Shale potential sparks development3/11/2013
The development of New Brunswick’s shale gas industry is an important part of a proposed export facility in Nova Scotia, says Contact Exploration CEO Steve Harding.
Contact, a company searching for natural gas in New Brunswick, and Pieridae Energy announced the creation of a new exploration and production company earlier this week.
The firm was formed with the purpose to source, develop and produce natural gas to serve as a “significant portion of the feedstock” for Pieridae’s proposed Goldboro LNG Terminal in Nova Scotia.
The deal also dedicates roughly 50,000 acres of New Brunswick land with the potential for natural gas development currently held by Contact to supplying the facility.
“There’s a huge benefit to New Brunswick here,” Harding said. “If New Brunswick becomes a large percentage supplier of natural gas to this project, the amount of royalties, the amount of work-related business to the province is fantastic.”
Contact states than an independent study of the shale gas resource within its Frederick Brook lands south of Moncton estimates there is more than two trillion cubic feet of recoverable gas within more than 10 trillion cubic feet in place.
Hiram Brook, also under Contact’s exploration, is believed to be “highly prospective,” although an independent resource study has yet to be completed.
The new company aims to secure natural gas assets “onshore Atlantic Canada and the eastern United States” for the Goldboro terminal, according to Pieridae.
The amount of gas needed is significant as the proposed terminal is anticipated to export up to about ten million metric tonnes of natural gas per year and have on-site storage capacity of 690,000 cubic metres of liquefied natural gas.
“The value of potentially getting gas from New Brunswick is that you don’t have to transport it that far so there is the ability to reduce the toll costs of transporting it by pipeline,” he said.
“There is value in getting it locally.
“If that can’t happen then the Goldboro project would have to look outside of Atlantic Canada and the northeastern United States would be the logical place to go.”
Contact received an initial cash payment of $1.3 million from Pieridae in the deal and has been issued shares of that company as part of the deal.
Contact and Pieridae are also seeking third-party equity funding for an additional $15.4 million which it expects to have in place by July 2014.
“Goldboro LNG creates an opportunity for further exploration and production of natural gas resources in Atlantic Canada and northeastern United States,” said Pieridae president and CEO Alfred Sorensen in a statement.
An environmental assessment process for the proposed natural gas plant is expected to start before the end of this year. Construction is expected to start in 2014 with the plant expected to be open in 2018.
The project counts on the reversal of the Maritimes and Northeast Pipeline, which currently flows south to New Brunswick and then west into New England.
Energy Minister Craig Leonard has pitched the potential need to reverse the Maritimes and Northeast Pipeline and for Saint John’s Canaport LNG terminal to begin exporting natural gas, noting that the province’s natural gas users will soon be faced, with the issue of supply that need to be addressed.
“What (the proposed Goldboro terminal) indicates to us in New Brunswick is that this export LNG concept is out there and is something that we really do have to take into consideration when we look at our own economic future,” Leonard said.
Harding has said that Goldboro is a benefit for New Brunswick.
“I know a lot of people were imagining that an export terminal at Canaport was going to happen,” Harding said. “But obviously in the backdrop here these guys have been working Nova Scotia and Goldboro and are very well poised to kick into gear.
“Because we have a lot of interest in New Brunswick, I just hope the province embraces this and benefits as well.”