Offshore Nova Scotia is on the precipice of becoming a vital natural gas producing basin in North America, and will play a “dominant role” in supplying the U.S. Northeast, the Maritimes and possibly central Canada, according to a new report by the Ziff Energy Group.

With ongoing exploration by majors and independents, the Scotian shelf’s development “will aggressively continue throughout this decade,” enhanced by new sub-sea gathering and transmission facilities that should bring significant energy supplies to market. Based on current discoveries and “anticipated” successes in the next few years, Ziff Energy forecasts Scotian gas production to increase to more than 1.2 Bcf/d by 2006, a remarkable upturn from its current production of 500 MMcf/d. By 2010, production on the shelf could be “in excess” of 2 Bcf/d, according to the report, and as production increases, incremental pipeline capacity will be constructed.

Given the discoveries so far, and a strong industry commitment, the report found that the current resource estimate of Scotian shelf reserves of 18.5 Tcf (by the Canadian Gas Potential Committee in September 2001) “can be considered conservative.” The estimate was based on a localized area of the shelf, near the existing Sable Island production, and did not extrapolate for the rest of the region, according to Ziff Energy.

Another advantage for the shelf is its location, which is 750 miles from the U.S. Northeast. That puts it in closer proximity to the Northeast than either Western Canada, which is 2,250 miles away, or the Gulf of Mexico, which is 1,250 miles away. “Further, the Scotian shelf production is iceberg-free, and has less weather-related issues than other potential (Canadian) East Coast production, and even the Gulf of Mexico’s hurricanes.”

One hurdle that may have prevented more exploration, the Laurentian Sub-basin Boundary dispute between the provinces of Nova Scotia and Newfoundland/Labrador, has now been resolved, noted the report, and the “potential development of this offshore region should be further enhanced and offer significant opportunities.” The Laurentian Sub-basin is expected to be connected into the existing and planned offshore infrastructure.

Ziff Energy noted the “expressions of concern” related to some recent dry holes on the Scotian shelf, but found that because the region is in its infancy (the first development permit was not issued until 1992), “we are confident that there will be sufficient future successes as increased knowledge of this relatively unexplored basin will prepare producers to be better able to target the potential successes.”

The report noted that many independents like Canadian Superior were now drilling on the shelf, and major producers have ramped up their exploration and production efforts, including Royal Dutch/Shell Group, Marathon Oil Co., Kerr-McGee Corp. and EnCana Corp.

The Scotian Shelf, said the report, “continues to be classified as a high-risk area,” but the “exploration successes and future commitments are a good indication that the near and longer term for this region will be bright. Even the recent dry holes can be considered successes from an exploration geological perspective in that they increase the existing knowledge on the underlying potential,” offering data and information on targeted oil and gas structures that exist.

The entire report may be downloaded from the Ziff Energy web site at www.ziffenergy.com.

©Copyright 2002 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.