Eastern Canada's Nova Scotia government is in favor of the proposed 1.1 million b/d Energy East crude oil pipeline terminating at a deep water port in the province, rather than in neighboring New Brunswick on the Atlantic coast, the province's Natural Resources Minister Andrew Younger said Monday.
Maximizing on existing infrastructure in Nova Scotia and making the project more cost efficient, were two prime reasons for the province making its case, Younger said in an interview from capital Halifax, adding that on February 7 he was in Calgary for a meeting with senior officials from TransCanada and also his counterpart in Alberta, Diana McQueen.
Last August, TransCanada unveiled the 1,864-mile (3,000-km) pipeline to transport crude oil from Alberta and Saskatchewan in the west of the country to refineries in Quebec, Ontario and New Brunswick in the east. The pipeline will also open up an export outlet to Asia and Europe by developing an export facility at Saint John Port John in New Brunswick.
"Port of Hawkesbury [in Nova Scotia] could be an option," he said. "It is the closest port in North America for exports to Asia, particularly India, and Europe and [independent operator] NuStar Energy has potential customers that are interested in taking oil from Canada to not only those two continents, but also the US."
Currently NuStar operates a 7.4-million-barrel storage terminal and transhipment facility near Port Hawkesbury that can accommodate ULCCs and also provide access to the US Midwest through the St. Lawrence Seaway and the Great Lakes system, he said.
There are a number of ways in which TransCanada could route the pipeline, Younger said, suggesting one option could be building a spur line from Saint John Port, or twining the planned pipeline from Quebec with separate lines going to both ports.
"TransCanada has indicated they are interested, but customer interest will dictate a final decision," he said.
A TransCanada spokesman, Philippe Cannon, said Monday there is already about 900,000 b/d of firm, long-term contracts to transport crude oil on the Energy East facility.
"Our portfolio is diverse and we are always interested and looking for new opportunities," he said, adding the company did not wish to comment on its talks on this matter.
TransCanada, Cannon said, was now looking at filing a project description with the federal National Energy Board by March this year and a final application in mid-2014.
DEEP WATER OIL POTENTIAL
TransCanada's verdict will be awaited, Younger said, adding his focus in the meanwhile will on the first well that Shell plans to drill in summer 2015 at its acreage some 160 miles off the coast of Nova Scotia.
There has been exploration off the Nova Scotia coast and it has mostly been in the shelf area. But, with a better understanding of the geology the industry interest is now getting into "deep" waters, he said, without identifying any depths.
"Water depths vary in the province and that's not important. What will matter is the resources and the economics of extracting it. We will be cautiously optimistic, while expecting a shift from natural gas to oil activities. There have been lot of exploratory wells drilled in the past, but they all turned out to be dry. We now see the industry hunting for oil more than gas due to the economic margins," he said, adding that Nova's Scotia's offshore oil resources were 8 billion barrels.
With limited oil production and an offshore gas reserve of 120 Tcf, Nova Scotia is home to the 300,000 Mcf/d Deep Panuke and the 200,000 Mcf/d Sable offshore projects operated by ExxonMobil and Encana respectively, Younger said.
In 2012, Shell was awarded licences to develop six deep water and two shallow water blocks in the province with the company committing to invest about C$1 billion ($965 million). Another contract was also awarded at the same time to BP for four deep water parcels in Nova Scotia with the company planning to spend C$1.05 billion.
"The Shell and BP bids confirm our offshore potential," he said. Shell completed a 10,000 square km (6,410 square mile) 3D seismic program in 2013, while BP will begin year the first of a two-season (2014 and 2015) 3D seismic program over 14,000 square km and may drill as early as 2017-18, Younger said.
No comments were immediately available from either Shell or BP's offices in Calgary, but Randy Hiscock,the company's manager for business development and new ventures, said last October he felt "pretty positive" about early results of the seismic program.
"As we get through the interpretation of that seismic data, it will determine how and if and when we move forward. But I'm fairly confident that it's looking good, and oil is what we are banking on rather that natural gas," he said at the Maritimes Energy Association's annual conference in Halifax.
