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CALGARY, Oct. 27, 2016 /CNW/ - Questerre Energy
Corporation ("Questerre" or the "Company") (TSX,OSE:QEC) reported
today on the resource assessment (the "Resource Assessment") of its
oil shale acreage in the Hashemite Kingdom of Jordan ("Jordan").
Michael Binnion, President and
Chief Executive Officer of Questerre, commented, "The Resource
Assessment indicates a significant resource with a best estimate of
discovered petroleum initially in place of between 7.8 billion
barrels to 12.2 billion barrels. While the size of this deposit is
very positive, we have many technical and commercial milestones to
achieve before we can develop this resource. We have started with
the assessment of three retorting technologies and an economic
feasibility analysis. By the end of the first quarter of 2017, we
plan to update the Resource Assessment to include the potential
volume and estimated value of any resources that could be
commercially developed using established technologies."
He added, "Though there are several large oil shale deposits in
the world, we are excited about this deposit because of its scale,
rich oil yield (best estimate average of 23 gallons per ton),
little to no expected interburden (intervals with no oil shale) and
proximity to surface. We are benchmarking against the Green River
shale, the largest oil shale resource in the world, located in
Utah, Wyoming and Colorado. As an example, in a sweet spot in
this area, Red Leaf Resources Inc. holds leases covering 14.5
square km known as the Greater Seep Ridge Area. An independent
qualified reserve evaluator engaged by Red Leaf estimates 150
million barrels of in place resources for this area using a 2:1
overburden to ore cutoff. This works out to about 10.3 million
barrels in place per square km. On our oil shale acreage in
Jordan, the petroleum initially in
place, using a similar cutoff is 7.8 billion barrels over 212
square km or approximately 36 million barrels per square km."
He further added, "Oil is produced from oil shale by mining and
heating organic material known as kerogen instead of horizontal
drilling and hydraulic fracturing that is used to produce shale oil
and gas. As a result, economics for oil shale depend on commodity
prices and the quality of the resource. This has been done
successfully in niche markets like Estonia and China with established technologies recovering
80% to 90% of the Modified Fischer Assay oil yields. We have a long
way to go before demonstrating production from our acreage in the
current price environment. We are, however, very encouraged by the
results to date to continue our work to make this happen."
The Resource Assessment was prepared by Millcreek Mining Group
("Millcreek"), an affiliate of Millcreek Mining, an independent
integrated engineering company. Millcreek is an independent
qualified resource evaluator, as defined by the National Instrument
51-101 – Standards of Disclosure for Oil and Gas Activities
of the Canadian Securities Administrators ("NI 51-101") and the
Canadian Oil and Gas Evaluation Handbook ("COGE Handbook"). The
Resource Assessment was prepared in accordance with NI 51-101 and
the COGE Handbook with an effective date of October 1, 2016. The Company is in the process of
completing a conceptual study, however, at this time, given the
preliminary nature of the Resource Assessment, it does not contain
any estimates regarding the timing or cost to obtain commercial
development nor has the Company finalized the specific recovery
technology to be used.
Excerpts from the Executive Summary of the Resource Assessment
are included below. A full copy of the Resource Assessment will be
available on the Company's website at www.questerre.com in early
November 2016.
The Resource Assessment covers the area under the Company's
Memorandum of Understanding ("MOU") with the Ministry of Energy and
Mineral Resources in Jordan.
Pursuant to the MOU, the Company has the exclusive right to conduct
exploration, engineering and development over 380 square km in the
Isfir-Jafr region of Jordan,
approximately 200 km south of the capital, Amman. This has been categorized into three
areas referred to Blocks A, B and C, separated by two highway and
infrastructure corridors. The Company holds a 100% working interest
in the MOU and the resources.
