Deep Panuke Gas Field, Canada

The Deep Panuke gas field is located 250km south-east of Halifax, Nova Scotia. PanCanadian has a 100% interest in the development. The wells tap into the natural gas reservoirs in the carbonate reef located underneath the original Cohasset-Panuke oil field - Canada's first offshore project - which ceased production in late 1999.

GEOLOGY

A keynote of the Deep Panuke geology is its position at the reef margin.

DRILLING

The area was first explored by Shell in 1986 and in the 1990s by PanCanadian. Since 1999, the operator has drilled four wells into the Deep Panuke structure, 3,400 to 3 500m below the now depleted Panuke oilfield. The PP-C3 well discovered 225ft of net pay, producing at a rate of 55 million cubic feet of gas/day.

The first appraisal well, PI-1 b, showed 110 ft of net pay, while the second appraisal well, H-08 flowed at an average rate of more than 50 million cubic feet per day of natural gas – the maximum capacity of the testing equipment - during a three-day test. The third appraisal well, M-79A, was drilled offshore about 3km east of the Panuke platform. The horizontal sidetrack encountered 360ft of net pay.

The natural gas project was given the go ahead in February 2001 when the billion dollar project to deliver 400mmcf/d natural gas from reserves of approximately 1 trillion cubic feet received approval. Start-up is scheduled for early 2005. The operator has awarded the contract for the front-end engineering design (FEED) study for the project to the Accent-Saipem Energy Joint Venture. Results are scheduled for the first quarter of 2002.

The two rival development concepts envisage either the two or three bottom founded platforms, subsea flow lines and tiebacks along with two separate subsea pipelines to transport processed natural gas and natural gas liquids to onshore infrastructure.

WELLHEAD PLATFORM

In both models, the existing Panuke platform will be modified and re-used as the wellhead platform. This will be connected to the processing/accommodation (3-platform option) or just the processing platform (2-platform option) via a pedestrian/service system bridge that includes a pipeline to transport raw gas from the wellhead platform to the processing/accommodations, or processing, platform.

At least two existing wells will be re-drilled by a jack-up drilling rig (either the Rowan Gorilla III or Rowan Gorilla V) from the existing Panuke platform. Two other wells, which cannot be accessed from the Panuke platform, will also be re-completed using a jack-up drilling rig.

PROCESSING/ACCOMMODATION PLATFORMS

In the two-platform case, the processing/accommodation platform will contain processing equipment to separate, measure, dehydrate (remove water and hydrocarbon liquids) and sweeten the raw gas. Acid gas, condensate and water handling equipment will also be installed on the platform. The processing facility is designed to process 400MMcfd with turndown capability and provision to expand to 650MMcfd.

The processing/accommodation platform will also house offshore personnel, accommodate necessary utilities, include a helicopter deck, with refueling facilities and associated safety systems.

In the three platform case, the processing platform will accommodate the gas processing system and power generation, while the accommodations platform will be used for utilities and a helicopter landing pad, a refueling station and crew accommodations.

PIPELINES

Deep Panuke will require its own pipeline because the Sable Offshore Pipeline does not have sufficient capacity to carry extra reserves. PanCanadian Petroleum has signed a service agreement with Halifax-based Maritimes & Northeast Pipeline (M&NP) for transmission of up to 400 million cf/d of natural gas to shore where it will connect with M&NP's main line at Goldboro. The 1,051km pipeline crosses the Canada/US border in New Brunswick and terminates in Dracut, Massachusetts.

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