New Brunswick's iconic images are of lobsters, lighthouses and stunning tides. Tourists flock to the Maritime province to immerse themselves in whale-watching in the Bay of Fundy, canoeing down the Restigouche River, and sailing on the waters of the Gulf of St. Lawrence. Traditional industries are lumbering, fishing, mining and farming; manufacturing and services have gained prominence in recent years.

Although its mining history is rich, encompassing plentiful lead, zinc and copper deposits in its northern part, and non-metals, such as potash and salt, in its southern region, New Brunswick has not been blessed with abundant oil and gas production.







Past disappointment

In the early 20th century, indications were that New Brunswick might have a rosy future in hydrocarbons. The province's first commercial oil and gas field was discovered in 1909 at Stoney Creek, in Albert County. Stoney Creek contained 21 million barrels of in-place oil in the Lower Carboniferous (Mississippian) Albert formation at depths between 500 and 1,100 meters.

Much of the field's promise went unrealized, however. Just 830,000 barrels of waxy crude and 28 billion cubic feet (Bcf) of gas were produced. Oil production ceased in the early 1970s, and gas production tailed off during the next 20 years.

Nonetheless, Stoney Creek, and the presence of albertite, a solid bitumen found in Albert formation shales, tantalized petroleum explorers. (In the mid-1800s, albertite was mined and distilled to make oil for street lamps.)

Lots of companies attempted to expand production beyond Stoney Creek. Exploration centered on the Maritimes Basin, a Carboniferous-to-Permian basin in the eastern part of the province. Such heavyweights as Shell Oil, Imperial Oil and Chevron were among the firms that explored New Brunswick to no avail, piling up a string of some 60 dry holes. Stoney Creek acquired the distinction of being the province's sole commercial play.

Corridor Resources Inc., a small Halifax-based explorer, finally snapped the lengthy string of dusters. In 2000, nearly a century after Stoney Creek's discovery, Corridor and its partner, Potash Corp. of Saskatchewan, drilled a gas well at McCully Field, in the Moncton sub-basin slice of the Maritimes Basin, about 12 kilometers northeast of Sussex.

"We found something new in an area that can really benefit from its development," says Norm Miller, Corridor president.



Initial success

The well was planned as a brine disposal well by Potash Corp., but Corridor had leased the oil and gas rights on the acreage and wanted to check out the petroleum possibilities there. Corridor, a publicly traded company formed in 1995, was prospecting throughout Atlantic Canada. The two firms put together a four-section joint venture to drill the well.

The 2,657-meter McCully #1 was drilled on a huge anticline, and it found gas in tight fluvial sandstones in the Hiram Brook member of the Albert formation.

The McCully discovery encountered more than 40 net meters of overpressured, gas-bearing sands within a 340-meter gross interval. The air-drilled well flowed at rates of up to 2.4 million cubic feet per day during drilling. At first, the partners estimated that the four-section area contained about 300 Bcf of gas in place in the Hiram Brook.

People were euphoric. However, the project turned out to be extremely complex. The lower part of the hole in the discovery well was drilled with conventional mud, which caused formation damage. A frac job was unsuccessful, and subsequent wells encountered similar difficulties. Certainly, abundant gas was present, but enticing it from the obstinate reservoirs proved to be confounding.

Marketing from the nascent field was another knotty challenge. The discovery well lay some 50 kilometers from the Maritimes & Northeast Pipeline, which moves gas from fields offshore Nova Scotia to markets in the Maritimes and New England. With no access to that line, Corridor and Potash Corp. eventually hooked up two wells to supply gas to the latter's potash mine some two kilometers away.

Corridor's discovery stirred interest from several firms. Notably, Houston-based independent EOG Resources Inc. partnered up with Corridor for a while, but bowed out of the area after drilling three tight-sand wells.

Throughout the ensuing years, Corridor continued doggedly working the project, raising funds, drilling wells and experimenting with various drilling and completion strategies.



Economic flow

Finally, in the fall of 2005, a breakthrough occurred. Corridor found a fracing formula that worked quite well on the stubborn reservoirs, and proved the McCully wells could be strong producers. "We learned each time how to improve the frac treatment, and it was instrumental to our success," says Miller. "Now we're able to bring our wells into production at much improved rates."

Key to the improved fracs was use of the correct fluids and proppants. Furthermore, Corridor had to make sure that the pressure and rate capabilities of the equipment were sufficient to deliver those fluids.

The McCully wells take between one and four fracs apiece, depending on how many reservoirs are present in each hole. Wells in the southern portion of the development see the full suite of reservoirs in the Hiram Brook; to the northwest, an overlying unconformity truncates the upper reservoirs. Indeed, the presence of the unconformity has been beneficial: it provides a stratigraphic component to the trap, and has extended the field boundaries beyond the four-way structural closure.