The oil shale deposits of the MOU occur as kerogen-rich beds
within the marine chalky limestones and marls of the Muwaqqar
Chalk-Marl ("MCM") Formation. The Resource Assessment is based on
the Modified Fischer Assay ("MFA") (see "Resource Definitions")
data from over 40 core holes, including 35 drilled by the Natural
Resources Authority ("NRA") and 5 drilled by Questerre in the last
three years. The database utilized consists of over 1,900 MFA
determinations ranging from 0.19 gallons per ton ("gpt") to 49.49
gpt.
The analytical MFA data suggests that the MCM oil shale is a
continuous package with an Upper Lean horizon ("ULH") and a Lower
Rich horizon ("LRH"). Determination between the ULH and LRH is
based on assay, using 15 gpt as the minimum grade for the LRH. The
ULH has an average thickness of 25.36m with a weighted average oil
shale grade of 12.5 gpt. The LRH sits directly below the upper lean
horizon with an average thickness of 40.68m. Weighted average grade
for the LRH is 22.78 gpt. Both oil shale horizons are
continuous throughout the area though based on current drilling,
the oil shale horizons appear to pinch out along the southern
margins of Blocks A and C.
The petroleum volumes within the area that resulted from this
estimation process were classified as Discovered Petroleum
Initially in Place ("DPIIP") and Undiscovered Petroleum Initially
in Place ("UPIIP"), in accordance with the criteria of the COGE
Handbook. DPIIP resources were further differentiated as Low, Best,
and High based upon a statistical analysis of the thickness and
grade data. It was determined that a radius of 1,000m from a core
hole could satisfactorily be used for quantifying a Low resource
estimate. Radii of 2,000m and 4,000m from a core hole were also
determined for quantifying Best and High resource estimates,
respectively. Resources classified as Undiscovered have not been
assigned any levels of confidence. DPIIP and UPIIP are the most
specific assignable categories of resources at this time given the
preliminary nature of the Resource Assessment, the nature of
recovery of the hydrocarbons by means of mining and that a program
of work to determine commercial viability using established
technology has not yet been completed.
Discovered and Undiscovered PIIP Estimate (MMbbls) as at
October 1, 2016
Parcel
|
Strata
|
Low
|
Best
|
High
|
Undiscovered
|
Block A
|
ULH
|
26
|
65
|
86
|
1
|
LRH
|
821
|
2,024
|
2,708
|
27
|
Block B
|
ULH
|
1,301
|
2,119
|
3,123
|
595
|
LRH
|
1,537
|
2,503
|
3,689
|
703
|
Block C
|
ULH
|
146
|
413
|
582
|
24
|
LRH
|
1,806
|
5,116
|
7,222
|
301
|
Total
|
5,636
|
12,240
|
17,410
|
1,651
|
The Best Estimate of the Discovered Resource PIIP is
approximately 12.2 billion barrels of synthetic crude oil at an
average grade of 20.12 gpt. Millcreek has been involved with
conceptual mine planning to produce oil shale feedstock to support
a surface retorting/processing facility capable of producing 20,000
bbl/d of synthetic crude oil. The purpose of the conceptual mine
planning was to develop preliminary mining costs and identify a
potential area(s) favorable to mine development. The mine planning
considered all regions within the area where the LRH can be mined
at less than a 2:1 volumetric ratio of overburden to ore, and
considers maximizing ore grade, location to main road and other
infrastructure, and minimizing the total mining cost per barrel.
The tables below present the resource quantities and their
classification that occur within the 2:1 volumetric ratio of
overburden to ore, favorable to surface mining. Best Estimate
for the LRH identifies 7.8 billion barrels with an average grade of
22.66 gpt.
