Maritimes & Northeast Pipeline LLC notified FERC Wednesday that it plans to withdraw its application to add 385 MDth/d of capacity to its system in New England in light of the fact that Canadian regulatory review of an upstream supply project — EnCana Energy Services Inc.’s Deep Panuke natural gas development project offshore Nova Scotia — has been discontinued indefinitely.

Maritimes’ notification comes one week after EnCana pulled its applications for the Deep Panuke project from Canada’s National Energy Board and the Canada-Nova Scotia Offshore Petroleum Board. EnCana told regulators it was working to resolve technical and commercial issues associated with Deep Panuke, and that by withdrawing its applications, it was not signaling that the project was dead.

Deep Panuke is seen as uneconomic because the expected commercial production of the field won’t be sufficient to support a 20-year transportation agreement with the Maritimes’ pipeline. The Deep Panuke field has about 1 Tcf in estimated gas reserves, with daily production projected to be 400 MMcf.

Maritimes said it would formally withdraw its application for its so-called Phase IV expansion when it received written notice from EnCana terminating its precedent agreement for firm transportation service. EnCana had signed a long-term agreement for the entire 385 MDth/d of firm transportation capacity to be created by the planned expansion of the Maritimes’ system.

“Upon the completion of EnCana’s reconfiguration of its project and the execution of a new precedent agreement, Maritimes is prepared to file a new Phase IV application with the Commission for approval of an expansion of its mainline that is consistent with EnCana’s reconfigured project,” Maritimes told FERC in a Dec. 10 letter [CP02-78-002]. This seems to suggest that any future application would propose a scaled-down version of current expansion plans.

“Maritimes continues to believe that the development of offshore Nova Scotia reserves presents one of the most expeditious ways of meeting the Northeast’s demand for new energy supplies.”

In August, FERC said it would continue to process the application for the Maritimes’ Phase IV project, despite pleas by the pipeline and EnCana to put the pipe expansion on hold until late in the year. The Commission at the time directed Maritimes to report to the agency on or before Dec. 10 on the status of the Deep Panuke project.

Earlier this month, EnCana announced that two exploration wells it drilled near the Deep Panuke discovery — the Margaree and the MarCoh — were successful, and that this bolstered its “confidence in the economic potential of the Deep Panuke discovery.” It further said it was assessing the size and timing of the project which, in turn, would impact the “mainline transportation picture.”

By late summer, Maritimes and its Canadian pipeline affiliate reported that they had spent approximately $15 million (US) on the Phase IV project, which includes 31 miles of 36-inch diameter looping and compression in Maine. The expansion, if it moves forward at its current size, would nearly double Maritimes’ existing system capacity to 800 MDth/d from 415.5 MDth/d.

Maritimes is owned by affiliates of Duke Energy, Westcoast Energy Inc., ExxonMobil and Emera Inc.

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