ExxonMobil Corp. has decided not to extend the life of its natural gas Sable Offshore Energy Project (SOEP) offshore Nova Scotia, officials said Friday.

Provincial authorities said the oil major notified them of the decision after engineers evaluated some untapped discoveries in the Sable Basin. The project, which ramped up in 1998, was expected to last for about 25 years.

Operators in 1998 boasted that the SOEP had potential production rates as high as 500 MMcf/d (see Daily GPI, Feb. 13, 1998). However, eight years later a Dalhousie University study indicated that the sixth and final field of the project, which ramped up in 2007, was in "terminal" decline (see Daily GPI, Jan. 10, 2006).

Paul McEarchern, managing director of the Nova Scotia Offshore/Onshore Technologies Association, said the pullback was discouraging and created a "real problem" exploration-wise for the province. ExxonMobil cited low gas prices as one reason for halting work on the project, he said.

"Exxon told us they were looking for a third party" to help develop the fields because the "economics are not there."

ExxonMobil in March applied with the province to conduct additional seismic testing on two previously identified gas fields found east of Sable Island.

According to provincial officials, SOEP generated around C$1.3 billion in royalties since 1999.

The only other gas project scheduled to begin operations in Nova Scotia's offshore is the Deep Panuke project, which Encana Corp. is helming. Deep Panuke, whose future has been questioned by some, is scheduled to begin operations early next year.

Although the Panuke project doesn't fit in with Encana's revamped onshore unconventional focus, late last year officials said they would hold on to the project for the time being (see Daily GPI, Nov. 16, 2009).

©Copyright 2010 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.