Net pay is generally between 20 and 50 meters per well, and drill depths vary from 2,400 and 2,700 meters. Individual wells have flowed at rates as high as 5.9 million cubic feet per day, with flowing tubing pressures of as much as 2,100 psi. Capital costs are around C$6 million per completed well at present, and estimated gross proven and probable reserves average from 4 to 8 Bcf per well.

This will be a banner year for Corridor: it expects to connect McCully Field to the Maritimes & Northeast pipeline momentarily, via a 50-kilometer pipeline that has been under construction since October 2006. "We're in the process of wrapping up our second stage of development," says Miller.

The company has built the spur and gathering system, and is in the latter stages of finishing off and commissioning a gas plant with a capacity of up to 50 million cubic feet per day. Capital costs of the pipelines and gas plant are approximately C$60 million.

"We'll be ready for production in June."

Corridor will tie in 15 wells to the pipeline, with production capacity of 35 million cubic feet per day. The company is in the process of drilling and casing six more wells, and this summer it will frac and complete seven. "By November, we aim to have 20 wells onstream at a rate of about 45 million per day," says Miller. Two-thirds of that gas will be net to Corridor.

And, the company has potentially 80 additional locations to drill on average spacing of 110 acres each. That's eight wells per section, which are 880 acres each in New Brunswick. Overall, Corridor holds 323,000 net acres in the McCully region. In March, the company brought a triple rig into the area from Alberta, to join a double that was already at work in the field.

Gas-in-place resources in the Hiram Brook at McCully are now estimated at 1 trillion cubic feet (Tcf). At present, Corridor's net proven gas reserves stand at 41.3 Bcf, and its net 2P (proven plus probable) reserves are 143.1 Bcf.

"It was up and down in the early going, but things have worked out very well."



Field rejuvenation

Anyone who has followed the oil industry in recent years is familiar with the self-evident truth that existing fields are good places to grow reserves. Stoney Creek, with its dismal recovery of less than 4% of original oil in place, is an excellent candidate for field rejuvenation.

That's just what Calgary-based operator Contact Exploration Inc. is working on. Contact has been active in onshore Atlantic Canada for the past five years. The company has acquired nearly 2 million acres in the region, says president and director Terry Brown.

Its front-running project is in New Brunswick, in and around Stoney Creek, where it has acquired some 75,000 acres of 100% leases. In 2005, it shot a 17-square-kilometer 3-D program over the shut-in field.

"We're looking at recovering another 10% of the remaining oil in place at Stoney Creek, just by using horizontal wells and recompleting old vertical wells," says Brown. To date, Contact has completed two horizontal wells in Stoney Creek and has tested several existing gas and oil wells in the field.

"We're currently in the final stages of getting all the regulatory permits to put wells on production," says Brown. "This will be the first onshore oil production in Atlantic Canada in 35 years." Pumping will start imminently on the two horizontal wells and three of the existing reworked vertical oil wells.

Stoney Creek's crude is light, running around 36 degrees API gravity. There's quite a bit of paraffin in the oil, so when it comes to surface, Contact must keep it warm in the tanks. Consequently, the company has also installed heat strings in its horizontal wells, in which it circulates glycol to keep the wellbores warm.

No fracturing is required in the oil reservoir. Porosities and permeabilities are high in the sandstones, which are in the Dawson Settlement member of the Albert formation. The well spacing is close, however, because the paraffin content makes the oil more viscous. Horizontals will be spaced about 100 meters apart, and laterals will extend 450 to 600 meters. This year, in addition to starting production, Contact plans to rework another 10 to 15 of the existing oil wells.

Stoney Creek's gas was produced from the Hiram Brook, the same member Corridor is working with at its McCully project. "We have a lot of similarities with Corridor's area, but our area is much shallower," says Brown. From eight existing gas wells, the company has already tested 1 million cubic feet of gas per day. "We want to maximize the gas production, and see what we can get for a threshold rate."

Contact has also shot 100 kilometers of 2-D seismic data adjacent to the field, looking for satellite prospects in the area. "We've identified several look-alike features to Stoney Creek, and we will drill two of those this summer," says Brown. These prospects are likely gas-prone, sized in the 50- to 100-Bcf range.

Naturally, there are challenges to working in New Brunswick, so far from Canada's vibrant Alberta oil patch. "We're isolated from the service sector, and we have to time everything carefully because rigs and equipment are scarce."

