Coalbed Methane Development in the Western Coalbed Methane Development in the Western Canadian Sedimentary Basin: Canadian Sedimentary Basin: A Significant Emerging Resource for North A Significant Emerging Resource for North America America Rocky Mountain Natural Gas 2004 Rocky Mountain Natural Gas 2004
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Coalbed Methane Development in the Western Canadian
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Coalbed Methane Development in the Western Coalbed Methane Development in the Western Canadian Sedimentary Basin: Canadian Sedimentary Basin:
A Significant Emerging Resource for North A Significant Emerging Resource for North AmericaAmerica
Rocky Mountain Natural Gas 2004Rocky Mountain Natural Gas 2004
CANADIAN CBM DEVELOPMENTCANADIAN CBM DEVELOPMENT
““FROM CONCEPT TO REALITY”FROM CONCEPT TO REALITY”
Western Canada Natural Gas Production Declines
Source: GMP Securities Ltd.
The WCSB Supply Challenge
39.6031.107.00Cash Flow from Operations ($billions)
13,60010,7002,700Gas Well Connections
(0.42)0.000.60WCSB Supply Growth (bcf/d/yr)
9920Reserve Life Index (years)
0.230.270.53Initial Productivity/Well (mmcf/d)
3.42.90.8Decline Volume (bcf/d)
16.516.49.8WCSB Production (bcf/d)
20.318.08.0Decline Rate (%)
200320001990
Source: TransCanada Corporation April , 2004
CBM Potential of North America
AppalachianAppalachian
San JuanSan Juan RatonRaton
UintaUinta Powder RiverPowder River
Western Canadian Western Canadian Sedimentary BasinSedimentary Basin
Black WarriorBlack Warrior
PiceancePiceance
Potential Daily ProducingBasins Resources Production Wells
Four distinct CBM play styles in Western Canada each of which has unique geological and reservoir characteristics
Western Canada plains – shallow (Horseshoe Canyon/Scollard)Western Canada plains – deep (Upper Mannville)Cordilleran mountain and foothills (Gates)Restricted Basins - British Columbia
Source: Defiant Energy
Distribution of Major Coal-bearing Areas
Graham IslandCoalfield TelkwaCoalfieldKappan andGroundhogCoalfields
TuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfieldKappan andGroundhogCoalfields
TuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfieldKappan andGroundhogCoalfields
TuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfieldKappan andGroundhogCoalfields
TuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfieldKappan andGroundhogCoalfields
TuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfieldKappan andGroundhogCoalfields
TuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfieldKappan andGroundhogCoalfields
TuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfieldKappan andGroundhogCoalfields
TuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
ReginaRegina
Prince RupertPrince Rupert
VancouverVancouver
KamloopsKamloops
VictoriaVictoria
British ColumbiaBritish Columbia
AlbertaAlberta
SaskatchewanSaskatchewan
Grande PrairieGrande Prairie
FernieFernie
SaskatoonSaskatoon
EdmontonEdmonton
CalgaryCalgary
Source: Defiant Energy
Mannville FormationScollard FormationMountains and Foothills
Horseshoe Canyon Formation
Major Exploration Areas:Alberta Plains Shallow – Scollard Fm
Cum coal thickness Cum coal thickness (metres)(metres)Natural gas content Natural gas content (scf/ton)(scf/ton)Depth range Depth range (metres)(metres)Resource base Resource base (bcf/section)(bcf/section)Total resources Total resources -- GIP GIP (tcf)(tcf)Well costs Well costs ($Cdn)($Cdn)Time to production Time to production (months)(months)Water qualityWater quality
Pilot projectsPilot projectsEnerplusEnerplusPenn WestPenn WestBonterraBonterra
