HALIFAX, NOVA SCOTIA--(Marketwired - Dec 18, 2014) - Corridor Resources Inc. ("Corridor" or the "Company") (CDH.TO) responded today to the introduction of a moratorium on shale gas development in New Brunswick.
"We have always maintained that a moratorium is not necessary for an industry that has operated responsibly and safely in this province," said Steve Moran, President and CEO of Corridor Resources. "We do not believe it is necessary and do not support it. We expect that the Government of New Brunswick should want to fully understand the potential rewards of allowing the industry to proceed, while ensuring the risks are manageable and acceptable. We strongly recommend that they expeditiously investigate the merits of the industry, for the sake of our shareholders and the people and industry of New Brunswick."
Mr. Moran said "the five conditions outlined today by the Government of New Brunswick, for lifting the temporary moratorium, are simply not clear enough. They do not provide a predictable path forward. In addition, New Brunswick already has clear and robust regulations in place under which the industry operates safely."
Since the Company was formed in 1995, Corridor and its partners have spent over half a billion dollars of risk capital in New Brunswick exploring for oil and natural gas. Corridor has drilled 46 wells in the Penobsquis and Elgin areas and completed 120 hydraulic fracture stimulations. In that time period, Corridor and its partners have paid over $19.0 million in royalties to the Government of New Brunswick and another $5.0 million to local landowners and municipalities. Corridor proudly stands behind its Health and Safety track record and good standing in the Penobsquis and Elgin areas. Corridor has invested heavily in the Province of New Brunswick and has earned the right to recover a return on that investment.
The vast majority of the wells drilled by Corridor and its partners were fracture stimulated using water as the stimulation fluid. Recently, liquefied propane has been used. Regardless of the fluid type, both are considered "hydraulic" fracture stimulations. All of these operations have been performed to the highest industry standards and without incident.
The nature of the geology in New Brunswick is such that the two formations currently producing natural gas, the Hiram Brook sand and Frederick Brook shale, cannot flow unless fracture stimulated. "If we are not permitted to fracture stimulate the wells, we cannot produce natural gas. This is not uncommon. The vast majority of all wells being drilled in North America are fracture stimulated. Over 175,000 wells in Canada have been fracture stimulated to date."
The Frederick Brook shale holds significant resource and economic potential for the people of New Brunswick and Corridor's shareholders. Corridor has successfully tested natural gas from six different sub-intervals in the Frederick Brook shale across 25 kilometers. Four wells are now producing natural gas from the Frederick Book. The thickness (up to 1,100 metres) of the Frederick Brook shale and lateral extent (up to 483 square kilometers) combined make it a world class resource and opportunity.
The independent engineering firm of GLJ Petroleum Consultants Ltd. ("GLJ") provided a best estimate of gross discovered unrecoverable resources on Corridor's lands of 67.3 trillion cubic feet ("TCF") (59.1 TCF net to Corridor) in the Frederick Brook shale as reviewed on March 25, 2014. A summary of this estimate is set forth in Corridor's Annual Information Form for the year ended December 31, 2013, a copy of which is available under Corridor's profile at www.sedar.com. Corridor has successfully tested and currently produces gas from the Frederick Brook shale. Ultimately, Corridor needs to demonstrate that drilling and producing natural gas from the shale is commercially viable. The technical understanding of recovering the Frederick Brook resource is still at a relatively early stage. The natural gas will not be considered "recoverable" until we gain more knowledge. The fracture stimulation technology of accessing and producing shale gas reserves has been advancing rapidly in recent years. Typically, it is common to produce 20% to 30% of the resource. In our case, that could be up to 13.4 to 20.1 TCF. To give a sense of perspective, the entire country of Canada consumes approximately 3.0 TCF per year.
Much has been said about the potential economic benefits of an expanding natural gas industry to the people of New Brunswick. While Corridor believes the benefits could be substantial, it is only by allowing Corridor and industry to continue its work assessing the resource, that those benefits can be quantified. This work will take significant investment capital, likely hundreds of millions of dollars. "The only certainty is that nobody will ever know the economic potential, should hydraulic fracturing no longer be permitted. To not allow the work to continue, would amount to a refusal by the Government of New Brunswick to ask the question of what the reward of pursuing this resource might be. We would consider that a wasted opportunity for the people of New Brunswick," added Mr. Moran.
Corridor understands the New Brunswick Government may feel there already is a de facto moratorium in place because of the stringent rules to source and manage the water needed to drill for and produce natural gas. We also understand that many New Brunswickers have anxiety about the impact on water resources due to increased natural gas activity.
