El Paso, Marathon to study subsea pipeline route from Nova Scotia

By the OGJ Online Staff

HOUSTON, May 4 -- El Paso Corp. and Marathon Oil Co. Friday said they have agreed to conduct a feasibility study for a subsea pipeline route to transport natural gas from Nova Scotia to the northeastern US.

The Sable Offshore Energy Project off Nova Scotia produces 450 MMcfd, which is shipped to markets in the US Northeast and Canada's Atlantic provinces via the Maritimes & Northeast Pipeline Ltd.

Stephen Beasley, president of El Paso unit Tennessee Gas Pipeline Co., told OGJ Online that the study would examine a subsea route from Novia Scotia to the US Northeast.

The US location has yet to be determined, but it could be as far away as New York City, Beasley said. He estimated the pipeline could be in operation as early as "the middle of the decade."

"We are thinking of this as a phased process. We would expect there will be a stepup over time," Beasley said, adding a connection to Newfoundland might be added.

Additional phases will depend upon the timing of new developments in gas production and also future gas demand, he said.

The feasibility study will cost millions of dollars, Beasley said, adding it is too early yet to talk about regulatory or environmental issues that might surface.

El Paso and Marathon said the Geological Survey of Canada suggests there could be more than 18 tcf of reserves from known and potential discoveries located off Nova Scotia, while other studies have suggested even higher estimates.

"This natural gas would be well situated geographically to provide energy supplies for nearby growing markets. Tennessee and Marathon have completed a preliminary feasibility analysis to examine technical and environmental issues. Preliminary findings were favorable and the two companies have agreed to proceed with further study," the companies said.

E. J. Holm, CEO of El Paso's Eastern Pipeline Group, said, "We have assessed that there is real value to be created by giving all participants along the value chain a new option for natural gas deliveries. This pipeline study is in response to the continued increase in demand for natural gas in Canada and the northeastern US. We are pleased to be aligned with Marathon and are also considering joining with other US and Canadian parties who can bring value to the project.''

Clarence P. Cazalot Jr., Marathon president, said, "A new pipeline to safely and efficiently transport gas to market would add considerable value to any new gas reserves discovered offshore Nova Scotia. The area has significant potential and we will be working to fully understand and address what is important to key stakeholders and local communities in Nova Scotia, Canada, and the Northeastern United States. This would include assessing potential economic and industrial opportunities associated with a landfall in Nova Scotia.''

In March, Ziff Energy Group, Calgary, said a study shows production from the Scotian Shelf off Canada's East Coast could more than double to 1.2 bcfd by 2005.

It said production from off Nova Scotia, already producing from the Sable Island area, could increase to more than 2 bcfd after 2005 (OGJ Online, Mar. 16, 2001).

Rick DeWolf, Ziff Energy senior vice-president, said the Scotian Shelf has estimated reserves of 18 tcf, and that could increase to 50 tcf.

This week at the Offshore Technology Conference in Houston, the premiers of Nova Scotia and of Newfoundland and Labrador provinces said the Canadian East Coast will be a growing exporter of oil, natural gas, and electric power to US markets within the next few years.

"Nova Scotia will be a player in the North American energy strategy by producing approximately 1 bcfd of gas by the middle of this decade and possibly double that by the end of the decade," said Nova Scotia Premier John Hamm (OGJ Online, May 1, 2001).

He said "Several major industry players are starting to examine the feasibility of a subsea route from the offshore to Nova Scotia to New England and New York. They are working on pipeline models that are at least as large as the Maritimes & Northeast line to carry gas that has yet to be discovered."

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