This project is an important part of our future growth and adds additional long-term oil sands assets to Enerplus.

In the first half of 2007, Enerplus acquired the Kirby Oil Sands Partnership located in the heart of the Athabasca oil sands fairway of Alberta. This strategic acquisition provides Enerplus with additional long-term oil sands assets with steam assisted gravity drainage (“SAGD”) development potential that we believe will add significant value for our unitholders in the years to come.

Oil sands assets are a key resource play for Enerplus given their lower geologic risk and the scalable development associated with these types of assets. The addition of an operated SAGD project compliments our existing portfolio of non-operated oil sands assets which include the mining and SAGD projects on the Joslyn lease.  

The Kirby Project is a 100% working interest, Enerplus-operated SAGD project which Enerplus currently believes has potential production capacity, through staged development, of 30,000 to 40,000 bbls/day of bitumen. The Kirby Lease covers 43,360 gross acres (over 67 sections of land) in the Athabasca oil sands fairway near several other major SAGD development projects currently on production.

Development plans at our Kirby oil sands project continued throughout the first quarter 2008 with the execution of our winter delineation program. We drilled 55 core holes and 3 water source/disposal wells on the lease. Our preliminary review of the core hole samples is encouraging. We expect to use this new information in support of the initial development on this lease, a 10,000 bbl/day SAGD project.

Geological 3D Model of SAGD project
Click on thumbnail to view enlarged PDF (3.87MB) version

While the Kirby Lease does not have current production or Proved or Probable Reserves, the independent GLJ Oil Sands Resources Report effective December 31, 2007 indicates a ‘‘best estimate’’ of contingent resources of 244 MMbbls of bitumen, as outlined in the table below. Enerplus believes that the Kirby Project is an attractive first operated project given the reservoir quality, apparent lack of thief zones, proximity to markets and infrastructure and potential expandability.

Enerplus’ initial development plans currently include a 10,000 bbl/d SAGD project starting in 2012 with further expansion capability to a total of 30,000 to 40,000 bbls/d of gross bitumen production over time. Enerplus’ current expectations as to the key milestones associated with the development of the Kirby Lease are as follows:

Project Location

The Kirby Oil sands Project covers an area of approximately 17,550 ha (43,360 acres) located in Townships 73, 74 and 75, and Ranges 7, 8 and 9 west of the 4th meridian. Highway 881 and the Athabasca Northern railway line bisect the lease area. The Kirby Project area is located approximately 87 km northeast of Lac La Biche and 24 km south of Conklin. CNRL Kirby and Devon Jackfish are the nearest SAGD projects to the lease area.

Project Description

Enerplus estimates the Kirby lease area to contain up to 244 million barrels of bitumen to support project development. The geological formations to be targeted include the Wabiskaw and McMurray formations at a depth of approximately 400 - 550 meters.

The proposed Kirby development will incorporate multi-well production pads with centralized steam generation, bitumen treating and water recycling facilities. Enerplus hopes to begin construction of the project in 2009 once regulatory approvals have been obtained.

To support this Enerplus has begun core hole drilling, engineering and environmental work necessary to support project design and regulatory approvals and has initiated its community and Stakeholder engagement program.

The SAGD Process

Enerplus will employ the Steam Assisted Gravity Drainage (“SAGD”) process to produce up to 10,000 bbls/day of bitumen. SAGD is a commercially proven recovery process that utilizes steam injection to heat the bitumen reducing its viscosity and allowing it to be produced from the reservoir.

Environmental assessment

An environmental assessment of the Kirby Oil Sands Project will be included in our project application. Enerplus has assembled an assessment team to begin the important task of collecting baseline data and to assess and understand the various impacts of the project both locally and regionally. As part of our assessment, we will identify all historical resources on the lease and study the air quality, noise levels, ground and surface water, soil / terrain, vegetation, wildlife, fisheries and traditional land use on the lease.

As part of the project planning Enerplus will strive to:

• Minimize the project footprint
• Minimize air emissions
• Improve energy efficiency
• Minimize the use of fresh water

Once the application has been submitted to AENV and the AEUB, there will be an opportunity for public comment and review.

Regulatory Process

To obtain approval for the Kirby Oil Sands Project, Enerplus will make application to both the Alberta Energy and Utilities Board (EUB) under the Oil Sands Conservation Act (“OSC”) and Alberta Environment (AENV) under the Environmental Protection and Enhancement Act (“EPEA”).

The application for the project will be an “integrated application” including an environmental assessment and project description for both AENV and the AEUB. More information on the OSC and the application process can be found on the AEUB website at www.eub.gov.ab.ca. Information on the EPEA is available on the Alberta Environment website at www.gov.ab.ca/env.

Kirby Project Employment

Enerplus’ employment and procurement policy is based on:

• Providing fair opportunities to experienced local and regional contractors, suppliers and businesses that understand the scope of work and are competitive on costs quality and reliability

Enerplus encourages local firms to participate in the bidding process. Contracts will be awarded on:

• Qualifications
• Reliability
• Experience
• Health and safety record
• Cost
• Environmental practices

To view oil sands employment opportunities with Enerplus click here.

Community Involvement

Enerplus places a high priority on preserving the quality of our environment and protecting the health and safety of our employees, contractors and the communities where we operate. Enerplus’ employment and procurement policy includes the hiring of qualified local and regional vendors and contractors on a competitive basis whenever possible. We are committed to building and strengthening long-term relationships based on honesty, trust, respect and cooperation. We respect community and stakeholder concerns and will work with local communities, government, and industry to address any issues that may arise. We also support local initiatives that improve the quality of life within these communities through volunteer involvement and contributions to non-profit organizations.

Enerplus recognizes that community and stakeholder engagement will continue throughout the life of the project. The approach to engagement will be developed in a manner that enables the company to better understand issues within the communities and identify options for resolution.
Communications will be two-way and will include all stakeholders affected by the project’s nature and scope, including First Nations, Métis, public, interest groups and the government.

Various opportunities for stakeholders and communities to obtain information and share their opinions on the project will be provided. These will include one-on-one meetings and an open house.

Click here for more information on SAGD.

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