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Husky Considering CNG Transport for White Rose Gas

Finding a proven, economical way to move natural gas onshore from far out in the North Atlantic has long been a puzzle for the Canadian oil and gas industry, but Husky Energy Inc. may be close to finalizing an agreement to use compressed natural gas (CNG) tankers to transport gas reserves from its White Rose oil prospect, an executive told a Calgary audience last week.

Husky has been focused on ramping up oil production by the end of this year from the White Rose field, located about 350 kilometers (217 miles) southeast of St. John's, NL. Going forward, Chris Laing, who manages Canada East Coast natural gas development for the Calgary-based producer, said Husky's interest in the Grand Banks offshore "is beginning to turn to gas."

Along with its considerable oil reserves, estimated at between 200-250 million bbl, White Rose holds an estimated 2.7 Tcf of gas reserves. However, because of its location, there has been no economically viable way to move the gas to market, Laing said.

"It's really the transportation to market that is the bone of contention," Laing said. "We can certainly sell it. We can certainly produce it. But how do we get it from Point A to Point B?" To transport the gas, he said, "White Rose could be one of the first projects to adopt CNG tankers."

Husky is the operator of the White Rose oil project, and it holds a 72.5% stake; Petro-Canada holds the remaining interest. Last year, Husky began to analyze the potential of producing the gas reserves there, including whether White Rose would be a good candidate for one of the first large-scale marine CNG tankers (see NGI, June 7, 2004).

Moving gas from other inhospitable offshore locations also may be possible with CNG tankers, according to Canadian officials. The Canada-Newfoundland and Labrador Offshore Petroleum Board estimates that the Labrador Shelf holds about 4.2 Tcf of gas, the Hibernia field 1.3 Tcf, and the Terra Nova field 0.5 Tcf. Newfoundland officials also believe another 50 Tcf lies offshore its boundaries.

Husky now is reviewing several plans on how to move gas from its White Rose field, according to Laing. Options under consideration besides CNG include a subsea pipeline, liquefied natural gas (LNG) transport or methanol conversion. CNG may be the most economical way to go, he said, because it requires less infrastructure than pipes or LNG.

"The leading candidate is CNG," Laing said."However, we feel that there are still significant technological issues to be resolved before an investment decision can be made to pursue the technology."

Four different CNG marine transport technologies -- EnerSea Canada, Williams Energy, Trans Ocean Gas and TransCanada Pipeline Group -- all have expressed an interest in transporting White Rose gas. Once a plan is in place, regulatory requirements would take two to three years, with services for offshore reserve owners within five years -- depending on the plan.

Stephen Henley, managing director of EnerSea Canada, noted that "For Atlantic Canada, CNG promises to unlock the stranded gas that is known to exist, as well as provide greater incentive for the exploration of yet additional resources."

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