Agreement to Supply Clean, Low Emissions
Natural Gas to Recently Financed, State-of-the-Art CPV Three Rivers
Energy Center in Grundy County,
Illinois
CALGARY, AB, Sept. 29, 2020 /CNW/ - Advantage Oil & Gas
Ltd. (Advantage) and Competitive Power Ventures (CPV) announce
today that the companies have agreed to a long-term gas supply
agreement for the recently financed CPV Three Rivers Energy Center
(CPV Three Rivers) in Grundy County,
Illinois. Advantage will supply 25,000 MMbtu per day of
clean, low emissions natural gas for a 10-year period, commencing
upon CPV Three Rivers reaching commercial operation in early
2023.
Commercial terms of the agreement are based upon a spark-spread
pricing formula, providing Advantage revenue diversification
through exposure to PJM power prices, back-stopped with a natural
gas price collar which supports Advantage's ongoing development
economics. The commencement date of this agreement complements
Advantage's existing market diversification strategy, both in term
and market access.
Advantage will supply natural gas to CPV Three Rivers from its
400 mmcf/d Glacier Gas Plant located near Grande Prairie, Alberta, in the heart of the
Montney fairway. The Glacier Gas
Plant is a low emissions facility that incorporates carbon capture
and sequestration technology. Advantage's world-class Montney asset has proved gas reserves of
approximately 2 trillion cubic feet; this long reserve life,
reliable and sustainable energy source will be delivered to CPV
Three Rivers on the Alliance Pipeline through Advantage's existing
Alliance meter station.
CPV Three Rivers is a state-of-the-art 1,250-megawatt
natural-gas-fueled, combined-cycle electric generation facility
that will use GE's latest highly-efficient HA turbine technology,
enabling unmatched efficiency of greater than 64%, with
industry-leading flexibility. By displacing older, less efficient
generation, this project is projected to avoid 1.7 million tons of
carbon dioxide emissions per year. The availability of flexible,
low-emitting resources like CPV Three Rivers is critical to help
manage the intermittency of renewable generation and maintain grid
reliability. CPV Three Rivers is a critical component to help
realize the vision Illinois
Governor J.B. Pritzker articulated
in his recently announced energy plan for the state.
CPV Three Rivers will sell its power into the PJM market,
providing enough power to meet the demand of up to 1.25 million
homes and businesses and helping the area transition away from
ageing, inefficient power generation facilities. Construction
commenced in early January of 2020 and commercial operation is
expected to begin in early 2023.
Both CPV and Advantage are pleased to be working together to
provide clean, reliable and sustainable power to the PJM region for
years to come.
About Advantage
Advantage Oil & Gas Ltd. is a gas weighted producer focused entirely on developing its significant position
in the Montney resource play.
Advantage's owned infrastructure, top-tier cost structure and high
capital efficiency provides a strong foundation for sustainable,
disciplined production growth with current production of
approximately 45,000 barrels of oil equivalent per day (270
mmcfe/d) (consisting of 2,500 bbls/d of light crude oil and medium
crude oil, 2,000 bbls/d of natural gas liquids and 243,000 mcf/d).
Advantage's land holdings consist of 210 net sections (134,400
acres) of liquids-rich Montney
lands at Glacier, Valhalla,
Progress and Pipestone/Wembley.
Management estimates a future drilling inventory of more than
1,400 horizontal well locations. Advantage's common shares trade on
the Toronto Stock Exchange under the symbol AAV with its head
office in Calgary, Alberta,
Canada. For more information: www.advantageog.com.
About CPV
CPV is uniquely positioned to leverage global technology and
financial partnerships to help modernize America's power
generation. Together with our investors, partners, host communities
and other key stakeholders, we are driven to improve our energy
infrastructure by developing and operating power generation
facilities using cutting edge, domestically available natural gas
and renewable power technologies. Headquartered in Silver Spring, MD, with an office in
Braintree, MA, the company has
ownership interest in 4.2 GW of clean generation across
the United States. The company's
Asset Management division currently manages more than 9,300 MW of
fossil and renewable generating
facilities in nine states for 12 different owner groups. Our focus on Environmental, Social and Governance
(ESG) and sustained track record of success have enabled us to grow
into the number one thermal developer and one of North America's premier energy companies. For
more information: www.cpv.com and follow CPV on Twitter
and LinkedIn.
Advantage Advisory
The information in this press release contains certain
forward-looking statements, including within the meaning of
applicable securities laws. These statements relate to future
events or our future intentions or performance. All statements
other than statements of historical fact may be forward looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "anticipate", "continue",
"demonstrate", "expect", "may", "can", "will", "believe", "would"
and similar expressions and include statements relating to, among
other things, Advantage's focus, strategy and development plans;
terms of the long-term gas supply agreement between CPV and
Advantage; timing of CPV Three Rivers reaching commercial
operation; benefits to be derived by the long- term gas supply
agreement; infrastructure of CPV Three Rivers and the anticipated
efficiencies and benefits; future drilling inventory; and CPV's
focus and strategy. Advantage's actual decisions, activities,
results, performance or achievement could differ materially from
those expressed in, or implied by, such forward-looking statements
and accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur or, if any of them do, what benefits that Advantage will
derive from them. Statements related to reserves are
forward-looking statements, as they involve the implied assessment,
based on estimates and assumptions that reserves described exist in
quantities predicted or estimated and can be profitably produced in
the future.
