Crew Energy Inc. (TSX:CR) has been informed by the Alliance Pipeline Limited Partnership that it has detected slope movement near its pipeline system near the Wapiti River, approximately 25 km southwest of Grande Prairie. Alliance plans to expose the affected section of pipe to conduct the necessary inspections subject to regulatory requirements. To accommodate this work, Alliance will be required to reduce system operating pressure at this location for the duration of the work, which in turn will cause a reduction in firm transportation service capability and zero flow restrictions at certain receipt points including Crew’s BC58 Septimus delivery point.
This suspension will result in all of Crew’s Montney production being shut-in until the situation is resolved, representing approximately 90 mmcf/day of natural gas and associated liquids or approximately 18,000 boe/day. The work commenced June 13, 2017, and is currently anticipated to last for a period of three to five days. Crew’s ability to mitigate this outage by delivering additional volumes to the Enbridge (Spectra) T-North Fort Saint John mainline is not available due to planned maintenance on that pipeline which overlaps with the Alliance outage.
As a result of this unplanned outage, Crew’s previously announced second quarter 2017 production guidance of 20,000 to 21,000 boe/day will be impacted by an average of 200 boe/day for each day Crew’s Alliance service is unavailable. Based on Alliance’s expectation of a three to five-day outage, second quarter production is expected to be impacted by approximately 600 to 1,000 boe/day. The company currently has three drilling rigs at work in northeast B.C., an inventory of 19 drilled and uncompleted wells and one frac spread at work with a second expected at West Septimus this week, allowing Crew to maintain its full year guidance of 24,000 to 26,000 boe/day.
This event further highlights the importance of maintaining multiple egress options for Western Canadian natural gas production and the strategic advantage of Crew’s land base, which is proximal to all three major pipeline export systems out of Western Canada. To take advantage of this strength, Crew is proceeding with the tie-in of its expanded 120 mmcf/day West Septimus gas processing facility into the TransCanada Pipeline system with work on the tie-in expected to commence in the fall of 2017 and conclude by April of 2018.
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