to this infill
drilling, 20 producing oil wells were refracture
stimulated during the year. These projects resulted in
a net incremental production rate of 260 bbls/day of
light crude oil. The waterflood recovery scheme was
also enhanced with the conversion of four wells to
water injector wells.
The success of the 2001 development program has
provided strong technical evidence that additional
upside is available in this property. The capital
program for 2002 includes provision for the refracture
stimulation of 48 existing wells throughout the year
and the drilling of 10 additional Viking oil wells. This
activity is expected to add approximately 350 bbls/day
of incremental oil production net to the Fund.
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MEDICINE HAT BANTRY, ALBERTA,
OPERATED, WI 95%
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Enerplus continued its successful infill drilling
program in 2001, expanding facilities and adding
4.2 MMcf/day of natural gas production with further
infill drilling planned for 2002.
Enerplus continued to develop this shallow natural
gas area in 2001 with a 27 well drilling program
completed in the second quarter and a 66 well drilling
program completed in the fourth quarter. In
conjunction with this infill drilling, compression
capacity was expanded by 8 MMcf/day in the second
quarter to handle the incremental production
anticipated from the fourth quarter infill program.
All wells were successfully drilled in 2001 with the
majority of the wells tied-in and brought on stream
in January 2002.
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Net production from this pool was
12.1 MMcf/day at year end and has been increased to
15.0 MMcf/day at the end of February 2002.
Enerplus plans to drill 37 additional wells in the fourth
quarter of 2002 to further develop this property.
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MEDICINE HAT SUN VALLEY, ALBERTA,
OPERATED, WI 100%
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Enerplus continued its successful development drilling
program, expanded facilities and refracture
stimulated numerous wells to add
3.1 MMcf/day net
of
natural gas production.
Enerplus succeeded in improving the natural gas
production from this Milk River shallow natural gas
zone asset during 2000. Based on this success, the
Fund initiated development plans in 2001 to infill
drill and expand compression capacity to develop an
additional 3 MMcf/day of natural gas production. The
compression expansion was initiated and completed
in the third quarter followed with the refracture
stimulation of 17 existing wells. Along with these
workovers, Enerplus successfully drilled 45
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additional
infill wells, which were tied in and placed on-stream
in December. Incremental production from this project
is approximately 3.1 MMcf/day.
In addition to the production increase, a total of
15.8 Bcf of natural gas reserves were added to the
proven developed producing category as a result of
the 2001 capital program. Development drilling of
25 additional wells is scheduled for 2002 along with
20 refracs of existing wells to further optimize the
production from the property.
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MEDICINE HAT GLAUCONITE C POOL, ALBERTA,
OPERATED, WI 72%
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Enerplus successfully organized a waterflood unit,
implemented waterflood operations and acquired
additional interest in this significant oil pool to add
production of over 600 BOE/day net to the Fund.
Following the purchase of our 28% working interest
in 1998, Enerplus set out to optimize the recovery of
the oil from this pool and achieved the first step of
unitizing the pool in 2001. Sixty percent of the pool
was unitized early in the year and shortly thereafter,
a secondary waterflood recovery scheme
was
implemented.
With the construction of the waterflood facilities
completed in the first half of 2001 water injection in
the reservoir has been initiated. The waterflood
recovery
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program is projected to add another 6% to
8% (12-16 million barrels) of recoverable crude oil
from this pool.
Subsequent to year end, Enerplus concluded the
purchase of a partner’s interest in both the Unit and
non-Unit portions of the pool. The acquired interests
provide incremental production of approximately
600 BOE/day to the Fund. With the implementation
of the waterflood in 2001, the Fund anticipates
production will increase significantly in 2002 as the
pool responds to the water injection.
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BENJAMIN, ALBERTA, NON-OPERATED, WI 20%
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Further development of this deep foothills natural
gas property occurred during 2001, with one well
successfully drilled and
tied-in and the completion of
a 47 km pipeline extension to take the production to
processing facilities at Ram River.
The successful natural gas well tested at a combined
total rate of 20 MMcf/day from three thrust sheets.
Placed on-stream in November, the well has
added incremental production of
15 MMcf/day
(3.0 MMcf/day net) to the Fund.
The natural gas production from the Benjamin area
was tied-in to the Ram River and Strachan natural
gas plants through the completion of a 47 km pipeline
in July of 2001. Additional
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processing capability was also added to ensure that future gas development
from this pool would not be flow restricted. Current
natural gas production from the Benjamin pool is
11.2 MMcf/day net to the Fund. The Operator has
proposed two additional wells that will be drilled
in 2002 and are expected to add combined production
of
3 MMcf/day net to the Fund.
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JOARCAM, ALBERTA, OPERATED, WI 80%
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Upon the completion of a six-well infill drilling
program early in 2001, a reservoir and geological
analysis was conducted revealing additional infill
drilling potential in this property. As a result, an
extensive capital program has been planned for 2002
which will increase production by approximately 50%
at Joarcam, the Fund’s largest crude oil property.
Current production from this pool is 3,200 BOE/day
comprised of approximately
2,200 bbls/day of crude
oil and natural gas liquids and
6.0 MMcf/day of natural
gas net to the Fund.
The reservoir study indicated that additional
infrastructure would be required to handle the
production from additional infill drilling and
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plans were developed in the fourth quarter of 2001 to
upgrade and expand the gathering system and
associated facilities. The 2002 capital program for this
area is estimated at $21 million and constitutes the
Fund’s largest capital expenditure for 2002. The
program will consist of a major facility and
infrastructure expansion at the north end of the
property. This facility work will provide the processing
capacity for the 18 well infill drilling program as well
as capacity for the existing wells in the area that are
not currently optimized. It is anticipated that the
facility work will be completed and that 11 of the 18
wells will be drilled and tied-in by the second quarter
of 2002. The balance of the wells are expected to be
drilled and tied-in by the later half of 2002. Total
incremental production from the project is expected
to be
1,700 BOE/day.
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