PanCanadian signs firm service agreement for Deep Panuke gas

PanCanadian Petroleum Ltd. has made another step toward the $1 billion development of Deep Panuke natural gas field 250 km off Nova Scotia. It signed a firm service agreement with Maritimes & Northeast Pipeline LLC to transport up to 400 MMcfd of gas for 10 years.

June 19, 2001

2 min read

By the OGJ Online Staff

HOUSTON, June 19 -- PanCanadian Petroleum Ltd. has made another step toward the $1 billion development of Deep Panuke natural gas field 250 km off Nova Scotia.

It signed a firm service agreement with Maritimes & Northeast Pipeline LLC to transport up to 400 MMcfd of gas for 10 years. The agreement is contingent upon numerous factors related to timing, construction of facilities, and regulatory approvals.

PanCanadian said Maritimes plans to expand its mainline to transport its gas, at a cost of $500 million (Can.).

"The signing of this contract confirms the first expansion of the Maritimes system in Canada," said Michael Phelps, chairman and CEO of Westcoast Energy Inc., the lead partner in the Canadian portion of Maritimes. "With this expansion, we are well on the way to our goal of doubling system capacity to 1.2 bcfd by 2005 and to 2 bcfd by 2010."

Previously, Westcoast had announced the joint venture's intention to invest $1 billion (Can.) to double the size of the 530 MMcfd line within 5 years (OGJ Online, June 14, 2001). M&NP was also in talks with Sable Offshore Energy Inc. about a second phase of development. Currently M&NP carries Sable gas.

The expansion is scheduled to be completed in late 2004 or early 2005 to meet the PanCanadian planned production target of first quarter 2005.

PanCanadian approved the Deep Panuke development in February (OGJ Online, Feb. 23, 2001). Production from Deep Panuke is expected in the first quarter of 2005.

Natural gas from the field will be piped to shore where it will connect with M&NP's mainline at Goldboro, NS. The 1,051-km pipeline crosses the Canada/US border in New Brunswick and terminates in Dracut, Mass.

PanCanadian has a 100% interest in the Deep Panuke development.