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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 America America Rocky Mountain Natural Gas 2004 Rocky Mountain Natural Gas 2004
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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

(tcf) (mmcf/d)

WCSB 528 30 - 40 >700 drilledSan Juan 85 ~2,000 >3,600Powder River 39 ~1,000 >11,000Uinta 10 280 >580Raton 10 ~160 >1,100Piceance 99 4 40-50

Potential Daily ProducingBasins Resources Production Wells

(tcf) (mmcf/d)

WCSB 528 30 - 40 >700 drilledSan Juan 85 ~2,000 >3,600Powder River 39 ~1,000 >11,000Uinta 10 280 >580Raton 10 ~160 >1,100Piceance 99 4 40-50

Source: Defiant Energy

Tapping the Potential

TertiaryCretaceousCretaceous-Jurassic

Alberta Plains

115-352 Tcf

Fernie/Elk Valley

19 Tcf

Peace River

60 TcfTotal reserve potential of CBM estimated at 182-553 Tcf in western Canada

Alberta Plains are estimated to contain 115-352 Tcf of CBM

Current recoverable estimates for CBM are 43-130 Tcf

Source: GSC, BC Government

Western Canadian Sedimentary Basin –Schematic Cross Section

Edge of Defor

Paleozoic

Lethbridge

Taber

Pakowki

Upper Mannville CoalsMannville

Coals

Lower

BasalDrumheller

Weaver

Colorado Shale

Lea Park

Nikanassin Fm

McKay

Milk River Formation

med Belt

Ardley CoalWestWest

EastEastScollard Fm

HorseshoeCanyon Fm

Belly RiverGroup

Mannville Group

Fernie GroupKootenay Group

Modified from CSUG NGC Technical Presentation, 03-2004

North American CBM Basins - Comparison

Raton

Fort Union

Ferron

Pottsville

Fruitland

Basin Dependent

Mist Mountain & Gates

Upper Mannville

Scollard

Horseshoe Canyon

Coal bearingformation

Variable1 - 103 – 950 - 12010 – 50

Fresh1 – 2010 – 1435030Raton

Fresh100 - 10002 – 525 – 50Up to 100Powder

Saline10 - 3013 – 18350 – 45025Uinta

Brackish<1010 - 15300 – 40025Black Warrior

Saline20 – 5015 – 20225-35070San Juan

UnknownUnknown5 – 5025 - 250Up to 500*restricted basins – B.C.

VariableVariable10 – 4050 – 35050 – 150WCSBmountains and foothills

Saline0.1 – 103 – 10150 – 35010 – 35Alberta plains deep

Dry1 - 101.5 – 325 - 7515 – 35Alberta plains shallow

Waterquality

Avg. Perm.(md)

(bcf/section)

gas content(scf/ton)

Coal (feet)Basin

Source: Defiant Energy

Coal Distribution and Play Definition

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

11--20203030--13013000--70070022--882020--4040250,000250,000variablevariablevariablevariable

ScollardScollard

EdmontonEdmonton

CalgaryCalgary

Grande Grande PrairiePrairie

A L B E R T AA L B E R T A

00--3 m3 m33--9 m9 m99--15 m15 m> 15 m> 15 m

Net coalNet coal

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

11--12123030--15015000--80080022--331515--2020250,000250,00000--11drydry

HorseshoeHorseshoe

CalgaryCalgary

Grande Grande PrairiePrairie

A L B E R T AA L B E R T A

00--6 m6 m66--10 m10 m1010--14 m14 m> 14 m> 14 m

Net coalNet coal

CBM fairwayCBM fairway 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 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

11--1212175175--330330800800--2000200055--1212150150--170170750,000750,0001212--1818salinesaline

Upper Upper MannvilleMannville

EdmontonEdmonton

A L B E R T AA L B E R T A

00--2 m2 m22--6 m6 m66--10 m10 m> 10 m> 10 m

Net coalNet coal

CalgaryCalgary

Grande Grande PrairiePrairie

EdmontonEdmonton

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

1515--40405050--35035000--150015001010--4040~ 100~ 100> 800,000> 800,000variablevariablevariablevariable

Source: Defiant Energy

Clear Opportunity

020406080

100120140160

Ard

ley

Car

bon-

Tho

mps

on

Low

erE

dmon

ton

Let

hbri

dge

Tab

er

Mac

kay

Upp

erM

annv

ille

Low

erM

anvi

lle

Res

ourc

es (t

cf)