CalgaryCalgary
Foothills/MountainsFoothills/Mountains PlainsPlains MajorMajorCoal ZonesCoal Zones
PaskapooPaskapoo
ScollardScollard
Battle/WhitemudBattle/Whitemud
BearpawBearpaw
OldmanOldman
ForemostForemost
Lea ParkLea ParkColorado GpColorado Gp
Mannville GpMannville Gp
Kootenay Gp/Kootenay Gp/NikanassinNikanassin
HorseshoeHorseshoeCanyonCanyon
PaskapooPaskapoo ObedObed
ArdleyArdley
DrumhellerDrumheller
LethbridgeLethbridge
TaberTaber
McKayMcKay
LuscarLuscarMannvilleMannville
KootenayKootenay
Carbon/Carbon/ThompsonThompson
CoalspurCoalspurEntrance CglEntrance Cgl
BrazeauBrazeau
Alberta GpAlberta Gp
GatesGatesMoosebarMoosebar
GladstoneGladstoneCadominCadomin
Terti
ary
Terti
ary
Uppe
r Cre
tace
ous
Uppe
r Cre
tace
ous
Wap
itiW
apiti
Belly
Rive
r Gp
Belly
Rive
r Gp
Lowe
r Cre
tace
ous
Lowe
r Cre
tace
ous
Lusc
ar G
pLu
scar
Gp
Jura
ssic
Jura
ssic
Saun
ders
Gp
Saun
ders
Gp
Source: Defiant Energy
Major Exploration Areas: Alberta Plains shallow - Horseshoe Canyon Fm
EdmontonEdmonton
Cum coal thickness Cum coal thickness (metres)(metres)Natural gas content Natural gas content (scf/ton)(scf/ton)Depth range Depth range (metres)(metres)Resource base Resource base (bcf/section)(bcf/section)Total resources Total resources -- GIP GIP (tcf)(tcf)Well costs Well costs ($Cdn)($Cdn)Time to production Time to production (months)(months)Water qualityWater quality
Foothills/MountainsFoothills/Mountains PlainsPlains MajorMajorCoal ZonesCoal Zones
PaskapooPaskapoo
ScollardScollard
Battle/WhitemudBattle/Whitemud
BearpawBearpaw
OldmanOldman
ForemostForemost
Lea ParkLea ParkColorado GpColorado Gp
Mannville GpMannville Gp
Kootenay Gp/Kootenay Gp/NikanassinNikanassin
HorseshoeHorseshoeCanyonCanyon
PaskapooPaskapoo ObedObed
ArdleyArdley
DrumhellerDrumheller
LethbridgeLethbridge
TaberTaber
McKayMcKay
LuscarLuscarMannvilleMannville
KootenayKootenay
Carbon/Carbon/ThompsonThompson
CoalspurCoalspurEntrance CglEntrance Cgl
BrazeauBrazeau
Alberta GpAlberta Gp
GatesGatesMoosebarMoosebar
GladstoneGladstoneCadominCadomin
Terti
ary
Terti
ary
Uppe
r Cre
tace
ous
Uppe
r Cre
tace
ous
Wap
itiW
apiti
Belly
Rive
r Gp
Belly
Rive
r Gp
Lowe
r Cre
tace
ous
Lowe
r Cre
tace
ous
Lusc
ar G
pLu
scar
Gp
Jura
ssic
Jura
ssic
Saun
ders
Gp
Saun
ders
Gp
Source: Defiant Energy
Major Exploration Areas:Alberta Plains Deep – Upper Mannville Fm
Pilot projectsPilot projectsCentrica / APFCentrica / APFTridentTridentThunderThunderBurlingtonBurlington
Cum coal thickness Cum coal thickness (metres)(metres)Natural gas content Natural gas content (scf/ton)(scf/ton)Depth range Depth range (metres)(metres)Resource base Resource base (bcf/section)(bcf/section)Total resources Total resources -- GIP GIP (tcf)(tcf)Well costs Well costs ($Cdn)($Cdn)Time to production Time to production (months)(months)Water qualityWater quality
Foothills/MountainsFoothills/Mountains PlainsPlains MajorMajorCoal ZonesCoal Zones
PaskapooPaskapoo
ScollardScollard
Battle/WhitemudBattle/Whitemud
BearpawBearpaw
OldmanOldman
ForemostForemost
Lea ParkLea ParkColorado GpColorado Gp
Mannville GpMannville Gp
Kootenay Gp/Kootenay Gp/NikanassinNikanassin
HorseshoeHorseshoeCanyonCanyon
PaskapooPaskapoo ObedObed
ArdleyArdley
DrumhellerDrumheller
LethbridgeLethbridge
TaberTaber
McKayMcKay
LuscarLuscarMannvilleMannville
KootenayKootenay
Carbon/Carbon/ThompsonThompson
CoalspurCoalspurEntrance CglEntrance Cgl
BrazeauBrazeau
Alberta GpAlberta Gp
GatesGatesMoosebarMoosebar
GladstoneGladstoneCadominCadomin
Terti
ary
Terti
ary
Uppe
r Cre
tace
ous
Uppe
r Cre
tace
ous
Wap
itiW
apiti
Belly
Rive
r Gp
Belly
Rive
r Gp
Lowe
r Cre
tace
ous
Lowe
r Cre
tace
