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Producers Launch Sable Island; Promise Deliveries in 22 Months

Producers Launch Sable Island; Promise Deliveries in 22 Months

With all regulatory approvals in place at both Federal and Provincial levels, sponsors of the Sable Island Offshore Energy Project last week signed both their key commercial agreements and the Facilities Alliance Agreement to engineer, construct and install production and gathering facilities to handle delivery of 3.5 Tcf of gas from offshore Nova Scotia. This formally commits the owners to the $2 billion first phase, which will deliver the first gas in late 1999.

"Today marks the most important step taken in the history of our industry in Nova Scotia," Mobil Oil Canada president Jerry Anderson said at the official launch last Wednesday. "We have formally set in motion the engineering, procurement, construction and installation of the first phase to produce gas from the Venture, North Triumph and Thebaud fields.

"And we're putting down roots here as we establish a new company, Sable Offshore Energy Incorporated (SOE Inc.), based in Halifax, to manage the project and oversee operations through its life," Anderson said.

John Brannan, currently Mobil Oil Canada's well operations manager, will become general manager of SOE Inc. and Lynn Zeidler of Shell Canada will continue as Tier 1 (first phase) implementation manager. They will be responsible for day-to-day management of the project and will report to the owners through the SOE Management Committee.

The project Facilities Alliance Agreement, signed today, formalizes the previously announced alliance among the seven companies [Allseas Canada Ltd., BBA, Elsag Bailey (Canada) Inc., Kvaerner Oil and Gas Ltd, MMIndustra/BrownandRoot Joint Venture, Saipem UK Ltd., and AGRA Monenco/BrownandRoot Joint Venture] to carry out the engineering, procurement, construction and installaton of the facilities.

"We have a very tight program to achieve the promised target of gas-to-market in late 1999. That's when we have told our customers they can expect gas and that's when we intend to get it to them. From today, we have 22 months in which to build the first phase. The main Thebaud platform will take an estimated 17 months to build and place. Our critical path flows from that schedule," Anderson said.

All the owners paid tribute to the support received in Nova Scotia and Canada generally in the past three years. "Without this support, we would not be here today confirming the largest single investment in Nova Scotia's history," Anderson added. "We are now in an exciting phase. A lot will happen in the next six months. Nova Scotia has already started to feel the effects of having an average of one million dollars a day being pumped into the economy. This will continue over the next two years."

The owners said the 1996 and 1997 3D seismic programs were showing greater reserve potential than initial estimates. Beyond the 3.5 Tcf to be tapped in the current project, the Geological Survey of Canada predicts the Shelf probably contains at least a further 13 Tcf of recoverable gas.

The SOE owners are: Mobil Oil Canada, 50.8%; Shell Canada, 31.3%; Imperial Oil, 9%; Nova Scotia Resources 8.4%; Mosbacher Operating. 0.5%.

Gordon Jaremko,Calgary

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