EnCana revives Nova Scotia's offshore hopes

The Nova Scotia government hopes a new deal with EnCana Corp. will breathe life into the province's floundering offshore oil and gas industry.

Premier Rodney MacDonald confirmed the energy agreement Friday at a meeting of the Offshore/Onshore Technologies Association of Nova Scotia.

"I'm sure many people thought this day would never come," MacDonald said, "but here we are with Deep Panuke back on track."

EnCana shelved development of the Deep Panuke natural gas field, about 250 kilometres southeast of Halifax, three years ago. The company said the project was too costly to proceed at the time.

But now there are indications the project will be smaller in size and less pricey than the original $1.1-billion price tag.

EnCana vice-president Dave Kopperson will only say the project details will be part of the development plan to be put forward to regulators later this year.

The deal with the province outlines job expectations, industrial benefits, royalties, and payments for research and development for developing Deep Panuke.

Among other things, EnCana has guaranteed 1.35 million hours of work in Nova Scotia, with 850,000 hours to be undertaken by Nova Scotians. Five onshore rigs will be built in the province.

The Nova Scotia government expects to receive $414 million in royalties over the lifetime of the project.

Calling it a "great picture," MacDonald said the energy agreement paves the way for new jobs and opportunities.

A trillion cubic feet

By the time EnCana shelved the Deep Panuke project in February 2003, its crews had hit four dry wells in the area in the previous two years.

But later in 2003 EnCana announced it had drilled two successful wells in the Panuke region and was submitting a new development plan for the field, which is now believed to contain a trillion cubic feet of gas reserves.

Kopperson agrees with MacDonald that Friday's announcement marks a new beginning for Deep Panuke, but he says a lot of work needs to be done before production can begin.

"The Deep Panuke development needs a timely and favourable review of the regulatory application," Kopperson said, adding to the list the need for attractive market conditions and a gas pipeline.

EnCana plans to file a project description this summer with the Canadian Environmental Assessment Agency, and a development plan application with the Canada-Nova Scotia Offshore Petroleum Board later this year.

If all goes well, Kopperson says gas could be flowing by 2010.