Apache drops New Brunswick shale; Corridor proceeds

By OGJ editors
-- Corridor Resources Inc., Halifax, received notice that Apache Canada has elected not to proceed with the second phase of the farmout program with Corridor in respect of the potential Frederick Brook shale gas resource development near Elgin, NB.

The two horizontal wells drilled and hydraulically fracture stimulated by Apache, Will DeMille G-59 and Green Road B-41, using similar large slick water techniques, have not generated sustained shale gas production to date. In May, G-59 was reopened and flowed frac fluid at low rates with minor gas shows over 5 days. When the Will DeMille G-59 well was shut-in after initial testing in early December, 2010, it had recovered only 4% of the total frac fluid, Corridor noted.

Corridor previously reported that the B-41 well had been placed on 45-day gas lift that ended on Mar. 16, 2011. At that time, the well was shut-in after recovering 17% of the frac fluid. In late May, due to significant well head pressure buildup, the well was reopened and flowed gas at a maximum rate of 700 Mscfd for several hours prior to frac fluids loading the well causing gas rates to decline.

Based on a consensus among third party expert consultants and Corridor technical staff, the most significant issues identified with the G-59 and B-41 well performance relate to the design of the horizontal wells in this high-stress environment and the fracture technique. Corridor believes that a different well design and frac program will lead to a commercial development of the Frederick Brook shale.

Corridor in December 2010 retested the G-41 well, which produced gas at a constant 4 MMscfd for 5 days at a final flowing pressure of 1,306 psi. During the first quarter of 2011, G-41 was used to provide gas lift and consistently delivered the required rate of 500 Mscfd during a 45 day test at a final pressure of 2,007 psi.

Corridor will drill two vertical appraisal wells in the Elgin area in late 2011 to confirm the well productivity required to proceed with a pilot phase.

Based on the results of these appraisal wells, Corridor plans a staged approach to demonstrate commercial viability that would include a pilot phase with a capacity of 40 MMscfd, targeting gas production in late 2013. This program would include vertical wells in a multiwell pad design to take advantage of the shale thickness and high gas saturations.

During the pilot phase, Corridor will evaluate various drilling and completion techniques. Corridor will provide further details on the Frederick Brook shale gas development plans in a corporate presentation to be placed on its website on June 6, 2011.

Corridor will also entertain discussions with potential joint venture partners who wish to engage in a program to develop the Frederick Brook shale and who can add value to the potential development. The information and data obtained to date from Corridor’s and subsequent Apache programs will be of significant value as this program advances.

Corridor noted that evaluation of the Frederick Brook shale gas resource is still in its early stage and that the best estimate of gross discovered resources is 67.3 tscf as estimated by GLJ Petroleum Consultants Ltd. in the GLJ shale resources report, effective June 1, 2009.

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