Niton and Caroline plays in Central Alberta. Click image for full-size view.

The Niton and Caroline area is a multi-zone liquids rich, tight gas play with production primarily coming from Jurassic Rock Creek and Mannville Ellerslie/Gething sands at depths ranging from 1,950 to 2,700 metres. Proprietary exploration, development, and operational knowledge gained by the Corporation in southern Alberta has resulted in accelerated growth of this core area over the past few years. Compton is an active driller at Niton, with approximately 144 wells drilled to date on its 265 sections of controlled land in this area at a 75% working interest.

 

Compton experienced significant drilling success in 2008: 25 wells were drilled, including 12 horizontal wells in the Rock Creek formation and 2 horizontal wells targeting the Ellerslie formation. 

 

Rock Creek Formation

The Rock Creek play’s variable permeability and water-free nature lends itself well to horizontal drilling and multistage fracturing. Compton is the leading Niton operator developing this play with 23 successful horizontal wells producing from this zone at the end of 2008. The typical horizontal Rock Creek well has an average initial rate of 3 MMcf/d in the first month of production, which contributes to play economics. In 2008, we also completed a joint venture farm-in to earn a further nine sections of land on this Rock Creek play, where three vertical and two horizontal Rock Creek wells were drilled during the year. In addition, our Edson 5-26-52-17W5M compressor station was expanded from 10 to 20 MMcf/d during 2008 to provide additional capacity for future production increases.

 

During the first half of 2009, activities continued to focus on the Niton area, targeting the Rock Creek formation. Compton has drilled three wells in the area during this period.  Historically, the average cost to drill and complete a Niton horizontal gas well is $4.1 million, or roughly 2.6 times the cost of a comparative vertical Rock Creek gas well.  Well costs are expected to be approximately 10% less than previous horizontal wells drilled in the area due to the Corporation’s focus on cost reduction and lower industry rates.

 

In the second half of 2009, Compton may continue with development operations in Niton targeting more permeable sands in the Rock Creek formation, should commodity prices and drilling costs support investment returns.

 

Ellerslie Formation

The Ellerslie formation is an under-pressured, essentially water-free, tight channel sand complex that is similar to our Hooker play, ranging in depth from 1,950 to 2,300 metres. Historically, these sands have only been developed through vertical drilling. Compton evaluated the application of new technology in 2008, drilling two horizontal wells targeting lower permeability sands in this zone. Both wells are on production with an average production rate of 670 Mcf/d as a first month initial rate. Older offset vertical wells, adjacent to Compton’s horizontals, had limited productive capability.