Discovered and Undiscovered PIIP Estimate (MMbbls) within a
2:1 Volumetric Strip Ratio as at October 1,
2016
Parcel
|
Strata
|
Low
|
Best
|
High
|
Undiscovered
|
A1
|
ULH
|
19
|
48
|
54
|
-
|
LRH
|
692
|
1,759
|
1,977
|
-
|
B1
|
ULH
|
232
|
328
|
331
|
-
|
LRH
|
896
|
1,267
|
1,280
|
-
|
B2
|
ULH
|
-
|
98
|
164
|
-
|
LRH
|
-
|
148
|
247
|
-
|
C1
|
ULH
|
148
|
387
|
534
|
34
|
LRH
|
1,763
|
4,610
|
6,373
|
407
|
Total
|
3,750
|
8,645
|
10,960
|
441
|
The Resource Assessment and an update on the Company's MOU in
Jordan will be presented at the
3rd Annual International Jordan Oil Shale Symposium and
the 36th Colorado School of Mines Oil Shale Symposium in
November 2016 in Jordan.
The accuracy of resource estimates is, in part, a function of
the quality and quantity of available data and of engineering and
geological interpretation and judgment. Given the data available at
the time this report was prepared, the estimates presented herein
are considered reasonable. However, they should be accepted with
the understanding that additional data and analysis available
subsequent to the date of the estimates may necessitate revision.
These revisions may be material. There is no certainty that any
portion of the resources will be discovered. If discovered, there
is no certainty that it will be commercially viable to produce any
portion of the resources.
The significant positive factors for estimating these resources
include good well-spaced core, continuous regular resource and low
structural complexity. The significant negative factors for these
estimates include the coarse grid of well control reflecting the
early stage nature of the project and the unknown nature of MFA
quality control on the Ministry drilled cores.
Oil Shale compared to Shale Oil
Oil shale is often confused with shale oil and shale gas
production. When conventional oil and gas is extracted from shale
rock formations like those in the Montney in Alberta, North
Dakota, Pennsylvania and
Texas, it is correctly called
shale oil and shale gas, not oil shale. Production of shale oil and
gas generally involves horizontal drilling and hydraulic
fracturing.
By contrast, oil shale development is the process by which a
solid organic material rich in hydrocarbons called kerogen is
converted to crude oil, condensate and natural gas by applying heat
in the absence of oxygen. All conventional oil and gas was once
kerogen. Over millions of years, heat from the earth's core caused
deposits of kerogen to transform into oil and natural gas. Modern
oil shale production simply accelerates the natural process of
turning kerogen into oil and gas, either by mining the ore and
heating it at the surface or heating it underground.
Questerre Energy Corporation is leveraging its expertise gained
through early exposure to shale and other non-conventional
reservoirs. The Company has base production and reserves in the
tight oil Bakken/Torquay of
southeast Saskatchewan. It is bringing on production from its
lands in the heart of the high-liquids Montney shale fairway. It is a leader on
social license to operate issues for its Utica shale gas discovery in the St. Lawrence
Lowlands, Quebec. It is pursuing
oil shale projects with the aim of commercially developing these
massive resources.
Questerre is a believer that the future success of the oil and
gas industry depends on a balance of economics, environment and
society. We are committed to being transparent and are respectful
that the public must be part of making the important choices for
our energy future.
Advisory Regarding Forward-Looking Statements
This media release contains certain statements which constitute
forward-looking statements or information ("forward-looking
statements") including the Company's plans, the Resource
Assessment, including the results thereof and the pending updating
to the Resource Assessment. Although Questerre believes that the
expectations reflected in our forward-looking statements are
reasonable, our forward-looking statements have been based on
factors and assumptions concerning future events which may prove to
be inaccurate. Those factors and assumptions are based upon
currently available information available to Questerre. Such
statements are subject to known and unknown risks, uncertainties
and other factors that could influence actual results or events and
cause actual results or events to differ materially from those
stated, anticipated or implied in the forward-looking
statements. As such, readers are cautioned not to place undue
reliance on the forward looking information, as no assurance can be
provided as to future results, levels of activity or
achievements. The risks, uncertainties, material assumptions
and other factors that could affect actual results are discussed in
our Annual Information Form and other documents available at
www.sedar.com. Furthermore, the forward-looking statements
contained in this document are made as of the date of this document
and, except as required by applicable law, Questerre does not
undertake any obligation to publicly update or to revise any of the
included forward-looking statements, whether as a result of new
information, future events or otherwise. The forward-looking
statements contained in this document are expressly qualified by
this cautionary statement.
