Canadians Soaking Up Sable Gas

Mobil Corp. and Duke Energy announced the signing of additional market agreements with Canadian buyers on Friday for Sable Island gas production, which is due to come on stream next November with the completion of the Maritimes &amp Northeast Pipeline project.

The new contracts were signed with Stora Port Hawkesbury Ltd., a large pulp and paper producer that agreed to purchase 10.5 MMcf/d of gas over the five-year life of the contract, and CGC Inc. (Canadian Gypsum), a building products company that agreed to purchase about 1 MMcf/d. The gas is being sold through Duke Energy Marketing L.P., the Canadian trading affiliate of Duke Energy Trading and Marketing, L.L.C., which is 60% owned by Duke Energy and 40% owned by Mobil.

Paul Bennett, vice president, Nova Scotia Business Unit, Mobil Canada, said the sales contracts provide the gas supply needed to help ensure the economic viability of the Maritimes lateral to Point Tupper. Both of the new buyers are located in Cape Breton, which means all of Mobil's Sable Gas under contract is being sold to Canadian companies. Another 86 MMcf/d package is going to Irving Oil in New Brunswick. With the new agreements, Mobil has under contract about 38%, or 97.5 MMcf/d, of its 51% share of Sable Island gas production.

"This level of sales to Canadian customers so early in the project is better than we had anticipated," said Lou Allstadt, President of Mobil's Americas Exploration and Producing. In fact, in the beginning Maritimes anticipated nearly all of the gas from Sable Island would be traveling south to New England markets.

A Mobil spokesman said the fact that Canadian companies are jumping on board before the Americans merely reflects a hesitancy of U.S. buyers to sign up prior to Maritimes Phase II being approved by FERC, which handed down its final decision in August.

"With the recent approval to begin construction of Phase II of the Maritimes &amp Northeast Pipeline into the Northeastern United States, we look forward to being able to reach other new industrial and electric generator markets in the Canadian Maritime Provinces and the Northeastern United States with clean-burning natural gas," Allstadt added.

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