An EnCana spokesman reiterated Thursday that the company is holding off on making any announcements regarding its $1.1 billion Deep Panuke project offshore Nova Scotia, which has been on hold since February, until its previously scheduled update for regulators on Dec. 10. He said it was pure speculation by analysts this week regarding whether the company might decide to connect Deep Panuke to ExxonMobil’s Sable Offshore Energy Project facilities, which are only about 30 miles away, and cancel previous plans to build its own pipeline to the Nova Scotia shore.

EnCana’s top executive in Halifax, Larry LeBlanc, resigned this week and the company said its East Coast operations, which include 80 to 100 employees, would be run by Jeff Rose, senior vice president of frontier exploration in North America, out of its Calgary office. The move led some observers to speculate that it meant EnCana was finally going to team up with ExxonMobil, the lead partner in the Sable project.

“It’s pure speculation,” said EnCana spokesman Alan Boras. “We continue to evaluate possible go-forward plans for how we can improve the economics of that project. We’ve also drilled a couple wells and said we’re encouraged by the results of those wells. We’re drilling a deep well in Weymouth. And we’re looking to give the regulators an update in December.”

Deep Panuke is estimated to hold 1 Tcf of gas, compared to Sable’s 3-4 Tcf. Deep Panuke also is expected to produce 400 MMcf/d.

The project was expected to go through complete regulatory review this year, but EnCana called a timeout in February and said it would reevaluate the project in December. It put the project on hold because its reserves were inadequate to warrant a 20-year pipeline contract with Maritimes and Northeast.

“When it was originally configured, we thought there would be more reserves found, but the circumstances have changed since the original application,” said Boras. “There hadn’t been any other additional major gas successes in the area that might have come along to fill in the back end of that transportation arrangement.”

There also have been indications by the Sable partners about revising downward some of their reserve estimates and their production profile. At this point, it makes economic sense to put the two projects together.

One of the Sable fields is actually farther away from the central Sable processing facility than Deep Panuke is. Nevertheless, EnCana’s predecessor, PanCanadian, wanted to build its own pipeline. Its initial application with the National Energy Board included a separate pipeline and processing plant. Those plans may have to change.

“There is a potential opportunity to look for other ways to develop the project that increase the overall returns and economic viability of it,” said Boras, “and all of those factors are being considered.”

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