JOSLYN

Development plans continue to advance on our 15% working interest in the Joslyn lease. The Operator has contracted Norwest Corporation to conduct a fulsome mining review of the lease which will be coupled with an internal SAGD assessment and optimization work expected to be completed in late 2008. The mining area may be expanded and this could limit the development of SAGD Phase III which is a 15,000 bbl/day expansion currently planned for production in 2010. Should we convert some of the SAGD area to mining, we could expect to possibly double the reserve recovery and increase the targeted production from the mine area. Joslyn SAGD Phase II continues to run behind schedule as a result of the steam release which occurred in May 2006 with current production at approximately 2,000 bbls/day from 11 well pairs. Three well pairs may be permanently shut in as a result of the steam release. Of the remaining four well pairs, steam is being circulated in three and approval is awaited to start steaming the fourth. Even with best efforts to enhance artificial lift and operating practices we do not expect to achieve the initial estimate for peak production of 600 bbls/day per well pair. We are currently assessing performance and it is too early to determine peak production from the existing well pairs however, we will require additional well pairs to achieve the planned 10,000 bbl/day production level.

French owned oilsands operator Total E&P Canada Ltd. disclosed Monday it plans to build a multibillion-dollar new oilsands upgrading refinery northeast of Fort Saskatchewan in northern Alberta. Total, a subsidiary of France's Total SA, said it has applied for regulatory approval for the project.

The total development cost of the project was $90,678,000 ( for 2006 - $49,328,000) and has not yet commenced commercial production. In 2006, Enerplus spent approximately $36.1 million at the Joslyn Lease to advance both the SAGD ($33.1 million) and the mining ($3 million) developments. The 10,000 bbls/d (1,500 bbls/d net to Enerplus) SAGD Phase II project (which now includes the single well pair previously forming SAGD Phase I) was scheduled for start-up (i.e. initial steaming) in the first half of 2006. The start-up of Phase II well pairs was delayed by a steam to surface incident that occurred on May 18, 2006. However, by December 31, 2006 more than one half of the well pairs were receiving steam and bitumen production volumes continue to increase. This delay did not affect Enerplus’ corporate production guidance for 2006 as Enerplus did not expect any commercial production volumes in 2006. Based on information provided by Total, as the operator of the Joslyn Project, Enerplus continues to expect SAGD Phase II to reach peak production of 10,000 bbls/d (gross) in 2008. However due to reduced operating pressures, this may require additional wells to be drilled and capital expenditures to be made in 2007 and 2008. Development of the mining portion of the Joslyn Project progressed in 2006 with the filing for regulatory approval for development of the mining resources located in the North Mine in February 2006.