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What at the end of this artickle does "brown field " means?

Opportunistic growth in the Great Divide

Carpe diem. That’s one phrase that accurately sums up the success story of Connacher Oil and Gas Limited.

Connacher may be a small company, but it is a mighty producer with 98,000 acres of oil sands leases, which include the Great Divide project near Fort McMurray, Alberta. The Calgary-based integrated oil sands company owns conventional crude oil and natural gas production and reserves in two Canadian provinces, Alberta and Saskatch­ewan. It also operates and owns a heavy oil refin­ery located in Great Falls, Montana.

Connacher also owns 22 per cent of a South American-based exploration and devel­opment called Petrolifera Petroleum Limited, a publicly-traded company on the Toronto Stock Exchange. Petrolifera owns crude oil and natu­ral gas production and reserves and conducts exploration and development on its extensive acreage holdings in Argentina, Peru and Colom­bia in South America.

Leading the way

When CEO, President and director Richard A. (“Dick”) Gusella first joined Connacher Oil and Gas Limited back in 2001, the company was just a Shell company. Around that time, Justin­ian Explorations Ltd. had changed its name to Connacher Oil and Gas Limited. With becom­ing the top executive at Connacher, Gusella had an opportunity to invest in the company. And so he stepped up and secured the leader­ship opportunity.

Shortly after, Gusella acquired some minor producing properties to have some cash flow, bring on more staff and find the “right deal.” Meanwhile, he continued working on an Argen­tinean property held by the company, an asset that was eventually rolled into a company called Petrolifera Petroleum Limited and which eventu­ally yielded a 40 million boe oil field in Argen­tina, which is still active and producing about 5,000 boe today.

In 2004, the company acquired its core holdings at Great Divide in Alberta’s oil sands. The main lease block is about 50 miles south of Fort McMurray on Highway 63 which runs between the oil sands region and Edmonton, Alberta’s capital city.

Connacher quickly explored its main lease block and brought its first production onstream within four years of its first purchase. “We’re about the only publicly traded oil company, apart from the bigger guys, with proven reserves, production and active plants. I think we are the poster child company for independents in the oil sands at this point in time, listed in public markets,” points out Gusella.

Thriving producer uses “in-situ” SAGD technique

Many companies can boast about having min­ing exploration and development opportunities, however, often it takes several years to reach the production stage. But that’s far from being the case with Connacher. “There’s a lot of arm wav­ing in the oil sands about resources and different recovery techniques; we like to think that we’re using the one that works,” explains Gusella.

And evidently so; executives at the thriving oil producer Connacher were early pioneers in the “in-situ” recovery scene for conventional heavy oil as well as in using a steam-assisted gravity drain­age (SACP) technology. The term “in-situ” refers to the process whereby bitumen is separated from the sands while still underground in the oil sands original location. This stands in contrast to oil sands mining operations, where the separation takes place after the oil sands are moved from their original location.

Due to a high quality oil sands reservoir with critical cap rock spread over the area, Con­nacher is able to utilize the proven technology of steam-assisted gravity drainage (SAGD) for its projects to date. The company takes pride in its first SAGD oil sands project at Great Divide, known as the “Pod One,” which started commer­cial production in March 2008, just four years after the initial purchase of oil sands properties in the region.

Strategic decision to acquire properties

Connacher’s strategic decision to acquire prop­erties, with related assets now worth well over $2 billion, was a key driver in the company’s growth plan. The company has a history of op­portunistic growth which is an essential part of its strategic approach and key to its success. Beyond assembling an exceptional team of oil and gas professionals over the years, the single most noteworthy event to shape Connacher as a company was the decision in early 2004 to acquire oil sands leases at Great Divide, Alberta.

After acquiring the lands and conducting exploration through 3D seismic and core hole-drilling, Connacher completed the construction of Pod One, the company’s first 10,000 bb/d plant at its Great Divide project in 2007. This included drilling 15 well pairs to inject the steam and pro­duce the bitumen from the reservoir.

Over the past three years, Connacher has had great successes–one after another. From begin­ning the steam injection at its great Divide “Pod One” oil sands projects to reaching a milestone of 10,000 bb/d for a second time, the company also received the Order in Counsel for its Great Divide Algar project in November 2008. The Algar project is now nearing completion and the related 17 SAGD well pairs have been drilled. Commis­sioning of the plant is targeted for april 2010, and production startup around August 2010 after a three month steaming cycle.

Future plans

Looking ahead, Connacher has an application now before the Alberta government with the goal of having the authority to expand its productive capacity up to 44,000 barrels a day with a view to eventually expanding beyond 50,000 bbl/d by 2015. “Our Algar site is currently under construc­tion which should be completed just under 300 days as planned. Algar is more expensive than Pod One because we built infrastructure—an access road and three well pads instead of two —and it’s been designed for future brown field ex­pansion,” adds Gusella. He believes moving away from the green field plant construction to brown field will also improve the company’s economics by lowering unit costs going forward.

Connacher has had many key lessons dur­ing the early phases of Pod one while producing over four million barrels, and the company and its management are confident of its futur