Nova Scotian independent likes eastern Canada prospects

Alan Petzet
Chief Editor-Exploration and Economics

The onshore portion of Canada's Maritime Provinces represents a true frontier with practically no oil or gas production and its own set of challenges.

The area is slowly becoming productive under the shadow of Atlantic Canada's burgeoning offshore industry.

Neither the much larger Atlantic play nor the fact that the onshore Maritimes are off the scope of most western Canadian and Lower 48 US operators bothers Norman W. Miller, president of Corridor Resources Inc., Halifax, NS.

Corridor, involved offshore as well as on land, was formed in 1995 mainly to exploit gas along the corridor of the Maritimes & Northeast gas pipeline from Sable Island to Nova Scotia, New Brunswick, and New England.

Miller, a founder of Corridor, led the company to acquire interests in Nova Scotia, New Brunswick, Quebec, Prince Edward Island, and Newfoundland.

Seven years into the venture, Miller noted that enjoying what you do helps but that everything takes longer than you think it will.

"You have to come up with the right combination of approaches, not one that jumps out at you and hits you over the head and says, 'I'm here.'"

Today Corridor is within months of receiving its first cash flow from natural gas sales, and Miller is more optimistic than ever about the potential of the Maritimes. The area's basins and subbasins contain potentially large resources, and exploration is still in its early stages.

"As the industry becomes more aware of our recent success, we will see more opportunities opening up," Miller said.

More companies seem to be showing interest in the onshore Maritimes, Miller said. In the US, Appalachian operators seem to have greater understanding of the Maritimes because of the geological similarities.

McCully gas field
Start-up of McCully field in New Brunswick northeast of Sussex is to involve delivery of an average 2.3 MMcfd of gas from two wells through a short pipeline to a mill operated by Potash Corp. of Saskatchewan, which owns the other 50% of the two wells.

The gas will back out No. 2 fuel oil, on whose cost the gas price is based.

The two wells are expected to recover a combined >10 bcf of gas during 20 years and will sustain mill demand 4-5 years before decline sets in, an outside study showed.

Miller points out that the two wells are expected to drain less than 8% of the original Corridor-PCS McCully four-section joint venture area of 1,432 ha (14 sq km), and that the gas accumulation is undefined and appears to be much larger. As many as 13 spacing units remain undrilled within the JV area.

Miller said Corridor believes that three wells drilled outside the original JV area in 2002 have more than doubled the potential unrisked gas-in-place figure of 500 bcf that consulting engineers attached to the first four McCully wells.

The field area is now considered to be 15 km long by 5 km at its widest point, and some data indicate the ultimate dimensions could be 22 by 8 km. All seven wells drilled at McCully encountered gas in the Albert formation of Mississippian age.

"We expect to be able to drill a large number of locations and generate enough gas to justify construction of a pipeline to the Maritimes & Northeast Pipeline (30 miles)," said Miller, who is assessing options for further drilling in 2003.

Logistics, challenges
Remoteness from infrastructure causes delays, and applying new and even existing techniques and technologies presents challenges for Corridor in the Maritimes frontier, Miller said.

"If a tool fails, you can't just get delivery in a few hours from Calgary or Houston," Miller noted. Eastern Canada has only six land rigs. All services are less readily available than in most conventional operating areas. Consultants are usually not close at hand, and all these factors tend to hike costs.

Corridor believes the Albert reservoirs are "dessicated, very dry, low porosity reservoirs with abnormally low water saturations." Water introduced in drilling and completion operators "tends to phase-block the reservoirs and damage the productive capability of the wells quite severely."

Formation damage appears to mend with time, as indicated in two wells Corridor recently retested, Miller said.

Drilling with air, fracturing with nondamaging fluids, and barefoot completions may have application at McCully. Untried techniques, batch drilling, and other factors have the potential to reduce the cost of a completed well below $2 million (Canadian), Miller said.

Multilateral wells could provide cost-effective means of tackling McCully's stacked reservoirs at depths of 2,000-2,900 m. Horizontal drilling is practically untried in the onshore Maritimes and may have application at McCully.

Other prospects
Corridor could have its busiest year ever in 2003.

Miller noted that Corridor's other prospects involve pure exploration, deeper zones, and exploitation of older apparent discoveries and lie onshore and offshore.

"The best reservoirs in the Moncton subbasin were present in a deep well drilled in the early 1980s that penetrated porous and permeable water-bearing sands in the Dawson Settlement member of the Albert formation (early Mississippian). Geophysical evidence indicates that these better reservoir sands are trapped below the Fredericks Brook shale," Miller said. None of the McCully wells drilled to date penetrated beneath this major shale event. That would involve drilling depths of 3,000-4,000 m.

Miller is very high on the >20,000 ha Old Harry prospect in 1,500 ft of water, which straddles the Quebec-Newfoundland maritime boundary in the Laurentian channel. A seismic vessel acquired 2D data on the northeastern part of the prospect during December 2002.

Most of Old Harry is in Quebec waters, but the province does not yet have an agreement with the Canadian government that would permit exploratory drilling there. Corridor hopes for resolution in early 2003. Old Harry is related to prospects on eastern Prince Edward Island but has a different sediment source and much better reservoir development, Miller said.

Corridor and Hunt Oil Co., Dallas, are awaiting approval of seismic programs off Cape Breton Island, NS, where Corridor holds 248,775 ha.

Miller said Corridor likes Anticosti Island geologically, particularly the Ordovician Trenton-Black River prospects. It acquired six new licenses in 2002 and holds working interests of 50-100% in licenses covering 2 million acres. Corridor hopes to undertake a multiwell exploration drilling program there in 2003.

Other prospects of interest to Corridor are Pennsylvanian gas at Green Gables near Cavendish on Prince Edward Island and Permian-Carboniferous sands at Fatima on the Magdalen Islands in the Gulf of St. Lawrence. Corridor has recently completed seismic acquisition programs in each of these areas.

At Green Gables, the new data show a strong amplitude vs. offset anomaly across the southern flank of this large onshore prospect. At Fatima, the new data show potential trapping of Permian sands beneath an overhanging salt ledge. Corridor hopes to drill both of these prospects in 2003.


Career highlights

Norman W. Miller is president and a director of Corridor Resources Inc., Halifax, founded by Miller and several associates in 1995.

Employment
Miller started in the industry with Shell Canada Resources Ltd., where he was involved with west and east coast Canada exploration programs in the late 1960s-early 1970s. He later held positions with Natomas in Indonesia and Petro-Canada in Calgary. He was president of E.P.I. Resources Ltd. and N.W. Miller & Associates Ltd., Calgary consulting firms, for most of the 1980s. He led Lasmo PLC's Nova Scotia team in the development and initial production of Cohasset and Panuke oil fields off Nova Scotia in 1990-93.

Organizations
Miller is a member of the Alberta Association of Petroleum Engineers, Geologists and Geophysicists (APEGGA), as well as a director of the Atlantic Institute for Market Studies (AIMS).

Education
A native of Nova Scotia, Miller graduated in science from Dalhousie University in 1962 and in mining engineering from Technical University of Nova Scotia in 1964.

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