Resource Definitions
Resources encompasses all petroleum quantities that originally
existed on or within the earth's crust in naturally occurring
accumulations, including Discovered and Undiscovered (recoverable
and unrecoverable) plus quantities already produced. "Total
resources" is equivalent to "Total Petroleum Initially In Place".
Resources are classified in the following categories:
Total Petroleum
Initially In Place ("TPIIP") is that quantity of petroleum that is
estimated to exist originally in naturally occurring accumulations.
It includes that quantity of petroleum that is estimated, as of a
given date, to be contained in known accumulations, prior to
production, plus those estimated quantities in accumulations yet to
be discovered.
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Discovered Petroleum
Initially In Place ("DPIIP") is that quantity of petroleum that is
estimated, as of a given date, to be contained in known
accumulations prior to production. The recoverable portion of
discovered petroleum initially in place includes production,
reserves, and Contingent Resources; the remainder is
unrecoverable.
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Contingent Resources
are those quantities of petroleum estimated, as of a given date, to
be potentially recoverable from known accumulations using
established technology or technology under development but which
are not currently considered to be commercially recoverable due to
one or more contingencies. Economic Contingent Resources (ECR) are
those contingent resources that are currently economically
recoverable.
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Undiscovered
Petroleum Initially In Place ("UPIIP") is that quantity of
petroleum that is estimated, on a given date, to be contained in
accumulations yet to be discovered. The recoverable portion of
undiscovered petroleum initially in place is referred to as
"prospective resources" and the remainder as
"unrecoverable."
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Prospective Resources
are those quantities of petroleum estimated, as of a given date, to
be potentially recoverable from undiscovered accumulations by
application of future development projects. Prospective resources
have both an associated chance of discovery and a chance of
development.
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Unrecoverable is that portion of DPIIP and UPIIP quantities
which is estimated, as of a given date, not to be recoverable by
future development projects. A portion of these quantities may
become recoverable in the future as commercial circumstances change
or technological developments occur; the remaining portion may
never be recovered due to the physical/chemical constraints
represented by subsurface interaction of fluids and reservoir
rocks. Uncertainty Ranges are described by the Canadian Oil and Gas
Evaluation Handbook as low, best, and high estimates for reserves
and resources as follows:
Low Estimate: This is
considered to be a conservative estimate of the quantity that will
actually be recovered. It is likely that the actual remaining
quantities recovered will exceed the low estimate. If probabilistic
methods are used, there should be at least a 90 percent probability
(P90) that the quantities actually recovered will equal or exceed
the low estimate.
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Best Estimate: This
is considered to be the best estimate of the quantity that will
actually be recovered. It is equally likely that the actual
remaining quantities recovered will be greater or less than the
best estimate. If probabilistic methods are used, there should be
at least a 50 percent probability (P50) that the quantities
actually recovered will equal or exceed the best
estimate.
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High Estimate: This
is considered to be an optimistic estimate of the quantity that
will actually be recovered. It is unlikely that the actual
remaining quantities recovered will exceed the high estimate. If
probabilistic methods are used, there should be at least a 10
percent probability (P10) that the quantities actually recovered
will equal or exceed the high estimate.
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MFA is the most common analytical method applied to oil shale.
It was first developed in Germany
and later modified by the US Bureau of Mines as a method to
evaluate oil shale potential. The analysis is a controlled
pyrolysis of the sample. The pyrolysis yields distilled vapors of
oil, gas, water which are cooled and then separated through
centrifuging.
Certain resource estimate volumes disclosed herein are
arithmetic sums of multiple estimates of DPIIP or UPIIP, which
statistical principles indicate may be misleading as to volumes
that may actually be recovered. Readers should give attention to
the estimates of individual classes of resources and appreciate the
differing probabilities of recovery associated with each class as
explained under this Resource Definitions section.
SOURCE Questerre Energy Corporation