Encana Ready to Pull the Plug on Deep Panuke
Friday 9 June 2017
CALGARY-based Encana is preparing the way to abandon its disappointing Deep Panuke gas field off Nova Scotia, Canada.
The move deals another blow to the province’s stricken upstream sector, where ExxonMobil is already far advanced with plans to abandon its larger Sable Offshore Energy Project (SOEP).
Western Canada-focused Encana is pre-qualifying contractors able to provide it with a jack-up rig to decommission Deep Panuke’s five subsea development wells.
In an expression of interest document with a deadline of 8 June, Encana stated that “no date for cessation of production of the Deep Panuke field has been identified”.
However, the operator did point out that the jack-up will be needed on location between 2019 and 2021.
EnCana’s lease contract with SBM Offshore for the Deep Panuke mobile offshore production unit (MOPU) is set to expire in 2021, although the deal also involves a dozen one-year extension options.
As of 31 December 2016, Encana’s maximum exposure in terms of remaining lease payments over the initial contract term with SBM stood at $299 million, down from $340 million in 2015.
Deep Panuke produces gas from four subsea wells tied back to the MOPU, where hydrogen sulphide and carbon dioxide are stripped out before being disposed of in a dedicated, subsea acid gas injection well.
Encana wants to charter a harsh environment jack-up to plug and abandon all five wells, lying in 30 to 65 metres of water.
The quintet of horizontal subsea trees — each weighing about 50 tonnes — will be recovered to surface and transported to Encana’s shore base in Dartmouth, Nova Scotia.
Gas from the field flows through a 175-kilometre pipeline to Goldboro, Nova Scotia, where it is sent to markets via the Maritimes & Northeast Pipeline.
Deep Panuke has been a major disappointment to Encana. Its reservoir was more challenging than expected, forcing the operator in 2015 to cut proven reserves to only 80 billion cubic feet, down from 355 Bcf in 2013 and as much as 635 Bcf in 2006 when Encana’s development plan was approved by the Canada-Nova Scotia Offshore Petroleum Board.
The field’s facilities were designed to handle 300 MMcfd but output struggled to reach this level, although they did reach about 270 MMcfd in 2014.
Increasing water cuts have also been a major problem in recent years, resulting in Encana shutting the field down in the summer months and resuming production in winter.
In 2016, gas production averaged about 52 million cubic feet per day.
The C$1 billion Deep Panuke project was originally due on stream in 2010 but, after being riddled with a series of cost overruns, delays and setbacks, first gas only flowed in 2013.