The East Coast of Canada, now one of the hot spots for new oiland gas exploration and development, could “definitely” be a partof the solution to New England’s energy needs, Premiers John Hammof Nova Scotia and Brian Tobin of Newfoundland and Labrador toldattendees at the Offshore Technology Conference in Houstonyesterday.

The Sable Offshore Energy project (SOE), with three gas fields inproduction offshore Nova Scotia, now is the fourth largest producingnatural gas basin in North America. (See NGI, April 3)

Connected to markets through the Maritimes & NortheastPipeline from Nova Scotia to New England, Hamm predicts that by theend of this year, more than 500 MMcf/d will flow — a perfect fitfor the Northeast U.S.’s diminishing supplies. What’s more, thetraditional thinking about Sable Island reserves adding up to 60Tcf to 80 Tcf of gas is “proving to be too conservative.”

“I can see the day when we will truly have coast to coastnatural gas production and delivery — a North American systemfrom Newfoundland and the Arctic to the West Coast and the Gulf ofMexico,” Hamm predicts.

Since SOE’s inception, Nova Scotia has become home to more thana dozen “significant” energy companies, among them PanCanadianwhose discovery well underneath the Panuke oil field is producing55 MMcf/d. A second well has tested 52 MMcf/day — both “very goodsigns,” Hamm says.

In less than two weeks, Hamm revealed, PanCanadian will sink itsthird well. If those results look good, it could be enough to pushfor more serious development. A fourth well is planned later thisyear, and PanCanadian is considering possible production withinthree years.

What’s most exciting about this development is that thediscoveries are taking place in what had been considered underratedgeological structures. According to the Geological Survey ofCanada, only about 1 Tcf was projected for the entire bank.PanCanadian engineers think they may have found 1 Tcf in one fieldalone.

“Obviously, we are beginning to push the boundaries ofconventional wisdom on our potential,” says the Nova Scotia head.”The structures off Nova Scotia are similar to those alreadydeveloped off Africa, Brazil and in the Gulf of Mexico. Once again,PanCanadian is a very major player in this new, very excitingplay.” But it’s not the only player.

Imperial Oil, a subsidiary of Exxon Mobil, has significantblocks there, as does Shell Canada. Both companies acquiredadditional interests in the land sale in 1999, and now, two othermajor players have come on to the scene. Marathon has acquired anoperating role in one block and is a partner with PanCanadian inanother. Also, Kerr-McGee has taken a half interest and become theoperator on the Canadian 88 blocks.

In shallower waters, more than 200 unexplored prospects are”sitting on the doorstep of the new infrastructure,” says Hamm.”The sweet spot is undoubtedly in the area around Sable Island.”

The first phase of Sable development is nearly complete, andstill to come is the second phase, which will bring on three morefields to keep up or even increase production levels. “The bottomline.last year, we talked about $780 million worth of explorationcommitments. Now, the official number stands at $842 million. Wethink that number is low when you consider every one of the 43licenses requires a well to be drilled on that block if the land isto be kept. I can also tell you that industry is keen to add morelands, and we hope to issue a call for bids later this month,” Hammsaid.

Meanwhile, Tobin encouraged OTC attendees to participate inNewfoundland and Labrador’s oil and gas industry, which he saysholds “global significance” and is setting Canadian records.

Previous estimates by the Canada/Newfoundland Offshore PetroleumBoard put the total recoverable reserves and discovered resourceson the Grand Banks at 1.6 Bbbl of oil, 4.0 Tcf of natural gas, and237 Mbbl of natural gas liquids. But, Tobin announced yesterday inHouston that estimates have been revised for several of the fieldslocated on the Grand Banks. Added just yesterday to the totals are526 million barrels of additional recoverable oil, over 1 Tcf ofnatural gas, and 53 Mb of recoverable natural gas liquids.

“These upward revisions result from extremely positivedevelopment drilling results from the Hibernia Field as well asrecent delineation drilling on the White Rose and the Hebron/BenNevis Complex, and the positive results from the West Bonne Baydiscovery well,” Tobin said. Husky Oil plans development of theWhite Rose Field, which has discovered recoverable resources of 275Mb, 2.1 Tcf of gas and 77 Mb of natural gas liquids.

“The fact that White Rose contains the single largest discoveredgas reserve on the Grand Banks, which is still not fully delineated,gives me great optimism for the future and the possibility of a majorgas development in Newfoundland and Labrador,” says Tobin. “WhiteRose, in addition to the other 3 Tcf of discovered gas reserves in theJeanne d’Arc Basin, augurs well for future gas development.” (See NGI,Sept. 9)

Tobin says that there are “indications” for “significantexploration beyond the Jeanne d’Arc Basin within the next couple ofyears.” As an example, he pointed to a recent land sale wherecompanies bid $134 million (U.S. money) for four parcels in theFlemish Pass Basin, which lies to the east of the Jeanne d’Arc indeeper water.

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