New Brunswick joins production ranks
New Brunswick has revived commercial oil production after a lapse of 30 years and made its inaugural natural gas shipments to New England.
In the process, the Maritime province has received a shot of optimism after more than 80 years of dashed hopes. New Brunswick Premier Shawn Graham and Norman Miller, chief executive officer of Corridor Resources, turned a valve June 27, starting the flow of 35 million cubic feet per day of gas to homes and businesses in the northeastern United States as well as Canada’s Maritime region.
Output from the McCully field is expected to reach 45 million cubic feet per day in November — sufficient energy to serve 250,000 homes — although some is committed to Potash Corp.
Independent assessments show McCully has about 1.3 billion cubic feet of proven, probable and possible reserves, but that could be just a beginning as Corridor expands its drilling to two more sites.
Miller said that if “things work out we could be on to something large.”
Exploratory drilling targeting a depth of 15,150 feet has reached 12,300 feet without encountering the hydrocarbon formation Corridor was counting on, but the company plans to continue the search. Jennings Capital analyst Greg Chornoboy suggested the bulk of Corridor’s potential lies in a site that contains shales with natural fractures and an abundance of gas. But Miller cautioned that the prospects of a commercial breakthrough hinge on summer work to determine whether gas can be extracted from the shale.
The McCully field first produced gas in the 1920s and was believed to have run dry until Corridor deployed modern technology to discover more gas in what Chornoboy described as a “bit of a science experiment” over several years.
Corridor has a market capitalization of C$825 million and assets valued at C$126 million. On a smaller scale, Contact Exploration has regulatory approvals to start production at three oil wells and add production from existing wells identified in a rework program last year.
So far the results have been modest, with about 2,000 barrels shipped to the giant Irving refinery at Saint John, New Brunswick.
—Gary Park
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