Acceleware Ltd. (TSX-V: AXE), a leader in the development of technologies enabling low-cost and environmentally-friendly extraction of heavy oil and bitumen, announced yesterday that it has secured a new partner and test site for its commercial scale pilot of the company’s transformative RF XL clean technology. Acceleware is very pleased to enter into agreements with Broadview Energy, a private oil and gas company with extensive heavy oil operating experience currently focused on developing thermal (SAGD) projects in West-Central Saskatchewan.
Details of the agreements
Under the terms of the agreements, Acceleware will farm-in to Broadview’s Marwayne asset near Lloydminster in the Cold Lake Oil Sands area and Broadview will be added as a consortium partner for the project. The agreements grant Acceleware certain access rights to the Marwayne asset to complete the project and provide the terms for future RF XL purchases by Broadview from Acceleware. With favourable operating conditions that support accelerated timelines, Broadview’s Marwayne asset is expected to be highly suitable for the RF XL commercial-scale test — offering numerous attractive features, including all-weather access, existing roads and well sites, and close proximity to key services and trades.
Acceleware believes that testing at Marwayne offers the most compelling heavy oil operating environment with an expedited path to commercialization of Acceleware’s RF XL clean technology. Key anticipated benefits of the Broadview partnership include:
- immediate access to a viable and high-quality test site targeting the GP formation anywhere within the Marwayne asset;
- an option to conduct a subsequent test at a second location within the Marwayne asset at any time within five years of the spud date of Acceleware’s first test wells; and
- ownership and economic benefit from all petroleum substances produced in both the first and second tests subject to a gross overriding royalty of up to 7.5 per cent payable to Broadview.
Acceleware has received conditional approval of the Broadview partnership and Marwayne test site from its core funders, Sustainable Development Technology Canada (SDTC) and Emissions Reduction Alberta (ERA) pending the completion of a project update, including a detailed budget forecast, confirmation of Acceleware’s ability to fund the remaining milestones for the project, and revised determinations pertaining to environmental benefits.
“We are extremely pleased with the Broadview partnership, which enables Acceleware to benefit from Broadview’s experience and agility while being able to access an optimal test site at Marwayne,” said Geoff Clark, CEO of Acceleware. “The extensive engineering and de-risking work that we have completed over the past two years will be instrumental in validating the performance and potential of our RF XL clean technology. We greatly appreciate the continued support of our funding partners, SDTC and ERA, as we continue to advance commercialization of this clean-tech innovation.”
“Broadview looks forward to working with Acceleware to advance the RF XL technology as we recognize its significant potential benefit for business, industry and the environment in opening up a new era of growth within the heavy oil sector,” said John Festival, Broadview’s CEO. “Broadview is excited to have a front row seat at the Marwayne test site where we will support Acceleware’s efforts to validate their RF XL technology. Over the past 30+ years, Broadview’s personnel have trialed and closely monitored a number of different heavy oil recovery technologies. Broadview recognizes Acceleware’s RF XL technology as one of the biggest potential game-changers in heavy oil and bitumen recovery since SAGD (steam assisted gravity drainage) was commercialized over 20 years ago.”
Although situated within the Cold Lake Oil Sands region, the reservoir at the test site is classified as a heavy oil deposit and oil produced from the area has lower viscosity than a typical oil sands reservoir. As such, the results gleaned from the project are expected to be more analogous to, and relevant for, conventional heavy oil operators in Alberta and Saskatchewan, as well as operators developing heavy oil deposits in the Middle East, California, and Latin America. In addition, the depth of this test site is anticipated to allow Acceleware to demonstrate that the RF XL clean technology can be successfully deployed to heat reservoirs at depths consistent with both heavy oil and oil sands reservoirs. The company believes that positive test results from the reservoir at Marwayne will open up a much larger addressable market for its RF XL clean technology upon commercialization, including the potential to re-invigorate the many CHOPs fields that have been shut-in and neglected in Alberta and Saskatchewan.
Acceleware intends to apply for regulatory approval of the project as soon as possible and is currently working with its service and component supply partners to update the budget and schedule for the project. Currently, the company anticipates the budget will range between $16 and $20 million, of which approximately $16 million has already been raised by Acceleware. This includes $5.25 million in funding from SDTC, $5 million from ERA and $2 million from a major oilsands producer. In light of the prevailing economics facing the oilfield service sector, the company believes there may be potential to secure material cost reductions in equipment and services that will be required to undertake the project.
Acceleware had previously entered into an agreement with Prosper Petroleum Ltd. to perform the pilot test at their planned Rigel site. However, the significant delays in securing regulatory approval of the Rigel SAGD project prompted Acceleware to terminate that agreement effective May 19, 2020.