Calgary 鈥� BlackPearl Resources Inc. plans to begin steam injection at its 6,000 barrels per day Onion Lake thermal project by June 1.
Steam will be injected in the first well pad of seven wells with first oil production expected in three to six months in the first phase project.
Oil from the Onion Lake project will be produced by steam-assisted gravity drainage or SAGD.
The update was included with Black Pearl鈥檚 first-quarter financial and operating report, issued May 6 that revealed the $223 million thermal project was completed ahead of schedule and on budget.
鈥淭his is an important milestone for BlackPearl. Our first thermal project has been completed successfully and it is the largest project the company has undertaken,鈥� said John Festival, president of BlackPearl.聽
鈥淧roduction from the Onion Lake thermal project should be some of our lowest cost production, which is critical in this lower oil price environment.鈥�
This phase of the project includes 13 horizontal production wells on two well pad sites.聽
All of these wells were drilled in late 2014 and were completed during the first quarter of 2015 along with the completion of 35 vertical steam injection wells.
The steam generation facilities are designed to generate approximately 17,000 barrels of steam per day.聽
No new conventional drilling occurred during the first quarter of 2015 due to low oil prices.
鈥淟ow crude oil prices made for a challenging Q1 for BlackPearl and most of industry,鈥� said Festival.
The company鈥檚 realized oil price was just $32.05 per barrel compared to $73.23 for the same period in 2014.
Revenue declined 63 per cent to $22.1 million compared with $59.6 million in the same quarter of 2014.
The decrease in revenues is attributable to a 57 per cent decrease in Black Pearl鈥檚 average sales price for oil during the quarter.
Revenue also declined due to a 12 per cent decrease in production to 8,269 barrels of oil equivalent per day compared to 9,363 boepd a year earlier.
Total production included heavy oil from its Mooney and Blackrod projects in Alberta.
The lower production volumes also reflect the company鈥檚 decision to shut in 40 conventional wells that were producing approximately 1,000 barrels of oil a day.聽
Festival said the wells that were shut-in during the quarter were wells with high operating costs that required well servicing.
He explained they were shut-in to save the expense of bringing them back on production while oil prices were low.
鈥淲e plan to put these wells back on production when oil prices recover to a level that they can contribute positive cash flow to our operations,鈥� he said.
