While Enerplus Resources believes there is long-term value in the Kirby project, the current cost structures, commodity price environment and its cost of capital do not offer a sufficient economic return for additional investment toward project sanctioning at this time.
The Kirby oil sands project is a 100% owned in-situ development that was acquired in early 2007. Delineation work to date has increased the original resource estimates by greater than 70% to over 400 million barrels of best estimate contingent resources. Application was filed in September 2008 for the first phase of the development, a 10,000 bbl/day steam assisted gravity draining project. Enerplus Resources has not booked any reserve volumes associated with the Kirby lease.
The company’s original 2009 activities were directed at providing additional information to regulators and stakeholders to advance our application, completing a seismic program which began in late 2008 and advancing detailed engineering. Enerplus Resources plan to complete an updated resource assessment this summer based on new seismic data and to complete the regulatory application process by this fall as originally planned. It will not, however, continue the advance engineering work which would have led to a sanctioning decision later in 2009. As the company had already significantly reduced its spending plans on Kirby for 2009 to $25 million, it expects a further modest decrease in the order of $5 million this year. Enerplus Resources expects to employ a majority of the existing oil sands staff on wrap up activities over the next several months and begin redeploying them into other areas of its business.
Enerplus Resources will continue to monitor economic, regulatory, market and technical developments which impact oil sands development and will revisit its plans for Kirby as circumstances warrant.
