Deer Mountain

The Deer Mountain Unit #2 is part of the Judy Creek Swan Hills Complex. The majority of the complex is under secondary and tertiary recovery schemes.  Adjoining units in the field have ultimate recoveries estimated at 35-40 percent of the original oil in place, with some operators expecting further increases in the future from potential CO2 injection schemes. Because the Swan Hills pools hold such large volumes of original-oil-in-place, each percentage point increase in the overall recovery factor represents significant incremental production and reserves at low geological risk.

Initial production from the Deer Mountain Unit commenced in 1964 and unitization occurred in late 1984. Recovery from the Deer Mountain Unit is low compared to offsetting pools in the field because of a historic lack of drilling and water injection.  To date, Arcan has fracture-simulated some existing oil wells and reworked existing water injection wells.  New oil wells and one new water injection well have been drilled. Liquids-rich solution gas that was previously flared have been tied in and Arcan shot approximately 34 square kilometres of 3D seismic covering the unit. As well, Arcan has constructed a new oil battery capable of processing 4,000 barrels of fluid per day and a new centralized water injection facility.  In Arcan’s 2007 year end reserve report, recovery is estimated at approximately 7.9 percent of the 39 mmboe original-oil-in-place.

The Future

Arcan considers Deer Mountain to be a legacy asset which is expected to produce for another 15-20 years or more even after additional drilling and reserves growth. The construction of the new battery and the water handling facilities will allow Arcan to implement a field-wide waterflood and continue drilling patterns of production wells and water injection wells for several years. Arcan is also examining the potential for exploration drilling in the Deer Mountain area.

In Q2, 2008, Arcan purchased interests (30% - 100%) in over 50 sections of land to the south and immidiately offsetting our unit.  Arcan plans to drill test wells and shoot 3D seismic in the second half of 2008.