The Chronicle Herald (Canada): Shell ponders stake in Panuke: “Interest in Shell Canada being a potential buyer of the Deep Panuke field - which has been on hold for almost two years by EnCana - was sparked by a recent Shell presentation to investors. Ian Kilgour, Shell vice-president of exploration and production, discussed "potential synergies with future development of the Panuke field." (ShellNews.net) 30 May 05
Petroleum giant may be ready to expand its N.S. holdings
By JUDY MYRDEN / Business Reporter
There is speculation that one of Nova Scotia's oldest players in the offshore has its eyes on the Deep Panuke natural gas discovery.
Shell Canada Ltd., which owns a third of the Sable gas project, is interested in EnCana Corp.'s nearby Panuke discovery, a Calgary newspaper reported.
Jan Rowley, a Shell Canada spokeswoman, confirmed that the company, as a partner in the Sable project, is in discussions with EnCana.
"I heard the same rumour (of a sale) but cannot comment on rumours," she said Friday of a potential deal between Shell and EnCana.
Ms. Rowley said discussions are ongoing between the Sable owners and EnCana, the country's largest oil and gas company.
Interest in Shell Canada being a potential buyer of the Deep Panuke field - which has been on hold for almost two years by EnCana - was sparked by a recent Shell presentation to investors.
Ian Kilgour, Shell vice-president of exploration and production, discussed "potential synergies with future development of the Panuke field."
He also noted that exploration in the area has been "disappointing" in recent years.
Shell suspended its $90-million exploratory well Onondaga, southwest of Sable Island, in May 2002 because not enough natural gas was found for commercial production.
During the presentation to investors, Mr. Kilgour showed a map of Nova Scotia's offshore with the Panuke discovery and its proximity to Shell's fields in the Sable project.
One industry analyst pointed to Shell as being a natural buyer for the Deep Panuke prospect.
"While talk surrounding a potential transaction involving EnCana's Panuke natural gas discovery has fallen silent over the past several months, Shell Canada's investors' day renewed our interest in the area," wrote Scotia Capital's Greg Pardy of Calgary.
Paul McEachern, executive director of the Offshore/Onshore Technologies Association of Nova Scotia, said it is just a matter of time before some company uses the huge Panuke gas reserves.
"It would be a neat fit," said Mr. McEachern, who heads a Halifax-based organization that represents about 500 companies in the industry.
"I don't want to raise expectations. I think EnCana is being true to its word to develop the project . . . but it shouldn't come as a surprise it is being shopped around," he said Sunday.
Ever since EnCana put the $1.1-billion Deep Panuke project on hold, ExxonMobil, the lead partner of the Sable project, said it was in talks with EnCana.
Plans for a major stand-alone project have been shelved for EnCana and the company has been in talks with Sable's owners to potentially tie its gas into the existing facilities.
The Calgary Herald reported last week that it would make sense for Shell to buy Panuke's 950 million cubic feet of gas reserves to ensure its gas commitments through the Maritimes and Northeast Pipeline as the Sable reserves dwindle.
"(It) would also shore up Shell's ability to keep gas pumping full speed through its pipeline, helping it avoid a potential writedown on the line," the newspaper reported.
In its first quarter results, Shell reported pumping about 115 million cubic feet of gas per day from the Sable gas fields.
This was down compared to previous years with 125 million cubic feet of natural gas pumped per day in 2004 and 135 million cubic feet in 2003, Shell reported.
The Sable fields are believed to hold at least 1.35 trillion cubic feet of gas, reduced from original forecasts of 3.6 trillion cubic feet before the project went into production.
That means Sable could run out of gas by 2014, 10 years earlier than first expected.
EnCana spokeswoman Lori MacLean refused to comment on specific discussions.
"The status of Deep Panuke remains the same," she said. "There are four areas of activity; the design, discussions with the Sable partners, reservoir analysis and regulatory improvements."
http://www.herald.ns.ca/stories/2005/05/30/f236.raw.html
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