Our 2016 drilling program was focused primarily on our Montney/Doig Resource Play. We actively employed the evolving technology utilized by the industry regarding horizontal well drilling and the related multi-stage fracture stimulation technology.
We had an active drilling program during 2016 drilling a total of 22 (22.0 net) wells, consisting of 14 (14.0 net) Montney/Doig horizontal wells at Pouce Coupe, 6 (6.0 net) Montney/Doig horizontal wells at Gordondale, 1 (1.0 net) Charlie Lake horizontal light oil well at Worsley and 1.0 (1.0 net) water disposal well at Gordondale. All of the horizontal wells drilled in 2016 utilized multi‐stage fracture stimulation technology.
Montney/Doig Resource Play
We drilled our first vertical exploration well for the Montney/Doig in February 2005. With the success of this well, we aggressively pursued opportunities to consolidate a significant position on the play. In May 2005, we completed the acquisition of properties for $242.8 million, including a working interest in 11 gas plants and related pipelines and a significant undeveloped land position on the play.
The technology relating to horizontal drilling and multi-stage fracture stimulation has rapidly expanded in the last 10 to 15 years. The industry’s first Montney/Doig horizontal wells were drilled in 2005 and we drilled our first horizontal well in September 2007. At December 31, 2016, 295 (289.7 net) Montney/Doig horizontal wells have been successfully drilled and cased on Birchcliff’s lands (which includes 87 (81.8 net) wells acquired in the Gordondale Acquisition), consisting of 67 wells in the Basal Doig/Upper Montney interval, 9 wells in the Montney D4 interval, 4 wells in the Montney D2 interval, 214 wells in the Montney D1 interval and 1 well in the Montney C interval.
The Montney D2 interval was a major focus for Birchcliff in 2016. The Gordondale Assets had one well drilled in this interval in 2014. We have significantly increased our confidence in the ultimate commerciality of the D2 interval based upon the previous technical work that was done on the Gordondale Assets by the prior owner, publicly available information resulting from industry activity on the Montney D2 interval, our own technical expertise developed in our Pouce Coupe Montney operations and recent completion results in the Gordondale area.
In 2016, approximately 96% of our natural gas production, 42% of our light oil production and 97% of our NGLs production came from the wells drilled on the Montney/Doig Resource Play. In 2016, production from the Montney/Doig Resource Play averaged 45,311 boe/d.
Increased Future Drilling Locations
At December 31, 2016, Birchcliff held 441.2 sections of land that have potential for the Montney/Doig Resource Play. Of these lands, 433.9 (406.6 net) sections have potential for the Basal Doig/Upper Montney interval, 395.4 (383.9 net) sections have potential for the Montney D1 interval, 399.9 (388.4 net) sections have potential for the Montney D2 interval and 328.1 (319.3 net) sections have potential for the Montney D4 interval. At December 31, 2016, Birchcliff’s total land holdings on these four intervals was 1,557.3 (1,498.2 net) sections. Assuming full development of four horizontal wells per section per drilling interval, Birchcliff has 5,992.8 net existing horizontal wells and potential net future horizontal drilling locations in respect of the Basal Doig/Upper Montney, Montney D1, Montney D2 and Montney D4 intervals at December 31, 2016. With 295 (289.7 net) horizontal locations drilled at the end of 2016, there remains 5,703.1 potential net future horizontal drilling locations at December 31, 2016, up from 3,367.3 at year end 2015. This does not include any potential net future horizontal drilling locations for the other two prospective Montney intervals, the Montney C and the Montney D3.
In the fourth quarter of 2014, Birchcliff drilled its first successful Montney/Doig horizontal exploration well in the Montney D4 interval in the Elmworth area. Birchcliff subsequently drilled its second successful horizontal exploration well in the Elmworth area in the Montney D4 interval in the first quarter of 2015, which was brought on production in June 2015.
As part of Birchcliff’s future growth plans for its Montney/Doig Resource Play, Birchcliff is continuing to prove up the play in the Elmworth area and intends to construct and operate a 100% owned and operated natural gas plant in the Elmworth area (the “Elmworth Gas Plant”). This plant is currently planned to be on-stream in the fall of 2022 and have a processing capacity of 40 MMcf/d. Birchcliff has commenced the preliminary planning for this plant and a critical requirement is a nearby acid gas disposal well which Birchcliff drilled in the first quarter of 2015. In the second and third quarters of 2015, Birchcliff conducted successful injectivity tests on the well. Birchcliff received regulatory approval for this acid gas well in August 2016.
PC Gas Plant Phase V Expansion Complete
The Phase V expansion of the PC Gas Plant was completed in September, 2017 and as a result processing capacity has increased to 260 MMcf per day from 180 MMcf per day. The project was completed on schedule and on budget.
Future Expansion of the PC Gas Plant
Engineering, procurement and fabrication work is underway for the Phase VI expansion of the PC Gas Plant which will increase processing capacity to 340 MMcf per day with an expected startup date of October 2018.