The Kakwa River Project is a large-scale, tight, liquids-rich natural gas property covering more than 500,000 net acres in the Kakwa area of northwest Alberta. This high-quality property contains a large resource base that is considered sufficient to deliver several years of production growth at a supply cost that is among the lowest in North America.
The Nest is Seven Generations’ primary development region, and can sustain between 15-20 years of future development drilling. Over time, the size of this inventory has the potential to expand as the company validates the development potential of other geologic formations and high-grades additional land outside of the Nest. Seven Generations holds nearly a 100% interest in the Nest and in many surrounding areas. This region is served year-round by a vibrant oil and natural gas service sector in the city of Grande Prairie.
Unlike other regions of the Montney that have higher natural gas content, the Nest is characterized by substantial natural gas liquids and condensate. Condensate is key for driving some of the best economics in North America because of its superior pricing, and the company’s assets are located within convenient reach of North America’s largest demand for condensate – the Canadian oil sands.
Condensate is a low viscosity hydrocarbon, which can dilute heavier oils that are too viscous to transport via pipeline. In Alberta, most production from the oil sands is blended with condensate (typically in the ratio of 1 barrel of bitumen with 0.4 barrels of condensate) to make a suitable blend for pipeline specifications.
Unlike oil and natural gas, which are exported to distant markets often at discounted prices, a significant portion of Canadian condensate demand is satisfied by imports, which helps to establish premium product pricing. Seven Generations expects the demand for condensate to exceed local supplies for the foreseeable future.
Gas Marketing and Transportation
Seven Generations Energy had the foresight to secure long-term marketing arrangements for its natural gas, knowing that its economic resource and growing supplies would require adequate offtake to achieve favorable pricing. The company accomplished this by securing volumes on two transcontinental natural gas pipelines – Alliance and TransCanada – that intersect near Seven Generations’ lands. Today, the company has diversified natural gas market access to markets in Alberta (AECO), Eastern Canada (Dawn), the US Mid-West (Chicago Citygate), the Gulf Coast (Henry Hub), and US West (Malin). These commitments allow room for the company to continue to grow its production volumes over the long-term, and in the near-term, generate profitable transactions by purchasing low-cost domestic gas for resale in higher priced markets.
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