November 29th, 2020

City selling gas well, hoping for news on oil well

By COLLIN GALLANT on November 21, 2020.

The city’s energy exploration business will sell a gas field near Brooks, rather than paying to shut it down and abandon it, following council approval this week.

But, the fate of the city’s largest remaining oil-producing property could also be revealed soon.

In September the News revealed that the city was seeking potential bids on its share in the Glauc C field, north east of Medicine Hat, and which accounts for the lion’s share of the city’s oil production.

Commissioner Brad Maynes told the News this month that the process is complete and evaluations are being done before direction is sought from council.

At the time of the listing, Maynes and elected officials described it as an exercise in valuation of the long-producing field operated by EnerPlus, and results in about 900 bpd to the city.

Maynes told council Monday that his department received an offer for the Eyremore Field, near Brooks, that had been slated to be shut down and abandoned by the city this year.

That would reduce the need to spend money winding down the field, and take about $6 million off the city’s current plan to spend $135 million abandoning wells.

Councillors approved the sales, saying it was better to sell them to another operator, rather than pay the cost themselves to permanently shut them in.

“They’re unproductive and costing us money to operate,” said energy and utility committee chair, Coun. Phil Turnbull.

The terms of the sale to an undisclosed company will not be made public.

“We’re decreasing our operating loss,” said Maynes, who told councillors that since the city’s decision two years ago to abandon 2,000 wells, the department has also searched for potential buyers who might see value in them.

“We’ve had a very focused commercial team,” said Maynes. “These properties are of interest to them, and we’ve always said we’d consider all sales.

“This will hopefully not be the last disposition that our group brings forward.”

Aside from Eyremore, the city plans to divest Denzil field in east-central Saskatchewan.

That was part of the city’s “organic growth” drilling program several years ago, and was said to be profitable after a strike showed production above 200 bpd of oil in 2016.

This week’s item however, states more capital work is required to improve access to the pool to make it “marginally economic.”

Similarly, two wells in the Pakowki area are owned 100 per cent by the city, but are currently shut in. Reworking them at current market prices is not recommended by city engineers, according to a division report.

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