Corridor Resources Joins Marico In Hunt For A "Producer Class" Natural Gas Distributor Franchise
Halifax, Nova Scotia, August 19, 1998: Norm Miller, President and CEO of Corridor Resources Inc. announced today that Corridor Resources has joined with MariCo Oil & Gas Corporation in its efforts to convince the Provincial Government to create a "Producer Class" distributor category for local producers.
Corridor Resources Inc. is a natural resources company incorporated to explore for and develop oil and natural gas reserves (onshore and offshore), initially in Quebec, New Brunswick and Prince Edward Island. The Company is headquartered in Halifax, Nova Scotia and is publicly traded on the Alberta Stock Exchange. Over the last three years, the Company has selectively acquired an extensive exploration land position covering 5.3 million acres onshore in the three provinces and offshore in the Gulf of St, Lawrence. The Company has been an active explorer of these lands and several strategic exploration prospects have been identified based on geologic, reservoir, cost and market criteria.
"The benefits of local gas production for New Brunswickers will come in the form of jobs, industrial development, increased access, provincial royalties and a lower delivered price for natural gas" said Mr. Miller.
Corridor Resources is concerned with the distribution of local natural gas from New Brunswick to markets within New Brunswick as distinct from the distribution of Sable natural gas. Corridor believes that local New Brunswick producers should be able to compete with the larger Sable producers by having the freedom to negotiate transportation terms that reflect the real cost of delivery to their customers, not the higher cost of delivery to customers in other markets. "The lower the price for delivered natural gas, the higher the market penetration for natural gas" says Mr. Miller. He believes that multiple franchises are preferable to single or monopoly franchise because multiple franchises better reflect the diversity of markets like New Brunswick. "Multiple franchises can be tailored to meet the specific needs of a particular market area" says Mr. Miller.
Corridor Resources wants to ensure that the gas distribution franchise process will encourage and strengthen the exploration for and the production, transmission and sale of New Brunswick's own gas resource. Accordingly, Corridor has expressed an interest in distributing natural gas, as a Producer franchisee, in the areas within and adjacent to its New Brunswick exploration and production rights.
Corridor Resources wants the Province of New Brunswick to create a local producer category that is confirmed in legislation or regulation governing the distribution of natural gas in the Province. Accordingly, the Company has recommend to the Minister of Natural Resources & Energy that the Province of New Brunswick implement a New Brunswick "Producer Class" by-pass right or right to develop a delivery system franchise. Local producers would have the right to request a regular franchisee to prepare a detailed plan for distributing the local producer's gas. If, however, the local producer is able to construct facilities to deliver its gas more quickly or less expensively than the regular franchisee, then the local producer could apply to the Public Utilities Board for: (a) an Order requiring the designated franchisee to accelerate its delivery timetable and/or lower its costs; or (b) authorization to construct and operate its own direct gas delivery system.
Mr. Miller says "The legislation should convey an irrevocable right that would permit local producers to construct their own natural gas distribution system(s) in the event alternative systems are not cost competitive or are not accessible to producers on a timely and cost competitive basis".
"Local gas production is the best way to ensure that smaller communities like Hillsborough, Marysville, Sackville and Cocagne gain access to natural gas says Mr. Miller.. Development of the Havelock and Elgin basins could see natural gas delivered to Sussex.
Mr. Miller says "The production and delivery of local gas to local markets will result in an alternate source of natural gas for consumers in competition with gas from offshore Sable Island. Competitive sources of natural gas and Corridor's plans for distribution will result in lower delivered prices for natural gas in New Brunswick. Lower energy costs will increase the competitiveness of New Brunswick's industries leading to more demand for products, increased sales and more jobs for New Brunswickers". The production of local gas could also encourage businesses to locate in New Brunswick if they are able to situate nearby lower cost natural gas supplies.
Corridor Resources believes that as many as 30 commercial prospects may ultimately be identified and drilled on its permit holdings. If, for example, 6 of those prospects result in natural gas discoveries, as many as 100 to 150 production wells could be required to fully develop and produce the potential natural gas reserves. Along with wellhead facilities, flowlines, field treatment facilities, etc., Corridor's total potential investment requirement could reach $300 million on their lands alone over the next decade.
To put things in perspective, 150 wells were drilled in the Stoney Creek field, producing an estimated 30 billion cubic feet of natural gas worth approximately $100 million in today's dollars. Based on the size and geological character of natural gas basins in New Brunswick, "we estimate there could be another 20 gas fields in the Province, comparable size to Stoney Creek" said Mr. Miller.
Mr. Miller says "Exploration and production activities could add as many as 1,000 new jobs to the New Brunswick economy over the next decade. Royalties paid to the Provincial Government (at 10%) on $2 billion of production would be an estimated $200 million over the production life of the basins".
This press release contains certain forward looking statements relating to, but not limited to, Corridor's operations, anticipated financial performance, business prospects and strategies, including expectations relating to production levels; capital expenditure programs; the quantity of natural gas reserves; projections of market prices; projections of costs; supply and demand for natural gas; expectations regarding the ability to raise capital and to continually add to reserves through exploration and development; and treatment under governmental regulatory regimes. These statements are based on current expectations that involve numerous assumptions regarding factors and risks that could cause actual results to vary materially, including, without limitation to, the following factors: risks associated with oil and gas exploration, financial risks, substantial capital requirements, bank financing, government regulation, environmental, prices, markets and marketing, dependence on key personnel, dependence on Potash Corporation of Saskatchewan, Inc., availability of drilling equipment and access, risks may not be insurable, management of growth, expiration of licenses and leases, reserves estimates, seasonality, competition, conflicts of interest, Kyoto Protocol, issuance of debt, title to properties and hedging. There is no representation by Corridor that actual results achieved will be the same in whole or in part as those set out in the forward looking information. Furthermore, the forward looking statements contained in this press release are made as of the date hereof, and Corridor undertakes no obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward looking statements, whether as a result of new information, future events or otherwise.