These statements involve substantial known and unknown
risks and uncertainties, certain of which are beyond Advantage's
control, including, but not limited to: changes in general
economic, market and business conditions; industry conditions;
actions by governmental or regulatory authorities including
increasing taxes and changes in investment or other regulations;
changes in tax laws, royalty regimes and incentive programs
relating to the oil and gas industry; Advantage's success at
acquisition, exploitation and development of reserves; unexpected
drilling results; changes in commodity prices, currency exchange
rates, reserves or reserves estimates; the occurrence of unexpected
events involved in the exploration for, and the operation and
development of, oil and gas properties, including hazards such as
fire, explosion, blowouts, cratering, and spills, each of which
could result in substantial damage to wells, production facilities,
other property and the environment or in personnel injury; changes
or fluctuations in production levels; individual well productivity;
competition from other producers; the lack of availability of
qualified personnel or management; credit risk; changes in laws and
regulations including the adoption of new environmental laws and
regulations and changes in how they are interpreted and enforced;
Advantage's ability to comply with current and future environmental
or other laws; stock market volatility and market valuations;
liabilities inherent in oil and natural gas operations; geological,
technical, drilling and processing problems and other difficulties
in producing petroleum reserves; ability to obtain required
approvals of regulatory authorities; and ability to access
sufficient capital from internal and external sources. Many of
these risks and uncertainties and additional risk factors are
described in Advantage's Annual Information Form which is available
at www.sedar.com and www.advantageog.com. Readers are also referred
to risk factors described in other documents Advantage files with
Canadian securities authorities.
With respect to forward-looking statements contained in this
press release, Advantage has made assumptions regarding, but not
limited to: conditions in general economic and financial markets;
the impact and duration thereof that the COVID-19 pandemic will
have on (i) the demand for crude oil, NGLs and natural gas, (ii)
the supply chain including Advantage's ability to obtain the
equipment and services it requires, and (iii) Advantage's ability
to produce, transport and/or sell its crude oil, NGLs and natural
gas; effects of regulation by governmental agencies; current and
future commodity prices and royalty regimes; future exchange rates;
royalty rates; future operating costs; availability of skilled
labor; availability of drilling and related equipment; the impact
of increasing competition; the price of crude oil and natural gas;
that Advantage will have sufficient cash flow, debt or equity
sources or other financial resources required to fund its capital
and operating expenditures and requirements as needed; that
Advantage's conduct and results of operations will be consistent
with its expectations; that Advantage will have the ability to
develop Advantage's properties in the manner currently
contemplated; current or, where applicable, proposed assumed
industry conditions, laws and regulations will continue in effect
or as anticipated; and the estimates of Advantage's
production and reserves volumes and the assumptions related
thereto are accurate in all material respects. Readers are
cautioned that the foregoing lists of factors are not exhaustive.
These forward-looking statements are made as of the date of this
press release and Advantage disclaims any intent or obligation to
update publicly any forward- looking statements, whether as a
result of new information, future events or results or otherwise,
other than as required by applicable securities laws.
Barrels of oil equivalent (boe) and thousand cubic feet of
natural gas equivalent (mcfe) may be misleading, particularly if
used in isolation. Boe and mcfe conversion ratios have been
calculated using a conversion rate of six thousand cubic feet of
natural gas equivalent to one barrel of oil. A boe and mcfe
conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. Given that the
value ratio based on the current price of crude oil as compared to
natural gas is significantly different from the energy equivalency
of 6:1, utilizing a conversion on a 6:1 basis may be misleading as
an indication of value.
The estimates of Advantage's reserves set forth in this press release have been prepared by Sproule Associates Limited
("Sproule") as of December 31, 2019
with a preparation date of January 30,
2020 in accordance with National Instrument 51-101 –
Standards of Disclosure for Oil and Gas Activities and the Canadian
Oil and Gas Evaluations Handbook using Sproule's forecast price and
costs as at December 31, 2019.
This presentation discloses drilling inventory in the
Glacier, Valhalla, Progress and
Pipestone/Wembley areas in three categories: (i) proved
locations; (ii) probable locations; and (iii) unbooked locations.
Proved locations and probable locations are derived from Sproule's
reserves evaluation effective December 31,
2019 and account for drilling locations that have associated
proved and/or probable reserves, as applicable. Unbooked locations
are internal estimates based on Advantage's prospective acreage and
an assumption as to the number of wells that can be drilled per
section based on industry practice and internal review. Unbooked
locations do not have attributed reserves or resources. Of the more
than 1,400 total drilling locations identified herein, 309 are
proved locations, 38 are probable locations and more than 1,053 are
unbooked locations. Unbooked locations have been identified by
management as an estimation of our multi-year drilling activities
based on evaluation of applicable geologic, seismic, engineering,
production and reserves information. There is no certainty that
Advantage will drill all unbooked drilling locations and if drilled
there is no certainty that such locations will result in additional
oil and gas reserves, resources or production. The drilling
locations on which Advantage actually drills wells will ultimately
depend upon the availability of capital, regulatory approvals,
seasonal restrictions, oil and natural gas prices, costs, actual
drilling results, additional reservoir information that is obtained
and other factors. While certain of the unbooked drilling locations
have been de-risked by drilling existing wells in relative close
proximity to such unbooked drilling locations, other unbooked
drilling locations are farther away from existing wells where
management has less information about the characteristics of the
reservoir and therefore there is more uncertainty whether wells
will be drilled in such locations and if drilled there is more
uncertainty that such wells will result in additional oil and gas
reserves, resources or production.
The following terms and abbreviations used in this press release have the meanings set forth below:
bbls/d barrels per day
GW
|
gigawatt
|
mmcf/d
|
million cubic feet
per day
|
mmcfe/d
|
million cubic feet
equivalent per day
|
mmbtu
|
million British
thermal units
|
MW
|
megawatt
|
SOURCE Advantage Oil & Gas Ltd.