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An anxious time for offshore gas projects Nova Scotia needs good news from Marathon well; Newfoundland gets boost from response to Husky call, advances in shipping technology Gary Park Petroleum News Calgary Correspondent
Hope is the most powerful commodity in Atlantic Canada these days as Nova Scotia and Newfoundland look for a breakthrough in the development of their offshore fields.
Despite its more advanced state of development, including the producing Sable project, Nova Scotia, after years of being pummeled by exploration failures, is in the midst of a nervous waiting game as it awaits results from an exploration well being drilled by a Marathon Oil-led partnership and a decision by EnCana on the future of its Deep Panuke plans.
Meanwhile, Newfoundland is closer than ever before to exploring ways of unlocking its 50 trillion cubic feet of gas deposits.
The greatest anxiety is focused on Marathon’s Crimson F-81 well that is currently at about 17,200 feet on its way to an expected 21,400 feet.
Success is vital if the 2002 Annapolis G-24 discovery by Marathon and its partners is to be turned into a commercial prospect and reinforce earlier Marathon projections of a field holding 5 tcf to 15 tcf. To date, the Houston company is keeping tight-lipped. Marathon well tight hole Philip Behrman, the company’s vice president, worldwide, told an Atlantic Gas Symposium in July “we are currently drilling the Crimson well and it’s a tight well and I really can’t talk about the well while drilling.
“We should reach total depth sometime late summer and then we will be talking about it at that point in time.”
He said the Annapolis find was “very nice … but what we need to do is find commercial discoveries in deepwater Nova Scotia. That’s something we didn’t do in the first well. We proved a lot, but we have more to go.”
However, Behrman remains upbeat about the region’s chances of filling a North American supply gap more economically than with imported liquefied natural gas.
To that end he is keeping pressure on the Nova Scotia government to clear away red tape to “reduce exploration well costs and optimize regulatory efficiency and cycle times. Well costs are high in Nova Scotia and are hurting or limiting our ability to explore ... and actually find the most productive trend in deepwater Nova Scotia.” Deep Panuke on hold Also in the balance is the future of EnCana’s Deep Panuke project, which was originally targeted for start-up by mid-2005 before being put on hold 18 months ago while the big Canadian independent looked for a better economic way of bringing the 935 billion cubic feet find into production.
EnCana’s Chief Operating Officer Randy Eresman told analysts in July that the delay in revealing plans for Deep Panuke is a “very usual thing” for a potential C$1 billion, offshore project.
“We think we are doing the most prudent thing,” he said. “We’re finding potentially new ways to design it and to substantially reduce the costs of the project.”
Those alternatives are dominated by discussions with partners in the Sable consortium about tying Deep Panuke in with their infrastructure.
For Newfoundland, technology is in the forefront of Husky Energy’s decision to revisit the future of 2.3 tcf of gas reserves in the White Rose oil field that is targeted to come on stream in late 2005 or early 2006. Marine transportation the key Advances in the development of marine transportation of compressed natural gas figure large among companies who answered Husky’s call in June for “expressions of interest” to determine if the technology exists for commercial development of White Rose gas.
Attracting more than 40 responses worldwide, Husky is taking the next step inviting more detailed plans from selected companies.
A spokesman for Husky told the Financial Post that the company will decide in the next six months to two years how and when it might move forward, although it is too soon to discuss size or cost.
Don Ingram, Husky’s senior vice president of midstream and refined products, told an investment symposium in June that “it’s not like we have to find the gas ... all we have to do is find a way to get it into the marketplace.”
He estimated White Rose could produce 150 million cubic feet a day of gas which will be reinjected for conservation reasons during the first two or three years of oil production.
“The economics of (gas) are outstanding ... we think it’s a better project than the oil at the end of the day,” he said.
Ingram gave compressed natural gas a “clear” edge over competing technologies in exploiting a deposit that would otherwise need submarine pipelines of 225 miles to 400 miles.
Husky and its White Rose partner, Petro-Canada, have previously indicated that a gas venture would not be profitable enough to support the construction and maintenance costs of a pipeline, which would have to cross Newfoundland’s notorious Iceberg Alley, where hundreds of icebergs a year scour the seabed. Currently no CNG tankers in commercial operation Although no CNG tanker is currently in commercial operation, the world is on the verge of developing the technology for marine transport of CNG, said Jim Wright, director of the Center for Marine Compressed Natural Gas at Newfoundland’s Memorial University.
He told an international conference in late June that modified vessels carrying CNG could be ready for service within two years, so long as regulators in Canada fast-track the guidelines and approvals.
In its call for expressions of interest, Husky said its initial review showed CNG had “potential” given the harsh Grand Banks environment, but it also wanted to assess all of the development options.
At an Atlantic Gas Symposium in Halifax on July 20, representatives of EnerSea Canada, Williams Energy, Trans Ocean Gas and TransCanada all confirmed their companies are vying to use various forms of CNG technologies to carry White Rose gas to shore and projected that services should be available for offshore gas owners within five years.
For seven years, TransCanada has been studying the use of converted oil tankers to transport CNG over distances of 1,500 miles, with the vessels capable of carrying up to 100 million cubic feet.
A spokesman for Irving Shipbuilding, which has teamed up with TransCanada to explore the tanker concept, said the technology is “very simple and an extremely economical way to transport gas.”
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