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Coalbed methane ("CBM") has emerged as a bona fide resource play in western Canada with significant drilling and production now attributable to the play. To date we have focused our commercial development efforts on the Horseshoe Canyon formation in three separate areas within the central Alberta fairway. Horseshoe Canyon coals are typically dry and do not have the water handling issues often associated with CBM production.
Key Facts about our CBM:
- Represents a small part of our production and reserves today but is expected to grow in 2006 to approximately 10.8 MMcf/day (1,800 BOE/day).
- At year-end, approximately 21 billion cubic feet (3.5 MMBOE) of proved plus probable reserves were added by our CBM development activities resulting in total CBM reserves of approximately 32 billion cubic feet (5.3 MMBOE).
- Similar to shallow gas development, the key to success for CBM involves the ability to execute large, multi-well development programs cost efficiently and to manage the post-drilling operations of these low-pressure wells.
- We are participating in a pilot project (CO2 Sequestration and Enhanced Methane Production "CSEMP") on our land with several other government and industry participants to study the potential to sequester CO2 and increase methane gas recovery from the Ardley coal.
- Leveraging our considerable experience gained from shallow gas development to efficiently exploit CBM.
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