Corridor believes the people of Manitoba, Saskatchewan, Alberta and British Columbia also care passionately about their water, health and safety. "We all have a vested interest to ensure that water is sourced, treated and disposed of in a sustainable, safe and responsible manner. The oil and gas industry has thrived in those provinces where hydraulic fracturing has been permitted for over sixty years. Corridor believes those provinces' regulatory and environmental framework would serve as excellent role models for developing the industry in New Brunswick."
Corridor is an Eastern Canadian junior resource company engaged in the exploration for and development and production of petroleum and natural gas onshore in New Brunswick and Québec and offshore in the Gulf of St. Lawrence. Corridor currently has natural gas production and reserves in the McCully Field near Sussex, New Brunswick and crude oil reserves in the Caledonia Field near Sussex, New Brunswick. In addition, Corridor has contingent resources and discovered unrecoverable resources in Elgin, New Brunswick and has a 21.67% interest in a joint venture which has undiscovered resources on Anticosti Island, Québec.
Forward Looking Statements
This press release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of Canadian securities laws. All statements other than statements of historical fact are forward-looking statements. Forward-looking information typically contains statements with words such as "anticipate", "believe", "plan", "continuous", "estimate", "expect", "may", "will", "project", "should", or similar words suggesting future outcomes. In particular, this press release contains forward-looking statements pertaining to: the characteristics of the Frederick Brook shale and potential of such properties. Statements relating to ""resources" are forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources described, as applicable, exist in the quantities predicted or estimated and can profitably be produced in the future.
Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward-looking statements will not occur. There can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the difference may be material and adverse to Corridor and its shareholders.
Forward-looking statements are based on Corridor's current beliefs as well as assumptions made by, and information currently available to, Corridor including information concerning anticipated financial performance, business prospects, strategies, regulatory developments, future natural gas commodity prices, future natural gas production levels, the ability to obtain equipment in a timely manner to carry out development activities, the ability to market natural gas successfully to current and new customers, the impact of increasing competition, the ability to obtain financing on acceptable terms, and the ability to add production and reserves through development and exploration activities and the terms of agreements with third parties, such as Corridor's forward sales and transportation agreements and the Anticosti Joint Venture. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks that forward-looking statements will not be achieved. These factors may be found under the heading "Risk Factors" in Corridor's Annual Information Form for the year ended December 31, 2013.
The forward-looking statements contained in this press release are made as of the date hereof and Corridor does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
Resources Disclosure
"Discovered resources" is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially-in-place includes production, reserves, and contingent resources; the remainder is unrecoverable. "Undiscovered resources" refers to those quantities of petroleum that are estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of undiscovered petroleum initially-in-place is referred to as prospective resources, the remainder as unrecoverable. Undiscovered resources carry discovery risk. There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. A recovery project cannot be defined for this volume of undiscovered petroleum initially-in-place at this time.
"Discovered unrecoverable resources ", the equivalent of "discovered unrecoverable petroleum initially-in-place resources", refers to that portion of discovered petroleum initially-in-place which is estimated, as of a given date, not to be recoverable by future development projects. A portion of these quantities may become recoverable in the future as commercial circumstances change or technological developments occur; the remaining portion may never be recovered due to the physical/chemical constraints represented by subsurface interaction of fluids and reservoir rocks;
"Undiscovered unrecoverable resources", the equivalent of "Undiscovered unrecoverable petroleum initially-in-place", refers to that portion of undiscovered petroleum initially-in-place which is estimated, as of a given date, not to be recoverable by future development projects. A portion of these quantities may become recoverable in the future as commercial circumstances change or technological developments occur; the remaining portion may never be recovered due to the physical/chemical constraints represented by subsurface interaction of fluids and reservoir rocks.
Resources do not constitute, and should not be confused with, reserves. Actual reserves and resources will vary from the reserve and resource estimates, and those variations could be material. There is no certainty that it will be economically viable to produce any portion of the resources.
The resources assessment was completed by GLJ Petroleum Consultants Ltd. effective June 1, 2009, as modified on March 25, 2014, setting forth certain information regarding discovered unrecoverable resources of Corridor's interests in the Frederick Brook shale formation. The best estimate is the value that best represents the expected outcome with no optimism or conservatism. There is no certainty that it will be commercially viable to produce any portion of these discovered resources.
For further information on Corridor's resources and reserves, see Corridor's Annual Information Form for the year ended December 31, 2013.