Overview

Apache has 4.4 million net acres across the provinces of British Columbia, Alberta and Saskatchewan. Our acreage base provides a significant inventory of both low-risk development drilling opportunities in and around a number of Apache fields and higher-risk, higher-reward exploration opportunities. At the end of 2009, the Canada region held approximately 22 percent of our estimated proved reserves, the second largest concentration in Apache.

In 2009, we drilled or participated in 201 wells. Three of the wells drilled during the year were exploration wells, and all were productive. Net production for the year averaged 77,147 barrels of oil equivalent (Boe) per day, which accounted for 13 percent of Apache’s total production. We plan to drill or participate in a total of 172 wells in 2010, including 156 development wells and 16 exploratory wells.
 

Horn River Basin

North American Shale Plays

Apache has more than 400,000 acres in the Horn River Basin shale gas play in northeast British Columbia. In 2009, we drilled 41 wells in the basin: 23 by Apache and 18 by EnCana. Four wells completed in 2009 continue to produce at over 4 million cubic feet per day (MMcfd) each and confirm reserves in excess of 10 billion cubic feet each.

To minimize the environmental footprint and costs, the wells are drilled in batches from multi-well pads. Completion activity commences once drilling operations from a single pad have been completed, allowing room for the equipment needed for fracturing operations to service the entire pad. Four of the EnCana-operated wells were placed on production in 2009 and at year-end were producing at a combined gross rate in excess of 19 million cubic feet per day (MMcfd). Apache commenced stimulating the 16 wells on its first operated development pad in the fourth quarter of 2009, with production scheduled for mid-2010.

Kitimat LNG

On Jan. 13, Apache Canada Ltd. agreed to acquire 51-percent ownership and throughput capacity interest in Kitimat LNG Inc.’s proposed LNG export terminal in northern British Columbia (read the release: Apache acquires 51 percent stake and reserves throughput capacity in Canada's Kitimat LNG project). We expect to begin the front-end engineering and design (FEED) study in early 2010. If we proceed with development, Apache’s net capacity will provide an outlet for 350 MMcfd from Horn River and other areas in Canada, providing access to markets with worldwide LNG prices. A final investment decision (FID) is expected in 2011 with initial gas exports beginning in 2014.

In association with our acquisition of interest in the Kitimat project, we also acquired a 25.5-percent interest in Pacific Trail Pipelines, the pipeline system servicing Western Canada’s natural gas producing regions.

New Brunswick

In December 2009, we entered into a farm-in agreement with Corridor Resources Inc. to appraise and potentially develop oil and natural gas resources in the province of New Brunswick. The 18-month appraisal program is intended to evaluate the commercial potential of natural gas development in the Frederick Brook formation and light oil development at a recent Caledonia oil discovery. Upon completion of this appraisal program, Apache will have earned a 50-percent working interest in the spacing units drilled and the option to participate in phase two of the project. Upon completion of phase two by March 31, 2013, Apache would earn a 50-percent interest in approximately 116,000 acres.

Enhanced oil recovery

Apache is successfully utilizing horizontal well technology to develop waterflood projects in the Zama and House Mountain fields located in Alberta, and enhanced oil recovery (EOR) projects in the Midale field of southeast Saskatchewan. The EOR project at Midale uses carbon dioxide (CO₂) injections to increase oil-field production. For more information on Apache’s EOR innovation and its potential for sequestering greenhouse gases, please go to Enhanced oil recovery and carbon capture and storage.

Coalbed methane

In 2010, we will continue intermediate-depth gas development drilling in Kaybob and West 5 and in Nevis for shallow coal bed methane (CBM) gas. Apache is the largest producer of coalbed methane (CBM), which is natural gas trapped in coal seams rather than sandstones. The core areas for our CBM development are Nevis, Provost and the North Grant Lands.