Corridor to Spend $25 Million Toward Pilot Plant

19 04 2014
TJ  APR 18
Resources Up to $175 million could be invested to develop reserves and drill series of new wells
ADAM HURAS LEGISLATURE BUREAU

Corridor Resources will spend $25 million this summer to further develop its shale gas reserves in New Brunswick – and is close to moving on a $150-million project that would see the company drill a series of new wells in an effort to bring its operations to full commercialization.

Corridor president and CEO Phillip Knoll says the company is going to hydraulically fracture four existing wells at different intervals in its Sussex-area shale gas play to increase production.
The move will provide pivotal data as to whether Corridor’s shale gas development in New Brunswick will begin to rapidly expand.
“Corridor itself has the potential of 67 trillion cubic feet of resources identified in the Sussex and Elgin area that underlay our lands,” Knoll said in an editorial board meeting with Brunswick News.
“That’s world class.”
He added: “We have to demonstrate we can do it on a commercial basis and we have a program this summer that is going to contribute to that demonstration.
“We’re going to spend roughly $25 million this year, all of our own cash to help commercialize our shale in Sussex, but in order to develop the world-class shale play we have, the next step is a $150-million pilot plant.”
The “pre-commercialization” plant aims to demonstrate the commercial aspect of the entire play.
Corridor wants to build that plant in Elgin where it has specific well sites identified.
“We’re going to raise that, we’re going to attract that investment into the province,”he said.“If we get that investment and it proves commercial we’re talking not about $150 million, but hundreds of millions of dollars of ongoing investment on a yearly basis.
“This isn’t small stuff, it’s significant.”
Corridor is also seeking approval to drill and hydraulically fracture two new natural gas wells in the Penobsquis area but won’t go ahead with that plan this year.
The $150-million project would see a “pilot plant” built in Elgin with two well pads, each with six wells. Each well would be hydraulically fractured several times. Corridor would also build a 35-kilometre pipeline from its gas plant in McCully to Elgin at the cost of roughly $35 million.
Approval to move ahead with the project will take at least a year.
The project itself would then take at least two more years to complete.
“This pilot plant would be the next thing we would like to do,” Knoll said “It’s three years out, but it would be the precursor to the full commercialization of this resource.
“It is an essential step.”
A partnering process for the project could begin as early as this fall, Knoll said.
“I think we’re very close in New Brunswick, Corridor is very close to being able to attract a significant amount of capital in the next few years,” Knoll said.“But I preface that with (that) we need to have continued co-operation from our governments. I believe we’re getting that because they understand the opportunity. We need people in industry, people in commerce,and just the average Joe to say this is a good thing, we need to do this.
“We then need to demonstrate the capability in our program this summer.”
Investors are interested in how long the wells will produce, something the program will help reveal.
“It’s going to do two things – it’s going to produce more production at the plant, which means more cash flow, but it’s also going to illustrate what we call the decline curves,” he said.“That demonstrates whether they’re economic or not.”
Corridor Resources drilled a first natural gas discovery well at the McCully Field, near Sussex, in 2000.
The Halifax-based company now has 30 wells extracting natural gas.
Two producing wells have been supplying a nearby potash mill with natural gas since 2003.
A 50-kilometre pipeline also connects the McCully Field to the Maritimes and Northeast Pipeline, which delivers natural gas to Canadian and United States markets.
Corridor and its partners have spent roughly $500 million in New Brunswick to date through capital investment,operating expenses, royalties and taxes, in order to identify the commercial potential of the resource, said Knoll.
“Shale would have never been discovered here if it wasn’t for Corridor,”Knoll said.
Corridor’s find is roughly 40 kilometres long and several kilometres wide.
“The thickest shale bed in North America, right here, over a kilometre thick”
Knoll said typically 15 to 20 per cent of the shale deposit is recoverable, meaning roughly nine to 12 trillion cubic feet can potentially be extracted in the Sussex area shale play over the course of 25 to 40 years of production.
Success of the summer program will aim to generate the capital needed for the next major step.
“All the money we invest is considered risk capital,” Knoll said.“This is all fairly high-risk stuff that we undertake, particularly our shale development in New Brunswick.
“High risk, high reward.
“We know we have a very large shale body that underlies our land in New Brunswick. We’ve identified it, we’ve drilled into it, and it has a world-class potential, but we have to determine through many years and many millions of dollars whether we can commercialize it.
“That’s what we’re in the process of doing.”
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