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

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

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

“This level of sales to Canadian customers so early in theproject 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 fromSable Island would be traveling south to New England markets.

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

“With the recent approval to begin construction of Phase II ofthe Maritimes & Northeast Pipeline into the Northeastern UnitedStates, we look forward to being able to reach other new industrialand electric generator markets in the Canadian Maritime Provincesand the Northeastern United States with clean-burning natural gas,”Allstadt added.

Construction on the SOEP began in January. The owners, Mobil OilCanada (50.8%), Shell Canada (31.3%), Imperial Oil (9%), NovaScotia Resources (8.4%) and Mosbacher Operating Limited (5%),estimate the reserve potential of the project at 3.5 Tcf of naturalgas, of which Mobil’s share is 1.8 Tcf. Maritimes initially will beable to transport 530 MMcf/d of gas, but will be designed for arelatively inexpensive expansion to 900 MMcf/d of total capacity.

©Copyright 1998 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press,Inc.