In a signing ceremony today, the Province of Prince Edward Island entered into an agreement with Corridor Resources Inc. (CDN-CRRI) of Halifax, Nova Scotia, to drill a test well to evaluate the potential of producing natural gas near Cavendish.
The planned well, called Green Gables #2, is located one-half of a kilometre southeast of a well drilled in 1972 by Hudson's Bay Oil and Gas Company (HBOG). The original well encountered natural gas at a depth of 7300 feet, but testing operations were unsuccessful in producing gas at commercial rates.
Studies by Corridor and Dobrana Resources Ltd. (VSE-DBR), a partner in the exploration, indicate the gas bearing formation in the original well may have been damaged by the drilling fluid and testing procedures used at the time. Corridor and Dobrana plan to drill the Green Gables #2 well utilizing an inhibited, low solids mud system and to fracture the gas bearing reservoir in an attempt to reduce and/or avoid damage thereby stimulating the rate of gas production.
Drilling will begin around the first of June and will be completed in approximately 40 days. Following the completion of the $1.5 million project, Corridor and Dobrana will each have a 50% interest in the Green Gables exploration licence. The project is expected to create between 15 and 20 jobs. Approximately 10 percent of the project cost will be spent on locally attained goods and services.
The provincial government will be providing a royalty holiday on production for five years to Corridor Resources and Dobrana for the project. "This project could potentially mean large economic spin-offs for the Island if natural gas is found," said Wes MacAleer, Minister of Economic Development and Tourism. "We are making progress in developing new industries in Prince Edward Island to supplement our traditional ones. A positive outcome from the project would guarantee more gas exploration in PEI."
"We are optimistic about it, but we have to prove it by drilling the well," said Norm Miller, President of Corridor Resources. "Through this agreement, the Government of Prince Edward Island has helped us attract our partner, Dobrana, to this project."