The May River project is Grizzly’s primary medium- to long-term growth asset. May River’s suite of advantages make it a compelling, low-risk prospect for value creation.
The advantages include:
- Large scale. Landholdings total 46,720 acres at 100 percent working interest and contingent resources are estimated by GLJ Petroleum Consultants Ltd ("GLJ") at 819 million barrels, capable of supporting production of up to 100,000 barrels per day by 2022. This makes May River approximately five to six times as large as Algar Lake;
- An extensive, homogeneous and high-quality Middle McMurray channel reservoir, featuring:
- Porosity of 33 percent;
- Bitumen saturation of 80 percent;
- Pay thickness of up to 40 metres at a depth of approximately 400 metres;
- Excellent cap rock integrity, with 17.5 metres of Clearwater Shale;
- Limited bottom water and top gas in some areas; and
- High permeability, making the reservoir appear amenable to a cumulative steam-to-oil ratio in the range of 2.2 to 2.8, according to GLJ’s December 31, 2013 reserve report;
- Demonstrated producing success in the same reservoir among adjacent industry projects; and
- Proximity to road and other infrastructure, including a distance of only 8 km from CN's bitumen rail-loading terminal at Windell.
In short, May River is first-class oil sands real estate.
Grizzly acquired the May River property in February 2012 in an asset acquisition valued at $225 million in cash, funded by new equity from Grizzly’s shareholders. The acquisition included data from 93 previous evaluation wells plus 68 square km of 3D and 4D seismic. A further 29-well resource delineation drilling program was immediately planned and carried out in winter 2012-2013.
May River lies approximately 130 km southeast of Fort McMurray and 14 km from the town of Conklin, providing access to infrastructure including roads, railways, airports and utilities. May River is surrounded by in situ projects producing approximately 160,000 barrels per day of bitumen, including several of the industry’s best-performing SAGD projects, with many more projects in planning.
Grizzly filed a 12,000-barrel-per-day development application in December 2013, and has converted 157 million barrels of contingent resource to reserves. An 83 km 2D full field seismic program was shot in the first quarter of 2014 to more fully define the remaining 660 million barrels of contingent resource and to facilitate future exploration for additional resource. As at Algar Lake, Grizzly intends to apply its ARMS facility model to achieve fast, reliable, economical development in manageable increments. Phase 1 would utilize two ARMS plant cores.
May River’s ultimate capacity is envisioned to be up to 100,000 barrels per day.