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Nova Scotia’s hopes of new gas frontier get boost Some predict Canada’s East Coast offshore will look like the North Sea within 10 years Gary Park PNA Canadian Contributing Writer
PanCanadian Petroleum has made a quick start in what shapes up as a benchmark year for Nova Scotia’s offshore as the Sable Offshore Energy Project builds to full production and exploration companies prepare to invest at least C$800 million over the next five years.
Calgary-based PanCanadian has given the first strong hints of a natural gas discovery that Newcrest Capital analyst Tom Ebbern said could “quite easily” be another Sable field, where reserves are estimated at 3.5 trillion cubic feet.
The company said it will not estimate the size of its reservoir until two more wells are drilled and more tests are run later this year.
However, PanCanadian President David Tuer rated as “potentially significant” two wholly owned exploration wells drilled into geological zones under the Panuke oil field, 150 miles southeast of Halifax and 25 miles from the Sable field.
“We are very excited by these strong natural gas tests which signal the potential emergence of another East Coast natural gas project,” he said.
The two wells drilled so far, Panuke P-3C and Panuke I-1B, intersected net pay of more than 230 feet and 100 feet and flowed up to 55 million cubic feet per day during a six-day test in January.
PanCanadian, which holds 4 million gross acres of Nova Scotia offshore exploration lands, said it will continue evaluation of the discoveries to determine the reservoir size and commercial potential as well as drilling at least two Scotian Shelf wells this year.
Sable is already well on the way to its peak production of 510 million cubic feet per day later this year, shipping the gas to Atlantic Canada and New England. Six wells have already been drilled for the start-up phase and 10 will likely be drilled by early summer.
Attention now turning to exploration areas Now attention is turning to the C$800 million in seismic surveys and drilling committed for 43 exploration licenses. Canada-Nova Scotia Offshore Petroleum Board Executive Director Jim Dickie said the regulator is conservatively counting on a minimum of 15 to 25 wells by 2005.
PanCanadian, along with its partners — Norsk Hydro Canada Oil & Gas, Murphy Oil Canada and Marathon Canada — is scheduling four or five 3-D seismic shoots this year, probably covering up to 8,000 square kilometers, plus 1,500 kilometers of 2-D seismic.
Shell Canada plans 2,500 square kilometers of 3-D seismic over two of its three deepwater blocks acquired in 1999 with partners Mobil Oil Canada and Chevron Canada Resources. But a Shell Canada spokesman said cooperation will eventually be needed to spread the cost of bringing a specialized deepwater drilling rig from overseas.
Petro-Canada rejoined the Nova Scotia offshore last year after quitting the region several years ago, buying 147,000 net acres in a deepwater Scotia Shelf block and 495,000 net acres on an adjoining block through a farm-in with Chevron. Its plans this year include 2,000 square kilometers of 3-D seismic on the Scotian Shelf.
Western Geophysical, a division of Baker Hughes, is shooting 1,600 square miles of seismic over Canadian 88 Energy’s unexplored acreage as the company works on contracting a rig to drill a well before July 2001.
This quickening pace has some observers forecasting that Canada’s East Coast offshore, dominated by Nova Scotia gas and Newfoundland oil, will resemble the North Sea within 10 years.
Matt Simmons, president of Houston-based investment banker Simmons & Co. International, said “we know there are some big structures out there. We know we can get at them.” He said current drilling density on the East Coast matches that of the North Sea 35 years ago, four years before the first major discovery.
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