Discovery Adds to Deep Panuke Potential
A decision is promised by spring on moving forward with a
project to increase natural gas production offshore of Nova Scotia
by at least 80%.
At the same time, Canada's fledgling East Coast gas industry is
showing signs of adding a dimension - production on land along the
year-old Maritimes & Northeast Pipeline's export route to New
England. The new offshore development prospect took a stride
forward when PanCanadian Petroleum Ltd. announced a fourth straight
stellar drilling success into a discovery it calls Deep Panuke. The
well, drilled to a depth of 15,105 feet beneath PanCanadian's
exhausted Panuke gas-liquids field, flowed 63 MMcf/d in production
tests. Three previous wells into the formation yielded flows of 50
MMcf/d in tests limited by capacity of the equipment.
PanCanadian president David Tuer described the latest drilling
results as "very promising." The Calgary-based producer said it now
has all the information it needs to decide whether the discovery
justifies a "stand-alone development." The decision will be made by
the end of first quarter 2001, PanCanadian said.
The latest well is about two miles from the mothballed Panuke
liquids production platform, in shallow water 150 miles southeast
of Halifax. PanCanadian is keeping mum on the plan it is now
considering, but has previously divulged ambitious thinking about a
gas discovery that it rates as the best in a decade for the region
and one of the biggest in its long history as the energy arm of
Canadian Pacific railroad, hotel and steamship empire.
In presentations to prospective investors, PanCanadian has
outlined possibilities for a 400 MMcf/d production development
costing C$645 million (US$445 million). The company has estimated
Panuke could be connected to the ExxonMobil-led Sable Offshore
Energy Project 25 miles away for about C$30 million (US$21
million), potentially triggering expansion by 500 MMcf/d M&NE.
But Tuer has also said the possibility of a new, separate pipeline
is also under review as a "strategic issue." PanCanadian is the
exclusive owner of the Panuke field, and one of the biggest holders
of drilling rights offshore of Nova Scotia with interests averaging
a 55% majority share in 4.5 million acres (7,030 square miles) of
On land along M&NE, meanwhile, a far smaller firm than
Canada's counterpart to the Texas-based Burlington and Union
Pacific empires has chalked up a discovery that would be considered
respectable in the western provinces. Corridor Resources Inc., a
Halifax-based independent founded by Nova Scotia-born veterans of
the western industry, said it is hot on the trail of a target with
reserves possibly exceeding 300 Bcf.
Corridor and drilling partner Potash Corp. of Saskatchewan
reported test flows of about 2.4 MMcf/d from a well near Sussex,
New Brunswick, into a formation about 8,000 feet deep. Titled
McCully, the 5.5-square-mile target zone is just 35 miles from
Corridor President Norm Miller said the discovery "signals an
exciting new exploration play" and stands out as "much larger than
anything we expected onshore in the Maritimes." The region has a
long history of tantalizing gas discoveries, with wells tapping
only pocket-sized reservoirs that deplete almost as fast as they
can be production-tested. Corridor reported the new find did not
follow the old pattern. Pressure stayed exceptionally high at more
than 4,100 pounds per square inch during the production tests, and
no invasion of water arrived to end the gas flows.
While Corridor and Potash Corp. formulate plans for follow-up
drilling to start early in the new year to establish its McCully's
true size, activity is also advancing at other New Brunswick sites.
Along with Corridor and Potash, participants in the regional
drilling play include Columbia Natural Resources Canada Ltd. and
Marico Oil & Gas Corp. Disclosures have been kept to a minimum
in order to avoid tipping off rivals at provincial government
auctions of drilling prospects, but industry participants say there
is potential for some production to start in 2001.
Gordon Jaremko, Calgary