Natural gas companies bank on shale's future

Several companies are actively looking at developing or expanding shale gas operations in New Brunswick.
Several companies are actively searching for shale gas in New Brunswick 4:00

New Brunswick’s relatively untapped shale gas reserves are creating a high level of interest from the gas industry even as the provincial government struggles to quiet the public discontent over the industry's future.

New Brunswick has an estimated 80 trillion cubic feet of gas locked more than a kilometre beneath the ground in the Frederick Brook Shale formation in the southern part of the province.

The Frederick Brook Shale formation, which was created more than 300 million years ago, runs from the Hampton area all the way to Sackville.

So far, nine companies have 71 different leases to search and explore for shale gas deposits across the province and not just in the southern part of New Brunswick.

There are two companies that already have proven track records in the industry and are hopeful that their parcels of land will turn into significant shale gas operations.

Halifax-based Corridor Resources discovered gas in Penobsquis in 2000 and is the owner of the 30 gas wells in the McCully Gas Field.

In addition, the company owns five wells in the Elgin area with viable levels of gas found in some cases.

Phillip Knoll, the president of Corridor, said the company plans to move forward with one or two more appraisal wells.

Eventually, the company plans to build a pilot operation in the Elgin area. That plant would include a pipeline back to the McCully Field operation, which connects into the Maritimes and Northeast Pipeline system.

Before that larger plan can be introduced, more wells have to be drilled and more gas must be found in order to entice deep-pocketed investors to help fund the project.

"That would envision the investment of about $150 million. We would raise that money through equity financing and/or bringing in a partner to contribute toward that effort," Knoll said.

Corridor had formed a partnership with Apache Canada, but the arrangement broke down earlier in 2011 when two test wells did not generate "sustained shale gas production."

Expansion plans

But Corridor Resources is not the player currently in the New Brunswick oil and gas market.

In the Hillsborough area, Contact Exploration took over an oil and gas field that has been a known producer for more than a century.

Contact Exploration is now producing roughly 100 barrels of oil a day at its Stoney Creek site.

Steve Harding, the president of Contact Exploration, said the company has gas exploration in its plans in land aside from Stoney Creek. 

Harding said the company has not ventured into gas exploration to this point because its existing assets are proving to be commercially successful.

"From a commerciality perspective and an existing infrastructure perspective it makes best business sense to address those first," he said.

"But all that said, we do have what we believe are good gas assets as well that in the future would be something that we would be interested in developing."

SWN’s future

While Corridor Resources and Contact Exploration are pondering expansion plans in the province, SWN Resources Canada is considering a leap into the province.

Tom Alexander, the general manager of SWN Resources Canada, said he remains hopeful about the land’s future for producing shale gas. (CBC)
SWN, whose parent company Southwestern Resources is based in Houston, Texas, holds about 1 million hectares worth of licences in the province.

Though SWN's licence extends clear across the province, it is north of the Albert formation in an area with no history of oil and gas discovery and is regarded as something of a long shot.

Tom Alexander, the general manager for SWN in New Brunswick, told an industry group earlier in November in Fredericton that his company is "truly exploring." But he also said there is widespread gas in the area.

SWN shut down its seismic testing operations earlier than anticipated this year after a series of blockades halted its crews. SWN expects to continue exploring its territory next year.

Alexander said he remains hopeful about the land’s future for producing shale gas. But whether it will lead to making money, he said that's another matter.

"It's clear there's something there. What's not clear and we'll continue to seek answers with our exploration program is it technically feasible?" Alexander said.

"Where is it actually coming from and is it economically feasible? So, there's a lot of something there we just don't know exactly what to do with it."

The potential for shale gas exploration and the use of the controversial practice of hydraulic fracturing has caused waves of protests across the province.

The New Brunswick government has already released a series of regulatory reforms intended to toughen up the rules governing hydro-fracking and resources extraction in the province.

However, Premier David Alward's government has promised to usher in even stronger laws, including an Environmental Protection Plan early in 2012.