The Winter pool, a heavy oil reservoir located in the L1oydminster area of Saskatchewan, was selected as a suitable candidate for the introduction of a horizontal well production system. An initial two phase program comprised of five horizontal wells and four vertical monitoring wells has been undertaken by CS Resources and its partners to evaluate the applicability of horizontal wells to improve primary production. Reservoir performance will be assessed within the context of ultimately employing other enhanced recovery methods to compliment horizontal wells.
The challenges facing the Canadian petroleum industry during the next decade will focus upon the key strategic areas of increased productivity and improved cost effectiveness. The continuing business environment of volatile crude oil prices has dampened the expansion plans of many companies and has placed at risk the Canadian mega projects such as Hibernia, Amauligak and Alberta's oil sands. These projects collectively represent Canada' 5 major long term opportunities for substantial increases to our domestic crude oil reserves.
Faced with the prospect of higher exploration and production costs combined with price volatility and uncertainty much of the improved efficiency we have witnessed in the Canadian industry during the past two years has resulted through corporate restructurings including mergers and acquisitions.
Notwithstanding this ongoing rationalization by the industry and the longer term prospects offered by Canada's frontier areas and oil sands mining projects, it remains apparent that improved and innovative technologies will be required to further exploit Canada is known occurrences of hydrocarbons. It is within this sphere of improved and enhanced recovery of those resources which have only been partially developed due to economic or technical constraints that CS Resources is concentrating its corporate efforts. Within Canada, the opportunity to effectively pursue this strategy is nowhere greater than with the vast heavy oil and oil sands resource base in the western provinces of Alberta and Saskatchewan. In keeping with this philosophy, the initial thrust under-taken by CS Resources has been to gain direct ownership of significant oil in place with a view to developing, in association with Institut Francais du Petrole and Societe Nationale Elf Aquitaine, the necessary technology to economically exploit these occurrences through improved reservoir managernent.
Many of the oil sands and heavy oil occurrences identified in western Canada during the past 100 years cannot currently be economically exploited using conventional vertical production methods. However I considerable effort is being made by industry and governments to develop improved and innovative technologies to enhance the economic recovery of these resources. The introduction of new production methods including horizontal technologies offers excellent promise to substantially alter- the economics for- many marginal pools and could ultimately have an important and favourable impact upon the value of the oil sands and heavy oil resource base in western Canada.
The oil sands represent an immense future source of hydrocarbons for Canada.