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Analyst: Corridor’s gas move ‘huge’
By Steve Proctor
Corridor Resources of Halifax will enter the big leagues next week when it hooks its natural gas supply in southern New Brunswick into the Maritimes and Northeast pipeline, says a Halifax analyst.
“On Wednesday when they move their first gas, they move from being simply a company supplying gas to a local mill to a gas provider shipping to the U.S. markets. It’s a huge step forward for them,” said Ken Chernin of Beacon Securities.
Corridor, headed by Elmsdale native Norm Miller, has spent more than $200 million developing the McCully field in southern New Brunswick since 2000.
“We started as a small private company with three partners and an investment of $75,000,” Mr. Miller said in an interview Thursday in the company’s map-clad boardroom on Spring Garden Road in Halifax.
“We grew a little bit with each project, first going public with over-the-counter sales, then onto the Alberta Stock Exchange, the Venture and last year onto the big board in Toronto.”
While it is a source of pride that the company has a market capitalization approaching $1 billion and its stock has almost tripled this year from a low of $4.64 a share, Mr. Miller’s focus is the hook-up of his gas plant and pipelines that will take place in a small field near Sussex, N.B.
“It’s an order-of-magnitude shift for us,” he said.
“It changes the dynamics completely. We will be a producer serving an unlimited market. It opens the doors to finding out how large this development can really be.”
Two wells on the site have been producing two million cubic feet of sweet natural gas since April 2003 to supply a mill owned by the Potash Corp. of Saskatchewan. By Wednesday evening about 35 million cubic feet of gas per day will be flowing into the pipeline and on to markets in the northeastern United States. The estimated size of the reserve is 143 billion cubic feet, but with $5 million-$6 million in monthly cash flow from selling the gas to Emera Energy, Mr. Miller said the company will have lots of opportunities to verify that number and look for more.
“Our first priority is to expand our drilling at McCully and grow our source. There’s a lot of potential here, but we have to prove it,” said the president and CEO.
The company, which earlier this month closed a $60-million stock financing deal for exploration purposes, has already contracted two rigs for drilling deep wells in New Brunswick and is bidding on a third rig that will be used to drill a well this summer in Prince Edward Island as part of a partnership with Petroworth Resources. That project may initially cost $5 million but could be expanded to include a second well if initial results are good.
There have been onshore gas discoveries in P.E.I. in the past, but no company has been able to capture it in a way that has been commercially viable.
Mr. Chernin said besides cash flow, the Maritimes and Northeast hook-up gives the company a credibility on the world stage “that will allow them to partner with other companies to do things that wouldn’t have been possible earlier on.”
One of those projects many be a venture in the Gulf of St. Lawrence called Old Harry. Mr. Chernin said preliminary exploration results hint at a reserve of five trillion cubic metres of gas or two billion barrels of oil.
“It’s too big of a project for them to take on by themselves, but they are now a much more attractive partner.”
When asked about the offshore possibility, Mr. Miller offered only a broad smile and the suggestion “anything is possible.” He said he believes demand and pricing for natural gas will be strong for many years.
“I think we are in the age of natural gas. It will be the bridge fuel from oil and coal to more sustainable sources, be they nuclear, wind or tidal.”
Late Thursday, Corridor stock was trading at $11.70 a share, up 10 cents on the day.