Ur-Energy Inc. announced the successful results of Phase 1 field testing on its patented injection well casing and installation technology. On April 21, 2022, the Company announced a research and development project to field test its patented injection well casing and installation method at its operating Lost Creek Uranium ISR Facility in south-central Wyoming. Following that announcement, the Company received approval of a Non-Significant Permit Amendment from the Wyoming Department of Environmental Quality - Land Quality Division and began field testing.
It have now completed Phase 1 testing of the technology. Field tests in Lost Creek's Mine Unit 2 demonstrated the mechanical integrity of injection wells installed using its new technology, with a 75% reduction in drill rig time compared to conventional methods and an 85% reduction in casing cost. The cost savings from reduced drill rig time will be partially offset by increased in-house labor.
Based upon testing to date, the overall cost reduction to install an injection well is estimated to be between $2.50 and $3.50 per pound of U3O8 produced. This represents as much as a 49% savings on the installation of an injection well. Injection wells generally represent approximately 65% of wells in wellfields designed with traditional "five-spot" recovery patterns.
Beyond improving the economics of injection well installation, its new installation technique is anticipated to result in numerous environmental benefits, including: Reduction of heavy vehicle traffic since drill rig time on injection wells is reduced from approximately 3.5 to 0.5 days per well as demonstrated during initial field tests; Up to 85% fewer air emissions during installation of injection wells; Less noise due to shortened drill rig and water truck time; A further reduction in already low well failure rates due to fewer points of potential failure, because the casing material is "tougher" in many respects than conventional PVC well casing, and the completion method requires less exposure to the drill string and bit compared to conventional methods; and Initial Mechanical Integrity Tests can be performed during installation without the need to re-enter the well. Next Steps: Several additional steps will be taken by the Company prior to implementing its new technology on a commercial scale. First, to finalize permitting, it will submit a report to LQD detailing the results of initial testing.
Because LQD Staff previously reviewed the engineering and witnessed the installation of wells utilizing the technology, it expect final approval will be efficiently processed. Phase 2 field testing will focus on well development methods with the goal of maintaining flow rates consistent with conventional methods and verifying required rig time as utilized in Phase 1 installations. It will continue testing all aspects of the new technology, including well integrity and flow rates, by installing and operating several of the new injection wells in an operational setting.
If the wells perform as expected, the technology will be implemented across Company operations. Given the potential significant cost savings presented by its technology, it will initiate a hydrologic modeling exercise to determine what well pattern geometry and spacing is most cost effective. It believes the five-spot well pattern geometry currently used throughout the industry may be improved by utilizing new technology in a seven-spot geometry as illustrated below.
This seven-spot geometry is expected to increase the sweep efficiency, improve the percentage of uranium recovered, and shorten the time required for mining and groundwater restoration. The modeling exercise will balance the well geometry and spacing against economics to determine the most cost-effective way to utilize the new technology. Future Application and Value to Ur-Energy: The new well installation technology is expected to be applicable across the in-situ recovery industry including in recovery of copper, lithium, soda ash, potash and other soluble minerals.
The technology can also be applied in the groundwater restoration industry when treated water is re-injected into the host aquifer. The technology may also provide cost benefits when micro-purging of groundwater monitor wells is desirable. The Company plans to monetize the patented technology by licensing it to these and potentially other industries.
While Phase 1 results have been favorable, additional testing, is required before determining if the technology will be proven commercially viable. By its very nature, research and development is challenging and outcomes are difficult to predict. It will provide an update after the planned additional injection wells are placed in operation, which is the ultimate test.
Ur-Energy professional and operations staff will continue to diligently pursue new technologies and other optimization of processes to drive down its already low production cost while reducing its environmental footprint. As previously announced, research and development on advanced, water filtration and treatment processes is ongoing. This project may require several more months before results are known and can be reported.