Monday, March 26, 2007

Pre-Development Projects: Deep Panuke

Here is the first of four stories on energy projects to come recently published in the Natural Resources Magazine supplement to Atlantic Business Magazine. Where the project details have changed since the article was written last December, I will note that at the end.


On June 30, 2006 Nova Scotia Premier Rodney MacDonald announced that the stalled Deep Panuke natural gas project was finally moving forward.

Deep Panuke first emerged as a potential third project for the Nova Scotia offshore in 2000, when PanCanadian Energy announced encouraging drilling results from a natural gas field associated with the Cohasset Panuke oil project. Deep Panuke will tap into the natural gas reservoirs located underneath the original Cohasset Panuke oil field, which ceased production in late 1999.

To start, EnCana has guaranteed 1.34 million person hours of work in Nova Scotia, including at least 850,000 by Nova Scotians. The agreement also contains a commitment to build accommodation facilities for the Offshore Production Unit in the province yielding some 280,000 person hours employment for Nova Scotians.

The Deep Panuke Offshore Strategic Energy Agreement (OSEA) announced by Premier MacDonald contains a unique element that will facilitate long term opportunities for Nova Scotia companies: EnCana will provide financial and human resources to help build an onshore drilling rig manufacturing operation in Nova Scotia $1 million dollars worth per rig towards the construction of five onshore rigs in province.

Nova Scotia companies who participate in this ambitious and creative supplier development initiative will acquire experience and an entrée into a market hungry for qualified labour and industrial capacity. Construction of the proposed initial five rigs could also help alleviate the rig shortage that has hindered the onshore industry in Atlantic Canada and across the country.

But rig construction is likely to be just the beginning of long term benefit emerging from the Deep Panuke OSEA. Premier MacDonald expects joint ventures and partnerships established during project development to establish export capacity and help Nova Scotia's resident industry flourish.

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