Source: Sproule

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)

Source: Defiant Energy

APF Alberta CBM Projects

Calgary

Wood River

Bittern

Doris

Edmonton

5M

Corbett Creek

Hackett

Rowley

APF CBM project areasHorseshoe Canyon FormationBearpaw Formation

Other CBM projects

APF Alberta Upper Mannville CBM Projects

Calgary

Doris

Edmonton

5M

APF CBM project areasHorseshoe Canyon Formation

Corbett Creek Bearpaw Formation

Corbett CBM Project

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

T59

T60

T61

T62

T63

R3W5R4R5R6R7

2.8

2.1

3.7

4.5 4.0

3.0

2.7

3.7

4.5

2.6

2.7 3.4

4.0

3.5

5.5

4.0

6.03.5

5.1

4.3

3.7

3.0

3.43.5

4.0

3.4

3.7 3.4

7.06.0

5.0

3.8

3.8

4.5 6.0

4.5 4.8 5.26.3

5.5

4.85.04.1

4.63.0

3.32.4

3.0

2.2 2.52.0

3.33.0

2.23.6 3.02.7

3.14.3

4.0

5.0 4.93.8

4.0

2.0

1.52.0

3.2

6.0

2.4

3.0

7.6

5.5

2.0

2.0

5.5

2.82.6

2.4

3.34.0

3.5

2.55.6

7.0

3.84.6

4.94.8

6.76.66.7

6.0

5.6

5.6

5.2

5.54.6

4.76.0 5.5

5.2

4.03.4

4.6

5.03.4

3.7

5.04.24.9

5.5

5.1 6.5

6.86.1

5.2

6.8

6.07.1

6.8

2.8

2.2

2.9

4.5

4.13.92.0 3.9

7.5

6.17.35.62.5

5.0 6.3

5.84.02.41.2

2.8

5.2

1.82.8

5.5

1.5 4.3

5.2

0.0

6.0

5.5

5.05.0 4.0

4.5

4.5

3.24.5

4.0 2.7

6.56.0

5.2

5.5 4.6 5.2

4.9

5.24.8

5.0

5.0

5.05.04.3 5.65.0

6.1

5.5 4.6

5.55.0

4.5

5.0

4.5

3.84.5

4.85.2

4.3 3.9

7.2

7.9

8.17.3

6.56.1

7.3

7.9

7.5 7.1

7.5 7.27.6 6.0

5.6

4.5

6.07.87.56.56.5

6.8

5.6

4.87.3 7.7

2.35.8

5.82.8

4.5

2.0 2.0

4.92.1

3.4

2.13.82.83.73.7

3.81.5

2.1

1.51.83.9

3.7 2.5

3.0

4.0

3.1

3.5

3.4

4.04.0

3.04.5

2.4

5.2

3.04.36.3

3.3

4.0

4.8

4.44.0

4.23.53.5

6.1

5.2

5.0 6.5

6.2 6.06.5

5.65.5

5.4

4.4

3.6

4.5

4.03.0

3.6

3.72.5

1.9

3.43.4

2.6 2.91.5

0.5

2.6

2.9

1.73.0

2.8

3.34.7

6.3

5.0 6.06.06.5 4.0

2.5

3.1

6.44.1

3.3

2.5

3.13.0

3.0

1.2

4.53.0

4.1

4.2 4.5

7.35.0

3.4

2.7

5.0

3.0

2.7

4.5

2.4

3.8 4.54.5

4.5

3.0

4.54.54.0

4.6 4.64.5

4.0

3.4

3.0

3.6

3.6

4.2

4.64.9

4.0

3.53.03.5

3.7

4.2

5.2

3.4

1.5 2.1

1

2

2

22

2

2

2

3

3

3

3

3

3

3

3

3

3

3

3

3

4

4

4

4

4

4

4

4

4

4

4

4

4 4

4

4

4

4

4

5

5

5

5

5

5

5

5

5

55

5

6

6

6

6

6

6

6

6

6

7

7

7

DORIS

JUDY CREEK

TIMEAU

VEGA

Cum thickness of Mannville coals depicted.

