A decision is promised by spring on moving forward with aproject to increase natural gas production offshore of Nova Scotiaby at least 80%.
At the same time, Canada’s fledgling East Coast gas industry isshowing signs of adding a dimension – production on land along theyear-old Maritimes & Northeast Pipeline’s export route to NewEngland. The new offshore development prospect took a strideforward when PanCanadian Petroleum Ltd. announced a fourth straightstellar drilling success into a discovery it calls Deep Panuke. Thewell, drilled to a depth of 15,105 feet beneath PanCanadian’sexhausted Panuke gas-liquids field, flowed 63 MMcf/d in productiontests.Three previous wells into the formation yielded flows of 50MMcf/d in tests limited by capacity of the equipment.
PanCanadian president David Tuer described the latest drillingresults as “very promising.” The Calgary-based producer said it nowhas all the information it needs to decide whether the discoveryjustifies a “stand-alone development.” The decision will be made bythe end of first quarter 2001, PanCanadian said.
The latest well is about two miles from the mothballed Panukeliquids production platform, in shallow water 150 miles southeastof Halifax. PanCanadian is keeping mum on the plan it is nowconsidering, but has previously divulged ambitious thinking about agas discovery that it rates as the best in a decade for the regionand one of the biggest in its long history as the energy arm ofCanadian Pacific railroad, hotel and steamship empire.
In presentations to prospective investors, PanCanadian hasoutlined possibilities for a 400 MMcf/d production developmentcosting C$645 million (US$445 million). The company has estimatedPanuke could be connected to the ExxonMobil-led Sable OffshoreEnergy Project 25 miles away for about C$30 million (US$21million), potentially triggering expansion by 500 MMcf/d M&NE.But Tuer has also said the possibility of a new, separate pipelineis also under review as a “strategic issue.” PanCanadian is theexclusive owner of the Panuke field, and one of the biggest holdersof drilling rights offshore of Nova Scotia with interests averaginga 55% majority share in 4.5 million acres (7,030 square miles) ofgas prospects.
On land along M&NE, meanwhile, a far smaller firm thanCanada’s counterpart to the Texas-based Burlington and UnionPacific empires has chalked up a discovery that would be consideredrespectable in the western provinces. Corridor Resources Inc., aHalifax-based independent founded by Nova Scotia-born veterans ofthe western industry, said it is hot on the trail of a target withreserves possibly exceeding 300 Bcf.
Corridor and drilling partner Potash Corp. of Saskatchewanreported test flows of about 2.4 MMcf/d from a well near Sussex,New Brunswick, into a formation about 8,000 feet deep. TitledMcCully, the 5.5-square-mile target zone is just 35 miles fromM&NE.
Corridor President Norm Miller said the discovery “signals anexciting new exploration play” and stands out as “much larger thananything we expected onshore in the Maritimes.” The region has along history of tantalizing gas discoveries, with wells tappingonly pocket-sized reservoirs that deplete almost as fast as theycan be production-tested. Corridor reported the new find did notfollow the old pattern. Pressure stayed exceptionally high at morethan 4,100 pounds per square inch during the production tests, andno invasion of water arrived to end the gas flows.
While Corridor and Potash Corp. formulate plans for follow-updrilling to start early in the new year to establish its McCully’strue size, activity is also advancing at other New Brunswick sites.Along with Corridor and Potash, participants in the regionaldrilling play include Columbia Natural Resources Canada Ltd. andMarico Oil & Gas Corp. Disclosures have been kept to a minimumin order to avoid tipping off rivals at provincial governmentauctions of drilling prospects, but industry participants say thereis potential for some production to start in 2001.
Gordon Jaremko, Calgary
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