Grizzly Oil Sands to use new development plan for just acquired May River project

CALGARY – Grizzly Oil Sands UlC. plans to use its modular oilsands development system to develop its just acquired May River property in Alberta.

The privately owned Calgary energy company says using its so-called ARMS development system will help the company develop a stream-assisted oilsands project that it bought this week from PetroBank Energy and Resources Ltd. (TSX:PBG) for $225 million.

Late Tuesday, PetroBank and Grizzly announced the transaction for the May River property, which includes 18,250 hectares of oilsands leases, including the Conklin, Alta. demonstration heavy oil recovery project.

Grizzly said the acquired leases are estimated to contain 90.6 million barrels of probable reserves and up to 624 million barrels in a best case.

The private company said it intends to develop the lease using SAGD recovery technology and the ARMS development system.

“The May River lease adds substantially to the magnitude and quality of Grizzly’s existing portfolio of projects, which, upon completion of the transaction will include approximately 800,000 net acres of oil sands leases and nearly three billion barrels of reserves and resources,: CEO John Pearce said in a release.

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The CEO said the company plans to work on filing regulatory applications for full field development of the oilsands project.

“The ARMS development model is an ideal template for the development of the May River lease and the inherent capital efficiencies and portability of the facilities will allow Grizzly to develop a very large scale project.”

Grizzly’s first ARMS plant is being built for the Algar Lake oilsands project, scheduled for first oil production in 2013.

Advanced, Re-locatable, Modular and Standardized plant design was developed to cut capital costs, speed up development and improve efficiency at the company’s SAGD projects.

The system is said to create more efficient production and improved reserve life over traditional SAGD projects.

Under steam assisted, or SAGD, technology, oilsands companies pipe steam underground to melt thick tar-like oilsands deposits.

The oil is then collected through a second pipeline and pumped to the surface.

The purchase of May River is expected to close by the end of February.

Financing of the deal is planned from Grizzly’s existing shareholders, investment funds managed by Wexford Capital LP and Gulfport Energy Corp. (NASDAQ:GPOR).