Light blue is maximum total thickness of coal

Greater Corbett Area

T59

T60

T61APF Upper Mannville Pilot10 Wells (1 disposal well)

Trident-Nexen CBM Project54 Wells (2 disposal wells)

APF Timeu

Trident-Nexen Upper Mannville Pilot

Thunder Upper Mannville Pilot

APF Doris

1 Well

Area of thick Upper Mannville coals

Good permeability indicated

Several Upper Mannville pilot projects underway

Potential 69 bcf of recoverable reserves to APF

T64

T63

T62

Active area for a number of producers

R6 R5 R4 R3W5R7

Corbett Creek

Phase 1: 4 wells, 1 water disposal well

Phase 2: 6 wells

Phase 3: 50 additional locations

Upper Mannville Economics

Reserves: 0.95bcf/well sales gasProductivity:

• six months, 25 mcf/d• 6-12 months, increase to 300 mcf/d• 12-24 months constant

Gas Price:• GLJ October, 2003 Forecast• $5.80, 4.70,4.70, 4.70, 4.75, 4.85/mcf

CDN/mcf (AECO)

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

100/16-10-062-06W5/00

Pumping GasCORBETT (0257)MANN UND (0248098)

Status:Field:Pool:

01 5

01 5

1 20

1 35

1 05

9 07 5

6 04 5

3 0

APF Horseshoe Canyon CBM Projects

Calgary

Wood River

BitternEdmonton

5M

Hackett

Rowley

APF CBM project areasHorseshoe Canyon FormationBearpaw Formation

Rowley (Trochu) Detail

3131 3631 3636

6

31

16

31 36

16

31 36

1

36

616161

s

sc@197

sc@280

sc@264

sc@194sc@185

6.5E logbhnd SC

mst bhnd SC5.7

E/GR log

bhnd SC

E log only

8.17.0

6.6

8.0 6.5

7.4E/GR log

7.0

6.3

6.0

6.5

7.0sc@186

sc@197

sc@188

7.0sc@190

sc@58 NLA

[email protected]@148

10.0sc@54

sc@192

7.

8.5sc@192

10.5sc@79

8.07m gas ss

7.5s

7.57.0

8.0sc@56

8.5sc@189

11.5sc@98

10.5sc@72

5.0sc@82

8.5

9.5sc@132

7.0sc@114

6.56.0

8.5sc@185 sc@265

7.5

10.0

9.510.7

8.4

9.57.5

sc@200

10.0

8.5EL sc@206

8.5

8.5sc@198

16.5Av 25scf/t

sc@281

7.0

11.5

9.5sc@206

'51 E log

6.5

6.5

7.5

10.3

9.5

8.5SC to 275m8.0

8.05.0EL

9.0

8.5

SC to 291m

6.5

9.0

8.5

E log7.3

8.5SC to 342m

10.0sc@110

11.3sc@193

sc@305

SC @ 302m

E log

4+ sc@266

9.0

12.1

7.0

8.0 7.5

8.1

11.9

13.5

s

sc@197

sc@280

sc@264

sc@194sc@185

6.5E logbhnd SC

mst bhnd SC5.7

E/GR log

bhnd SC

E log only

8.17.0

6.6

8.0 6.5

7.4E/GR log

7.0

6.3

6.0

6.5

7.0sc@186

sc@197

sc@188

7.0sc@190

sc@58 NLA

[email protected]@148

10.0sc@54

sc@192

7.

8.5sc@192

10.5sc@79

8.07m gas ss

7.5s

7.57.0

8.0sc@56

8.5sc@189

11.5sc@98

10.5sc@72

5.0sc@82

8.5

9.5sc@132

7.0sc@114

6.56.0

8.5sc@185 sc@265

7.5

10.0

9.510.7

8.4

8.57.5

sc@200

10.0

8.5EL sc@206

8.5

8.5sc@198

16.5Av 25scf/t

sc@281

7.0

11.5

9.5sc@206

'51 E log

6.5

6.5

7.5

10.3

9.5

8.5SC to 275m8.0

8.05.0EL

9.0

8.5

SC to 291m

6.5

NLA 200mcf/d

9.0

8.5

E log7.3

8.5SC to 342m

10.0sc@110

11.3sc@193

sc@305

SC @ 302m

E log

4+ sc@266

9.0

12.1

7.0

8.0 7.5

8.17.5

11.9

13.5

7.0sc@114

10.7

8.5

NLA 200mcf/d

7.0sc@114

10.7

8.5

NLA 200mcf/d

8.5

7

7

7

7

7

9

9

9

9

9

9

911

1111

11

13

155.6

2.3182.3

177.1493.9

505.4

34.9307.0276.7

405.1169.8

78.4

74.5

130.183.8

50.1105.6

148.5157.1 30.9 37.2 115.1

130.1

289.3

163.3

505.5

68.069.640.2

49.6 177.4 72.2

455.7433.7123.5

7

7

7

7

7

9

9

9

9

9

9

911

1111

11

13

15

A

A'

BYEMOOR

ROWLEY

RUMSEY

TROCHU

BYEMOOR

RUMSEY

SCOLLARD

TROCHU

Detail of Trochu area showing

Isopach of cumulative Horse Shoe Canyon Coals in meters.

