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Encana moves to shut Deep Panuke offshore project

31 May 2017 20:54 (+01:00 GMT)
Encana moves to shut Deep Panuke offshore project

Calgary, 31 May (Argus) — North American independent Encana plans to shut down its C$1bn ($740mn) Deep Panuke natural gas project project offshore of Nova Scotia.

Deep Panuke, which started producing natural gas in December 2013, could be shut as early as 2019. The company confirmed it is planning the decommissioning process.

Deep Panuke's four wells are located about 155 miles (250km) southeast of Halifax, on the Scotian Shelf.

Encana initially planned to produce gas from Deep Panuke for up to 13 years. But well results during the first 18 months of production were disappointing because of higher-than-expected water levels.

The company slashed initial reserve estimates in 2015 to about 80 Bcf (2.3bn m³) from 400-900 Bcf. That year, Encana said the project should produce 180-200mn cf/d, or roughly half as much gas as forecast.

Encana had begun producing seasonally from the project, drawing gas in winter to meet peak demand in New England markets.

Deep Panuke and other sources of Canadian supply are facing increased competition from a deluge of supply from the northeast US. That low-cost gas has weighed on prices in the New England and curbed US demand for Canadian imports.

Operational challenges may have also dimmed the prospects for Deep Panuke.

According to the Canada-Nova Scotia Offshore Petroleum Board, Deep Panuke production averaged 58mn cf/d in March.