Deep Panuke battling 'serious' water woes

Encana has had to extend a planned shutdown of its Deep Panuke natural gas project off Nova Scotia to deal with unexpectedly high levels of water coming up with the natural gas it's pumping from beneath the ocean floor.

"When you have more water than you expect in a natural gas deposit, that's always serious and it's serious because it has to be addressed and there are costs associated with that," said Nova Scotia Energy Minister Andrew Younger.

A regularly scheduled maintenance shut down that started Sept. 26 will continue into November.

Younger revealed the Calgary oil company has been trying to resolve the issue for months, saying officials briefed him about their "challenges" in mid-July during a tour of the platform located 150 kilometres off Nova Scotia.

"We've been aware of this for a number of months now," Younger told CBC News.

How big is the problem?

Encana is trying to determine if the high water levels are a feature of the entire basin, or restricted to the four wells producing the natural gas, he said. 

If the problem is related to a specific well, the company may have to drill additional wells. Otherwise Encana may have to upgrade processing equipment on the platform that separates water from natural gas.

All of the options are expensive. The day rate for an offshore drill rig can range from $300,000 to $500,000.

"This is a problem we want to see solved," he said. 

Encana says it extended the maintenance shutdown — called a "shut-in" by the industry — to improve reliability ahead of high demand in the winter months.

Back online next month

"The extended shut-in period also provides us with the opportunity to assess the increased volume of water that we've recently experienced," Encana spokeswoman Lori MacLean wrote to CBC News.

MacLean said Deep Panuke is expected to go back online in November.

The billion-dollar project has gone from a white elephant to a cash cow for the company.

It was several hundred million dollars over budget and years behind schedule when it start producing natural gas in 2013. High gas prices last winter generated huge profits for Encana.

Deep Panuke generated $395 million in cash for Encana in the first quarter of 2014. 

Younger says this shut-in is well timed, as it's coming in period of lower demand and lower natural gas prices.