Wells licensed as CBM wells circled in black.

Last month (May-04) average daily gas production in mcf/d.

APF CBM Wells

Trochu (Detail) Cross-Section6-7-33-21W4 6-5-33-21W4 10-29-32-21W4 6-19-32-21W4

350

400

450

500

550

600

650

700

Kbelly_rv

Kbearpaw

350

400

450

500

550

600

650

700

Kbelly_rv

Kbearpaw

350

400

450

500

550

600

650

700

Kbearpaw

Kbelly_rv

350

400

450

500

550

600

650

700

Kbelly_rv

Kbearpaw

+802.7

Kmilk_rvHusky Oil Oprtns Ltd

1982/03/24

100/06-07-033-21W4/00A

+841.4

MbanffHusky Oil Oprtns Ltd

1981/11/19

100/06-05-033-21W4/00

<=2251.5m=>

+833.1

Klea_parkPhil lips Petrl Rsrcs Ltd

1978/08/11

102/10-29-032-21W4/00

<=2817.5m=>

+833.4

MbanffRife Rsrcs Ltd

1989/02/26

100/06-19-032-21W4/00

<=3279.5m=>A'

1:60

0

APF Energy Inc

Cross Section A - A'Rowley CBM Project

Licensed to : APF Energy IncBy : ESR Date : 2004/07/23Scale = 1:600 Datum : Sea Level

Interval : From Kbearpaw to Kbelly_rv

3136

61

mst bhnd SC5.7

E/GR log

bhnd SC

E log only

8.17.0

6.6

8.0 6.5

7.4E/GR log

10.0

9.510.7

10.0

2004/03165.29597.5

2004/03441.5

13902.9

2004/02500.9

27426.0

2004/0340.7

1473.0

2004/03435.9

16522.3

2004/02250.6

14335.9

2004/03374.3

19915.5

mst bhnd SC5.7

E/GR log

bhnd SC

E log only

8.17.0

6.6

8.0 6.5

7.4E/GR log

10.0

9.510.7

10.0

10.710.7

7

9

TROCHUTROCHU

A

A'

T3 2

T3 3

R21 W4R2 21 : 40 55 7

Time (years)2004 2005

030

000

3000

6000

9000

1200

015

000

1800

021

000

2400

027

000

Cumulative GAS Mcf

055

055

110

165

220

275

330

385

440

495

Calndr-Day Avg GAS McfMonthly Hours [No Data]

00.

30.

030.

060.

090.

120.

150.

180.

210.

240.

27

Ratio: WTR/GAS Bbl/MMcfPrdc g-Day Avg CND [No Data]Prdc g-Day Avg GAS [No Data]

Cum GAS 27,425.9 McfCum OIL 0.0 BblCum WTR 4.4 Bbl

Data As Of:From:

To:

2004-04 (AB)2004-022004-04

INDIVIDUAL PRODUCTION981384 TROCHU 7-7-33-21

100/07-07-033-21W4/00

Flowing GasTROCHU (0908)TD UND (0999998)

Status:Field:Pool:

Time (years)2004 2005

010

000

1000

2000

3000

4000

5000

6000

7000

8000

9000

Cumulative GAS Mcf

020

020

4060

8010

012

014

016

018

0

Calndr-Day Av g GAS McfMonthly Hours [No Data]

00.

90.

090.

180.

270.

360.

450.

540.

630.

720.

