Don’t hold your breath waiting for a revised plan from EnCana Corp. on its stalled Deep Panuke natural gas project offshore Nova Scotia. After notifying provincial authorities in December it would submit a new plan in six months, EnCana now estimates it could take up to a year as it works on ways to make the offshore discovery economical. Panuke originally was estimated to hold 1 Tcf of gas and was expected to produce 400 MMcf/d.
EnCana requested a regulatory time-out early last year, and the Canadian government allowed it to withdraw its plan. EnCana officials then said they would submit another plan that could involve piping offshore gas from the nearby Sable Offshore Energy Project (see NGI, Dec. 8, 2003). However, in its year-end earnings announcement and subsequent conference call with analysts, management indicated that the time frame may be extended.
COO Randy Eresman said the company is holding talks with other stakeholders involved in the offshore Nova Scotia, including ExxonMobil Canada. Part of the new plan, said Eresman, now involves incorporating EnCana’s Margaree and MarCoh exploration wells near Panuke, which is located about 250 kilometers southeast of Halifax. But he noted that Panuke’s future may hinge on results from that exploration.
EnCana holds 100% of Margaree. It also holds 24.5% of MarCoh, while ExxonMobil holds 51% and Shell Canada holds 24.5%.
Eresman said there has been a lot of good news for the Panuke, including last year’s nine-day production test in which the Margaree well flowed gas at a rate of more than 53 MMcf/d, similar to older Panuke production tests (see NGI, Sept. 1, 2003). Margaree is located about seven kilometers northeast of the discovery well, and it showed a gas-bearing pay zone of about 70 meters. The MarCoh well, located four kilometers northeast, encountered approximately 100 meters of gas bearing reservoir, which provided sufficient reservoir information to define that portion of the reservoir and determine that a flow test was not required.
Despite the setbacks, Eresman said EnCana remained committed to make the Panuke a “reality in Atlantic Canada.” But he said that the development still wouldn’t move forward until it can achieve “risk-adjusted returns that are competitive with other projects in the company’s portfolio of investment opportunities.”
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