Maritimes Hooks PanCanadian, Plans First of Several Expansions

Confirming plans announced two weeks ago by Westcoast Energy CEO Michael Phelps, Maritimes & Northeast Pipeline said last week it has signed agreements with PanCanadian Petroleum Corp. to transport up to 400 MMcf/d of gas from PanCanadian's C$1 billion Deep Panuke project offshore Nova Scotia to markets in Atlantic Canada and New England (see NGI, June 18).

Maritimes proposes to expand its mainline in order to transport the PanCanadian volumes. The expansion, representing a C$500 million (US$330 million) investment, is scheduled to be completed in late 2004 or early 2005 to meet the PanCanadian planned production target of first quarter 2005.

"The signing of this contract confirms the first expansion of the Maritimes system in Canada," said Phelps. Westcoast is the lead partner in the Canadian portion of Maritimes. "With this expansion, we are well on the way to our goal of doubling system capacity to 1.2 Bcf/d by 2005 and to 2 Bcf/d by 2010."

Phillip Knoll, president of Maritimes & Northeast Pipeline Limited Partnership, said the agreements will reduce transportation rates "significantly, enhancing the competitiveness of Scotian Shelf natural gas in relation to other supply basins in North America." Maritimes continues to be the preferred route for moving offshore Eastern Canadian gas to market. PanCanadian had considered building its own pipe to tap an expected 1 Tcf of production, and had been courted by others, such as El Paso and Marathon. But Maritimes proved to be the most economic alternative.

Deep Panuke is located 150 miles southeast of Halifax, NS. Since 1999, PanCanadian has drilled four wells in the field, each of which tested at rates in excess of 50 MMcf/d. Gas will be piped to shore where it will connect with M&NP's mainline at Goldboro, NS. The pipeline crosses the Canada/U.S. border in New Brunswick and terminates in Dracut, MA.

Maritimes intends to immediately prepare applications for expansion authorization from the National Energy Board and the Federal Energy Regulatory Commission. Maritimes sponsors are Westcoast (37.5%), Duke Energy (37.5%), ExxonMobil (12.5%) and Emera Inc. (12.5%).

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