Sussex-area fracking plans shelved over 'regulatory uncertainty'

Corridor Resources says it is halting a search for investors to back a multimillion-dollar plan to frack for natural gas near Sussex, citing "regulatory uncertainty" in New Brunswick.

The provincial government recently took steps to partially lift a moratorium on hydraulic fracturing, a controversial process that breaks shale deposits to extract gas. 

But the Halifax-based company says the provincial government has advised it's "unable to consider applications for an exemption to the moratorium as they undertake a consultation process with the New Brunswick First Nations."

The company made the announcement in a quarterly financial update to investors Monday. 

"Due to the regulatory uncertainty in New Brunswick, in particular when or if Corridor's lands will become exempt from the moratorium, Corridor is and has been limited in its ability to market the Frederick Brook Shale prospect to potential joint venture partners," the company said in a news release.

Given the uncertainty, the company says it has deferred "the marketing" of the work "until such time that the moratorium is lifted in respect of our licenses and the New Brunswick regulatory process becomes clear and is consistent with other oil and gas producing jurisdictions."

Mike Holland, the New Brunswick minister of energy and resource development, said the department hasn't received an application from the company to begin fracking. 

He directed questions about whether the government told Corridor it isn't able to consider applications back to the company. 

Steve Moran, Corridor's president and CEO, declined an interview Tuesday. 

Corridor Resources has extracted natural gas east of Sussex since 1999. It stopped fracking after the former Liberal government imposed a moratorium after the 2014 election.

Corridor was seeking investors to expand its extraction network.

The company's  32 existing wells are centred in the Penobsquis area in the McCully Field. The company was looking for a partner to develop wells in the Frederick Brook shale, farther east toward the Elgin area.

Holland said it's disappointing the investment isn't taking place at this point. 

"I would have loved to see more activity take place," Holland said in an interview. 

Sussex Mayor Marc Thorne said the town would love to see more money spent in the region but understands consultation must take place. 

"We certainly would love to see them at work exploring and contributing to the economy, but we also realize having said that that it needs to be done right," Thorne said.

Meanwhile, the company said it is looking to spend outside the province. 

"With working capital of approximately $64 million, Corridor enjoys considerable optionality to pursue opportunities for deployment of our capital," Moran said in a news release. 

Progressive Conservative Premier Blaine Higgs said lifting the moratorium would help the company as it sought investors. 

"My goal is to be able to tell Corridor [Resources] within a month's timeframe that we are open for business," Higgs said in June.

Higgs, after announcing the partial lifting of the moratorium, said the government would consult with Indigenous people.

The announcement about loosening the moratorium was called a "serious mistake" by top Indigenous leaders. Chief George Ginnish of Natoaganeg First Nation had said the province must consult with Indigenous people before making a decision, not after. 

Last month, Higgs told the Assembly of First Nations that the duty to consult remains vague and undefined. 

"We also need a clear understanding of what consultation means to ensure we've done it effectively," he said.

Building a relationship

The province's 2011 policy on the duty to consult says it must take place when "contemplating an action or a decision that may infringe upon proven or asserted Aboriginal and treaty rights."

On Tuesday, Holland said consultations with Indigenous people have been taking place on a number of files, including natural gas.

He wasn't able to provide a specific date when talks began on fracking. 

He said consultation isn't "checking a box" but about building a relationship.