Vulcan Minerals Inc.

Vulcan Minerals Inc.

December 07, 2009 09:24 ET

Vulcan Minerals Inc.-Wildcat Natural Gas Discovery at Red Brook

ST.JOHN'S, NEWFOUNDLAND AND LABRADOR--(Marketwire - Dec. 7, 2009) - Vulcan Minerals Inc. ("the Company")(TSX VENTURE:VUL) is pleased to announce that Vulcan-Investcan Red Brook#2 has flowed natural gas to surface on three drill stem tests. This is the first flow of natural gas to surface for any petroleum well in the Bay St George basin and clearly demonstrates the hydrocarbon potential of this under-explored area. Videos of the test flares are posted on the company's website The well will be cased to a total depth of 1965 metres for further evaluation and determination of accurate sustainable flow rates in order to fully assess this discovery. The well tested a flank play along the west side of the Flat Bay Anticline which is mapped at surface over a 20 km strike length. It was drilled pursuant to a 50/50 joint venture with Investcan Energy Corp.

During drilling of the well an over pressured zone was encountered which required using a heavy mud system to control the well. Based on the drill stem test results significant formation damage was caused by this heavy drilling fluid. This damage constricted the formation's ability to flow natural gas into the well bore. As a result the flow rates achieved at Red Brook on the drill stem tests are not an accurate reflection of the potential flow rates achievable after the reservoirs have been stimulated by hydraulic fracturing. A fracture stimulation is designed to increase permeability and access formation fluids deep beyond the damaged zone. Consequently, flow rates can increase significantly as evidenced by the results achieved in similar rocks in New Brunswick. As a result, the Company is having all evaluation data analysed towards designing a fracture stimulation program. This program will also include an evaluation of the Robinsons #1 well which encountered a significant number of gas shows as reported on October 15, 2009.

A comparable analogue to the Red Brook - Robinsons discoveries is the McCully field in New Brunswick. It occurs in similar Carboniferous age rocks within the larger Maritimes Basin which contains the Bay St. George sub-basin in western Newfoundland. The field contains approximately 400 billion cubic feet of proved and probable natural gas in place (at 50% probability as per Corridor Resources Inc. web site). It currently produces approximately 28 million cubic feet per day into the Maritimes and Northeast pipeline. The success of the McCully Field relies on the effective hydraulic fracture stimulation of tight sandstone gas reservoirs.

The island of Newfoundland does not have a natural gas distribution system for commercial or residential use. Other than possible local industrial uses for natural gas the main market opportunity lies in the production of electricity. The island currently generates up to 450 megawatts of electricity at the Holyrood thermal plant which represents approximately 25% of the island's generative capacity. This equates to approximately 100 million cubic feet of natural gas consumption per day. The Holyrood plant burns heavy Bunker C oil to generate that electricity at prices averaging approximately 80% of the West Texas Intermediate oil price. Electricity generated from western Newfoundland natural gas production could be a viable alternative to the Holyrood plant on a cost competitive basis in addition to being environmentally favoured on an emissions basis as a cleaner burning fuel than Bunker C oil. The Company believes that a natural gas discovery on the island of Newfoundland is not a stranded resource with little net present value. On the contrary, it would be a valuable source of environmentally friendly energy vis-a-vis displacement of some or all of the Holyrood electrical production. Vulcan and its partner, Investcan Energy Corporation must now prove up reserves and flow rates to justify any commercial production. Towards that end the Company is formulating a fracture stimulation program for the Red Brook and Robinsons wells to properly test and evaluate their productive potential.

Vulcan currently holds a minority working interest in the Parsons Pond project, western Newfoundland, where Nalcor Energy Oil and Gas is the operator. Nalcor has indicated its intention to commence operations at Parsons Pond in January 2010 and has issued an Authority for Expenditure and a Notice of Independent Operations to partners in respect to a proposed well on petroleum exploration permit 03-103. Vulcan has a 10% working interest in this permit and has elected to participate in the well and has so advised the operator. Significant developments in operations will be reported as they occur. This will be the first of a planned three well exploratory program at Parsons Pond.

Vulcan is a diversified junior exploration company focused on petroleum exploration in the under-explored western Newfoundland and Labrador areas and also holds mineral interests in areas strategic to its operations in Newfoundland and Labrador.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. The statements made in this News Release may contain certain forward-looking statements. Actual events or results may differ from the Company's expectations. Certain risk factors may also affect the actual results achieved by the Company.

There can be no assurance that forward-looking information will prove to be accurate. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from any conclusions, forecasts or projections described in the forward-looking information. Accordingly, readers are advised not to place undue reliance on forward-looking information. Except as required under applicable securities legislation, the Company undertakes no obligation to publicly update or revise forward-looking information, whether as a result of new information, future events or otherwise.

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