ExxonMobil ready to drill, or do deals to get value from Sable

Gary Park

Petroleum News Calgary Correspondent

ExxonMobil Canada has no intention of accepting a shortened lifespan for the troubled Sable natural gas project offshore Nova Scotia, the company’s newly appointed President Alex Dodds said.

Although the current productive life of the field is forecast to end in 2014, about 10 years ahead of schedule, Dodds said ExxonMobil wants to “make sure it’s utilized for its design life.”

He suggested that could include new gas discoveries, or a possible deal to combine EnCana’s nearby Deep Panuke field with Sable.

In his first public speech since taking charge of ExxonMobil’s operations on Canada’s East Coast — including its 50.8 percent operator stake in Sable, plus stakes in Newfoundland’s Hibernia and Terra Nova oilfields — Dodds said “we will continue to look for additional gas resources and develop what’s already there.

“The Sable project design life is for 25 years. Our objective is to continue to develop gas in the area and ensure those facilities are fully utilized,” he said.

Dodds made his remarks Feb. 5 amid another write-down of Sable reserves by two other partners — Shell Canada, which has a 31.3 percent interest, and Pengrowth Energy Trust, with 8.4 percent. The other partners are Imperial Oil 9 with percent and Mosbacher Operating 0.5 with percent.

He conceded that ExxonMobil’s number are “now aligned with the other owners,” which effectively puts Sable’s gas sales reserves at about 1.35 trillion cubic feet, compared with early estimates that ranged as high as 3.5 tcf.

In addition to restoring some of those numbers through drilling, he said the Sable partners are in talks with EnCana, which has stalled development of its 930 billion cubic foot Deep Panuke find while it explores options to make the project more economic.

“If it makes sense, Deep Panuke and Sable may be combined ... but it is very early days,” Dodds said.

EnCana has agreed that a joint effort or cooperation in using Sable’s established infrastructure is possible.

Fueling that prospect is the MarCoh D-41 well, drilled in the Deep Panuke reservoir last year by ExxonMobil, EnCana and Shell Canada. That well encountered 100 meters of gas bearing reservoir, but has yet to be tested.

Although Shell Canada said a technical review of the Glenelg well drilled last year rates it as uneconomic for standalone development, Dodds is not ready to give up on what would be the last of Sable’s six fields.

He said the well is “still under evaluation” and until that work is completed ExxonMobil will not make a final decision.