ous
Lusc
ar G
pLu
scar
Gp
Jura
ssic
Jura
ssic
Saun
ders
Gp
Saun
ders
Gp
Source: Defiant Energy
Major Exploration Areas: WCSB - Mountains and Foothills
Graham IslandCoalfield TelkwaCoalfield
Kappan andGroundhogCoalfieldsTuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfield
Kappan andGroundhogCoalfieldsTuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfield
Kappan andGroundhogCoalfieldsTuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfield
Kappan andGroundhogCoalfieldsTuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfield
Kappan andGroundhogCoalfieldsTuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfield
Kappan andGroundhogCoalfieldsTuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfield
Kappan andGroundhogCoalfieldsTuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Graham IslandCoalfield TelkwaCoalfield
Kappan andGroundhogCoalfieldsTuyaRiver CoalRiver
B owronR iverHat CreekCoalfieldM erritC oalfieldSimilkameenCoalfieldNanaimoCoalfieldCom oxCoa lfieldSuquashCoalfield
Prince Rupert
Vancouver
Kamloops
Victoria
BRITISHBRITISHCOLUMBIACOLUMBIA
Fernie
Foothills/MountainsFoothills/Mountains PlainsPlains MajorMajorCoal ZonesCoal Zones
PaskapooPaskapoo
ScollardScollard
Battle/WhitemudBattle/Whitemud
BearpawBearpaw
OldmanOldman
ForemostForemost
Lea ParkLea ParkColorado GpColorado Gp
Mannville GpMannville Gp
Kootenay GpKootenay Gp
NikanassinNikanassin
HorseshoeHorseshoeCanyonCanyon
PaskapooPaskapoo ObedObed
ArdleyArdley
DrumhellerDrumheller
LethbridgeLethbridge
TaberTaber
McKayMcKay
LuscarLuscarMannvilleMannville
KootenayKootenay
Carbon/Carbon/ThompsonThompson
CoalspurCoalspurEntrance CglEntrance Cgl
BrazeauBrazeau
Alberta GpAlberta Gp
MoosebarMoosebar
GladstoneGladstoneCadominCadomin
Terti
ary
Terti
ary
Uppe
r Cre
tace
ous
Uppe
r Cre
tace
ous
Wap
itiW
apiti
Belly
Rive
r Gp
Belly
Rive
r Gp
Lowe
r Cre
tace
ous
Lowe
r Cre
tace
ous
Lusc
ar G
pLu
scar
Gp
Jura
ssic
Jura
ssic
Saun
ders
Gp
Saun
ders
Gp
GatesGates
Pilot projectsPilot projects
Cum coal thickness Cum coal thickness (metres)(metres)Natural gas content Natural gas content (scf/ton)(scf/ton)Depth range Depth range (metres)(metres)Resource base Resource base (bcf/section)(bcf/section)Total resourcesTotal resources--GIP GIP (tcf)(tcf)Well costs Well costs ($cdn)($cdn)Time to production Time to production (months)(months)Water qualityWater quality
Largest potential exists in the Upper Mannville coals
Alberta Plains In Situ Coalbed Methane Resources By Coal Zone
Critical success factors for Western Canadian CBM play types
Alberta Plains – Horseshoe Canyon Formationlow cost drilling and completion techniqueswell established land base and low royalty structureco-mingling of all coal beds in stratigraphic sectionserendipity of conventional reservoirsexisting low pressure surface infrastructurestrong gas prices
Alberta Plains – Scollard Formationlow cost drilling and completion techniqueswell established land base and low royalty structurecost effective water disposal optionsstrong gas prices
Source: Defiant Energy
Critical success factors for Western Canadian CBM play types
Alberta Plains – Mannville Formationlow cost drilling and completion techniqueswell established land base and low royalty structureserendipity of conventional reservoirseffective dewatering of reservoir through critical mass of production wellsexisting low pressure surface infrastructure
WCSB Foothills and Mountainslow cost drilling and completion techniqueswell established land base and low royalty structurecost effective water disposal optionsapplication of new drilling and completion technology to overcomepermeability and coal fabric barriers (sheared coals)
