EnCana Corp., which is expected to emerge as a pure-play natural gas producer at the end of this month, is holding on to its Deep Panuke gas field offshore Nova Scotia, at least for the time being, CEO Randy Eresman said Thursday.

The East Coast field, which has been in development for several years, finally is expected to ramp up production late next year or in early 2011, Eresman told financial analysts during a conference call to discuss 3Q2009 earnings (see Daily GPI, Nov. 13). Deep Panuke is one of the few assets in EnCana’s portfolio that isn’t onshore shale or tight gas, and the company has fielded rumors about its possible sale for years.

“On the Deep Panuke project, we’ve always expressed it as being dissimilar from all of the other projects that EnCana has been pursuing over the last number of years, our unconventional gas strategy, but we have not been actively pursuing the sale of the assets,” Eresman said.

“We’re comfortable keeping it in our portfolio as it is approaching production,” he said. However, “…if the situation was right, we would consider selling it as well.”

Most of EnCana’s 2010 capital spending is for North American unconventional gas projects, which are spread across the continent. The bulk of 2010 capital is directed to growing production in EnCana’s lowest-cost plays and to evaluate emerging plays, primarily the Haynesville Shale and Horn River Basin. The preliminary budget allocates $750 million and $350 million, respectively, to these two plays alone.

However, the budget includes a healthy US$220 million for the Deep Panuke gas project. Even at today’s gas prices, Deep Panuke is economically viable, said Mike Graham, who runs EnCana’s Canadian operations.

“When you look at sort of Deep Panuke on a go-forward basis, it is definitely economic in today’s gas prices, if you will, and that’s based on sort of our $6.50/Mcf long-term price,” said Graham. “We see Panuke as very economic at this point.”

©Copyright 2009Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.