81

Ratio: WTR/GAS Bbl/MMcfPrdcg-Day Av g CND [No Data]Prdcg-Day Av g GAS [No Data]

Cum GAS 9,597.5 McfCum OIL 0.0 BblCum WTR 4.4 Bbl

Data As Of:From:

To:

2004-04 (AB)2004-032004-04

INDIVIDUAL PRODUCTION981384 TROCHU 2-5-33-21

100/02-05-033-21W4/00

Flowing GasTROCHU (0908)TD UND (0999998)

Status:Field:Pool:

Bearpaw

Belly River

Rowley CBM Well Production

Time (years)2003 200504

080

080

160

240

320

400

480

560

640

720

Cumulative GAS MMcf

070

0 070

014

0 021

0 028

0 035

0 042

0 049

0 056

0 063

0 0

Calndr-Day Avg GAS McfCalndr-Day Avg WTR BblCum GAS 795,534.8 Mcf

Cum OIL 0.0 BblCum WTR 247.2 Bbl

Data As Of:WellCount:

2004-05 (AB)41/95

SELECTED WELLS PRODUCTION 2003-052004-05

From:To:

Time (years)2003 200504

010

0010

020

030

040

050

060

070

080

090

0

Cumulative GAS MMcf

085

0 085

017

0 025

5 034

0 042

5 051

0 059

5 068

0 076

5 0

Calndr-Day Avg GAS McfCalndr-Day Avg WTR BblCum GAS 976,751.6 Mcf

Cum OIL 11,958.9 BblCum WTR 67,137.3 Bbl

Data As Of:WellCount:

2004-05 (AB)67/136

SELECTED WELLS PRODUCTION 1984-032004-05

From:To:

035

035

050

5

315

45

280

40

245

35

210

30

175

25

140

20

105

15

70 10

Trochu – All Trident wells 41 wells averaging 160mcf/d. Press release (7-29-04) reports 6MMCF/D from 32 wells = 188 mcf/d/well.

Trochu - All licensed CBM wells. 67 wells averaging 120 mcf/d

Horseshoe Canyon Economics

Reserves (bcf/well sales gas): • Base 0.180 & Upside 0.265

Productivity (raw): • Base case 125 mcf/d• Upside 190 mcf/d• Decline exponentially

Gas Price:• GLJ July, 2004 Forecast

Capital Cost per well: • Well: Cdn.$292,000• Field: Cdn.$82,500

Operating Cost:• Cdn.$0.60/mcf• Cdn.$1,200 per well-month

Horseshoe Canyon Production Rate Over Time

Rat

e (m

cf/d

)

