An Ontario company says it is encouraged by peat testing it has conducted in western Newfoundland, and has an eye on the newsprint mill in Corner Brook as a potential customer.

Peat Resources Ltd. believes that peat could be commercially drawn from bogs in southwestern Newfoundland.

President Peter Telford said samples taken during the first phase of an exploration program south of the town of St. George's show good promise.

"The results that they submitted to us recently show that we do have the volume and the quality of peat that we need to develop a … very good operation in that area," Telford told CBC News.

Potential customers include electrical generation companies throughout eastern North America, as well as the manufacturing sector. Close to home, the company sees Corner Brook Pulp and Paper as a logical customer.

"There are industrial applications that may be attractive," Telford said.

"For example, in Corner Brook, you've got a large paper mill there that uses a variety of fuels, and I know have been looking for alternative fuels, so we'll be talking to them about the potential use of peat fuel at that operation."

Corner Brook Pulp and Paper last year made an unsuccessful bid to burn used tires to generate power at its mill.

Meanwhile, Peat Resources is planning a peat fuel pilot project in Stephenville. Details of the plan will be made public later this month.