The Deep Panuke gas field, offshore Nova Scotia, is confirmingbeliefs that the Sable Island region may contain the mostsignificant gas finds there in 10 years, with news this week that asecond appraisal well by PanCanadian maxed out the testingequipment, with a flow rate at the well averaging more than 50MMcf/d.

PanCanadian said yesterday that the results of the three-daytest on its second appraisal well, H-08, which began drilling May24, encountered net pay of 325 feet. Drilling to date has proven agas column in the pool of at least 450 feet, and the reservoircurrently is estimated at six to eight kilometers in length.

“This second appraisal well indicates the Deep Panuke gas fieldis the most significant discovery in Atlantic Canada in more than adecade,” said Gerald Macey, PanCanadian’s executive vice presidentof exploration. “Deep Panuke is emerging as a world class play, andits proximity to markets and pipelines offers PanCanadian thepotential to substantially increase reserves and production.”

PanCanadian’s H-08 well is about two kilometers southwest of thediscovery well, PP-3C, which had a net pay of 225 feet. The firstappraisal well, P1-1B, had net pay of 110 feet. In February, PanCanadian said that each of the first two wells flowed duringmulti-day tests at more than 50 MMcf/d, again the maximum capacityof the testing equipment.

PanCanadiannow is drilling M-79, a third appraisal well there.Once the M-79 results are available (expected in September),PanCanadian will evaluate the reserve size, commercial potentialand development options. Production could be on stream by late2003. Later this year, another exploratory test is also scheduledfor a separate structure on the Panuke license.

The Calgary-based company holds a significant lease positionoffshore Nova Scotia — 15 exploration blocks and two productionlicenses, covering more than 4 million gross acres. Its averageworking interest is 55%, and PanCanadian operates 16 of thelicenses. It holds 100% interest in the Deep Panuke, which islocated about 250 kilometers southeast of Halifax,

The Sable Offshore Energy (SOEP) project, which has three gasfields in production offshore Nova Scotia, already is the fourthlargest producing natural gas basin in North America, and Canadianofficials hold that the East Coast of Canada may be key to meeting theU.S.’s energy needs (see Daily GPI, May3). Since SOEP’s inception, Nova Scotia has become base for morethan a dozen energy companies and their relatedprojects. PanCanadian’s discovery well was one of the first with amajor find.

Canadian officials have called PanCanadian, with its Deep Panukefield, a “very major player,” but it isn’t by itself. ImperialOil, an ExxonMobil subsidiary, Shell Canada, Marathon andKerr-McGee all have significant land positions offshore NovaScotia. The Canada/Newfoundland Offshore Petroleum Board first putthe total recoverable reserves and discovered resources on theGrand Banks at 1.6 billion bbl of oil and 4 Tcf of natural gas.However, those estimates have been revised upward for several ofthe fields located on Eastern Canada’s Grand Banks.

Even PanCanadian is unsure of the extent of its own find, andhopes to estimate by the end of this year the true size of the gasfind in Deep Panuke. In the past, PanCanadian has kept itsestimates on the conservative side, but its potential at DeepPanuke is believed to be tremendous.

Although there have been rumors calling for another pipeline thatcould transport Sable Island region reserves, including the DeepPanuke reserves, they went unconfirmed yesterday. Starting in the fallof 2003, PanCanadian has described production to develop 1 Tcf ofreserves at a rate of 400 MMcf/d for 15 years (see Daily GPI, April 3). A flow of that magnitude wouldnearly double the output that SOEP began exporting to New Englandthrough the Maritimes & Northeast Pipeline last winter.

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