020406080

100120140160180200

2004 2006 2008 2010 2012

UpsideBase Case

Payout in 2.6 to 1.5 years

ROR: 27% to 71%

F&D: Cdn. $12.47 to $8.47/boe

Wood River CBM Project

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

16

31 36

T39

T40

T41

T42

T43

T44

R21W4R22R23R24R25

7.0

8.5

6.511.0

11.011.5

10.0

6.5

8.5

6.04.66.05.8

6.5

6.5

9.0

5.5

7.0

3.5

5.8

10.5

8.5

10.0

7.5

9.0

7.5

6.512.0

9.0

9.5

10.5

8.5

14.5

11.5

12.0

10.5

11.0

10.012.0

11.5

11.0

9.09.0

11.09.0

8.5

8.510.0

8.5

7.5

8.8

9.5

7.5 10.09.0

9.5

8.5

7.0

8.0

12.0

5.0

8.5

8.010.0

9.5

7.0

6.5

9.5

11.0

10.5

6.0

11.0

11.0

10.5

9.0

8.0

10.09.512.57.5

11.0

9.5

9.511.0

10.0

7.5

8.57.5

10.0

10.08.05.0

3.5

5.5

11.5

13.0 11.0

11.59.58.5

7.56.5

5.5

8.09.0

9.5

6.5

7.5

8.5

8.5

4.56.5

6.57.5

7.0

6.5

6.5

8.09.0

7.5

10.5

9.5

8.0

12.0

8.57.0

7.5

12.0

9.0

8.5

10.0

8.58.0

8.0

7.0

7.59.0

10.5

10.0

8.5

8.5

7.5 6.5

7.0

7.5

8.5 8.0

9.0 10.5

8.5

9.58.0

9.55.5

7.5

8.06.5

10.0

7.5

7.57.5

8.0

8.0

8.5

6.5

6.5

10.0

7.5

8.0

6.5

4.5

7.0

13.0

5.8

7.3

14.0

9.08.5

12.0

9.0

7.0

7.0

5.5

7.5 7.3 8.5

6.7

5.5

7.5

7.0

5

7

7

7

7 7

7

7

7

7

7

7

7

9

9

9

99

9 9

9

9

9

9

9

9

9

9

9

9

11

11

11

11

11

11

11

11

13

19.2

212.8

51.1

7.7

278.1

442.4

376.1

437.0

389.2

237.822.8

151.9166.978.2

54.495.3

22.2

69.4142.5233.8286.1

93.357.1

43.166.9161.8109.0

158.15.7

156.748.8

124.8

212.7

77.5

76.8

168.9

106.8

142.5233.8

93.3 43.1

99.3

24.0

257.7230.0

83.7

56.3

61.6

188.2

175.9

181.0

155.7199.7

8.9298.0262.1

141.596.7

26.2

370.6

49.0

20.3 48.8

43.7

442.4

376.1

155.1

237.8

151.9106.8271.5

286.1

93.357.1

43.1161.8109.0

99.3

24.0

113.5

223.8

99.5

84.8

105.7

177.0145.6

147.9

48.8257.7230.0

222.0

184.6367.3

224.818.0

161.3

272.3

250.5

59.8

157.9

102.5

188.2

61.429.8

117.7 70.1

181.0

155.7199.7

298.0262.1141.5

66.4

ALIX

CHIGWELL N

CHIGWELL

ERSKINE

NEVIS

WETASKIWIN

WO

OD

RIV

ER

Lic CBM wells in black.

Pool Code is Edm Coal in open green circles.

Perf’d in Edm/Bpw in solid green diamonds.

Av. Daily production for last month in mcf/d in red.

Wood River Coal Completions

Time (years)2003 200504

080

080

160

240

320

400

480

560

640

720

Cumulative GAS MMcf

055

0055

011

0016

5022

0027

5033

0038

5044

0049

50

Calndr-Day Avg GAS Mcf

015

1.5

34.

56

7.5

910

.512

13.5

Calndr-Day Avg WTR BblCum GAS 763,732.5 McfCum OIL 0.0 BblCum WTR 913.9 Bbl

Data As Of:WellCount:

2004-05 (AB)39/126

SELECTED WELLS PRODUCTION 2003-072004-05

From:To:

Time (years)2003 200504

020

0020

040

060

080

010

0012

0014

0016

0018

00

Cumulative GAS MMcf

095

0095

019

0028

5038

0047

5057

0066

5076

0085

50

Calndr-Day Avg GAS Mcf

020

24

68

1012

1416

18

Calndr-Day Avg WTR BblCum GAS 1,622,336.1 McfCum OIL 0.0 BblCum WTR 1,215.8 Bbl

Data As Of:WellCount:

2004-05 (AB)54/54

SELECTED WELLS PRODUCTION 2003-082004-05

From:To:

Time (years)2003 200504

055

055

110

165

220

275

330

385

440

495

Cumulative GAS MMcf

035

0035

070

010

5014

0017

5021

0024

5028

0031

50

Calndr-Day Avg GAS Mcf

020

24

68

1012

1416

18

Calndr-Day Avg WTR BblCum GAS 540,285.3 McfCum OIL 0.0 BblCum WTR 1,021.5 Bbl

Data As Of:WellCount:

2004-05 (AB)25/25

SELECTED WELLS PRODUCTION 2003-022004-05

From:To:

39 producing wells licensed as CBM wells. May 2004 total 5360 mcf/d. Average rate per well 137 mcf/d.

54 wells designated as producing from Edmonton Coal undesignated Pool. May 2004 production 8618 mcf/d. 160 mcf/d per well average prod.

25 wells producing from perfed interval Edm Coal to Base Bearpaw. May 2004 production 3343 mcf/d. 133 mcf/d average per well.

Western Canada CBM Drilling Activity:1975 - Present

Num

ber

of w

ells

dri

lled Production (M

mcf/d)

Source: Defiant Energy

8449

97

140

594 600

0

100

200

300

400

500

600

700

Pre 2000 2000 2001 2002 2003 2004 Projected0

25

50

75

100

125

150Number of wells drilled

Daily production

36

100

Predicted CBM Production in Canada

Modified from CSUG NGC Technical Presentation, 03-2004

Year

Ave

rage

Pro

duct

ion

(bcf

/d)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

NEB Techno -Vert

TCPL

Current Canadian gas production is ~ 17 Bcf/D

Environmental Responsibility

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.

APF Energy Trust2100, 144 – 4th Avenue S.W. Calgary , Alberta T2P 3N4Internet: www.apfenergy.comE-mail: [email protected] Telephone: (403) 294-1000 Toll Free: (800) 838-9206 Fax: (403) 294-1074


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