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EnCana's Deep Panuke On Track for 2010 Ramp-Up

EnCana Corp.'s Deep Panuke natural gas project off the coast of Halifax in Nova Scotia remains on schedule to ramp up in 2010, the project director said last week.

Dave Kopperson, vice president of the producer's Offshore East Coast Canada division, said the facility would mark only the sixth offshore project for Canada's Atlantic region. Nova Scotia is anxious to build its oil and natural gas sector, and Kopperson said the province has bent over backwards to ensure the Deep Panuke's success. He provided an update for a luncheon crowd at the Offshore Technology Conference in Houston.

Kopperson, who volunteered to take over the Deep Panuke project in 2002, said the province of Nova Scotia has been a key reason that EnCana decided to move forward.

"Nova Scotia is good for business," he said. "EnCana has been part of the fabric of Nova Scotia for more than a decade."

The Deep Panuke is unique among Calgary-based EnCana's oil and gas projects in that it is the only one in the offshore. The producer focuses on unconventional gas development across North America in Colorado, Wyoming, East Texas, Alberta and northeast British Columbia. The Deep Panuke was a legacy asset from EnCana's two predecessor companies, PanCanadian Energy Corp. and Alberta Energy Co. Ltd. (see NGI, Feb. 4, 2002), unlike anything else in its portfolio.

EnCana now considers the offshore project to be a keeper, but that hasn't always been the case.

Faced with concerns about regulatory hurdles, costs, the actual size of the resource and transportation issues, EnCana took a regulatory time out on Deep Panuke in 2002 to determine whether to proceed. Faced with an arduous regulatory process that was expected to last for years, Nova Scotian officials stepped in and helped EnCana complete the entire project approval process with federal and provincial regulators within 11 months, Kopperson noted.

"We had everything we needed for a project, and that gave us confidence in the process, which is an important part of the work," he said.

With an agreement in hand and a province that wanted and needed the work, EnCana and Nova Scotia achieved a "win win," he said. "The province was really interested in Deep Panuke and knowing the province was on our side was important...Many didn't think we'd get the project across the goal line, but we did. Now the days are busy in Halifax and they are expected to get busier in 2008 and 2009.

"In short order we will award a contract for the fabrication block, and we expect to have a contract by the end of May...and a new survey this spring. Throughout 2008 we'll continue to issue bidding opportunities as the company moves from design to construction. In the months to come, there will be increasing local activity. Before the end of the year we'll have a shore base...and further ahead in 2009, the drilling program will get under way by the end of the second quarter of 2009...That day will be sooner than we think."

The EnCana board approved the project last year after federal regulators gave the go-ahead on the company's development plan (see NGI, Oct. 29, 2007). The C$700 million project, located about 175 kilometers off the coast of Halifax, is expected to deliver more than US$400 million in royalties to the Nova Scotian province over its 13-year life.

"The facility is being designed for 350 MMcf/d and it will have estimated production of 200-300 MMcf/d on average," Kopperson said. He pointed to constraints on the U.S. portion of Maritimes & Northeast Pipeline, which was addressed by the pipeline operator in a proposal to increase capacity earlier this year (see NGI, Feb. 11). EnCana has contracted with Maritimes for 250 MMcf/d of capacity and plans to produce more if interruptible service is available.

"We have had exceptional gas flows and test rates" from the Deep Panuke already, Kopperson noted, with more than "250 MMcf/d achieved in wells from this region."

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