EnCana Corp.'s East Coast chief said Monday the company remains committed to the Deep Panuke natural gas project offshore Nova Scotia, but it still has not determined the best way to bring the gas ashore. Deep Panuke's recoverable reserves are pegged at 632 Bcf.

The National Energy Board and the Canada-Nova Scotia Offshore Petroleum Board launched two weeks of hearings Monday on the proposed C$700 million (US$593 million) project. The hearings mark the second time EnCana has sought approval to develop the field; it called a time-out four years ago to reconsider costs and reserves estimates (see Daily GPI, Feb. 18, 2003). Deep Panuke is located 155 miles southeast of Halifax in water more than three-and-a-half kilometers (two miles) below the sea floor.

"Since calling a time-out on Deep Panuke development in February 2003, EnCana has invested considerable energies in rethinking and redesigning the project," said EnCana Vice-President Dave Kopperson. He testified Monday. Kopperson said Deep Panuke will bring jobs, business and other opportunities to Nova Scotia. However, he said EnCana has to maintain control over how the gas is shipped ashore to ensure it keeps its costs down.

Kopperson said EnCana is considering whether to build a new C$200 million underwater line from the Deep Panuke to Goldsboro, NS, or use a subsea pipe to tie into the existing Sable Offshore Energy Project's (SOEP) export pipe, which also goes to Goldsboro. Once the Panuke reservoir is depleted, EnCana also wants to have the right to abandon the export pipeline, in-field flowlines and umbilicals as part of the decommissioning program. Kopperson estimated the reservoir could be depleted 13 years after first production.

"As EnCana has not yet determined a preferred option, it is EnCana's view that your approval of Deep Panuke must allow for both pipeline options, leaving the final decision on the option selected to EnCana," Kopperson told regulators. EnCana has already spent C$340 million on developing Deep Panuke, Kopperson noted. Future costs will hinge on whether it can decide which pipeline method is most economic and whether it can abandon it when the work is completed.

Approval of the Deep Panuke project could bring back some momentum to Nova Scotia's offshore industry, said Paul McEachern. He is managing director of the Offshore/Onshore Technologies Association of Nova Scotia.

"It's going to reinvigorate a supply and services community that has had to look elsewhere in the world in order to survive," McEachern said Monday. He noted that many of the group's members have had to find work elsewhere because of the steady slowdown in Nova Scotia's energy industry after EnCana put the Panuke project on hold in 2003.

Since 2004, 32 exploration licenses have expired in Nova Scotia. Of the 23 active licenses remaining, 13 are set to expire this year. The SOEP, which is the only offshore project now operating in the province, is expected to run out of gas within the next five years.

Before EnCana moves forward, the Deep Panuke has to receive regulatory approval and receive a nod by the company's board of directors. With approval, the project could ramp up in 2010, according to EnCana.

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