The East Coast of Canada, now one of the hot spots for new oiland gas exploration and development in the world, could”definitely” be a part of the solution to New England’s energyneeds, Premiers John Hamm of Nova Scotia and Brian Tobin ofNewfoundland and Labrador told attendees at the Offshore TechnologyConference in Houston last week.

The Sable Offshore Energy project (SOE), with three gas fieldsin production offshore Nova Scotia, now is the fourth largestproducing natural gas basin in North America.

Connected to markets through the Maritimes Northeast Pipelinefrom Nova Scotia to New England, Hamm predicts that by the end ofthis year, more than 500 MMcf/d will flow – a perfect fit for theNortheast U.S.’s diminishing supplies. What’s more, the traditionalthinking about Sable Island reserves adding up to 60 Tcf to 80 Tcfof gas is “proving to be too conservative.”

“I can see the day when we will truly have coast to coastnatural gas production and delivery — a North American systemfrom Newfoundland and the Arctic to the West Coast and the Gulf ofMexico,” Hamm predicts. “A truly integrated North American energysystem using the cleanest, most environmentally friendly petroleumproduct available today, natural gas.”

Since SOE’s inception, Nova Scotia has become home to more thana dozen “significant” energy companies, among them PanCanadianwhose discovery well underneath the Panuke oil field is producing55 MMcf/d. A second well has tested 52 MMcf/day — both “very goodsigns,” Hamm says.

In less than two weeks, Hamm revealed that PanCanadian will sinkits third well and if those results look good, it could be enoughto push for more “serious development. A fourth well is planned forlater this year to establish firm reserve projections, and if allgoes according to plan, PanCanadian is considering possibleproduction within three years.

What’s most exciting about this development is that thediscoveries are taking place in what had been considered underratedgeological structures. According to the Geological Survey ofCanada, only about 1 Tcf of gas was expected to be found on theentire bank. PanCanadian engineers think they may have found 1 Tcfin one field alone.

“Obviously, we are beginning to push the boundaries ofconventional wisdom on our potential,” says the Nova Scotia head.”The structures off Nova Scotia are similar to those alreadydeveloped off Africa, Brazil and in the Gulf of Mexico. Once again,PanCanadian is a very major player in this new, very excitingplay.” But it’s not the only player.

Imperial Oil, a subsidiary of Exxon Mobil, has significantblocks there, as does Shell Canada. Both companies acquiredadditional interests in the land sale in 1999, and now, two othermajor players have come on to the scene. Marathon has acquired anoperating role in one block and is a partner with PanCanadian inanother. Also, Kerr-McGee has taken a half interest and become theoperator on the Canadian 88 blocks.

In shallower waters, more than 200 unexplored prospects are”sitting on the doorstep of the new infrastructure,” says Hamm.”The sweet spot is undoubtedly in the area around Sable Island.”

The first phase of Sable development is nearly complete, andstill to come is the second phase, which will bring on three morefields to keep up or even increase production levels. “The bottomline…last year, we talked about $780 million worth of explorationcommitments. Now, the official number stands at $842 million. Wethink that number is low when you consider every one of the 43licenses requires a well to be drilled on that block if the land isto be kept. I can also tell you that industry is keen to add morelands, and we hope to issue a call for bids later this month,” Hammsaid.

Meanwhile, Tobin encouraged OTC attendees to participate in hisprovinces’ oil and gas industry, which he says holds “globalsignificance” and is setting Canadian records.

Previous estimates by the Canada/Newfoundland Offshore PetroleumBoard put the total recoverable reserves and discovered resourceson the Grand Banks at 1.6 billion bbl of oil, 4 Tcf of natural gas.But Tobin said that estimates have been revised for several of thefields located on the Grand Banks. Added just last week to thetotals are 526 million barrels of additional recoverable oil, over1 Tcf of natural gas.

“These upward revisions result from extremely positivedevelopment drilling results from the Hibernia Field as well asrecent delineation drilling on the White Rose and the Hebron/BenNevis Complex, and the positive results from the West Bonne Baydiscovery well,” Tobin says. The discovery well was drilled byAmoco in 1997 and 1998.

“The quality of the Hibernia reservoir has exceededexpectations,” Tobin says, which is a “good omen for our firstproducing oil field.”

Within a year, Tobin revealed that Hibernia will be joined withother petroleum development offshore. The Terra Nova field is 22miles southeast of Hibernia and development drilling is ongoing atthe northeast and southwest hole sites, and three wells have beencompleted to date. Husky Oil plans development of the White RoseField, which has discovered recoverable resources of 275 millionb/o, 2.1 Tcf of gas, and 77 million bbl of natural gas liquids.

“The fact that White Rose contains the single largest discoveredgas reserve on the Grand Banks, which is still not fullydelineated, gives me great optimism for the future and thepossibility of a major gas development in Newfoundland andLabrador,” says Tobin. “White Rose, in addition to the other 3 Tcfof discovered gas reserves in the Jeanne d’Arc Basin, augers wellfor future gas development.”

Tobin says that there are “indications” for “significantexploration beyond the Jeanne d’Arc Basin within the next couple ofyears.” As an example, Tobin pointed to a recent land sale wherecompanies bid $134 million (U.S. money) for four parcels in theFlemish Pass Basin, which lies to the east of the Jeanne d’Arc indeeper water.

Carolyn Davis, Houston

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