The Barnett Shale in the Fort Worth Basin may be the most hyped natural gas shale area of North America, but the Canadian Maritimes abundant rock could be the next new thing. Led by Nova Scotia and New Brunswick, all four of Canada's Atlantic provinces are seeing an upward trend in awarding onshore exploration rights, and even though the activity level is modest by comparison to the onshore activity in Western Canada, this emerging region is garnering considerable interest from small and large producers.

Canaccord Adams energy analyst Irene Haas, who has been studying gas shale plays across North America, said she initially focused on finding the "next big shale" in Western Canada, but she was intrigued by the results of two of the first movers in gas shale in New Brunswick and Nova Scotia. The Canadian Maritimes, she said, "could be ahead of the pack." The region is "very intriguing" for two reasons: its proximity to the U.S. East Coast, which is the largest consumer of natural gas; and "attractive" royalty regimes.

The huge Maritimes Basin is comprised of a series of thick continental and marine sediments of the Upper Paleozoic with carboniferous rock that extends across the provinces. Conventional exploration activity is focused on two key rocks, the Horton and Windsor groups, along with a "younger" unit that is of interest to coalbed methane (CBM) explorers: the Cumberland Group.

"In New Brunswick, some of the sub-basins have been subjected to at least five major episodes of basin inversion in the geologic past," said Haas. "This complex history has created a number of big structures and fractured the prospective Horton Group. While early exploration efforts are focused on the big structural highs, we believe that more oil and gas can be found in the more subtle stratigraphic plays, which have been overlooked thus far." Also, "fields are likely to be more 'chopped up,' a successful trend may or may not extend over a large area."

What is helping to push onshore exploration efforts, albeit slowly, along is the gas pipeline infrastructure now in place and the offshore exploration finds that include the Sable Offshore Energy Project and the on-again, off-again Deep Panuke proposal by EnCana Corp. (see related story).

Onshore, Haas said the work to date by Corridor Resources Inc. and Triangle Petroleum Ltd. has been "cutting-edge" in the Maritimes, and they both have prospective acreage near the Maritimes & Northeast Pipeline. They also are both drilling new wells to test their gas shale concepts.

EOG Canada Resources Inc., whose parent company has garnered considerable success from the Barnett Shale, also has a multi-well program on its exploration license in Nova Scotia. And Stealth Ventures Ltd. is exploring for CBM. Stealth holds the rights to explore in the Stellarton and Springhill areas of Nova Scotia. These basins are thought to contain more than 1.0 Tcf of in-place gas in the coal seams (generally 2,000-8,000 feet below ground service).

Corridor, with nearly 820,000 net acres in the Moneton Basin, was the "first mover in the emerging Horton Group-Frederick shale gas play" of the McCully field in New Brunswick, Haas noted. And Triangle Petroleum, the first mover in the Nova Scotia Shale play, has "firsthand experience with the Barnett Shale and the Fayetteville Shale..." and its wells to date "hint"at a potentially gas-prone shale in the Kennetcook Basin.

No big commercial success has been made onshore in Nova Scotia yet, but the success in New Brunswick is considered a good omen since both provinces have similar geological settings.

"We are excited about the ongoing exploration efforts in New Brunswick and Nova Scotia," said Haas. "While we believe that it is possible to find multiple Tcf of gas in place in both basins, the plays are still in the incubation and exploration stage, and more wells are needed to prove these play concepts."

According to the Canadian Association for Petroleum Producers, producers currently hold 12 exploration agreements and two CBM agreements onshore Nova Scotia. More than 110 exploration wells have been drilled in various parts of the province, with small amounts of oil and gas discovered in about one-third of these wells. The Nova Scotia Department of Energy estimated there are work commitments "in excess of C$10 million over the next two to three years."

The East Coast "will see more gas soon," but it's not too early to plan ahead" for transportation capacity, said Haas. "In our opinion, the U.S. East Coast market could see an increase in supply in late 2008 and early 2009" with new gas from the Rockies Express pipeline, gas from the Barnett, Woodford and Fayetteville shales, seasonal gas from the planned Canaport LNG [liquefied natural gas] Terminal and seasonal gas from other LNG regas facilities.

©Copyright 2007 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.