Additionally, New Brunswick is not accustomed to oil and gas production, so each step of a project requires extensive education for regulators and residents alike. "It takes a lot to work through all the regulatory requirements in an area that hasn't seen much industry activity before. We have to be patient."



Shale-gas play

A new play is also emerging in New Brunswick, alongside Stoney Creek and McCully. Corridor recently drilled its F-58 well to 3,754 meters in McCully Field and encountered a thick section of highly fractured, overpressured organic shales in the Frederick Brook, the member sandwiched between the Hiram Brook and Dawson Settlement.

"We've had very significant gas intrusions in the well, and we'll be testing that, both conventionally and also by fracing it," says Miller. "There's a lot of gas in the formation and we're going to find out if we can produce it at economic rates."

Corridor is also considering a horizontal shale-gas test later this year in the Elgin sub-basin, an area northeast of the McCully development and also part of the Maritimes Basin.

Furthermore, Contact Exploration is pursuing the Frederick Brook shale play on its acreage near Stoney Creek. At the old oil field, the shale is the oil window, but to the south of the field, it is deeper and gas-prone. "We have an area that is a good target for shale gas, and we have a couple of companies that have been seriously looking at it," says Brown.

Contact has agreed to farm out 68,000 acres of its properties that have shale-gas potential. Its partner, Calgary-based Triangle Petroleum Corp., is currently conducting studies and could spud a test before the end of the year. "We hope that we can have as much success as Corridor has had in the shale," says Brown.



Three wells planned

PetroWorth Resources, a Calgary-based publicly traded firm, is another Canadian junior that concentrates completely onshore Eastern Canada. The company owns leases throughout the region, says Neal Mednick, president. It was formed in 2003 as a private firm, and has acquired licenses on properties in Prince Edward Island, New Brunswick and Nova Scotia.

"We now have 100% exploration rights to about a million acres onshore Eastern Canada," he says.

Some 41,000 of those acres are in New Brunswick, smack between McCully and Stoney Creek fields. The Hiram Brook is about 1,000 to 1,200 meters in depth in the southern part of PetroWorth's acreage. On the side of the block near Stoney Creek, it rises to about 600 meters. The company completed a 2-D seismic program last year, and is ready to start an exploration drilling campaign.

"We have a good number of prospective targets in New Brunswick," he says. PetroWorth's plan is to drill two wells adjacent to Stoney Creek this summer, offsetting a couple of old gas wells that were drilled right on the border of its properties. After those are completed, it expects to move southwest toward the McCully area and drill a deeper well.

PetroWorth recently raised C$6 million in two private-placement financings, with major participation by Sprott Asset Management. "We've got a fair amount of institutional support, which is indicative of how well positioned we are."



Near neighbor

New Brunswick's activity is also spilling over into its close neighbor Prince Edward Island, Canada's smallest province. PEI lies directly east of New Brunswick, and is also in the Maritimes Basin.

PetroWorth Resources holds 444,000 acres in PEI, east of Charlottetown. During the past few years, it has conducted an extensive 2-D seismic program and an intensive 25,000-acre 3-D survey. "That's the largest 3-D shot onshore Eastern Canada," says Mednick. "We have a lot of land in PEI and we have some extremely large and promising structures identified."

PetroWorth's acreage lies immediately east of Corridor's Green Gables property, a huge structure on which Corridor will drill a well this summer. Corridor holds a total of 2.3 million net acres in Atlantic Canada, 264,000 of which are in PEI.

The company has been working the little province for years; in 1997, its Green Gables #2 encountered 50 meters of tight-gas potential pay. However, the reservoir sands resisted Corridor's attempts at production, and the company was not able to make an economic completion.

Now, it's ready to go back. Armed with its success at McCully, Corridor will retest the sizeable Green Gables feature, which boasts 11,000 acres of closure and potential of 500 Bcf of original gas in place. The company plans a new well and frac stimulation at its Green Gables #3, for a cost of C$4 million.

"The reservoirs are Pennsylvanian in age in PEI, as opposed to Mississippian in New Brunswick," says Miller. "The sands in PEI are similar in some aspects, but they are in the coal measures, and the reservoirs contain a lot of clay."

PetroWorth will closely watch Corridor's work in PEI this summer, and then make the decision to either drill its properties itself or look for partners. "We have tremendous properties; all of the scientific preparation has been done, " says Mednick. "We're now poised to make this a great success."

Indeed, it's been a very long time coming, but these days, companies working in the Maritimes Basin are looking at batches of fresh possibilities and intriguing opportunities. The patience, stubbornness and perseverance of many people-and in particular those at Corridor-have shaped a promising future for viable energy production in this corner of Canada.