Capital Cost: • Well: $600,000 per well• Facility: $150,000 per well
Operating Cost:• $0.50/mcf• $2,500 per well-month
Rat
e (m
cf/d
)
0
50
100
150
200
250
300
2004 2006 2008 2010 2012
Mannville Production Rate Over Time
Payout in 4.1 years
ROR: 30%
F&D: $0.80/mcf
CBM Completion & Water Disposal
Removal of water lowers the pressure within the coal zones allowing the gas to be produced
Volumes that are produced during de-watering are re-injected into approved water disposal zones
Withdrawl, use and disposal of all produced water is regulated by the Province of Alberta. To protect the eco-system, no surface disposal of saline water is permitted
Cost of drilling disposal wells can be allocated across the relevant producing wells
Corbett “Inside” Well
Possible preliminary evidence of increasing gas rate as dewatering proceeds
Time (y ears)2002 200503 04
030
000
3000
6000
9000
1200
015
000
1800
021
000
2400
027
000
Cumulativ e GAS Mcf
075
7.5
1522
.530
37.5
4552
.560
67.5
Calndr-Day Av g GAS Mcf
075
075
150
225
300
375
450
525
600
675
Monthly Hours hrs
015
015
3045
6075
9010
512
013
5
Prdcg-Day Av g WTR BblPrdcg-Day Av g CND [No Data]Prdcg-Day Avg GAS Mcf
Cum GAS 26,304.3 McfCum OIL 0.0 BblCum WTR 39,253.3 Bbl
Data As Of :From:
To:
2004-05 (AB)2002-122004-05
INDIVIDUAL PRODUCTION981405 ET AL CORBETT 16-10-62-6
CBM production can utilize existing infrastructure for both drilling and development purposes
CBM producers must adhere to the same responsible drilling, production and operations regulations as all other producers
APF consults with local stakeholders to address concerns surrounding the perceived impacts of CBM drilling and production
Wells are cased with steel and then cemented to protect all underground water sources during production
Contact Information
Corporate ContactsMartin Hislop, C.E.O.
Steve Cloutier, President Alan MacDonald, Vice President, Finance
Dan Allan, Vice President, Coalbed MethaneChristine Ezinga, Corporate Planning Analyst
DISCLAIMER Certain statements in this material are “forward-looking statements” including outlook on oil and gas prices, royalty rates, operating expenses, estimates of future production, estimated completion dates of construction and development projects, business plans for drilling and exploration, estimated amounts and timing of capital expenditures and anticipated future debt levels. Information concerning reserves contained in this material may also be deemed to be forward-looking statements as such estimates involve the implied assessment that the resources described can be profitably produced in the future. These statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ from those anticipated by APF Energy Trust and APF Energy Inc. These risks include, but are not limited to: the risks of the oil and gas industry (e.g., operational risks in exploration for; development and production of crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; and health, safety and environmental risks), risks in conducting foreign operations (e.g., political and fiscal instability in nations where APF Energy does business), the possibility that government policies may change or governmental approvals may be delayed or withheld; and price and exchange rate fluctuations. These and other risks are described in APF Energy’s reports that are on file with Canadian securities regulatory authorities. Any offering of trust units may only being made under a prospectus. Any trust units offered will not be and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.