2005 Highlights
  President's Message
  Operations
    Sustainability
    Competitive
     Advantages
    Key Resources
     Shallow Gas
     Waterflood
     Development
     Bakken Oil
     Oil Sands
     Coalbed Methane
     Other
      Conventional
  Acquistions and
   Divestments
  Reserves
  Corporate
     Governance
  Environment,
      Health and Safety
  Community
      Involvement
  MD&A
  Financial Statements
  Notes
  Supplemental
       Information
   5 Year Detailed
     Statistical Review
   Operational Statistics
   Supplementary
     Reserve Information
   Historical
    Performance
   2005 Income Tax
     Information
   Abbreviations
   Definitions
   Directors & Officers
   Corporate
    Information
  

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Shallow natural gas has been a core development area for Enerplus since the late-90s. It fits the trust model due to its large, aerial extent, low geologic risk and the repeatable, predictable, large scale nature of development activities. The shallow gas formations in southern Alberta and southwest Saskatchewan consist of a massive tightly packed sandstone that covers an area of over 10,000 square kilometres. These zones are typically less than 800 metres in depth, upper Cretaceous in age with Milk River, Medicine Hat and Second White Specks as the key producing zones.

Our success in this area involves our ability to execute large, multi-well development programs cost efficiently and to manage these low-pressure operations once they are drilled. An understanding of tight shallow gas reservoirs and the effective use of production optimization techniques contribute to the success in this area. Wells typically cost approximately $180,000 to drill and complete and generally produce approximately 70 Mcf/day with 150 MMcf (25 MBOE) of reserves (although actual results will vary across the asset base).

Key Facts about our Shallow Gas:

  • Production has grown from 12 MMcf/day (2,000 BOE/day) in the late-90s, to approximately 83 MMcf/day (13,800 BOE/day) through both development and acquisitions activities.
  • Represents approximately 17% of our production and 20% of our reserves with over 540 billion cubic feet of proved plus probable reserves (90 MMBOE).
  • Encompasses seven key property regions in southern Alberta and southwest Saskatchewan.
  • Features a substantial reserve life index of 15.9 years.
  • Has an inventory of approximately 900 net drilling locations to support continued drilling activity for many years to come.
  • Strong natural gas prices have increased the value of existing production and supported the economic development of increased density drilling of up to 16 wells per section in some areas.

2005 Activities
Shallow gas continues to be our most active drilling area. In 2005, we achieved a new record for shallow gas drilling by participating in 336 gross wells (200 net). Enerplus invested $58.7 million to add 1,900 BOE/day at an average on stream cost of $30,900/BOE/day. Key operated drilling programs occurred during the year at Bantry, Hanna Garden, Medicine Hat and Verger while significant drilling also occurred on our non-operated acreage at Shackleton. Our main development activity during 2005 was drilling, with additional investment in compression and pipelines to handle incremental production volumes. We followed up on the success of our 2004 high density (up to 16 wells per section) drilling program, with 73 gross (70.6 net) high density wells at Bantry and Medicine Hat. Year-end reserve additions from development of shallow gas were approximately 41.4 billion cubic feet (6.9 MMBOE) on a proved plus probable basis.

2006 Outlook
Development activity is expected to continue escalating in 2006 with plans to invest $74 million to drill approximately 570 gross wells (over 300 net) including 121 gross (108 net) high density wells. Key drilling areas include Bantry, Hanna Garden, Medicine Hat, Shackleton and Verger. Our 2006 development plans also include investments in compression to handle incremental production and to increase production from existing wells.  


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